DJ MARKET TALK: MS Keeps Chalco At Underweight; Still "Expensive"
1529 [Dow Jones] Morgan Stanley shares some analysts' view that Chalco's (2600.HK) earnings set to recover in 2H; thinks Chalco will be profitable in 2H, says there is still chance company will achieve full-year EPS forecast, especially with management's focus on lower costs.
Still, MS doesn't agree with buying Chalco at current levels; says stock trades at 1.9X 2010 P/BV with 4% ROE, 49.8X FY10 P/E makes shares even less attractive vs Alcoa at 25X. Even if applying house's bull-case pricing assumption, Chalco would trade at 29X FY10 P/E, "still looks expensive."
Keeps Underweight call, HK$7.73 target price