KLCI regains some lost ground at mid-morning
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Brahims to buy remaining 49% stake in Brahims-LSG sky Chefs for RM130m cash
Australia to seal trade deal with Malaysia
CIMB Research downgrades Telco sector to Neutral
Thai NESDB agency keeps 2012 GDP growth f'cast at 5.5%-6.5%
ECM Libra Research maintains Hold on Sunway, target price RM2.17
Categories
| CIMB bullish on JAKS, says share may worth up to RM1.46 |
| Business & Market 2009 | |||
| Written by Financial Daily | |||
| Tuesday, 02 June 2009 10:48 | |||
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JAKS Resources, which is Malaysia’s largest mild steel (MS) pipe producer, is a member of one of the four consortiums shortlisted for the supply of water pipes for the upstream portion of the interstate water transfer scheme. The project, which has a value of around RM800 million, could start in March next year. “This, plus downstream piping works for Langat 2 (RM1.2 billion) and Selangor non-revenue water (NRW) (RM2 billion), could bump up the group’s order book from RM467 million to as much as RM4.5 billion,” said CIMB in a research report yesterday. JAKS Resources is not rated by the research firm. According to CIMB, JAKS Resources has a strong chance of emerging as one of the main beneficiaries of the inter-state water  transfer, Langat 2 and NRW in Selangor. “We estimate its net profit to surge from RM6 million in FY09 to RM40.3 million in FY10 largely due to the inter-state water transfer and Langat 2. JAKS Resources’ earnings could hit an all-time high of RM81.1 million in FY2011,” noted the research house. It added that JAKS Resources’ entry into Vietnam’s power sector at this juncture would be a good move as the company can lock in cheaper coal supply and a lucrative tariff. The coal-fired power plant will be the largest in Vietnam. Last month, the company signed a build-operate-transfer (BOT) memorandum of understanding with Vietnam’s Ministry of Industry and Trade. Construction of the power plant is scheduled to kick off sometime in 2010. CIMB also noted that JAKS Resources’ shares could be worth up to RM1.46. “Applying discounts of 0%-20% to our CY10 13.5 times target market P/E (price earnings), we arrive at a lower range value of RM1.17/share and an upper range of RM1.46/share. This implies 46%-82% share price upside.” “JAKS is a high-beta play on the recovery of the stock market in 2009 and a beneficiary of government pump-priming. It provides exposure to all three key developments in the water sector — inter-state water transfer project, Langat 2 and NRW nationalisation. Vietnam is a bonus if it materialises,” it concluded. JAKS Resources closed at 84 sen yesterday, up five sen. This article appeared in The Edge Financial Daily, June 2, 2009.
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