JPMorgan starts Mewah at overweight, target $1.30

Stock Name: Mewah
Company Name: MEWAH INTERNATIONAL INC.
Research House: JP Morgan Chase

JPMorgan has initiated coverage of Singapore palm oil refiner Mewah International (MEWI.SI) at overweight with a target price of $1.30.

JPMorgan said it expects Mewah’s capacity increase and margin expansion to drive earnings to grow at an annual average of 16% over 2011-2013.

Mewah’s new specialty fats production lines will be dedicated to the production of higher margin cocoa butter substitutes, and it also has plans to produce cocoa butter equivalents, the brokerage said.

“With recent political instability in Ivory Coast, the world’s largest cocoa producer, and historical under investment in cocoa planting threatening global cocoa supply outlook, we see strong potential for cocoa butter substitutes and equivalents picking up the supply shortfall,” JPMorgan said.

It also said it expects Mewah’s economies of scale to imrpove as its refining capacity increases 19% by the second half of next year.

At 9:52 a.m., shares of Mewah were 1% higher at $1.00 but have fallen 4.8 percent since the start of the year.