HLG Starts Carotech As Buy, With 90 Sen Target

HLG Research starts coverage on Carotech with Buy call, target is 90 sen on 18X 2008 earnings. Tips 40% CAGR FY06-09 EPS growth on company's plant expansion (120,000 metric ton-capacity by January 2008 vs 16,000 metric tons now), which "will more than compensate for lower margins from record high CPO prices". While shares have performed poorly relative to KLCI, CPO futures (inverse relationship with CPO prices), HLG thinks CPO prices have peaked at MYR2,300-2,400/metric ton and are biased downward due to rising supply and slow biodiesel demand growth. Shares down 0.7% at 69 sen midday.