Halcyon has been consolidating below the 0.800 level for about a week and has staged a breakout above the 0.800 Psychological resistance level this morning. High today was 0.825. Short term uptrend is in placed if 0.800 remains as the new resistance turned support. As long as 0.800 holds, we are bullish with a short term target of 0.84 to 0.86 level.
Stop loss at 0.785 nevertheless.
UOBKH – 27th March 2013
Valuations
• Halcyon Agri (Halcyon) is trading at 9.5x 2012 PE and 3.6x
P/B. Its 2012 net profit jumped by about 130% yoy to reach
US$10m.
Investment Highlights
• A solid midstream natural rubber player. Halcyon
operates in the midstream segment of the natural rubber
supply chain. This involves: a) procurement of raw rubber,
b) processing into technically specified rubber, and c) selling
to vehicle tyre manufacturers. It had a production capacity
of 92,380mt p.a. as of end-12 and is set to expand its
capacity by 65% within the next three years. Halcyon owns
and operates two processing facilities in Palembang,
Sumatra, while its merchandising and marketing office is in
Singapore.
Strong cash flow to support potential M&As. Halcyon
generated FCF of US$7m in 2012 and this boosted its cash
balance by 42% yoy to hit US$12m. We see the potential for
M&As in the upstream segment, which would enhance
Halcyon’s position in the natural rubber supply chain,
expand its earnings potential and capture better margins.
No comments:
Post a Comment