Shanghai Petrochemical a Buy

Zacks senior equities analyst Paul Raman, CFA recommends a Buy on shares of petrochemical firm Shanghai Petrochemical Co., Ltd. (SHI).  Here's what his latest update had to say:

'Shanghai Petrochemical's exposure to the fast-expanding Chinese economy and strong  petrochemical product demand make us confident of strong volume growth. Although the company reported loss for the third quarter of 2007, it showed good profits for the nine-month period. Price hikes in major products triggered earnings.

'In the third quarter of 2007, net losses were $11 million, compared to $0.46 million in the prior-year period. The company reported a loss per share of $1.3 in the third quarter 2007. Volatile international crude oil prices, rising raw material costs and the competitive market scenario affected earnings. Revenues amounted to $1690.1 million, reflecting a decline of 9.24% from the corresponding quarter of the previous year.

'Long-term growth in China and a low valuation gives us a positive outlook on the stock. Thus, we rate the stock a Buy with a six-month target price of $82.63. Currently, the ADS is trading at 26.9x our 2007 EPADS estimate of $2.67. The earnings in the first half of 2007 have been significantly up over the prior-year period.

'Moreover, we expect the company's strong fundamentals to improve the stock's performance in the coming term. Hence, we rate it a Buy and set a target price of $82.63. This is 27.3x our 2007 EPADS estimate.'

Reducing Target on Credit Suisse

An update has just come out today on Credit Suisse Group (CS), in which senior banking analyst Ann H. Heffron, CFA is restating her Hold rating on the company.  We excerpted the following details:

'We are continuing our Hold on Credit Suisse Group (aka CSG), but reducing our target price to $62. CSG reported 2007 third quarter earnings of CHF1,302 million, down 11% year over year. This reflected CHF2.2 billion in write-downs at the investment banking group in structured products and leveraged loan commitments related to credit market turmoil.

'We are reducing our EPADS estimates to $6.68 from $7.50 for 2007 and to $7.18 from $8.10 for 2008. We expect results to continue to reflect the uncertainty stemming from weakness in the sub-prime mortgage and credit markets. CSG has repurchased CHF3.7 billion under a CHF8 billion share repurchase program and posted a 12% rise in the annual dividend to a $1.97 indicated rate.

'At its current stock price, Credit Suisse trades at substantial discounts to the industry median, based on 2007 and 2008 consensus estimated earnings and price/book. The 3-5 year outlook for CSG's earnings growth is 10% versus 11% for the industry, while CSG's dividend yield of 3.3% is above the industry average.