Author Topic: AmResearch Buy (maintain) THREE-A RESOURCES BHD TP1.50  (Read 1393 times)

Online Ļaughing Ģor

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AmResearch Buy (maintain) THREE-A RESOURCES BHD TP1.50
« on: April 24, 2012, 02:22:41 PM »
Saturday April 21, 2012

WE re-iterate our “buy” recommendation on Three-A Resources but clip our fair value from RM1.70 per share to RM1.50 per share.

This is based on a target price earnings (PE) of 20 times forecast financial year ending Dec 31, 2013 revised earnings as we impute in a more conservative utilisation rates based on progressive earnings contributions from the company's maiden China plant.

Our target PE is close to China consumer peers' average of 18 times.

We believe that Three-A's structural growth is firmly on track. We understand commercial production of its “blueprint” manufacturing hub in Qinhuangdao, China, is scheduled to kick-off this June.

The company is fine-tuning its machineries at the state-of-art facility, which boasts a 13,600-sq-m floor area.

To underline our growing confidence, expansion plans for an additional 6,000 tonnes has already been targeted for completion by end of financial year 2013.

The produce in China is expected to yield higher margins due to a strong focus on higher value products such as HVP (hydrolysed vegetable protein) powder versus HVP liquid and; the absence of quality competition within the local market.

Contrary to perception, most local producers operate on a much smaller scale, while a few bigger ones lack international accreditation. In contrast, Three-A adheres to European standards and hence, is expected to enjoy better pricing power.

We have trimmed our earnings forecasts by 18% for financial year 2012 and 5% for financial year 2013, as we impute in a more conservative utilisation rates based of progressive earnings contributions from Three-A's maiden China plant.

We estimate earnings contributions from the China plant to rise from 5% in financial year 2012 to 23% next year. Earnings in the near term will remain Malaysia-driven, given enlarged capacities from the second caramel colour plant and an average utilisation rate of about 70%.

The company's valuation is attractive and the current weakness in share price is an excellent opportunity to accumulate the stock.

We also see material upside to our earnings forecast from the potential expansion to other geographical locations in China.

The Star
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Offline ginkobiloba

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Re: AmResearch Buy (maintain) THREE-A RESOURCES BHD TP1.50
« Reply #1 on: April 24, 2012, 02:24:17 PM »
waaa LG cleaning up investlah rubbish 'research' report with clean report.  :)
God gave you a brain. Use it wisely to swing trade. Kekeke

Offline gigidemiao

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Re: AmResearch Buy (maintain) THREE-A RESOURCES BHD TP1.50
« Reply #2 on: April 24, 2012, 02:31:34 PM »
waaa LG cleaning up investlah rubbish 'research' report with clean report.  :)

yes..
thanks a lot, LG~
 :handshake:
 :)

Offline charmingplus

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Re: AmResearch Buy (maintain) THREE-A RESOURCES BHD TP1.50
« Reply #3 on: April 24, 2012, 02:56:16 PM »
I agree that this is a very potential counter reaching RM1.50 as now oledi going to touch RM1.30.
AGM, good news coming too.