Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Company Name: ANN JOO RESOURCES BHD
| Research House: MIDF | Price Call: HOLD | Target Price: 1.31 |
Showing posts with label ANNJOO. Show all posts
Showing posts with label ANNJOO. Show all posts
February 19, 2013
December 6, 2012
Ann Joo's share price stays unchanged
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Ann Joo Resources Bhd's share prices closed the morning trading session unchanged at RM1.33 despite its proposal to dispose its stake in Anshin Precision Industries Sdn Bhd for RM8.9 million.
Throughout the session, the counter stayed pegged at RM1.33 with 138,100 shares changing hands.
Via the disposal of a 59.1 per cent stake in the company, Ann Joo would record a disposal gain of RM1.3 million, said Hong Leong Investment Bank (HLIB) Research in a note to Bernama.
"We see the disposal as immaterial to the company and therefore our neutral view for the counter.
The company still maintained a target price of RM1.33 and put a hold recommendation on the stock.
Nevertheless, HLIB Research said the latest move was in line with Ann Joo's strategy to focus on its core business which was manufacturing and trading of steel products. Bernama
Company Name: ANN JOO RESOURCES BHD
| Research House: HLG | Price Call: HOLD | Target Price: 1.33 |
Ann Joo Resources Bhd's share prices closed the morning trading session unchanged at RM1.33 despite its proposal to dispose its stake in Anshin Precision Industries Sdn Bhd for RM8.9 million.
Throughout the session, the counter stayed pegged at RM1.33 with 138,100 shares changing hands.
Via the disposal of a 59.1 per cent stake in the company, Ann Joo would record a disposal gain of RM1.3 million, said Hong Leong Investment Bank (HLIB) Research in a note to Bernama.
"We see the disposal as immaterial to the company and therefore our neutral view for the counter.
The company still maintained a target price of RM1.33 and put a hold recommendation on the stock.
Nevertheless, HLIB Research said the latest move was in line with Ann Joo's strategy to focus on its core business which was manufacturing and trading of steel products. Bernama
November 28, 2012
Ann Joo - 3QY12 Results Review
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Company Name: ANN JOO RESOURCES BHD
| Research House: MIDF | Price Call: HOLD | Target Price: 1.31 |
June 1, 2012
Kenanga cuts Ann Joo's target price
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Kenanga Research lowered its target price on steel maker Ann Joo Resources Bhd's stock to RM1.62 from RM1.96, citing weak demand for steel products due to the protracted European financial crisis.
Kenanga, which maintained its "market perform" rating on Ann Joo, said the oversupply of steel in China could have exacerbated the situation.
"We expect a slower 1H12 due to lackluster demand in the international market as the long-drawn European crisis caused customers to delay their purchases," the broker wrote in a note to clients.
Reflecting these concerns, the stock has dipped nearly 18 percent since mid-April.
However, Ann Joo could benefit from demand coming from key infrastructure, port and airport projects, the broker said. -- Reuters
Company Name: ANN JOO RESOURCES BHD
| Research House: KENANGA | Price Call: SELL | Target Price: 1.62 |
Kenanga Research lowered its target price on steel maker Ann Joo Resources Bhd's stock to RM1.62 from RM1.96, citing weak demand for steel products due to the protracted European financial crisis.
Kenanga, which maintained its "market perform" rating on Ann Joo, said the oversupply of steel in China could have exacerbated the situation.
"We expect a slower 1H12 due to lackluster demand in the international market as the long-drawn European crisis caused customers to delay their purchases," the broker wrote in a note to clients.
Reflecting these concerns, the stock has dipped nearly 18 percent since mid-April.
However, Ann Joo could benefit from demand coming from key infrastructure, port and airport projects, the broker said. -- Reuters
May 9, 2012
Maybank raises Ann Joo to 'buy'
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Maybank Research raised its call on Malaysia's steel products manufacturer Ann Joo Resources to "buy" from "sell" on the back of stronger demand growth in the Southeast Asian country.
"We are turning positive on Ann Joo due to pent-up local steel demand from 2H12 onwards and potential long-term high-margin vendor contract from Petronas," the broker said in a research note on Wednesday.
Ann Joo's trading arm supplies flat steel to Petronas for its fast-track oil and gas project, and is in the midst of securing a long-term vendor contract which would boost its trading revenue by RM250 million.
Maybank added that local steel supply is likely to be tight from 2013 onwards due to the roll-out of mega infrastructure projects such as LRT extensions and the Sg Buloh-Kajang MRT. Maybank raised Ann Joo's target price to RM2.20 per share from RM1.30. -- Reuters
Company Name: ANN JOO RESOURCES BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 2.20 |
Maybank Research raised its call on Malaysia's steel products manufacturer Ann Joo Resources to "buy" from "sell" on the back of stronger demand growth in the Southeast Asian country.
"We are turning positive on Ann Joo due to pent-up local steel demand from 2H12 onwards and potential long-term high-margin vendor contract from Petronas," the broker said in a research note on Wednesday.
Ann Joo's trading arm supplies flat steel to Petronas for its fast-track oil and gas project, and is in the midst of securing a long-term vendor contract which would boost its trading revenue by RM250 million.
Maybank added that local steel supply is likely to be tight from 2013 onwards due to the roll-out of mega infrastructure projects such as LRT extensions and the Sg Buloh-Kajang MRT. Maybank raised Ann Joo's target price to RM2.20 per share from RM1.30. -- Reuters
April 20, 2012
Ann Joo Resources - Turning up the heat in 2H
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Target RM2.39
We left our meeting with Ann Joo's MD feeling more positive about its 2H12 prospects as construction of mega projects should gain traction then. A minimum wage policy will have limited direct impact on EPS and management is making good progress in its Petronas steel tender. A contract with Petronas to supply high-grade steel for its oil and gas projects could boost our FY12 pretax profit estimate by up to 30%. We maintain our Trading Buy call and target price basis of 11.3x CY13 P/E. Uncertainty about its blast furnace is why Ann Joo is not an outperform.
Source: CIMB Daybreak - 20 April 2012, Full PDF Report
Company Name: ANN JOO RESOURCES BHD
| Research House: CIMB | Price Call: TRADING BUY | Target Price: 2.39 |
Target RM2.39
We left our meeting with Ann Joo's MD feeling more positive about its 2H12 prospects as construction of mega projects should gain traction then. A minimum wage policy will have limited direct impact on EPS and management is making good progress in its Petronas steel tender. A contract with Petronas to supply high-grade steel for its oil and gas projects could boost our FY12 pretax profit estimate by up to 30%. We maintain our Trading Buy call and target price basis of 11.3x CY13 P/E. Uncertainty about its blast furnace is why Ann Joo is not an outperform.
Source: CIMB Daybreak - 20 April 2012, Full PDF Report
March 28, 2012
Building Materials - NEUTRAL - 28 March 2012
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Company Name: ANN JOO RESOURCES BHD
| Research House: KENANGA | Price Call: HOLD | Target Price: 1.96 |
We maintain a Neutral rating on the sector as both steel and cement are currently vulnerableto volatile raw material prices, which may erode margins. We prefer the cementsector over the steel sector as the latter could experience margins erosionfrom the timing difference of current volatile raw material prices.Furthermore, steel customers are still cautious in restocking as the China steeloutput growth is slacking and as the country puts greater focus on its consumersrather than building projects. On the other hand, the cement sector will farebetter comparatively as margins expansion in the sector on lower coal cost aswell as higher sales volume from the expected construction contract awards andexecution particularly from the MRT and LRT extension works will continue tosupport the sector. In the steel sector, we prefer Ann Joo Resources (MARKETPERFORM, TP: RM1.96) over Malaysia Steelworks (MARKET PERFORM, TP: RM1.19) forits well managed production and proven track record. On cement, we do not havea rating for Lafarge Malaysian Cement (NOT RATED) as we have yet to cover thestock.
Steel mills toimprove as more construction activities kick in. Most steel mills are stillbeing hit by the dip in steel prices in the previous quarter although we expectto see a brighter prospect for the overall industry as it moves into the 2H12 as more construction awardsunder the Economic Transformation Programme (ETP) and 10MP projects are announced.This is because steel takes up c.20% oftotal property development costs which in return, will help boost sales ordersfor both AJR and Masteel.
Sales volume stillmuted. In the past few months, steelmills were hit by (1) weakened steel prices and (2) expensive inventories that have eroded the millers' margins. Nonetheless,we believe this should ease as the millsbegin to clear their expensive inventories and replenish it with current lowerpriced raw materials. With steel prices expected to spike in 2Q12 on the backof potential restocking by traders and coupled with cheaper scrap costs, weexpect most of the steel mills to see improving margins as they move into 2H12.That said, steel prices are still predominantly determined by China's steel outputgrowth, which has shown a slower growth lately as its government puts greater focuson the consumers rather than building projects.
Slow down post-CNYbut 2012 on overall will still be good for cement. On the cement sector, we believe that 2QCY12earnings will be muted given the typically slower construction activitiespost-CNY. Nonetheless, for the fullyear, we believe that the sector will be supported well by 10MP and ETP projects such as KLIA 2, LRT Package A and executionof new projects such as the LRT PackageB, Greater KL/KV MRT (Sg BulohKajang) and government land developments at SgBuloh and Cochrane.
Preference for cementcompanies. We are more positive oncement companies compared to steel companies given the stable coal cost, whichhas remained sideways c.US$120/MT for the past 10 months, coupled withnormalised rebates of US$10-30/MT. We are not so concerned of theadditional capacity from Hume (+7% in2013) as we believe this could be absorbed by the greater demand from the ETPprojects such as LRT, MRT, KL International Financial District, WarisanMerdeka, Sg Buloh Malaysia Rubber Land, etc.
NEUTRAL. Although we are somewhat positive on contract flows, we are maintaining a NEUTRAL rating onthe sector as both steel and cement are vulnerable to the current volatility ofraw material prices, which may erodetheir margins. That said, we prefer cement companies over steel companies dueto the easing international coal prices as opposed to the volatile steel price,which may have an adverse impact to steel margins. We prefer Ann Joo Resources(NEUTRAL, TP:RM1.96) over Malaysia Steelworks (BUY, TP: RM1.44) for its wellmanaged production and proven track record. We do not have a rating for LafargeMalaysian Cement (NOT RATED) as we haveyet to cover the stock.
Source: Kenanga
March 19, 2012
Ann Joo Resources - 3-2-1 Blast off!
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Company Name: ANN JOO RESOURCES BHD
| Research House: CIMB | Price Call: BUY | Target Price: 2.39 |
Target RM2.39
The Edge weekly reported that Ann Joo's newly completed blast furnace (BF) will enable it to reduce electricity costs by 30% and manufacture high-grade steel. It also aims to double its upstream capacity, expand regionally and sell 20% to a strategic partner. These are positive developments and we were happily surprised to hear that the Lim family is seeking a strategic partner as this would enable Ann Joo to manufacture high-grade steel. Maintain Trading Buy with an unchanged target price based on 11.3x CY13 P/E.
February 29, 2012
Ann Joo Resources: Maintain Sell - Risks from soft global steel outlook
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Maintain Sell. 2011 core net profit of RM113m (+1% YoY) was 8% below our forecast but in line with consensus. Though we are positive on domestic ETP-led demand growth, we think margins will continue to be pressured by soft international ASPs. We have tweaked our 2012-13 EPS upward by 3-6% p.a. to incorporate better trading earnings ahead. Maintain Sell and TP of RM1.30 (0.6x trough-cycle P/BV).
Maybank Research 29 Feb 2012
Click here for full report
Company Name: ANN JOO RESOURCES BHD
| Research House: MAYBANK | Price Call: SELL | Target Price: 1.30 |
Maintain Sell. 2011 core net profit of RM113m (+1% YoY) was 8% below our forecast but in line with consensus. Though we are positive on domestic ETP-led demand growth, we think margins will continue to be pressured by soft international ASPs. We have tweaked our 2012-13 EPS upward by 3-6% p.a. to incorporate better trading earnings ahead. Maintain Sell and TP of RM1.30 (0.6x trough-cycle P/BV).
Maybank Research 29 Feb 2012
Click here for full report
Ann Joo Resources - Good finish to a difficult quarter BUY
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Company Name: ANN JOO RESOURCES BHD
| Research House: AMMB | Price Call: BUY | Target Price: 2.74 |
We maintain our BUY recommendation on Ann Joo Resources, andtweak slightly upwards our fair value for the stock to RM2.74/share (unchangedtarget PE of 12x) to adjust for actual FY11 figures.
Ann Joo reported a net profit of RM62mil for FY11. The headlineprofits doubled our forecast, but came in short of consensus (~62%). Thepositive surprise against our forecast largely came from a relatively goodfinish to the final quarter.
Ann Joo managed to deliver a net profit of RM11mil in 4QFY11 (our expectations: a loss of~RM20mil) despite a challenging operating environment and start-up costs incurredduring the launch of its blast furnace in October. This reflects management'stight control over its cost structure, particularly in the procurement of rawmaterials ' we believe.
On a sequential basis, the group returned to the black againsta RM25mil loss in 3QFY11 that was mainly inflicted by inventorywrite-down/unrealised forex losses to the tune of RM60mil.
Ann Joo declared a final dividend/share (DPS) of 3.5 sen, bringingFY11 DPS to 7.5 sen or a gross yield of ~1%. This was lower than our forecastof 10 sen.
Barring a sudden deterioration in the global macro picture, weproject a 127% YoY growth in FY12F net profit at RM140mil.
We expect domestic steel demand to gather momentum movinginto 2H12 on a step-up in Malaysian infrastructure activities, particularlywith the imminent roll-out of the Sg.Buloh-Kajang MRT line.
On the other hand, prices of key inputs appear to have normalised.For instance, the average international scrap price had retracted to theUS$460/tonne level last month from US$503/tonne in September 2011.
We expect Ann Joo's net gearing level to have peak at 1.4x forFY11, improving to 1.1x and 0.9x, respectively, by FY12F-13F, following thesuccessful commissioning of its RM650mil hot metal plant last October.
Ann Joo remains our top pick for traction to the steel sector.The stock trades at attractive forward FY12F-14F PEs of 7x-9x - below itssix-year average historical PE of 11x ' against a robust EPS CAGR of 35%.
ANNJOO (FV RM2.16 - NEUTRAL) FY11 Results Review: Sheltered by Provisions, Tax Incentive
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Company Name: ANN JOO RESOURCES BHD
| Research House: OSK | Price Call: HOLD | Target Price: 2.16 |
Ann Joo's FY11 net profit of RM61.7m was spot on with ourestimates but below consensus. The recognition of tax incentives plusprovisions made for diminution in inventories in 3Q helped to compensate forthe meager steel making margins in 4Q. We see a slow start for 2012 asactual work on various mega projects may take time to kick start and the recovery in steel prices may be delayed. The long gestationfor its newly commissioned blast furnace (BF) and recent share price rally may have partly priced in the potential surgein steel prices. Thus, we downgrade Ann Joo to a NEUTRAL, with our FV kept at RM2.16, derived from 0.98x FY12 BV, or-0.5 standard deviation of the stock's historical trading range.
Almost on thedot. Thanks to the recognition of tax incentives which resulted in a positive tax incomeof RM6.2m, Ann Joo's FY11 net profit came in at RM61.7m, almost spot on with our projection but below street estimates. The tax benefit aside, management's decision to make provisions fordiminution in inventory value amounting to RM37.9m in 3Q also helped to compensate for the sharp erosion in steel making margins in 4Q.This occured when the sharp plunge in the prices of iron ore, steel scrap andsteel gave rise to a negative mismatch of lower selling prices and still-high raw materialcosts, as there is an inherent time lag before the latter starts to decline.
Near-term outlookchallenging. Although the award of mega projects is gaining pace, it maytake a while for actual works to begin and eventually stoke demand for steel.That said, steel prices have been lackluster and disappoint our earlier expectations of a possible recovery in February. Thus weexpect a slow start for 2012. Also, we suspect Ann Joo may start to expense anyinterest costs incurred for its newly commissioned blast furnace (BF). Wealso expect the company to only enjoylimited conversion cost savings as it relies on expensive importedmetallurgical coke. Meanwhile, management expects its new plant to take another three months to achieve efficiency as some ancillaryequipment is on the final stage of installation. On full installation, Ann Joomay be able to fully utilise the electricity and gas generated from the BF,plus inject cheaper PCI coal to meet part of its requirement for expensivecoke.
Downgrade to NEUTRAL.As the stock has put on some 14.4% since our last upgrade, we suspect that themarket may have priced in a potential surge in steel prices. We now anticipate steel prices to rebound in March, with Chinaexpected to crank up its constructionactivities as it enters the spring season. As Ann Joo's share price offers limitedupside to our FV, we are compelled to downgrade it toNEUTRAL, with only a marginal tweak in our projection. We value the stock usinga book-based valuation, at -0.5 standard deviation of its historical tradingrange, which is one notch lower than the industry's, as we remain vigilant onthe potentially long gestation period for its BF.
Source: OSK188
Ann Joo Resources (Sell; TP: RM1.34) - Below our expectation
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Company Name: ANN JOO RESOURCES BHD
| Research House: HLG | Price Call: SELL | Target Price: 1.34 |
Ann Joo Resources (Sell; TP: RM1.34)
Below our expectation
- FY11 core net profit of RM103.4m (-13.8%) came in below our expectation,at only 84.6% of our forecast. Variance against our forecast washigher-than-expected production cost.
- Recommended a final NDPS of 3.5 sen, bringing totalNDPS for FY11 to 7.5 sen.
- Management maintains its cautious view onsteel price outlook in 2012, given the global economic uncertainties and theexpected slowdown in the Chinese economy. Given its cautious view on steelprices, management indicated that it would pare down its inventory level forraw materials.
- Hopeful to achieve cost savings at itsblast furnace in 3 months' time, pending installation of several auxiliaryfacilities, the utilization of pulverized coal injection and the utilization ofcheaper raw materials.
- Expects sales tonnage of this division will grow by atleast 10% in 2012.
- Maintain 2012-13 net profit forecasts and TP of RM1.34 (based onunchanged 9x 2012 FD EPS of 14.9 sen).
Source: HLIB Research 29 Feb 2012
Ann Joo Resources - Prospects are heating up
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Company Name: ANN JOO RESOURCES BHD
| Research House: CIMB | Price Call: TRADING BUY | Target Price: 2.39 |
Target RM2.39
At 98% of our forecast and 100% of consensus estimates, FY11 core net profit was in line. While the steel outlook is cautious, domestic prospects are improving. EPS is likely to get a boost from a RM200m p.a. Petronas contract and a 7% p.a. output lift from the MRT in 2H12.
February 20, 2012
Riding on the MRT ticket
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Company Name: ANN JOO RESOURCES BHD
| Research House: AMMB | Price Call: BUY | Target Price: 2.73 |
November 25, 2011
HLIB Research 25 November 2011 (Gent M'sia; Genting; TM; Sunway; DRB; MISC; Ann Joo)
Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Stock Name: GENTING
Company Name: GENTING BHD
Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Stock Name: SUNWAY
Company Name: SUNWAY BERHAD
Stock Name: DRBHCOM
Company Name: DRB-HICOM BHD
Stock Name: MISC
Company Name: MISC BHD
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Company Name: GENTING MALAYSIA BERHAD
| Research House: HLG | Price Call: HOLD | Target Price: 4.07 |
Stock Name: GENTING
Company Name: GENTING BHD
| Research House: HLG | Price Call: HOLD | Target Price: 11.19 |
Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
| Research House: HLG | Price Call: HOLD | Target Price: 4.54 |
Stock Name: SUNWAY
Company Name: SUNWAY BERHAD
| Research House: HLG | Price Call: BUY | Target Price: 3.12 |
Stock Name: DRBHCOM
Company Name: DRB-HICOM BHD
| Research House: HLG | Price Call: BUY | Target Price: 2.90 |
Stock Name: MISC
Company Name: MISC BHD
| Research House: HLG | Price Call: SELL | Target Price: 5.57 |
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
| Research House: HLG | Price Call: SELL | Target Price: 1.34 |
Genting Malaysia (HOLD)
GenUK Shows Improvement on 3QFY11
'''' GenM's 3QFY11 results came in line with expectation, with total net profit of RM347.1m, accounting for accounting for 73.8% of HLIB's estimate and 72.3% of consensus full year estimates.
'''' The Group recorded increase of 10.7% and 3.2% in net profit QoQ and YoY respectively, mainly contributed by overall higher volume of business and hold percentage in RWG, improvement on GenUK's operations and a construction profit generated from progressive development ofvideo lottery facility at RWNY.
'''' Management opined that the excellent performance of RWNY for the first few weeks after its opening could be due to novelty effect. However, performance might ramp up after the full opening of 4,525 of VLTs and 475 ETGs by end-2011.
'''' GenM announced that Genting Casinos UK Ltd had entered in a S&P agreement to acquire Fox Poker Club Ltd for RM38.5m. No detailed information was given on this purchase as management says it is still in an early stage.
'''' Maintain target price of RM4.07 based on SOP valuation. Given its recent surge in share price and potential upside of less than 10%, downgrade to HOLD.
''
Genting Berhad (HOLD)
3QFY11 Beats Expectation
'''' GenT's 3QFY11 results came above our expectation but in line with consensus, with total net profit of RM597.2m, accounting for 80.1% of HLIB's estimate and 74.6% of consensus full year estimates.
'''' The group recorded net profit increase of 43% for 9MFY11 to RM3,730.2m, contributed by leisure & hospitality, power and plantation division
'''' RWG and RWS achieved better performance in the current quarter mainly attributed to the favourable win percentage and overall higher volume of business.
'''' Power division's revenue increased mainly due to better dispatch and higher 2011 tariff rate in Meizhou Wan power plant and higher energy charge in Kuala Langat plant. However, EBITDA is lower due to the higher coal prices of RMB651/tonne for 9MFY11 (9MFY10: RMB597/tonne).
'''' GenP's 3Q net profit rose 40.8% yoy mainly due to margin expansion from higher output and palm product prices.
'''' TP raised by 2% to RM11.19 based on SOP valuation, to reflect the higher target price on Genting Plantation. Maintain Hold.
''
TM (HOLD)
3Q11 Results: In Line
'''' 9MFY11 reported core net profit of RM502.6m came in within our expectation, accounting for 76.4 % of our full-year forecast and 87.9% of consensus.
'''' 3QFY11: Revenue RM2,321.7m (+6% yoy, +4% qoq), EBITDA RM812.5m (+1% yoy, +8% qoq) and PATAMI RM137.3m (+8% yoy, +2% qoq).
'''' Internet: Registered strong revenue growth with +26.3% yoy and +6.4% qoq as the main driver behind TM's growth.
'''' As of 21 Nov, TM's UniFi has passed 1.096m premises covering 77 exchanges and activated more than 202k subscribers, representing 18.4% take up rate. HSBB's blended ARPU as at 30 Sept is RM184.
'''' TM is not too concern over other fixed telco players as their reachability is not as wide and not too aggressive. TM has no plan to enforce the download capping in the near term and view this as their strong value proposition over other competitors.
'''' TM also observes that Streamyx users are upgrading to the lowest package of UniFi and is positive to TM as UniFi commands a higher ARPU.
'''' Due to the recent price rally, we downgrade our call to HOLD with unchanged target price of RM4.54 (based on DDM, WACC of 6.4%, TG 0.1%). The stock is likely to continue attract investors due to its defensive nature amidst strong swings in global equity market.
''
Sunway (BUY)
A much improved quarter
'''' Sunway's 3Q core earnings of RM94m grew by 22% from the previous quarter, bringing its 9M11 core earnings to RM226m or 17.5 sen/share (QoQ: +22%), making up 75% and 73% of ours and street's estimates respectively.
'''' The strong 3Q performance was due to improved earnings margin whereby core PBT margins expanded from 5.1% in the previous quarter to 6.3%. Earnings were also lifted by strong contribution from the Singapore and Australia property developments.
'''' During the quarter Sunway, achieved new property sales of RM454m compared to RM481m in 2Q and RM403m in 1Q, bringing YTD new property sales to RM1,3bn. Majority of new sales were from Singapore, Velocity, Vivaldi and South Quay. Meanwhile, the Raya festive season and summer holidays affected the construction division which saw a sharp slowdown in construction activities based in the Middle East.
'''' Maintain BUY call in view of deep values with TP of RM3.12 based on SOP valuation.
''
DRB (BUY)
Facing Another Bump
'''' Below expectations ' 2Q12 results were behind both HLIB's number and consensus. Reported 2QFY3/12 core earning of RM129.6m, taking 1H12 to RM219.8m, achieving 45.1% of HLIB estimates and 46.2% of consensus.
'''' The impact of Japanese crisis on DRB automotive division remained visible in 2Q12, as supply constraint only started to ease off in July. Yet, DRB faced another crisis when Thailand was heavily flooded. DRB's 34% owned Honda Malaysia shut down its Melaka assembly plant since 25 Oct, and there is still no clear timeline for the plant to resume operations.
'''' Volkswagen CKD assembly remained on track with the recent production roll out of the CKD Passat 1.8 in Pekan plant. Initially, DRB will assemble 5,000 units of VW p.a. and gradually ramped up to 50,000 units p.a. by 2018.
'''' Maiden contribution of ~RM9m from POS Malaysia in 2Q12. POS remained as an important catalyst to drive the Group's earning growth going forward, with synergistic opportunities with Muamalat, Uni.Asia and KLAS.
'''' Maintain BUY with revised TP of RM2.90.
''
MISC (SELL)
Its Time to Remove Bad Seed
'''' In line ' Reported 2Q FY12/11 core earning of RM25m, taking 6M FY12/11 core earning to RM156.6m, 55.3% of HLIB's number. We expect stronger 3Q FY12/11 due to seasonally higher petroleum charter rate.
'''' Continued losses incurred in Petroleum, Chemical and Liner divisions, impacted by low charter rates and high bunker costs.
'''' Expect continued challenging business environment for Petroleum, Chemical and Liner divisions due to overcapacity situations, while MMHE and Offshore divisions to benefit from the booming oil and gas industry.
'''' Exit Liner business by mid-2012. Expect one-of-loss provisions of US$400m (~RM1.2bn) in 3Q FY12/11 (non-cash items). Included also US$30m (~RM90m) cash for the miscellaneous items such as employee compensation and winding-up expenses.
'''' Positive on the exit strategy, as MISC will reduce cash burn, and able to focus resources into developing other core divisions i.e. LNG and Offshores, as well as turnaround its Petroleum tanker division. We estimated the Liner's book value at RM915m, assuming 50% (16 units owned, 16 in-charters) of the provision is for asset impairments, Liner's book value will deteriorate to ~RM300m!.
'''' Maintain SELL with higher TP of RM5.57.
''
Ann Joo (SELL)
3Q11 hit by provisions
'''' Stripping out exceptional items, 9M11 core net profit of RM102.4m came in within our expectation, accounting for 86.3% of our full-year forecast (as we expect 4Q performance to remain uninspiring). Against the market consensus, the results came in below expectations, at 75.2% of the full-year estimates.
'''' Management has turned cautious on the sector's near-term outlook, as the global economic uncertainties (arising from the Eurozone debt crisis) and monetary tightening measures by the Chinese government will affect demand and prices for steel products internationally. Given its less-than-optimistic view on the sector's near-term outlook, management indicated that it will not embark on aggressive inventory replenishing activities in the near term.
'''' Management indicated that its mini blast furnace has achieved capacity utilization of 60-65%, and the blast furnace expenses will not be recognised in 2011's income statement, as it is still running at pre-operating level.
'''' 2012-13 net profit forecasts cut by 15.1-32.6% largely to reflect lower sales volume (in anticipation of lower export volume) and lower selling price assumptions.
'''' Following the downward revision in our net profit forecasts, our TP for Ann Joo is cut by 26.5% from RM1.83 to RM1.34 based on 9x revised 2012 FD EPS of 14.9 sen.
Ann Joo Resources (Sell): Beginning of cyclical downturn
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Below expectations. 9M11 core net profit of RM94m (-18% YoY) was 56% of our full-year forecast and 67% of consensus. We are turning negative on AJR: (i) sequential quarterly earnings is likely to slow on weaker export sales and margins; and (ii) we believe the global steel market is at the beginning of a contraction mode given the negative global economic outlook. We cut our 2011-13 EPS forecasts by 27-59% and downgrade Ann Joo to Sell. TP is now RM1.30 (from RM3.30) as we apply trough-cycle P/BV valuation of 0.6x (from 11x 2012 PER).
Maybank research (25 November 2011)
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Company Name: ANN JOO RESOURCES BHD
| Research House: MAYBANK | Price Call: SELL | Target Price: 1.30 |
Below expectations. 9M11 core net profit of RM94m (-18% YoY) was 56% of our full-year forecast and 67% of consensus. We are turning negative on AJR: (i) sequential quarterly earnings is likely to slow on weaker export sales and margins; and (ii) we believe the global steel market is at the beginning of a contraction mode given the negative global economic outlook. We cut our 2011-13 EPS forecasts by 27-59% and downgrade Ann Joo to Sell. TP is now RM1.30 (from RM3.30) as we apply trough-cycle P/BV valuation of 0.6x (from 11x 2012 PER).
Maybank research (25 November 2011)
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September 20, 2011
Stable domestic demand and ASP good for Ann Joo
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Ann Joo Resources Bhd
(Sept 20, RM1.96)
Maintain trading buy at RM2.07 with revised target price of RM2.70 (from RM3.50): Our recent meeting with the management indicated that the average selling price (ASP) of domestic steel bar continues to remain stable ranging between RM2,300 to RM2,400 per tonne. The current price has improved from a low of RM1,900 per tonne in 4Q10.
The increase in selling prices is primarily driven by cost-push factors rather than demand-pull. Year-to-date, the spot iron ore price has risen significantly reaching a peak of US$200 (RM628) per tonne from an average of US$160 per tonne in 4Q10. Scrap metal prices have also moved up by some 15% quarter-on-quarter. With raw material prices remaining high, we believe steel bar prices will remain steady within the RM2,300 to RM2,400 per tonne range in 4Q11.
As such, we are keeping our FY11 ASP assumption at RM2,260 per tonne. We gather that Ann Joo has sufficient scrap metal to last for at least three months of production, allowing the group some purchasing flexibility against the current high scrap metal prices.
Despite the strong news flow on various construction projects, we gather that domestic demand has yet to experience any significant pick-up. Demand is however stable. Ann Joo has consistently managed to sell in excess of 30,000 tonnes of steel bars a month, suggesting that our 405,000 tonne steel bars sales assumption for FY11 is achievable.
Despite our recent revision on our 2011 GDP forecast, we make no changes to our construction growth forecast. We maintain our 6% and 7% construction growth estimates for 3Q11 and 4Q11. However, we are more cautious on the export outlook on the back of the softening global economic outlook especially in developed countries. Against this backdrop, in the medium term we think the current soft sentiment for exports will likely persist.
Despite the existing and potential mega projects like LCCT 2, Second Penang Bridge and MRT, we understand that Ann Joo will maintain its business model, continuing to sell via its distributors instead of supplying directly to construction players and/or to any specific construction project. This is to minimise credit risk as the credit period could extend up to 60 days.
The sintering plant started hot commissioning in April this year and Ann Joo expects the furnace to start commissioning by year-end, barring technical hiccups during the test run. Iron ore for the mini blast furnace will be sourced locally, which is some US$20 to US$40 per tonne cheaper than global prices, due to lower iron content and freight savings. We believe this will give Ann Joo a cost advantage and aid in margin expansion. As for coke supply, there is no additional purchase to the 50,000 tonnes it has in stock in the medium term.
For 1H11, Ann Joo declared a gross dividend of four sen per share. Although lower than the six sen per share declared in 1H10, we think our full year dividend per share (DPS) estimate of nine sen, based on 30% payout ratio, is achievable, as the group has historically declared higher DPS in 2H11. In addition, its gross cash has more than doubled to RM141 million in 1H11 with a positive free cash flow of RM18 million. At the current price level, the stock offers a decent dividend yield of 4.3%.
Over the past one month, Ann Joo's share price has been affected by the current weak market sentiment, falling by circa 18%. Despite the improvement in domestic demand and stable average selling prices, we are still concerned over the medium-term outlook of the industry given the volatility of raw material costs (iron ore, coal, scrap prices) and the sluggish external environment.
We maintain our 'trading buy' call on Ann Joo. We believe Ann Joo is one of the better long steel players to leverage the infrastructure development theme under the Economic Transformation Programme, given its strong balance sheet and credible management. However, we have revised down our target price to RM2.70 (from RM3.50).
We still tag a 30% discount but on a revised three-year average rolling price-earnings ratio of 11.5 times on CY12 earnings (from 13.8 times previously).'' ' Affin IB Research, Sept 20
This article appeared in The Edge Financial Daily, September 21, 2011.
Company Name: ANN JOO RESOURCES BHD
| Research House: AFFIN | Price Call: TRADING BUY | Target Price: 2.70 |
Ann Joo Resources Bhd
(Sept 20, RM1.96)
Maintain trading buy at RM2.07 with revised target price of RM2.70 (from RM3.50): Our recent meeting with the management indicated that the average selling price (ASP) of domestic steel bar continues to remain stable ranging between RM2,300 to RM2,400 per tonne. The current price has improved from a low of RM1,900 per tonne in 4Q10.
The increase in selling prices is primarily driven by cost-push factors rather than demand-pull. Year-to-date, the spot iron ore price has risen significantly reaching a peak of US$200 (RM628) per tonne from an average of US$160 per tonne in 4Q10. Scrap metal prices have also moved up by some 15% quarter-on-quarter. With raw material prices remaining high, we believe steel bar prices will remain steady within the RM2,300 to RM2,400 per tonne range in 4Q11.
As such, we are keeping our FY11 ASP assumption at RM2,260 per tonne. We gather that Ann Joo has sufficient scrap metal to last for at least three months of production, allowing the group some purchasing flexibility against the current high scrap metal prices.
Despite the strong news flow on various construction projects, we gather that domestic demand has yet to experience any significant pick-up. Demand is however stable. Ann Joo has consistently managed to sell in excess of 30,000 tonnes of steel bars a month, suggesting that our 405,000 tonne steel bars sales assumption for FY11 is achievable.
Despite our recent revision on our 2011 GDP forecast, we make no changes to our construction growth forecast. We maintain our 6% and 7% construction growth estimates for 3Q11 and 4Q11. However, we are more cautious on the export outlook on the back of the softening global economic outlook especially in developed countries. Against this backdrop, in the medium term we think the current soft sentiment for exports will likely persist.
Despite the existing and potential mega projects like LCCT 2, Second Penang Bridge and MRT, we understand that Ann Joo will maintain its business model, continuing to sell via its distributors instead of supplying directly to construction players and/or to any specific construction project. This is to minimise credit risk as the credit period could extend up to 60 days.
The sintering plant started hot commissioning in April this year and Ann Joo expects the furnace to start commissioning by year-end, barring technical hiccups during the test run. Iron ore for the mini blast furnace will be sourced locally, which is some US$20 to US$40 per tonne cheaper than global prices, due to lower iron content and freight savings. We believe this will give Ann Joo a cost advantage and aid in margin expansion. As for coke supply, there is no additional purchase to the 50,000 tonnes it has in stock in the medium term.
For 1H11, Ann Joo declared a gross dividend of four sen per share. Although lower than the six sen per share declared in 1H10, we think our full year dividend per share (DPS) estimate of nine sen, based on 30% payout ratio, is achievable, as the group has historically declared higher DPS in 2H11. In addition, its gross cash has more than doubled to RM141 million in 1H11 with a positive free cash flow of RM18 million. At the current price level, the stock offers a decent dividend yield of 4.3%.
Over the past one month, Ann Joo's share price has been affected by the current weak market sentiment, falling by circa 18%. Despite the improvement in domestic demand and stable average selling prices, we are still concerned over the medium-term outlook of the industry given the volatility of raw material costs (iron ore, coal, scrap prices) and the sluggish external environment.
We maintain our 'trading buy' call on Ann Joo. We believe Ann Joo is one of the better long steel players to leverage the infrastructure development theme under the Economic Transformation Programme, given its strong balance sheet and credible management. However, we have revised down our target price to RM2.70 (from RM3.50).
We still tag a 30% discount but on a revised three-year average rolling price-earnings ratio of 11.5 times on CY12 earnings (from 13.8 times previously).'' ' Affin IB Research, Sept 20
This article appeared in The Edge Financial Daily, September 21, 2011.
May 27, 2011
ANNJOO - CIMB Research maintains Trading Buy on Ann Joo
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Research House: CIMB
KUALA LUMPUR: CIMB Equities Research said although ANN JOO RESOURCES BHD []'s annualised 1Q11 net profit came in at 109% of its forecast, it was largely in line.
The research house said on Friday, May 27 that it expected the 2H to be slower due to start-up costs when Ann Joo's blast furnace is fully operational.
'But at 89.6% of consensus estimates, it will disappoint the market. As expected, no dividends were declared. Billet-scrap spreads have edging up gradually from US$160/mt in Jan 2011 to US$186/mt in May, which bodes well for 2Q.
'We maintain our estimates and RM3.74 target price, still based on 13.05x CY12 P/E, a 10% discount to our target market P/E of 14.5x. Ann Joo remains a TRADING BUY and could be catalysed by higher selling prices and improved local demand due to more CONSTRUCTION [] starts. CY11 gross yields are now 6.0%, the highest in the building materials sector,' CIMB Research said.
Company Name: ANN JOO RESOURCES BHD
Research House: CIMB
KUALA LUMPUR: CIMB Equities Research said although ANN JOO RESOURCES BHD []'s annualised 1Q11 net profit came in at 109% of its forecast, it was largely in line.
The research house said on Friday, May 27 that it expected the 2H to be slower due to start-up costs when Ann Joo's blast furnace is fully operational.
'But at 89.6% of consensus estimates, it will disappoint the market. As expected, no dividends were declared. Billet-scrap spreads have edging up gradually from US$160/mt in Jan 2011 to US$186/mt in May, which bodes well for 2Q.
'We maintain our estimates and RM3.74 target price, still based on 13.05x CY12 P/E, a 10% discount to our target market P/E of 14.5x. Ann Joo remains a TRADING BUY and could be catalysed by higher selling prices and improved local demand due to more CONSTRUCTION [] starts. CY11 gross yields are now 6.0%, the highest in the building materials sector,' CIMB Research said.
February 25, 2011
ANNJOO - Ann Joo fairly valued at RM2.89: OSK
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Research House: OSK
Company Name: ANN JOO RESOURCES BHD
Research House: OSK
OSK says that Ann Joo Resources Bhd's FY2010 net profit of RM120m was below its and street estimates as it slipped into the red in Q4.
While OSK expects the company to benefit from huge inventory bought at lower cost and a potential pick-up in steel demand moving into H1 FY2011, it thinks the market may have priced in the potentially upbeat performance.
OSK also suspect that some quarters may be disappointed with the
prolonged delay in its mini Blast Furnace (BF) project.
These factors, together with poor earnings visibility beyond six months, prompt OSK to keep its 'neutral' recommendation on the company and its fair value of RM2.89. - Reuters
While OSK expects the company to benefit from huge inventory bought at lower cost and a potential pick-up in steel demand moving into H1 FY2011, it thinks the market may have priced in the potentially upbeat performance.
OSK also suspect that some quarters may be disappointed with the
prolonged delay in its mini Blast Furnace (BF) project.
These factors, together with poor earnings visibility beyond six months, prompt OSK to keep its 'neutral' recommendation on the company and its fair value of RM2.89. - Reuters
February 22, 2011
ANNJOO - Ann Joo's FY10 results to come in below expectations
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Research House: RHB
Ann Joo Resources Bhd
(Feb 22, RM2.92)
Downgrade to underperform at RM3 with revised fair value RM3.02 (from RM3.14): We believe Ann Joo's FY10 ended December results (due out on Feb 24) are likely to come in below our as well as the market's expectations due to lower than expected sales volume, particularly in the export segment. This is despite some slight improvement in average selling prices and margins. Export sales to Vietnam, its main export market, will have declined significantly owing to the surging inflation and currency devaluation in the nation.
We understand that there will be a further delay in the commissioning of Ann Joo's mini blast furnace project to end-April, from early January previously. However, the impact to our FY11 forecast is negligible as we have assumed minimum contribution from the project in 1H11.
While there have been encouraging signs of late in the form of rising steel prices globally since early 2011, we view these increases as cost push in nature and not demand push. Having said that, Ann Joo is still expected to achieve better margins compared with its peers in 1H11, as it with foresight stocked up scrap (that will last until end-February) when scrap prices were below US$400 (RM1,220)/tonne in 2H2010 (against US$490-500/tonne currently).
We cut our FY10 net profit forecast by 12.2% to RM137.9 million, largely to reflect the lower sales volume. We also cut our FY11/12 net profit forecasts by 3.8% and 1.3% respectively, after adjusting for:
(i) '' ''higher raw material costs that more than offset higher average selling prices; and
(ii) '' ''lower effective operating days for its mini blast furnace project (from 350 days to 230 days) in FY11.
The risks include:
(i) '' ''oversupply in China that results in dumping by Chinese steel producers in the international market;
(ii) '' ''a steep contraction in global steel consumption that will weigh down international steel prices; and
(iii) disruption in supplies of raw materials.
We believe volume and top line growth of steel producers are not likely to translate to significantly improved profitability, as margins will continue to come under pressure due to rising feedstock prices (iron ore, coking coal and scrap). Indicative fair value is reduced to RM3.02 (from RM3.14) based on 10 times revised FY11 fully-diluted earnings per share of 30.2 sen, in line with our one-year forward target PER for the steel sector. Downgrade to 'underperform'. ' RHB Research, Feb 22
This article appeared in The Edge Financial Daily, February 23, 2011.
Company Name: ANN JOO RESOURCES BHD
Research House: RHB
Ann Joo Resources Bhd
(Feb 22, RM2.92)
Downgrade to underperform at RM3 with revised fair value RM3.02 (from RM3.14): We believe Ann Joo's FY10 ended December results (due out on Feb 24) are likely to come in below our as well as the market's expectations due to lower than expected sales volume, particularly in the export segment. This is despite some slight improvement in average selling prices and margins. Export sales to Vietnam, its main export market, will have declined significantly owing to the surging inflation and currency devaluation in the nation.
We understand that there will be a further delay in the commissioning of Ann Joo's mini blast furnace project to end-April, from early January previously. However, the impact to our FY11 forecast is negligible as we have assumed minimum contribution from the project in 1H11.
While there have been encouraging signs of late in the form of rising steel prices globally since early 2011, we view these increases as cost push in nature and not demand push. Having said that, Ann Joo is still expected to achieve better margins compared with its peers in 1H11, as it with foresight stocked up scrap (that will last until end-February) when scrap prices were below US$400 (RM1,220)/tonne in 2H2010 (against US$490-500/tonne currently).
We cut our FY10 net profit forecast by 12.2% to RM137.9 million, largely to reflect the lower sales volume. We also cut our FY11/12 net profit forecasts by 3.8% and 1.3% respectively, after adjusting for:
(i) '' ''higher raw material costs that more than offset higher average selling prices; and
(ii) '' ''lower effective operating days for its mini blast furnace project (from 350 days to 230 days) in FY11.
The risks include:
(i) '' ''oversupply in China that results in dumping by Chinese steel producers in the international market;
(ii) '' ''a steep contraction in global steel consumption that will weigh down international steel prices; and
(iii) disruption in supplies of raw materials.
We believe volume and top line growth of steel producers are not likely to translate to significantly improved profitability, as margins will continue to come under pressure due to rising feedstock prices (iron ore, coking coal and scrap). Indicative fair value is reduced to RM3.02 (from RM3.14) based on 10 times revised FY11 fully-diluted earnings per share of 30.2 sen, in line with our one-year forward target PER for the steel sector. Downgrade to 'underperform'. ' RHB Research, Feb 22
This article appeared in The Edge Financial Daily, February 23, 2011.
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