Clarus has $4.50 targetPost says analyst peddles Zongshen PEM as buy
2008-06-09 07:46 ET - In the News
The Financial Post reports in its Saturday edition that Clarus Securities began coverage on Zongshen PEM Power Systems last week, rating the stock a speculative buy with a target price of $4.50. The Post's Stephane Malhomme, writing in Trading Desk, says the target is a 65-per-cent gain over Friday's close of $2.72. Clarus's optimism hinges on the bullish growth potential for the electric bike market in China, and from Zongshen Power's specific ability to exploit that growth. The Chinese e-bike market is the largest in the world, exceeding 17 million units in 2007. Analyst Youssef Abboud expects the market to grow by 15 per cent a year for five years "driven by rising affordability, higher gas prices, and a supportive regulatory environment," he wrote in a research note. Mr. Abboud also likes Zongshen Power's proprietary technology. "ZIG is a growth story and is a play on affordable, green transportation for the masses in China," Mr. Abboud said. Zongshen Power expects to quadruple sales to 800,000 units by early 2009. The company reported revenues of $6.5-million for first quarter 2008, versus $1.8-million in the corresponding quarter in 2007. Sales during the first quarter totalled 23,413 units.