Daiwa Research raised its target price for SITC International (01308) to HK$9.6 from HK$7.8 and upgraded its rating to "buy" from "hold".
The research house cited SITC management saying that the worst of the COVID-19 impact was in February. Shipment volume declined by 4.3% in 1Q, better than management's estimate as it had expected a steeper drop. The 2% ASP increase in 1Q was supported by surcharges on the low-sulphur fuel oil price (LFSO) and capacity cuts by other competitors, while SITC expanded its capacity.
SITC's operations fully resumed in March and its shipment volume returned to positive YoY growth during March-May, buoyed by delayed orders and stock replenishment. Daiwa raised its 2020-22 EPS forecasts by 20-29% on higher volume and ASP growth assumptions.
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