KLCI extends gains as global markets rise
Petrofac gets RM220m Carigali refurbishment job
Bursa Malaysia Derivatives launches revamped options on index futures
Willowglen MSC unit gets RM19.99m of jobs
Axiata edges up on positive 1Q earnings
UAC surges on Boustead privatisation plan
April inflation seen at 2.1% y-o-y, matches March level
Suaram slams prosecution of opposition leaders involved in Bersih rally
Categories
| Perwaja an outperform, says RHB |
| Business & Market 2009 | |||
| Written by Financial Daily | |||
| Wednesday, 17 June 2009 11:21 | |||
|
The research house said Perwaja was poised to benefit from the improving outlook of the steel industry, noting that the company had structural advantages over its competitors, while better product prices and higher production output would underpin strong earnings growth beginning financial year 2010 (FY10). It said the four trillion yuan (RM2.07 trillion) stimulus plan by China, the world’s largest steel consumer and producer, would boost demand for steel and hence the prices of long steel products internationally. The improving industry outlook would also be driven by easing concerns on dumping activities by major steel producing nations  and rising crude oil prices, which may increase oil revenues and hence revive construction spending in the Gulf States.While Perwaja was expected to make a net loss of RM11.2 million in FY09 — due to higher raw material cost in the first half of the year and weaker sales volume and selling prices — RHB said investors should look forward to FY10. “We believe the market has fully discounted this and investors should look forward to FY10. We expect Perwaja to turn around in FY10 with a net profit of RM125.7 million, underpinned by higher average selling prices, higher sales volumes and lower raw material cost,” it said. The research house forecasted Perwaja to further make net profit of RM147.9 million in FY11. “Our FY09 to FY11 net profit forecasts have yet to incorporate the potential new capacity of 1.3 million tonnes of billets per annum arising from the restoration of its legacy steel making plants that are expected to come onstream by mid-FY10,” it noted. As at March 31, Perwaja’s net debt and net gearing stood at RM849.6 million and 0.85 times, respectively, which is the third highest after Ann Joo Resources Bhd and Southern Steel Bhd. However, RHB Research said it was not overly concerned, as “we project its net debt and net gearing to decline to RM659.6 million and 0.6 times as at end-FY10 that will be in line with an average of 0.6 times of its peers”. The research house’s indicative fair value of RM2.07 for Perwaja was based on 10 times FY10’s fully-diluted earnings per share (EPS) of 20.7 sen, in line with its one-year forward target price-earnings ratio (PER) of 10 times for the long steel product sector. This article appeared in The Edge Financial Daily, June 17, 2009.
|
|||
|
|