China Merchants gave a buy rating to Imperial Dynasty Furniture (01198-HK) and valued the company using the industry average PE method, resulting in a target valuation of HK $2.50 for the imperial dynasty.

According to China Merchants, the EPS for the imperial dynasty from 2010 to 2012 is expected to be 0.26,0.35 and 0.47 yuan, with net profits up 3.6 per cent, 32 per cent and 33.1 per cent respectively from a year earlier in 2010-2012. According to the calculation, the average PE of Hong Kong stock furniture industry from 2009 to 2011E is 12.4,8.7and 7.2times.

Imperial furniture rose 6.80 per cent to HK $2.20 yesterday.