Xinren Aluminum Holdings rated 'buy' by DBS

Stock Name: XinRen
Company Name: XINREN ALUMINUM HOLDINGS LTD

Research House: DBS Vickers

Price Call: BUY

Target Price: 0.65

DBS Vickers Securities in a Feb 8 research report says "Xinren Aluminum has secured an option to buy an initial 21% stake in China Leading International Group Limited (CLI), a growing primary aluminum producer in Xinjiang that has its own power and smelting plants.

"Additionally, Xinren has a second call option to buy another 30% stake in CLI after completing the purchase of the initial 21% stake.

"Xinren's is trading at an undemanding 4.8x FY12F PE and 1.0x FY12F P/BV despite the 17% rise in share price over the last 5 trading days and 23% over last 2 weeks. No changes to earnings at this juncture given lack of details. Target price of 65 cents. MAINTAIN BUY."

Xinren Aluminium target raised to 76 cents by DBSV

Stock Name: XinRen
Company Name: XINREN ALUMINUM HOLDINGS LTD
Research House: DBS Vickers

DBS Vickers raises Xinren Aluminium (MN5.SG) target price to $0.76 from $0.70 and keeps its Buy recommendation after the China-based aluminum producer announced it intends to acquire 100% of the equity interest in two China smelting plants, Liupanshui Shuangyuan and Yichang Changjiang, for an aggregate consideration of no more than RMB442.4 million ($86 million), financed by internal funds; the total smelting capacity of the plants, currently owned by group majority shareholders the Zeng family, is 275,000 tons.

DBS Vickers analyst Eun Young Lee says “we believe the valuation discount should narrow going forward given that the reason for the discount was its indirect ownership in the two smelting plants, its major revenue-generating assets.” The new target is pegged at 9.5x FY11 P/E, reflecting the transition to direct ownership, which translates to 7.2x FY11 EV/EBITDA and 2.5x FY11 P/BV.

The new target is also benchmarked at a 20% discount, against 25% previously, to the weighted average of its global peers. The stock is +1.1% at $0.45.

XinRen - Xinren started at Buy by DBS Vickers; Well positioned in China

Stock Name: XinRen
Company Name: XINREN ALUMINUM HOLDINGS LTD
Research House: DBS Vickers

DBS Vickers initiates Xinren Aluminium (MN5.SG) at Buy with a $0.70 target.

Says the company is well positioned in the Chinese aluminum industry as an integrated manufacturer with 275,000 tons smelting capacity and 50,000 tons fabrication capacity.

Notes Xinren was profitable in the last three years, unlike some of its peers; "profitability stems from its two cost competitive smelting plants, which were constructed at sites where there is abundant electricity at generally lower tariffs."

Target price pegged to 7.9x FY11F P/E, translates to 2.2x FY11F P/BV, a 38% discount to worldwide peers, adjusting for no equity ownership of the smelting plants, potential risk of policy changes and volatile aluminum prices, and zero dividends.

"Undemanding valuation and poor share performance since listing have excessively factored the risk."

Shares are up 5.5% at $0.480.