Daiwa upgraded Super Modern Agriculture (0682.HK) from underperforming to better than the broader market, while the bank raised its target price to HK $5.50 from HK $4, equivalent to a price-to-earnings ratio of 4.0 times for fiscal 2010, still at a historic low.

Daiwa said that while it believed that corporate governance issues would dampen share price performance, share trading was unreasonable at trough valuation levels (the main uncertainties were eliminated after the placement). Daiwa points out that Chaoda is currently a net indebtedness, with little debt since it repaid $225 million of covered senior bonds in February 2010, a factor that could lead to a rebound in dividend payouts after falling over the past two years.