Tuesday, July 04, 2006

Stock Upgraded: China Sun with price target of 1.26 by Merrill Lynch!

Merrill Lynch said it has initiated coverage of China Sun Bio-chem Technology Group Co Ltd with a "buy" rating and a price target of 1.26 sgd per share as it expects strong earnings for China's top producer of modified starch. The brokerage expects China Sun's net profit to rise from 242 mln yuan last year to 304 mln yuan this year, 395 mln yuan next year and 471 mln yuan in 2008. "We forecast an earnings per share compounded annual growth rate of of 25 pct for 2006-2008 on the back of its newly doubled corn starch and modified starch capacities," Merrill Lynch said. "The stock has corrected from its high of 1.02 sgd and presents an excellent buying opportunity," it added. Apart from strong earnings from its core modified starch business, Merrill Lynch said China Sun's ethanol facility, which will start operations in October this year and become profitable next year, is another potential share price driver. The brokerage said it has not included in its price target, potential contributions from fuel ethanol and starch sweeteners. These two new could add a further 0.20 sgd to its price target, Merrill Lynch said. At 11.04 am, China Sun was up 0.085 sgd or 12.14 pct at 0.785 with 83.57 mln shares traded.

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