Post Reply
81-100 of 290
Now DBSVickers is also BULLISH!! Target $1.05
Hitting the sweet spot
�� Story: Luzhou Bio-Chem (LUBC) placed out 36m new shares,
diluting its share capital by 10%. The net proceeds of S$25.7m
will be used mainly for capacity expansion.
diluting its share capital by 10%. The net proceeds of S$25.7m
will be used mainly for capacity expansion.
�� Point: We look forward to the completion of the HFCS
production lines in 2Q07, which will allow LUBC to ramp up
production of the high-margin sweetener used in carbonated
drinks.
production lines in 2Q07, which will allow LUBC to ramp up
production of the high-margin sweetener used in carbonated
drinks.
�� Relevance: Having taken into account the dilution impact,
interest cost savings and increase in ASPs, we are raising our
FY07 and FY08 net earnings by 3-6%. We maintain our BUY call
on LUBC with a target price of S$1.05 based on DCF valuation.
interest cost savings and increase in ASPs, we are raising our
FY07 and FY08 net earnings by 3-6%. We maintain our BUY call
on LUBC with a target price of S$1.05 based on DCF valuation.
New share placement dilutes share capital by 10%. Luzhou Bio-Chem
(LUBC) issued 36m new shares, diluting the share capital by 10%. The
estimated net proceeds of S$25.7 million will be used to: 1) partially
finance the construction of the JV plant in Sichuan, including purchase
and installation of production line, machinery and equipment, 2)
construct new production lines for special feed products in Shandong
and 3) build production lines for high fructose corn syrup in Liaoning.
The capital expenditure is expected to cost S$20.9m and the remaining
net proceeds of S$4.8m will be used as working capital.
(LUBC) issued 36m new shares, diluting the share capital by 10%. The
estimated net proceeds of S$25.7 million will be used to: 1) partially
finance the construction of the JV plant in Sichuan, including purchase
and installation of production line, machinery and equipment, 2)
construct new production lines for special feed products in Shandong
and 3) build production lines for high fructose corn syrup in Liaoning.
The capital expenditure is expected to cost S$20.9m and the remaining
net proceeds of S$4.8m will be used as working capital.
Government measures expected to stabilise corn prices. During 2H06,
we saw corn prices increase to a high of RMB1,200/ tonne. As corn
prices were still relatively high in 4Q06, we believe that margins will be
slightly compressed. Going forward, margins could potentially rise with
the shift in product mix towards the higher-margin HFCS, assuming corn
prices remain fairly stable. We are reassured by the Chinese
government?s recent efforts to control corn prices from soaring. It was
recently announced that regulations would be imposed to control
companies using grain as raw material in biofuel production. From 2007
onwards, companies which plan to produce biofuels are required to
seek regulatory approval. Since Nov 06, the Chinese government has
allowed increases in the supply of grain by releasing some of its
national stockpile to offset price jumps. We believe that such measures
will keep corn prices from increasing substantially in the short term.
we saw corn prices increase to a high of RMB1,200/ tonne. As corn
prices were still relatively high in 4Q06, we believe that margins will be
slightly compressed. Going forward, margins could potentially rise with
the shift in product mix towards the higher-margin HFCS, assuming corn
prices remain fairly stable. We are reassured by the Chinese
government?s recent efforts to control corn prices from soaring. It was
recently announced that regulations would be imposed to control
companies using grain as raw material in biofuel production. From 2007
onwards, companies which plan to produce biofuels are required to
seek regulatory approval. Since Nov 06, the Chinese government has
allowed increases in the supply of grain by releasing some of its
national stockpile to offset price jumps. We believe that such measures
will keep corn prices from increasing substantially in the short term.
Maintain BUY, target price: S$1.05. The new special feed plant in
Shandong will have a capacity of 20k per annum. LUBC hopes to sell it
for RMB2,500/tonne, twice the price it is currently commanding for byproducts.
As we have limited information on special feed products, we
are raising the ASP of by-products by 21% to RMB1, 500/tonne. As a
yardstick, China Sun Bio-Chem is selling its by-products for approx.
RMB1,500/ tonne. As LUBC is ramping up HFCS production, we have
also raised the sweeteners ASP by 5% per annum to RMB2,100/ tonne in
FY07. Having taken into account the dilution impact, interest cost
savings and increase in ASPs, we are raising our FY07 and FY08 net
earnings 3-6%. We maintain our BUY call on LUBC with a target price
of S$1.05 based on DCF valuation.
Shandong will have a capacity of 20k per annum. LUBC hopes to sell it
for RMB2,500/tonne, twice the price it is currently commanding for byproducts.
As we have limited information on special feed products, we
are raising the ASP of by-products by 21% to RMB1, 500/tonne. As a
yardstick, China Sun Bio-Chem is selling its by-products for approx.
RMB1,500/ tonne. As LUBC is ramping up HFCS production, we have
also raised the sweeteners ASP by 5% per annum to RMB2,100/ tonne in
FY07. Having taken into account the dilution impact, interest cost
savings and increase in ASPs, we are raising our FY07 and FY08 net
earnings 3-6%. We maintain our BUY call on LUBC with a target price
of S$1.05 based on DCF valuation.
The Acc/Dist graph has been in a downtrend since mid-November. If you look at the bar chart, you'll see that there are 2 peaks since mid-Novemeber... and that the second peak is lower than the first peak. That's why I think its on a downtrend.
Ya as fellow investors, our aim is to make money. So let's all earn together without trying to talk the stock down.
Better news from Bush last night on the usage ethanol as alternative fuel.......'The proposal would set the amount of ethanol and other alternative fuels to be blended into the fuel supply at 35 billion gallons by 2017, up from 7.5 billion gallons in 2012. The standard would be expanded beyond ethanol to include oil alternatives such as biodiesel, methanol, butanol and hydrogen'.
It is only a matter of time before this gem shoot past $1.
spurs88, I read the research report for sure! But that is just a reference , guideline.
I am just tired of this counter for past 12 days, that's all. Nothing more than that.. Maybe I need a little bit patient to see the results. Oh yeah, what's your opinion on the new placement shares announced last two days? Let's have a friendly sharing environments here. ...