Hu An Cable Holdings Ltd: Earnings surprise!

Stock Name: Hu An
Company Name: HU AN CABLE HOLDINGS LTD.

Research House: CIMB

Price Call: BUY

Target Price: 0.38

BUY; TP: S$0.38

• Maintain Buy with increased target price of S$0.38. Using the same multiple of 6.0x P/E and an increased CY 13 EPS of S$0.063, based on reduced estimates for interest expense, we derive an increased target price of S$0.38. This translates to a total upside of 157% including FY12 dividends. We still maintain our view that Hu An is grossly undervalued.
• FY11 net profit would have been in line with our estimates had we not been overly conservative with our projection for 4Q11 interest expense. We have accordingly, readjusted our assumptions for this and raised our forecast for CY13 EPS.
• We continue to favour Hu An for its >15% ROE, high dividend yields (6.7 ' 9.1%) for FY12-FY14, cheap valuation and its direct exposure to China's strong demand for infrastructure expansion.
• The company Chairman will be giving a presentation to CIMB clients during CIMB's Corporate Focus Series event on 13 March, 12:30 pm (be sure to sign up!); followed by an analyst briefing in the afternoon.

Source: CIMB TRADER AM 02 March 2012