Nomura reaffirms Straits Asia Resources (AJ1.SG) at Buy with $2.80 target price after 3Q profit after tax at US$23 million, topping house's estimate by 10%, mostly on lower tax rate (31%). 

Tips around US$80 million ($103.1 million)PAT for FY10; says stock attractively valued, laggard play, has underperformed peers by 30% year-to-date; notes strong volumes at Jembayan mine, while costs, tax have come down. 

 

Expects delay in Northern Leases mine permit, but says any positive surprise there would substantially impact FY11 forecasts, as expects mine to be high margin production; expects volume uptick from further reserve upgrades at Jembayan, Northern Leases while M&A would still be key catalyst; “even if there is no acquisition, with a 60% dividend payout ratio, we estimate its dividend yield will be 5% in FY11F and 7% in FY12F - much higher than regional peers.” 

 

Shares off 0.4% at $2.31.