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.

FerroChina stock price higher on hoping for high future earnings.

Kelive Research on FerroChina.
The investors hope the Ferrorhina will have robust earnings in future, with the group benefitting from demand for steel and from its expansion program.
Kelive Research estimates that by 2008, FerroChina will have a steel processing
capacity of 2.4 million tonnes, compared to 900,000 tonnes at present.
By that time, FerroChina will also have emerged as the largest producer of
galvanized steel in Asia.

Kelive Research expects FerroChina's net profit to have risen to 291 million yuan last year
from 146.1 million yuan in 2005, and to rise to 400.75 million yuan this year and 730
million yuan next year. Kelive Research‘s fair value for FerroChina is S$1.92 per share.

CIMB-GK on FerroChina.
FerroChina, a maker of galvanized steel coils in China, with an "outperform"
rating and a target price of $2.29 per share as it expects the company to
post robust earnings in the next two years on the back of its aggressive
expansion plans.

By 2008, FerroChina will have an aggregate capacity of 2.4 million tons, making it
the largest non-integrated galvanized still maker in Asia, CIMB-GK said.
Earnings will expand in tandem with capacity expansion.

CIMB-GK said it expects FerroChina's net profit to rise from 146.1 million yuan in
2005 to 289.3 million yuan last year, 364.1 million this year and 691 million next year.
Demand for galvanized steel is well diversified, with FerroChina recently
securing some US$317 million worth of orders from the UK, Australia, New Zealand, Israel, Italy and Southeast Asia.


AUDITORS
Deloitte & Touche

BACKGROUND
The Company was incorporated in Bermuda on 30 September 2004.The Group is a manufacturer of heavy gauge galvanized steel coils with thickness ranging from 0.6mm to 4.2mm and width ranging from 660mm to 1550mm. Currently, the Group has one galvanization production line with an annual production capacity of 300,000 tons for the manufacturing of its products. The Group is expected to expand its capacity to 700,000 tons a year when its second galvanization production line is put into commercial production by end May 2005.The Group's customers are mainly steel trading companies, steel structure engineering companies and steel processing factories in China.

Company web site:-
http://www.ferro-china.com/history.asp

Summary
FerroChina Ltd. is a steel processor engaged in the production and sale of galvanized steel coils, primarily heavy gauge galvanized steel coils, and other related products, with an annual production capacity of 700,000 metric tons. The concentration of the zinc layer ranges from 180 grams per square meter to 350 grams per square meter. The thickness of the Company's steel coils ranges from 0.6 millimeters to 4.2 millimeters and the width ranges from 600 millimeters to 1,550 millimeters. Its production facility is located in Dongbang Industrial Park, Changshu, Jiangsu Province, the People's Republic of China. It has made export sales to Singapore, Spain, the United States, the United Kingdom and Taiwan. FerroChina Ltd., through its wholly owned subsidiary, Twin Well Group Limited, holds a 100% equity interest in Changshu Xingdao Advanced Building-Material Co., Ltd. In December 2006, the Company acquired Xinghai and Xingyu.

Links:-
http://www.ferro-china.com/
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