Stock Name: Mewah
Company Name: MEWAH INTERNATIONAL INC.
Research House: Daiwa
Company Name: MEWAH INTERNATIONAL INC.
Research House: Daiwa
Daiwa initiates Mewah International (MV4.SG) at Outperform with a $1.15 target price. The house notes the Malaysia-based palm-refiner’s operating policy to hedge its price risk, such that its refining ’spread’ (bulk division EBITDA/tonne) should not be affected directly by changing commodity prices: “we expect this spread to remain generally steady over the 2009-2013 period, at around US$27/tonne. Accordingly, we see production capacity as the key to Mewah’s earnings prospects.”
It notes, Mewah has announced plans to expand refining capacity by 26.3% by end-2012 (vs end-2010), with about 85% of this expansion and associated working-capital needs already financed by its November IPO. “Thus, we think investors that buy now can be confident about the company’s 2011-2013 net-profit growth prospects.”
It notes, Mewah has announced plans to expand refining capacity by 26.3% by end-2012 (vs end-2010), with about 85% of this expansion and associated working-capital needs already financed by its November IPO. “Thus, we think investors that buy now can be confident about the company’s 2011-2013 net-profit growth prospects.”
Daiwa adds, its forecast 2010-2014 adjusted net-profit CAGR of 6.9% means that Mewah should not trade at a 2011E P/E premium to the market; “hence, we see a target P/E of 13.6X on our 2011 EPS forecast as fair.”
Shares are up 1.0% at $1.01.
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