CIMB Research retains Outperform on Daibochi

KUALA LUMPUR: CIMB Equities Research is retaining its Outperform recommendation on Daibochi Plastic & Packaging at RM2.59 and has a RM3.92 target price.

It said on Wednesday, July 6 the sharp fall in raw material prices since June should give Daibochi’s 3Q11 profit margins a boost as selling prices for the quarter have already been locked at the market prices prevailing at end-May.

“We maintain our FY11-13 EPS forecasts while noting that there is upside to both our numbers as well as the share price if raw material prices continue to fall or if the company clinches some major contracts from new MNC clients over the next few quarters.

“We also retain our RM3.92 target price, which is based on 10.2x CY12 P/E, a 30% discount to our 14.5x target market P/E. Daibochi remains an Outperform and our top pick in the packaging sector, helped by its generous gross dividend yield of 8%,” it said.