Stock Upgraded: AusGroup target price raised from 0.7 to 0.8 by Westcomb

Westcomb Securities has upgraded its target price for AusGroup Ltd to 0.80 sgd from 0.70, saying it expects wholly-owned unit Cactus' earnings to continue benefiting from the robust demand in the oil and gas industry. AusGroup provides engineering services to the oil and gas sector. "We are of the view that Cactus will perform exceedingly well on the back of the robust demand for subsea systems as well as related offshore components for oil and gas exploration activities," Westcomb said in a note to clients. "Cactus has increased its staff strength and added yard capacity in Singapore to cope with the rising orders from its key customers," it added. Westcomb expects AusGroup's net profit to rise from 11.28 mln aud in the year to June 2006 to 20.2 mln in the current fiscal year and to 24.4 mln in the following year. Growth will be driven largely by contributions from Cactus, which became a fully-owned subsidiary last month. AusGroup bought an initial 76.6 pct stake in Cactus in May. At 11.30 am, AusGroup was up 0.035 sgd or 7 pct at 0.535 with 27.22 mln shares traded.