StraitsAsia - Straits Asia started at Buy by Nomura with $2.80 target

Stock Name: StraitsAsia
Company Name: STRAITS ASIA RESOURCES LIMITED
Research House: Nomura

Nomura starts Straits Asia Resources (AJ1.SG) at Buy with $2.80 target price, says Dow Jones.



Nomura says strong coal prices, pick-up in coal volumes should lead to earnings upturn, possible stock re-rating for Indonesia-based miner.



“We expect Straits Asia’s coal sales volumes to almost double over the next five years, driven by production increases at Jembayan mines and a strong ramp-up at Northern leases,” says research house.

Notes SAR generates strong operating cashflow that can be used to fund acquisitions. Says even if there’s no acquisition, dividend yield still attractive at estimated 5.8% for FY11, 8.3% for FY12, based on 60% dividend payout ratio. Shares –0.4% at $2.29 yesterday.