Global Hunter Securities Upgrades China Gerui Advanced Materials Group Ltd (CHOP) to Buy; Warrant Overhang Removed
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Price: $0.65 --0%
Rating Summary:
2 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 19 | New: 8
Rating Summary:
2 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 19 | New: 8
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Global Hunter Securities upgraded China Gerui Advanced Materials Group Ltd (NASDAQ: CHOP) to Buy.
Global analyst said, "We initiated coverage of China Gerui on August 12, 2010 with a Neutral rating as we expressed our concern that the company’s capital structure, which contained 16.5MM warrants that expire in March of 2011, would prove to be a significant overhang, preventing near-term appreciation. We also expressed our enthusiasm for both the operating business and management and recommended to investors to remain patient. CHOP’s warrants expired on March 19 (effective date March 21), removing the overhang. As a result, we are upgrading CHOP to a Buy rating with a $10 price target, predicated on 8.4x 2011 P/E and 5.4x 2011 EV/EBITDA multiples. In this note we also highlight the key points that are the crux of our bullish outlook and why the company should be viewed separately from the broader group of steel commodity players. Those reasons include CHOP’s leading position in the niche precision steel products market, diverse end-market applications and “tolling” operating model (which helps to reduce the company’s commodity risk), strong operating cash flows, quick cash conversion cycle and a number of identifiable, near-term catalysts that should help create value for investors, including: a strong Q4 announcement with a clean 20F report, an update on the capex rollout and a potential auditor upgrade to a Big Four firm in 2011."
For more ratings news on China Gerui Advanced Materials Group Ltd click here and for the rating history of China Gerui Advanced Materials Group Ltd click here.
Shares of China Gerui Advanced Materials Group Ltd closed at $5.60 yesterday.
Global analyst said, "We initiated coverage of China Gerui on August 12, 2010 with a Neutral rating as we expressed our concern that the company’s capital structure, which contained 16.5MM warrants that expire in March of 2011, would prove to be a significant overhang, preventing near-term appreciation. We also expressed our enthusiasm for both the operating business and management and recommended to investors to remain patient. CHOP’s warrants expired on March 19 (effective date March 21), removing the overhang. As a result, we are upgrading CHOP to a Buy rating with a $10 price target, predicated on 8.4x 2011 P/E and 5.4x 2011 EV/EBITDA multiples. In this note we also highlight the key points that are the crux of our bullish outlook and why the company should be viewed separately from the broader group of steel commodity players. Those reasons include CHOP’s leading position in the niche precision steel products market, diverse end-market applications and “tolling” operating model (which helps to reduce the company’s commodity risk), strong operating cash flows, quick cash conversion cycle and a number of identifiable, near-term catalysts that should help create value for investors, including: a strong Q4 announcement with a clean 20F report, an update on the capex rollout and a potential auditor upgrade to a Big Four firm in 2011."
For more ratings news on China Gerui Advanced Materials Group Ltd click here and for the rating history of China Gerui Advanced Materials Group Ltd click here.
Shares of China Gerui Advanced Materials Group Ltd closed at $5.60 yesterday.
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