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Disclaimer:-Please note that all such analysis is provided by way of information only. All of the information was and should be taken as having been prepared for the purpose of reference only and that none were made with regard to any specific investment objective, financial situation or the needs of any particular person who may receive the analysis. Any recommendation or advice that may be expressed in or inferred from such analysis therefore does not take into account and may not be suitable for your investment objective.

Sunday, May 25, 2008

Ferro China Research Report

by CIMB-GK (22 May)

The expansion of FerroChina's Xinghai and Xingyu facilities appear on track. With its new lines, Ferro China aims to boost output, improve the product mix and gross margins.

While FerroChina suffered an initial shock in 4Q2007 when there was a one month lag to raise selling prices to accomodate higher feedstock prices, the margin between HRC (hot-rolled coil) and galvanised steel has been rising slowly.

We revise our FY2008-2010 forecast marginally by between -0.4% to 1.5%. With improved business visibility and possible value-creation from strategic investors, we upgrade out target CY2009PE to eigth times from seven times, still pegged at 35% discount to industry peers to account for its smaller size.

-Research Report by CIMB-GK (22 May)
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