The CookedFairwood Holdings — BUY??(0052.HK/HK$7.18; TP: HK$8.90??) Ashley CHEUNG, CFARating Change — Fairwood reported in its interim results ended 30 Septemberthat net profit increased 6% YoY to HK$49m. The major surprise came from thestrong rebound on a half‐on‐half basis. On the back of sustainable economicrecovery, we believe that Fairwood will further benefit from faster same‐store salesgrowth and outlet expansion. We have revised up our EPS forecast by 17% forFY10, 11% for FY11 and 20% for FY12. We raise our target price from HK$6.30 toHK$8.90, implying 24% upside. We thus upgrade our rating for Fairwood fromSELL to BUY.
The RawCoal prices mostly up last week on tight supplyGrace TANGSnippet — Coal prices at Qinhuangdao (QHD) rose for the sixth straight week lastweek, increasing about 2‐3% WoW on the back of strong demand and tight supply.
We note that the daily output of coal in Shanxi dropped 7% WoW and believe thatthe coal supply in the province will remain tight for the rest of the year. Inaddition, the high frequency of recent mine disasters will aggravate the tighteningsupply, which will bolster coal prices this month.
Tariff adjustments have slight negative impact on CRP(0836.HK/HK$15.80, BUY) Peter YAO, CFASnippet — China Resources Power (CRP) announced its on‐grid tariffadjustments pursuant to NDRC’s notice effective 20 November 2009. In line withour China Power sector report dated 12 November 2009, certain coal power plantsin Jiangsu, Guangdong, Henan, Liaoning and Zhejiang had their tariff levelslowered 1.13‐1.33%, 1.53‐1.59%, 0.76%, 0.98‐0.99% and 1.72%, respectively. On anattributable capacity‐weighted basis, the effective tariff facing CRP will drop0.64% in 2010. This decreases our EPS forecast for the year by about 2%.
Zijin Mining agrees to acquire Indophil(2899.HK/HK$8.12, HOLD; 601899.SS/Rmb10.00, BUY) Belle CHANSnippet — Zijin Mining has agreed to pay A$545m (equivalent to Rmb3.37bn) for100% of Indophil Resources NL. Zijin will make a cash offer of A$1.28 per share.
The proposal represents an 18% premium to the closing price of Indophil shares ofA$1.085 on 26 November 2009 (the last trading day prior to announcement of theoffer); and a substantial 83% premium to Indophil’s six‐month volume‐weightedaverage price of A$0.70.
CRCC: Limited Exposure in Dubai(1186.HK/HK$10.22; 601186.SS/Rmb9.23, BUY Patrick LISnippet — China Railway Construction Corporation (CRCC) issued aclarification today that the company only has six projects in Dubai for a totalcontract value of US$91m, which represents a mere 0.27% of 2008 revenue. Asnone of these projects entail dealings with Dubai World and because they areprogressing smoothly at present, the company does not expect a materialimpact from the meltdown at Dubai World.
