Core-Pacific Yamaichi has recommended home appliance maker Raymond Industrial as a 'buy'' and set a target price with an upside of 48 per cent.
Raymond has just reported a first-half net profit surge of 52.4 per cent year on year to HK$35.3 million. Turnover increased by 55.5 per cent to $453 million.
The broker has increased its turnover forecast for the full year by 8.7 per cent to $1.14 billion based on stronger than expected sales of electrical appliances but has trimmed its net profit forecast by 6.4 per cent to $102.7 million, assuming a lower gross margin. It has revised down 2005 and 2006 turnover and net profit forecasts because the sales outlook has been clouded by high oil prices and raw material costs.
The broker says Raymond shares have been oversold on concerns of raw material costs and the attractive dividend yield of 6 per cent forecast for 2004. It estimates fair value at $3.40, compared with a price on September 10 of $2.30.
The counter closed at $2.40 on Friday.
