September 28, 2012

Masteel profits to remain volatile: OSK



KUALA LUMPUR: Malaysia Steel Works (KL) Bhd's (Masteel)
profits are expected to remain volatile, especially in view of the plunging steel prices, said OSK Research Sdn Bhd.

In a note today, OSK said despite despite the bullishness over the company's growing tonnage, there has been no firm guidance from its management on upcoming profits.

"This is understandable considering that steel prices are heading south again," it said.

OSK said progress on Masteel's proposed rail project in Iskandar Malaysia was also slow despite firm commitment from the management.

It said the rollout of mega projects under the Economic Transformation Programme (ETP) to be long-drawn, at least until the general election.

"We do not foresee any major surprises in the company's profits in the medium term, particularly the second half of financial year 2012 although the initial commencement of some ETP projects may be sufficient to keep local prices relatively strong than the international spot price.

"Masteel's stringent inventory policy may help reduce the time lag for it to enjoy lower material costs," it said.

OSK has maintained its 'neutral' call on the stock at fair value of 83 sen. -- BERNAMA

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