China Merchants gave Zhejiang 08331-HK a buy investment rating, believing that the company's 12-month reasonable share price was Rmb5.60, implying 33 per cent room for growth.

China Merchants said the company reported Rmb0.20 per share in the first half of 2010, up 121 per cent from a year earlier, and is expected to earn Rmb0.42 per share for the full year of 2010. The Bank believes that the important value of the company is that it has mastered the core technology of EPS, the lifeblood of future steering gear development, and is optimistic about the strong growth of the company in the next three years. Although the company's share price has hit a record high, it is still undervalued relative to the industry.

Zhejiang Shibao rose 4.22 per cent to HK $4.45 yesterday.