Global of Kuwait (GLOBAL) issues a report giving RAK Ceramics (RAKCEC) a buy rating. See full report download (MS Word, 3 pages)
Global Investment House Kuwait 23 March 2009:
RAK Ceramics Company (RAKCEC) – Initial Coverage Report
• Global values RAKCEC at AED1.76/share & recommends a BUY on the stock
Global Investment House - RAK Ceramics Company (RAKCEC) was incorporated in 1989. The company is a multi-country producer with production facilities of tiles and sanitary ware. The Company’s current tile and sanitary ware capacity stands 112.8mn Sq,m per annum and 4.0mn pieces per annum respectively. The company has fully/partially owned subsidiaries that handle trading and warehousing in important markets like UK, France, Germany and India.
We expect RAK Ceramics to make great strides, going forward because of Company’s determined effort to think beyond the lucrative UAE/GCC market, a very aggressive approach in entering and capturing regional and overseas markets with a focus on some of the largest markets of the world, not restricting its vision to manufacturing in the region, but to go far into foreign lands to set up manufacturing locations and ploughing large portion of profits back into technical up-gradation on a regular basis. The company has positioned itself well in the niche segments of the market where possibility of competitor to take away their share is remote.
The value of RAKCEC’s shares derived from the weighted average of the DCF and relative valuation methods is AED1.76 per share. The stock closed at AED1.32 on the Abu Dhabi Stock Exchange at the end of trading on 10th March 2009, which implies that the weighted average value of RAKCEC’s shares is at a premium of 33% to the share’s current market price. At their current price, RAKCEC’s shares have a P/E multiple of 4.2x and 3.7x for 2009 and 2010 respectively. We therefore recommend a ‘BUY’ on the RAK Ceramics Company’s stock at its prevailing price levels.
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