Guohao Capital maintains China Iron Titanium (00893-HK) buy rating, with a six-month target price of Rmb4.40, equivalent to 11 times 2011 earnings and the company's current price to 7.8 times 2011 earnings. Based on the company's bright earnings growth prospects, strong business growth and continued mergers and acquisitions, the Bank believes that China Iron Titanium is undervalued.

Guohao said that based on its guidance on production, sales prices and costs this year, the bank adjusted its profit forecast for 2011 to 71 billion yuan (34 yuan per share). This is based on the assumption that the company's iron concentrate production has increased by 15 per cent, the average selling price has increased by 11 per cent and the unit cost has risen by 5 per cent. That means an increase of 33% in earnings per share this year.

China Iron and Titanium fell 3.8% to HK $3.04.