Chiho-Tiande 0976

[winston]

Not vested. From Phillips:-


Risks

1) Its capability expansion may be below the expectation.
2) Global economy may fall into the stagflation.


Buy-rating for expectable high speed growth

Benefited from the support of emerging industry policy and expansion of the Company's production capacity, we expect that the Company will realize a turnover of HKD5.44 billion and HKD8.26 billion, a net profit of HKD372million and HKD563million respectively in 2010 and 2011, which is converted to an annual growth rate of -11% and 51%, and earnings per share of HKD0.42 and HKD0.56.

We evaluated the Company based on its potential growth and with reference to PE ratio. Currently it PE ratio almost ranks the lowest in peers with 12 times, far behind the average of 18 times.

We give a conservative evaluation rating, i.e. 15 times of earning per share in 2011 and the 12-month target price is HKD8.45, with 21% premium than the current price. We give it a buy-rating.