Guoyuan gave Minghui International (03828-HK) a buy rating for the first time, giving it a price-to-earnings ratio of 15 times forecast 2011 earnings, corresponding to a target price of HK $5.40; the target price is about 99 per cent higher than the current share price, forecasting a compound growth rate of 44.5 per cent in revenue and 65.9 per cent in net profit for 2010-2012.

Guoyuan said that with the acquisition of Autian Group, Minghui International will transform its role from a manufacturer in the past to a cosmetics manufacturer and chain retail brand operator with a vertically integrated business model. Since the latter enjoys a higher valuation in the capital market than the former investors in Minghui International will significantly benefit from the increase in the company's valuation.

Minghui International rose 2.21% to HK $2.78.