Sound Global was sold down after its weak 4Q12 results, CFO departure and the ensuing management shuffle. The stock is now trading at 9x FY13F PE or –1SD of its historical mean. It is the cheapest water stock in the region, trading at >40% discount to peers’ average of 15x PE. Our analyst has adjusted FY13/14F earnings by -5%/+12% respectively to conservatively phase out project recognition schedule. Maintain BUY, target price lowered to S$0.81 (Prev S$ 0.89), but there is still 62% potential upside. Surging interest expense and delayed execution are key risks; Sound Global’s depressed valuations could draw privatization interest, in our view.
SoundGlobal rebounding after hit its bottom support 49c, currently 52c, up 2c(10.35am)
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