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2009-6-5 11:55:00 a.m. HKT, XFNA
DJ MARKET TALK: Citi Ups Hidili Industry Target 136.7% To HK$6.51
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| 1139 [Dow Jones] STOCK CALL: Citigroup raises Hidili Industry (1393.HK) target price to HK$6.51 from HK$2.75 after increasing FY09-10 earnings forecasts by 18%-24% as bumps up FY09-10 coking coal price outlook by 4%, 24%. Notes volume forecasts unchanged; tips potential upside if company raises production rates, acquires operating assets. Keeps at Buy. Says strong steel production equates to strong coking coal demand, coking coal prices finding strong bottom. Adds, with stable supply, market could turn tight in 2H09 if China construction activities accelerate. "With more friendly credit environment now compared with 2H08, Hidili's management has put M&A strategy back on the table. We expect additional value in the stock should acquisitions be delivered as the costs in China are still as low as CNY5-CNY15/ton." Lowers risk rating to Medium from High on view coking coal downside risk limited. Shares +7.5% at HK$6.30; HSI flat. (LES) Contact us in Hong Kong. 852 2802 7002; MarketTalk@dowjones.com
(Delayed by 1 hour)
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