09 December 2010 20:08 [Source: ICIS news]
HOUSTON (ICIS)--A recovering US housing market in 2011 could ramp up end-market earnings for chlorovinyls and aromatics producer ?xml:namespace>
Dahlman Rose initiated its coverage of
“We do not see a lot of downside risk considering the current state of the vinyls market,” the report said. “Upside, however, is considerable.”
The report on Thursday came more than a year after the company’s precarious return from near-bankruptcy.
Dahlman Rose managing director Charles Neivert did not cite when stock prices would go up, noting in the report that
“[Georgia Gulf Corporation] is still first and foremost a housing play,” the report said. “Although it is significantly improved with the recent restructuring, the shares will have a hard time reaching full potential without improvements to the housing market.”
Dahlman Rose said the likely scenario, with a 70% probability, was a gradually-recovering US housing market with modest growth in gross domestic product (GDP). The scenario estimated that housing starts would slowly edge back to an annual rate of 750,000 to 800,000 units by the end of 2011 as the GDP grows slowly.
Natural gas averages in 2008 were $8.86/MMBtu. But thus far in 2010, the average has been about $4/MMBtu, the report said.
In housing, the pending home sales index in October rose to 89.3 on a scale of 100, up from September’s level of 80.9, according to the National Association of Realtors.
But the housing market has yet to recover from its drawn-out downturn, with foreclosed homes making up 25% of all home sales in the third quarter, according to RealtyTrac, which lists foreclosures.
($1 = €0.75)
By Ruth Liao
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