Stock Buy Call: Pine Agritech with a price target of 2.46 by Kim Eng!

Kim Eng said it has upgraded its rating on Pine Agritech to 'buy' from 'hold' with a 2.46 sgd price target, based on its view that the company will continue to enjoy strong growth. "We believe the business model justifies this premium valuation, built around expansion of high margin products secured by long term supply agreements with locked-in pricing, volume and tenures," the brokerage said in a note. Kim Eng also eyes some upside potential in its 2006 earnings forecast of 329.8 mln yuan if Pine Agritech is able to secure more new customers than expected or if it achieves better average selling prices and margins on its existing orders. "We believe the time to reflect more bullish assumptions in our 2007 forecast is drawing closer and there should be greater clarity in the third quarter of 2006," Kim Eng added. Upside potential for its present 2007 estimate of 418.7 mln yuan will come from higher utilisation of its expanded soy oligosaccharide syrup (SOS) capacity and profit contributions from the new peptide product, the brokerage said. At 10.33 am, Pine Agritech's shares were up 0.11 sgd or 4.90 pct at 2.36 with 240,000 shares changing hands.