CGS-CIMB Research has kept its “add” rating for Jiutian Chemical Group given that the average selling price (ASP) of the company’s chemical products is expected to be strong ahead.

The brokerage, however, has lowered its target price for the stock to 13.5 cents from 14.5 cents previously.

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According to CGS-CIMB, the asking price for dimethylformamide in Southern China – as quoted by Oilchem.net, an online platform for energy and chemical information in China – was RMB10,200 a tonne.

The price is inclusive of 13% value added tax and represents a year-to-date increase of 25% and y-o-y jump of 82%, it says.

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CGS-CIMB says the ASP is expected to remain firm on the back of the recovery in China’s economy.

The ASP will also be supported by rising demand for methylamine (MA) products from fast-growing sectors including electric vehicle (EV) batteries, semiconductor, pharmaceuticals and animal feeds.

SEE: Jiutian Chemical Group posts record FY20 net profit of $35.5 mil on surge in gross profit, other income and absence of impairment losses

“We remain positive as near-term ASP outlook remains strong,” CGS-CIMB analyst Lim Siew Khee, Ong Khang Chuen and Kenneth Tan write in a note dated Feb 24.

The brokerage has forecast the company to record earnings of RMB222 million, up 28% y-o-y, in FY2021.

As at 4.13 pm, Jiutian Chemical Group was down 0.6 cent or 6.3% at 8.9 cents with 95.4 million shares changed hands.