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'Widening profitability', 'stark improvement' make Jiutian Chemical a 'buy': UOBKH

Jovi Ho
Jovi Ho4/6/2022 11:45 AM GMT+08  • 3 min read
'Widening profitability', 'stark improvement' make Jiutian Chemical a 'buy': UOBKH
"We expect 1QFY2022 financials to reflect a significant scale-up in gross margin and operating leverage."
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High average selling prices (ASPs), slower rise in raw material costs make for a widening of gross profitability for Jiutian Chemical Group, says UOB Kay Hian Research analyst Clement Ho.

Jiutian is a producer of chemicals such as dimethylformamide (DMF) and sodium hydrosulfite. It is also involved in the processing and sale of consumable carbon dioxide and oxygen. The group sells its products wholly in China to manufacturers of downstream products that use methanol, methylamine and DMF.

In an April 5 note, Ho is maintaining “buy” on Jiutian with a raised target price of 16.8 cents, up from 13.8 cents previously. The new target price represents an 86.7% upside.

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