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Daily ShareChat: Nuplex

By Jenny Ruth

Thursday 17th June 2010

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With the recent decline in its share price, resins company Nuplex Industries' shares are looking inexpensive, says Forsyth Barr analyst John Cairns.

He values the stock at $3.63.

"Gobal resin demand is continuing to recover. However, with the exception of Asia, (it) is still tracking below 2008 levels," Cairns says.

"Raw material pricing is increasing and pass-through price increases are being implemented. Nuplex is refocusing its product mix on higher-margin specialist resins," he says.

He is forecasting Nuplex's earnings before interest, tax, depreciation and amortisation (EBITDA) for the year ending June 30 will be $131.4 million compared with the company's reiterated guidance of between $125 million and $135 million.

European demand is recovering but the impact of European fiscal austerity measures is far from clear, he says. Australasian demand is also continuing to recover, although volumes are still below prior year levels.

"Nuplex is continuing to move its product mix to higher specification resins, driven in part by regulations limiting toxicity and the ongoing commitment to develop new technologies in-house," Cairns says.

"The transition to new technologies and the reduction in low-margin resin sales is driving higher average margins."

Nuplex's extensive restructuring during the global financial crisis has resulted in a lower fixed cost base, he says.

Recommendation: Accumulate (raised from hold).

Daily ShareChat articles report how the main experts in the market might view a certain share and we provide this commentary as a useful resource for investors. Content on this site does not in any way constitute a recommendation to buy, hold or sell any particular share. Investors should always seek professional advice before making any investment decisions.

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Get quotes for Nuplex Industries Limited Ordinary Share (NPX)

NZX Annoucements for NPX

20 Jan 2012	JOINTV: NPX: Nuplex MOU to establish a Russian Joint Venture
20 Jan 2012	RELINT: NPX: DISCLOSURE NOTICE - OFFICER'S RELEVANT INTEREST
19 Jan 2012	RELINT: NPX: DISCLOSURE NOTICE - OFFICER'S RELEVANT INTEREST
16 Jan 2012	SSH: NPX: SSH Notice - ("ACC")
4 Jan 2012	GENERAL: NPX: Nuplex Completes Viverso Acquisition