Stock Name: KINSTEL
Company Name: KINSTEEL BHD
Research House: HWANGDBS
KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) is maintaining a Buy on Kinsteel with a target price of RM1.30 based on 1.3 times NTA. It said on Thursday, April 29 it likes Kinsteel for its earnings recovery story and estimates net profit to grow five times in FY10, from a low of RM18 million in 2009. HDBSVR said this is supported by the upward trend in steel and iron ore prices, coupled with improving demand outlook as evidenced in the planned increase in production capacity. Kinsteel is trading at attractive valuations of 1.0x P/NTA (vs Southern Steel and Ann Joo of 1.3x) and has a decent ROE of 10-12% in FY10-11. The research house said the steelmaker's average selling price (ASP) for billets jumped to US$660 per tonne (+20%) and steel bars to US$760 a tonne (+27%) since January this year while it expects to secure iron ore ex-freight at US$183 a tonne. The stronger steel prices in 2010 would lift Kinsteel's revenue and earnings. It expects the risks of price volatility or sudden price collapse are mitigated, following Vale, Rio Tinto and BHP Billiton's decisions to shorten the long-term agreements for international iron ore prices. "We expect local demand to pick up in the later part of the year while exports to continue its growth momentum (grew 15% in 2009)," it said.
Company Name: KINSTEEL BHD
Research House: HWANGDBS
KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) is maintaining a Buy on Kinsteel with a target price of RM1.30 based on 1.3 times NTA. It said on Thursday, April 29 it likes Kinsteel for its earnings recovery story and estimates net profit to grow five times in FY10, from a low of RM18 million in 2009. HDBSVR said this is supported by the upward trend in steel and iron ore prices, coupled with improving demand outlook as evidenced in the planned increase in production capacity. Kinsteel is trading at attractive valuations of 1.0x P/NTA (vs Southern Steel and Ann Joo of 1.3x) and has a decent ROE of 10-12% in FY10-11. The research house said the steelmaker's average selling price (ASP) for billets jumped to US$660 per tonne (+20%) and steel bars to US$760 a tonne (+27%) since January this year while it expects to secure iron ore ex-freight at US$183 a tonne. The stronger steel prices in 2010 would lift Kinsteel's revenue and earnings. It expects the risks of price volatility or sudden price collapse are mitigated, following Vale, Rio Tinto and BHP Billiton's decisions to shorten the long-term agreements for international iron ore prices. "We expect local demand to pick up in the later part of the year while exports to continue its growth momentum (grew 15% in 2009)," it said.
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