Sunday, January 27, 2008

2008 Stock Picks by OCBC Investment Research

OCBC Investment Research came up with 12 stock picks as above for 2008.
Personally, I have quite a few friends telling me how good Cacola is, and I have done some research on it.
I would say that in terms of business, it is similar to Man Wah but in terms on potential, I would rate it much better than Man Wah.
Thus, it would be quite worth it to invest in the current price as the fair value indicated is 0.75.

The detailed report of Cacola by OCBC Investment Research is as follows:

Cacola: It recently impressed with a 89.4% YoY surge in 3Q07 net profit on the back of a 26.0% rise in revenue. OCBC Investment Research says Cacola is a beneficiary of China’s booming economy, as studies have estimated that the growth of home furnishings in China will outpace GDPgrowth by 3%-4%.

It enjoys a low cost manufacturing base in Dongguan, and uses readily-available materials for its products, making it less susceptible to fluctuations in raw materials’ prices, says OCBC.

Cacola’s geographical reach has multiplied since 2000, and it plans to intensify its presence in major cities by setting up more mega stores and a new home-deco centre.

Cacola is trading at an attractively low 6.2x FY07 PER and has reported a higher profit margin than its peers, notes OCBC.

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