Fufeng Group Limited (HKG:0546) RMB 1025Mn CB Issuance Completed, Stock Still Undervalued, 2010 TP Raised To HKD 9.03
Hong Kong, April 27, 2010 AEST (ABN Newswire) - Fufeng Group Limited (
HKG:0546) (PINK:FFNGY) announces that Joint Lead Managers have exercised the Option in full for RMB205Mn (equivalent to approximately US$30Mn) in principal amount of Option Bonds, bringing the total issue size of convertible bonds to RMB1025Mn (equivalent to approximately US$150.1Mn) in aggregate principal amount of Bonds. The company's stock has gained 31.17% since our recommendation on Feb.12, 2010.
The company completed an issuance of 4.5% convertible bonds of RMB 820Mn on April 1, 2010 and granted to the Joint Lead Managers an option to subscribe for all or any of the Option Bonds up to a further aggregate principal amount of RMB205Mn (equivalent to approximately US$30Mn).The exercise of this option indicates that investors are holding very positive outlook for the company.
We still believe the company has its own competitive advantages in terms of production capacity and cost control. The company's strategy to transform itself from an industrial product manufacturer (glutamate acid) to a consumer product manufacturer (MSG) is raising the company's valuation. The stock's past two-month performance has indicated that the market has gradually recognized the true value of the company. We still believe in the company's strategy and execution. We believe the company should enjoy a higher valuation to reflect its transformation to a consumer product manufacturer, therefore we decided to give Fufeng a 12X 2010 PE, resulting in a TP of HKD 9.03 vs previous HKD 7.52, representing a 39.35% upside potential from current price HKD 6.48.We maintained our buy rating.
Link:
http://www.abnnewswire.net/media/en/docs/62697-HKG-0546-20100427-apr.pdf
About Fufeng Group Limited
Fufeng Group (
HKG:0546) is the world's largest producer of MSG, xanthan gum and a major supplier for a series of bio-fermentation products. The main products of the Group are food additives, animal nutrition, colloid and high-end amino acids. In fiscal 2016, Fufeng generated sales of approximately RMB11.2 billion and profit attributable to shareholders of about RMB1.09 billion. For more information, please visit our website www.fufeng-group.com
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