Daifuku is still optimistic about Daesung Foods (3999.HK) and sees it as a recovery concept stock due to its positive sales growth prospects for chicken and livestock ingredients, plus a recovery in chicken prices.

Daifuku maintained the purchase rating of Daesung Foods; it gave the stock a target price of HK$2.12, which is based on the expected compound annual growth rate of 32% in earnings per share for the 09-11 fiscal year and the predicted price-earnings ratio of 12.5 times in FY10.

Daifuku said that the profit margin of Dacheng Foods in FY10 may gradually pick up, as chicken prices in China in mid-March rose 3% from the average price of RMB 15.96 per kilogram in FY09 to RMB 16.48 per kilogram.

The stock rose 2.29% yesterday to close at HK$1.79.