Bioplastics growth potential boosts US Cereplast - report

26 May 2009 22:24  [Source: ICIS news]

HOUSTON (ICIS news)--Beacon Equity upgraded US bioplastics producer Cereplast to the speculative buy level behind growth potential within the company’s products, the US small-cap research firm said on Tuesday.

Cereplast doubled its sales revenue to $4.6m (€3.3m) in 2008 from $2.3m in 2007 and has said it expected to double sales revenues again in 2009.

Beacon quoted a market report from Helmut Kaiser Consultancy, which expected the global bioplastics market to grow 20-30% /year, to 5m tons/year in 2015 from 200,000 tons/year in 2006, further fuelling the optimistic industry outlook.

“[The company’s] proprietary technology, environmentally friendly resins and increasing visibility make Cereplast a potentially attractive takeover candidate for a larger chemicals and plastics company,” Beacon said.

Cereplast has announced supply deals in 2009 with Georgia-Pacific, Warner Tool Manufacturing and Dorel Juvenile Group, a division of Dorel Industries.

Cereplast said it would rely on larger plastics compounders to meet such supply agreements instead of increasing its own production capacity.

To that end, Cereplast signed a distribution deal with US plastics compounder A Schulman earlier this year.

Cereplast, which traded early Tuesday at 15 cents/share on the over-the-counter (OTC) markets, has a price target of $1.12/share, according to the research report.

($1 = €0.71)

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By: Ben DuBose
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