China XLX Fertiliser: In steady fashion

Stock Name: China XLX
Company Name: CHINA XLX FERTILISER LTD.

Research House: CIMB

Price Call: BUY

Target Price: 0.43

Target S$0.43

Results defied headwinds, with growth in key businesses. Management hints of coming excitement in the form of possible ASP hikes. We do not see any road bumps which could derail a record year in the making.

Source: CIMB Research 27 Feb 2012

CIMB upgrades China XLX to 'outperform'

Stock Name: China XLX
Company Name: CHINA XLX FERTILISER LTD.

Research House: CIMB

Price Call: BUY

Target Price: 0.43

CIMB Research has upgraded Singapore-listed Chinese fertilizer producer China XLX Fertiliser (CXLX.SI) to ’outperform’ from ’trading buy’ and raised its target price to $0.43 from $0.39.

A US$51 million ($66.3 million) investment from Primavera Capital will boost China XLX’s financial flexibility, CIMB said, adding that the combination of Primavera’s experience in capital markets and China XLX’s strengths in operations can help the firm grow its business.

China XLX is likely to benefit from the Chinese government’s efforts to consolidate the country’s urea industry aimed at reducing inefficient production capacity, improving the competitiveness of domestic producers as well as decreasing emissions and energy consumption, CIMB said.

Easing coal prices will also provide cost relief to China XLX, CIMB added. China XLX stock has fallen around 45% so far this year.

China XLX Fertiliser upgraded to 'buy' by DBS

Stock Name: China XLX
Company Name: CHINA XLX FERTILISER LTD.

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.40

DBS Vickers Securities in an Oct 12 research report says: "China XLX's share price collapsed 57% since early 2011, under-performing STI by c.40% on the back of weak 1H earnings and investors' risk aversion towards small-mid cap and S-chips.

"Current valuations at GFC trough levels of 0.76x 12-month forward P/BV and 7.6x PE are attractive entry points in our view. Our target price is raised to 40 cents, as we roll over our valuation to blended FY2011/2012 EPS, still based on 12x PE (-1.0SD), translating to 1.1x P/BV (-1.0SD).

"In spite of our conservative forecasts (16-17% below consensus) and valuation methodology, current share price still offers 51% upside to our target price, suggesting stock is oversold and undervalued. UPGRADE TO BUY."

China XLX Fertiliser rated 'neutral' by CIMB

Stock Name: China XLX
Company Name: CHINA XLX FERTILISER LTD.

Research House: CIMB

Price Call: HOLD

Target Price: 0.39

CIMB in an Aug 3 research report says: "2Q11 core net profit of Rmb38.1 million (+86% y-o-y, +80% q-o-q), though below consensus, meets our expectation, reflecting a better sales mix and ASP increases.

"2Q11 and 1H11 core EPS forms 24% and 37% of our FY2011 forecast respectively, in line as they reflect seasonality. The ASP improvements and stabilising margins are commendable but not reasons to turn bullish just yet, as we remain wary of costlier coal input and fund-raising needs from aggressive expansion.

"ASPs as a whole could still be volatile because of overcapacity in China while methanol producers are still confronting cost pressures. Our earnings estimates are unchanged, so is our target price of 39 cents, still at 7x CY12 P/E, a 50% discount to peers. MAINTAIN NEUTRAL."

CLSA starts China XLX Fertiliser at Buy

Stock Name: China XLX
Company Name: CHINA XLX FERTILISER LTD.
Research House: CLSA

CLSA starts China XLX Fertiliser (B9R.SG) at Buy with a target price of $0.63 as China’s lowest-cost coal-based urea and compound fertilizer producer seeks to double annual capacity to two million tons by the 2013 calendar year. 

“The recent underperformance compared with regional peers is unjustified, with the market overly fixated on rising input costs...we expect the main earnings driver in 2011 to be rising urea and methanol prices.”" 

Adds China XLX will benefit from strong demand for urea and compound fertilizers. The stock is up 1% at $0.505. 

China XLX - CIMB cuts China XLX to Underperform, lowers target

Stock Name: China XLX
Company Name: CHINA XLX FERTILISER LTD.
Research House: CIMB

CIMB downgrades China XLX Fertiliser (B9R.SG) to Underperform from Outperform, lowers target to $0.45 from $0.71, after cutting its FY10-FY12 earnings estimates by 13.8%-39% to reflect persistent cost pressures. 

“The amount of additional capacity from various urea players will limit ASP increases, we believe, while coming production could be affected by electricity cuts.” 

CIMB’s new target price is still set at 7X CY12 P/E, a 50% discount to its peers. “We believe de-rating catalysts will come from:

1. deteriorating margins for methanol with the recovery stalling;


2. high urea ASPs paradoxically affecting volume sales as most distributors purchase products at low prices, and some are cautious about the high prices; and


3. costlier coal inputs.”

Shares are off 3.3% at $0.585.