Yuanta Securities initially rated Shuncheng Holdings (0531.HK) as a buy, with a target price of HK$1.60. This is based on five key factors: the current stock price suggests that the company's recession period will continue to be extended (profit will continue to fall 15% from the previous year); the latest data shows that demand for furniture has rebounded in the early years; Shuncheng Holdings turned a loss into a profit. After the decline in earnings over the past three years, the company's profit in fiscal year 2010 increased 36% year-on-year; short-term stimulus factors include mergers and acquisitions and asset injection in the second half of 2010; a good risk/return model, where the stock price is equivalent to the 2010 fiscal year's cash market excluding the 2010 fiscal year The profit margin is 3.1 times, which is 9% lower than the asset-based valuation.

The stock rose 1.9% to HK$1.09 yesterday.