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Camco full-year results beat KBC Peel Hunt’s expectations, broker targets 110% upside

London-based stockbroker KBC Peel Hunt said Camco's (AIM: CAO) full-year results have exceeded its expectations, with the carbon trader and climate-change consultant reporting pre-tax profit of €1.1m for 2009, ahead of the broker’s expectations of a €5m loss. KBC maintained its ‘buy’ for the group, targeting 34p per share, reflecting 110% upside from the current price.

The stockbroker also noted that Camco’s reduced costs and forward sales contributed significantly to the positive performance. Furthermore the results represent a second consecutive annual profit, distinguishing Camco from its peer group, KBC said.

According to KBC, Camco has successfully proved it can achieve good prices in volatile carbon trading markets, noting two recent transactions, where Camco sold its carbon substantially above market price, whilst simultaneously passing on delivery risk.

Additionally the broker noted that Camco is actively pursuing opportunities beyond the Clean Development Mechanism of the Kyoto Protocol, with particular emphasis on establishing itself in US markets.

KBC recently revised its pricing and valuation models for Camco, as such the broker said it saw no reason to change these at this time. The broker maintained its carbon price assumption of €13, despite a recent weakening in the carbon price, down to €11.1 for 2010- 12.

Disclosure: The author holds no positions in the company