Guohao Capital maintains the Pearl River Steel Pipe (1938.HK) buying rating, with a target price of HK$4.20. Pearl River Steel will announce its results on March 29; Guohao Capital estimates that Zhujiang Steel Pipe's net profit in 2010 will be RMB 134 million, down 65% from the previous year, affected by China's continued austerity measures and the European financial crisis. The bank said that both of these factors contributed to delays in delivery dates for basic projects and the company's sales orders. The bank pointed out that the current price of Pearl River Steel Pipe is equivalent to 9.8 times the price-earnings ratio in 2011, which is not fully valued because of strong profit growth prospects; the bank expects that Pearl River Steel Pipe's profit in 2011 will reach 350 million yuan, and earnings per share in 2011 will increase 146% over the previous year. The bank saw signs of improvement on the demand side. The bank added that overseas demand had begun to heat up since the fourth quarter of 2010, which was the first driver of the company's performance. Pearl River Steel Pipes rose 2.78% on Friday to close at HK$3.70.