CHT rated 'buy' target at SG$1.22 - UOB Kay Hian

UOB Kay Hian has initiated coverage on CHT (Holdings) Ltd, with a "buy" call and a price target of S$1.22 per share based on the Chinese adhesive tape manufacturer's steady earnings potential.

"As a major producer of specialty adhesive tapes, CHT is a direct play on the
fast-growing automobile sector in China and overseas," UOB Kay Hian said.

"CHT's acquisition of technological know-how through its joint venture with
Plymouth Rubber Co Inc and its low production costs are its key competitive
advantages," it added.

UOB expects CHT to post a 22.3% compounded annual growth rate for revenues
between 2005-2009, from 580.7 million yuan to 1.3 billion yuan, driven by the ramp-up in
utilisation rates.

It estimates CHT's net profits will grow to 156.5 million yuan last year from 113.6
million in 2005, to 205 million this year, to 221.6 million next year, and to 241.7 million in 2009.

AUDITORS

Grant Thornton, Hong Kong

BACKGROUND

The Company was incorporated on 31 December 2002 under the laws of Bermuda as a holding company. Its subsidiaries are established in China, Hong Kong and the British Virgin Islands. The Group's manufacturing facilities are located in Zhuozhou City, Hebei Province, China.The principal activity of the Company is investment holding. The Group is principally engaged in the business of the manufacture and sale of adhesive products, polyvinyl chloride ("PVC") film and pressure sensitive adhesive ("PSA"). It is also engaged in the manufacture and sale of machinery for the manufacture of adhesive products.

Company web site:-
http://www.chinahuaxia.com

Summary
CHT (Holdings) Ltd. is an integrated adhesive tape producer in the People's Republic of China. It is engaged in the development, manufacturing and distribution of categories of adhesive tapes, which include polyvinyl chloride (PVC) electrical tapes, biaxially orientated polypropylene (BOPP) and PVC packaging tapes, polyethylene and PVC protective tapes, masking tapes, PVC marking tapes, double-sided tapes, pipe wrapping tapes, cotton tapes and BOPP stationery tapes. The adhesive tape products segment manufactures and sells adhesive tapes such as electrical tape, packaging tape, protective tape and stationery tape for industrial and household use, as well as other related products. The PSA segment manufactures pressure sensitive adhesive for use in the manufacture of adhesive tapes. The PVC film segment manufactures polyvinyl chloride film for use in the manufacture of adhesive tapes. The machinery segment manufactures machinery use in the manufacture of adhesive tapes.