Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: MIDF | Price Call: HOLD | Target Price: 9.00 |
Showing posts with label LMCEMNT. Show all posts
Showing posts with label LMCEMNT. Show all posts
February 21, 2013
November 30, 2012
To benefit from shifting trends of "green" construction industry
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: MIDF | Price Call: HOLD | Target Price: 9.00 |
August 1, 2012
RHB raises Lafarge to 'outperform'
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
RHB Research raised its call on Lafarge Malayan Cement Bhd to "outperform" from "market perform" on the back of rising domestic demand and higher cement selling prices.
"As the largest cement player in Malaysia with a lion market share of 40 percent, Lafarge is a good proxy to the massive public and oil and gas infrastructure spending," RHB said in a note on Wednesday.
"Rising domestic cement demand also allows Lafarge to unlock its earnings potential by changing its sales mix towards even more high-margin domestic sales vis-a-vis low-margin export sales," RHB added.
RHB raised Lafarge's fair value by 23 percent to RM9.05 per share from RM7.34 previously.
As of 9.49am, Lafarge's shares rose 2.5 percent against the Malaysian benchmark stock index's 0.15 percent rise. -- Reuters
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: RHB | Price Call: BUY | Target Price: 9.05 |
RHB Research raised its call on Lafarge Malayan Cement Bhd to "outperform" from "market perform" on the back of rising domestic demand and higher cement selling prices.
"As the largest cement player in Malaysia with a lion market share of 40 percent, Lafarge is a good proxy to the massive public and oil and gas infrastructure spending," RHB said in a note on Wednesday.
"Rising domestic cement demand also allows Lafarge to unlock its earnings potential by changing its sales mix towards even more high-margin domestic sales vis-a-vis low-margin export sales," RHB added.
RHB raised Lafarge's fair value by 23 percent to RM9.05 per share from RM7.34 previously.
As of 9.49am, Lafarge's shares rose 2.5 percent against the Malaysian benchmark stock index's 0.15 percent rise. -- Reuters
July 31, 2012
MIDF sees higher margin for Lafarge Malayan
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
KUALA LUMPUR: MIDF Research expects Lafarge Malayan Cement Bhd's (LMC) margin to expand due to easing coal costs and higher selling price.
In a note today, MIDF said the new cement price hike, effective tomorrow, was the positive surprise as it expected the bulk cement price to increase only next year and by a marginal RM10 per metric tonne.
The cement price will be increased from RM16.75 and RM17.75 per 50kg bag while for bulk cement price it will increase RM20 per metric tonne or 6.3 per cent to RM340.
"Based on our analysis, for every RM10 metric tonne increase in bulk cement price, LMC's net profit forecast will increase by 15.1 per cent which translates into an increment of 7.4 sen to its earnings per share," it said.
Meanwhile, besides the hike in cement price, coal fuel cost which accounted for 25 per cent of total cost is now getting cheaper, it added.
The coal price is currently trading at US$83.3 per metric tonne, 32 per cent below its one-year peak of US$122.9 in September 2011.
"Based on our sensitivity analysis, for every US$10 per metric tonne decrease in coal prices, net profit would potentially increase by 8.5 per cent, and vice versa," MIDF said.
Hence the research firm is revising upwards the financial year 2013 earnings forecast by 15.1 per cent.
"Nonetheless we are leaving our financial year 2012 forecast unchanged as we believe the higher price and low coal costs would be offset by its low production following major shutdowns for scheduled maintenance between February and June this year," it added.
As the demand stays resilient, MIDF reiterated its cement demand growth projection of 8.0 per cent for this year given the numerous infrastructure projects under the 10th Malaysia Plan and Economic Transformation Programme that were already on-going.
"Hence, we are upgrading our LMC's recommendation to 'buy' with a higher target price of RM9.00," it added. -- BERNAMA
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: MIDF | Price Call: BUY | Target Price: 9.00 |
KUALA LUMPUR: MIDF Research expects Lafarge Malayan Cement Bhd's (LMC) margin to expand due to easing coal costs and higher selling price.
In a note today, MIDF said the new cement price hike, effective tomorrow, was the positive surprise as it expected the bulk cement price to increase only next year and by a marginal RM10 per metric tonne.
The cement price will be increased from RM16.75 and RM17.75 per 50kg bag while for bulk cement price it will increase RM20 per metric tonne or 6.3 per cent to RM340.
"Based on our analysis, for every RM10 metric tonne increase in bulk cement price, LMC's net profit forecast will increase by 15.1 per cent which translates into an increment of 7.4 sen to its earnings per share," it said.
Meanwhile, besides the hike in cement price, coal fuel cost which accounted for 25 per cent of total cost is now getting cheaper, it added.
The coal price is currently trading at US$83.3 per metric tonne, 32 per cent below its one-year peak of US$122.9 in September 2011.
"Based on our sensitivity analysis, for every US$10 per metric tonne decrease in coal prices, net profit would potentially increase by 8.5 per cent, and vice versa," MIDF said.
Hence the research firm is revising upwards the financial year 2013 earnings forecast by 15.1 per cent.
"Nonetheless we are leaving our financial year 2012 forecast unchanged as we believe the higher price and low coal costs would be offset by its low production following major shutdowns for scheduled maintenance between February and June this year," it added.
As the demand stays resilient, MIDF reiterated its cement demand growth projection of 8.0 per cent for this year given the numerous infrastructure projects under the 10th Malaysia Plan and Economic Transformation Programme that were already on-going.
"Hence, we are upgrading our LMC's recommendation to 'buy' with a higher target price of RM9.00," it added. -- BERNAMA
February 23, 2012
HLIB Research 23 Feb 2012 (WCT; SP Setia; AirAsia; MISC; IJM; TSH; Lafarge; KLK; IJM Plant.; Economics; Traders Brief)
Stock Name: IJMPLNT
Company Name: IJM PLANTATIONS BHD
Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Stock Name: TSH
Company Name: TSH RESOURCES BHD
Stock Name: IJM
Company Name: IJM CORPORATION BHD
Stock Name: MISC
Company Name: MISC BHD
Stock Name: AIRASIA
Company Name: AIRASIA BHD
Stock Name: SPSETIA
Company Name: SP SETIA BHD
Stock Name: WCT
Company Name: WCT BHD
Company Name: IJM PLANTATIONS BHD
| Research House: HLG | Price Call: SELL | Target Price: 2.80 |
Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD
| Research House: HLG | Price Call: SELL | Target Price: 21.03 |
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: HLG | Price Call: HOLD | Target Price: 7.11 |
Stock Name: TSH
Company Name: TSH RESOURCES BHD
| Research House: HLG | Price Call: HOLD | Target Price: 2.13 |
Stock Name: IJM
Company Name: IJM CORPORATION BHD
| Research House: HLG | Price Call: HOLD | Target Price: 5.77 |
Stock Name: MISC
Company Name: MISC BHD
| Research House: HLG | Price Call: HOLD | Target Price: 5.57 |
Stock Name: AIRASIA
Company Name: AIRASIA BHD
| Research House: HLG | Price Call: BUY | Target Price: 4.50 |
Stock Name: SPSETIA
Company Name: SP SETIA BHD
| Research House: HLG | Price Call: HOLD | Target Price: 3.95 |
Stock Name: WCT
Company Name: WCT BHD
| Research House: HLG | Price Call: BUY | Target Price: 2.98 |
WCT (BUY)
Nursing back the order book
'' WCT has secured a RM331m contract from Riverson Corporation S/B for the construction of a mixed commercial development which is expected to be completed by Aug-14.
'' YTD, WCT has secured RM632m worth of projects and outstanding order book has been lifted to ~RM3.0bn, translating to ~1.9x FY10's construction revenue and ~1.4x order book-to-market cap ratio.
'' With 2 successive contract wins in a month, returning interest into the stock may act as an upside catalyst. We maintain our BUY call on WCT with at TP of RM2.98.
''
SP Setia (HOLD)
Revised Takeover Offer Document Released
'' SP Setia has officially released the revised joint-offer document, with a firm timeline for the acceptances, with March 14th being the deadline.
'' Key salient points remain unchanged ' (1) Tan Sri Liew will still be given a free hand to govern SP Setia, (2) The company's listed status will be maintained, with a minimum 25% public spread, and (3) Tan Sri Liew still retains his 3-year Put Option on his 8% stake at RM3.95 per share.
'' Maintain HOLD and target price of RM3.95, which is the revised offer price.
''
AirAsia (BUY)
Spreading Wings in 2012
'''' Reported 4Q11 core net profit of RM279.7m, leading to FY11 core profit of RM725.2m, in line with our forecast of RM718.2m and consensus's RM744.7m.
'''' FY11's average ticket prices dropped 5.1% yoy on the back of strong competition from Firefly. We expect yield to improve in FY12, given Firefly has stopped operation since Nov 2011 while MAS is in the midst of cutting its capacity.
'''' Management indicated forward bookings remain strong for Malaysia and Indonesia units, while Thailand is catching up.
'''' Management is bullish with Japan and Philippines JV. Japan AirAsia is targeted to make profit within its 1st year operation, while Philippines AirAsia within 2nd year operation.
'''' Net gearing continued to improve to 1.4x in FY11 vs 1.7x in FY10.
'''' Hedged 27% of 1H12 fuel requirement at US$120/bbl (jet kerosene).
'''' Maintain BUY with unchanged Target Price of RM4.50.
''
MISC (HOLD)
Thirsty for Turnarounds
'''' Reported 3Q FY12/11 core earnings of RM14.7m, taking 9M FY12/11 core earning to RM272.5m, in line with HLIB's RM283.1m, but higher than consensus estimates of losses.
'''' Petroleum, Chemical and Liner divisions continued to report losses due to low volumes, low charter rates and high bunker costs. Bunker price had increased to US$750/mt level.
'''' Management continued to guide gloomy outlook for Petroleum and Chemical businesses. Moreover, there is likelihood of charter rate being push down further due to Iran's sanction.
'''' MISC will be exiting Liner segment by 1H12. MISC has specifically provided RM1.45bn (larger than previous guidance of RM1.2bn) for the potential losses of exiting Liner business.
'''' Upgrade to HOLD with unchanged Target Price of RM5.57, after its price had come down.
''
IJM Corp (HOLD)
Encouraging 3Q results
'''' IJM posted encouraging performance during 3Q as all division contributed positively. 9MFY12 core earnings (after adjusting for unrealised forex loss of RM34m) grew by 53% to RM359m (26.3 sen/share) from RM235m (17.5 sen/share) previously. Core earnings made up 75% of our estimates and 78% of streets' estimates.
'''' Despite the encouraging results, we maintain our HOLD call on IJM with a TP of RM5.77 (previously RM5.72) as fundamentals have already been fully reflected in its share price.
''
TSH Resources (Hold; TP: RM2.13)
Boosted by strong FFB growth
'''' FY11 net profit of RM120.5m (+41.7%) came in within expectations, accounting for 100.9% of our forecast and 97.5% of consensus estimates.''
'''' Maintain net profit forecasts and SOP-derived TP of RM2.13. However, we are downgrading our recommendation on TSH from BUY to HOLD as upside is now capped by the recent strong run-up in share price.''
''
Lafarge (M) Cement (Hold; TP: RM7.11)
Above expectations
'''' FY12 net profit of RM317.8m (+7.6%) came in above expectations, accounting for 115.2% of our forecast and 112.8% of consensus estimates.''
'''' Despite the better-than-expected set of results, we are keeping our 2012-13 net profit forecasts unchanged, as we believe our forecasts have adequately reflected the expected pick-up in cement consumption.''
'''' TP maintained at RM7.11 based on 16.5x 2012 EPS of 43.1 sen. Maintain Hold.
''
Kuala Lumpur Kepong (Sell; TP: RM21.03)
In line
'''' 3MFY09/11 core net profit of RM356.3m (yoy: -10.8%; qoq: +37%) came in within expectations, at 24.4-24.6% of our and consensus full-year forecasts.
'''' Maintain net profit forecasts and TP of RM20.13 (based on 15x CY2012 EPS).
''
IJM Plantations (Sell; TP: RM2.80)
Above expectations
'''' 9MFY03/12 net profit of RM150.2m (+31.6%) came in above expectations, at 80.7% of our full-year forecast and 84.6% of consensus full-year estimates.''
'''' FY03/12-13 net profit forecasts raised by 5.5% and 4.6% to RM196.5m and RM190.0m respectively, largely to reflect: (1) Higher FFB yield assumption for IJMP's Malaysian oil palm estates; and (2) Slightly lower production cost assumptions.''
'''' TP raised by 4.9% to RM2.80 based on 13x CY 2012 FD EPS of 21.5 sen. However, we are downgrading our recommendation on the stock from Hold to Sell as valuation has run ahead of fundamentals.''
''
January Inflation Report
'''' Inflation eased further to 2.7% yoy in Jan 2012 (Dec: +3.0% yoy), in line with the consensus estimate.
'''' Price increase of the transport category moderated further to 1.6% yoy (Dec: +1.9% yoy) from a high of 6.0% yoy in May 2011 due to the lapse of fuel price hike effected a year ago. Food & beverages segment recorded slower price increase (+4.8% yoy) while price growth of housing & utilities sector inched up to 1.8% yoy.
'''' The pick-up of CPI MoM growth (+0.3%; Dec: +0.1%) may be driven by one-off festivity (Chinese New Year). However, it does suggest that underlying inflation remained apparent which will still be a concern for BNM.
'''' We maintain our inflation forecast for 2012 at 2.7%, factoring in Pemandu's future subsidy removal in Jul & Dec 2012 respectively).
'''' The civil servant salary revision, Budget goodies for the lower-income group, implementation of minimum wage, and tight employment situation will cause inflation to remain sticky at an elevated level.
'''' While room for OPR cut is now available, we still expect BNM to hold the OPR steady at 3.00% until end-2012 on resilient growth outlook and sticky inflation.
''
KLCI: Market turns cautious''
'''' Overall, the rebound from 16 Feb's low of 1549 pts continues to be weak as broader market turns more cautious and trading volume shrank, suggesting that the rally is running out of steam. The KLCI is still below our envisaged resistance channels of 1570-1580 pts. Supports fall on 14-d SMA (1554), 1550 and mid Bollinger band (1543).
Crude oil: Still upside bias
'''' High crude oil prices are likely to be sustainable in the short term amid escalating tensions between Iran and Western nations coupled with liquidity injection since Dec 11 which spurred big infusion of speculative capital into riskier assets. Iran said earlier this week that it stopped selling crude to France and Britain in a move designed to pre-empt European sanctions. The European Union on 23 Jan agreed to ban crude imports from Iran starting 1 July to pressure the country over its nuclear program.
'''' Looking at the chart, if prices can maintain above the long term downtrend line since all time high in June 2008 (US$145/barrel), it may continue to climb towards US$115/barrel after a brief sideways profit taking consolidation. Further resistance is US125/barrel (23.6% FR). Immediate supports are US$94-100.
Beat expectations
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: ECMLIBRA | Price Call: BUY | Target Price: 7.97 |
LMCEMNT
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Lafarge Malayan Cement; Fully Valued; RM7.37
Price Target: RM6.00; LMC MK
FY11 net profit beat expectations; declares 10sen interim DPS. FY12 will be a challenging year. Maintain
Fully Valued and RM6.00 TP.
Source: HwangDBS Research 23 Feb 2012
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: HWANGDBS | Price Call: BUY | Target Price: 6.00 |
Lafarge Malayan Cement; Fully Valued; RM7.37
Price Target: RM6.00; LMC MK
FY11 net profit beat expectations; declares 10sen interim DPS. FY12 will be a challenging year. Maintain
Fully Valued and RM6.00 TP.
Source: HwangDBS Research 23 Feb 2012
February 20, 2012
Cementing a solid base
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: AMMB | Price Call: BUY | Target Price: 8.28 |
January 19, 2012
HLIB Research 19 Jan 2011 (Lafarge; Economics; Traders Brief)
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: HLG | Price Call: HOLD | Target Price: 7.11 |
Lafarge (M) Cement (Hold; TP: RM7.11)
Largest Beneficiary from ETP
'''' Our investment highlights for Lafarge are:
1.'' Our favourable outlook on the construction sector, and cement sector is the major direct beneficiary from the construction sector;
2.'' As the largest player in Malaysia, Lafarge will be the largest beneficiary from ETP implementation; and
3.'' Strong balance sheet.
'''' We are projecting Lafarge's net profit in 2012-13 to rise by 32.7% and 10.8% to RM366.2m and RM405.7m from a projected net profit of RM276.0m in 2011.
'''' We are initiating coverage on Lafarge with a HOLD recommendation and TP of RM7.11 based on 16.5x 2012 EPS of 43.1 sen.
''
December Inflation Report
'''' CPI growth eased further to 3.0% yoy in Dec 2011 (Nov: +3.3% yoy), slightly below the consensus estimate of 3.1%, due mainly to lapse of fuel price hike effected a year ago. Accordingly, price increase of the transport category eased sharply to 1.9% yoy (Nov: +3.9% yoy).
'''' The lapse of fuel price hike contributed to a 0.3ppt reduction in the CPI growth. December inflation rate would have remained at 3.3% yoy if Pemandu had continued with its subsidy removal in Dec 2011.
'''' Stable mom CPI growth of 0.1% and easing of services inflation (3.1% yoy; Nov: 3.2% yoy) provided a relief that price pressure on the ground has begun to stabilise.
'''' We now lower our inflation forecast for 2012 to 2.7% from earlier forecast of 3.0% as Pemandu did not perform any subsidy removal for Dec 2011 as anticipated.
'''' We expect BNM to keep the OPR at 3.00% until end-2012 given the resilient economic growth with sticky inflation.
''
Holding well above the key 200-d SMA support''
'''' We reiterate that as long as KLCI continues to remain its posture above the crucial 200-d SMA (now at 1502), the benchmark index is still likely to gradually refill the huge gap of 1529-1546 resistance recorded on 5 Aug 11, probably as early as next week. Ahead of the CNY holidays next week, we expect more sideways consolidation above the 200-day SMA. Breaking the key 200-d SMA will drag index lower to 30-d SMA (1496) and 50-d SMA (1484) levels.
Medium to long term positive after recent consolidation
'''' Following the breakout above the downtrend line formed since 2002 coupled with improving technical readings on the monthly chart, BOXPAK is expected to rally further towards the 50% FR (at RM2.36) and 38.2% FR (RM2.65), which is also the 52-wk high. A breakout above RM2.65 will drive prices higher to a more formidable resistance near RM3.00.
'''' We believe BOXPAK could find its floor soon amid signs of bottoming up on its hourly chart and share prices also retraced back to below the 50% FR (daily chart). Immediate supports are RM2.06 (61.8% FR-daily chart) and RM2.00 (monthly mid Bollinger band). Cut loss below RM2.00.
November 23, 2011
Discounting continues
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: AMMB | Price Call: HOLD | Target Price: 6.74 |
Lafarge Malayan Cement: Buy
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Proxy to major wins in construction Shariah-compliant
Maintain Buy. 9M11 net profit of RM201m (-7% YoY) was below expectations, at 68% of our full-year forecast and 63% of consensus. However, we continue to see LMC as a proxy to the local construction sector which should receive a significant lift in job flows next year. Meanwhile, LMC's share price is well-supported by its decent net dividend yield of >5%. Our 2011 EPS is lowered by 5% but our 2012-13 forecasts and TP of RM7.60 (17x 2013 PER) are retained.
Maybank research (23 November 2011)
Click here for full report ''
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 7.60 |
Proxy to major wins in construction Shariah-compliant
Maintain Buy. 9M11 net profit of RM201m (-7% YoY) was below expectations, at 68% of our full-year forecast and 63% of consensus. However, we continue to see LMC as a proxy to the local construction sector which should receive a significant lift in job flows next year. Meanwhile, LMC's share price is well-supported by its decent net dividend yield of >5%. Our 2011 EPS is lowered by 5% but our 2012-13 forecasts and TP of RM7.60 (17x 2013 PER) are retained.
Maybank research (23 November 2011)
Click here for full report ''
3QFY11: Below expectation
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 6.78 |
November 10, 2011
RHB Research maintains Underperform on Lafarge
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
KUALA LUMPUR (Nov 10): RHB Research Institute is maintaining its Underperform on Lafarge Malayan Cement as competition heats up in the domestic market.
It said on Thursday Lafarge estimates domestic cement demand to grow by 6%-8% in 2011 and 3%-5% in 2012, underpinned by key on-going large-scale infrastructure projects.
'Rebates given by cement players have surprisingly trended higher recently, while margins are under pressure due to high coal prices and hike in electricity tariff. The higher rebates mainly reflect increased competition in the industry, as certain players are trying to capture additional market share ahead of the imminent capacity expansion in the industry by mid-2013,' it said.
RHB Research said Lafarge has no plans to increase production capacity, but is looking for ways to de-bottleneck its production process. With minimal capex spending going forward, Lafarge's strong operating cashflow will be sufficient to support its dividend payout (estimated 34sen/share in FY11, translating to a decent yield of 4.9%).
'We cut our FY11-13F earnings forecasts by 3-7%, having adjusted our domestic cement demand growth assumptions, domestic vs. export sales ratio, domestic net selling price, and coal price assumptions.
'Indicative fair value is reduced to RM6.02 (from RM6.36) based on 14x revised FY12/12 EPS of 43.0 sen, in line with our one-year forward target PER for the cement sub-sector,' it said.
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: RHB | Price Call: SELL | Target Price: 6.02 |
KUALA LUMPUR (Nov 10): RHB Research Institute is maintaining its Underperform on Lafarge Malayan Cement as competition heats up in the domestic market.
It said on Thursday Lafarge estimates domestic cement demand to grow by 6%-8% in 2011 and 3%-5% in 2012, underpinned by key on-going large-scale infrastructure projects.
'Rebates given by cement players have surprisingly trended higher recently, while margins are under pressure due to high coal prices and hike in electricity tariff. The higher rebates mainly reflect increased competition in the industry, as certain players are trying to capture additional market share ahead of the imminent capacity expansion in the industry by mid-2013,' it said.
RHB Research said Lafarge has no plans to increase production capacity, but is looking for ways to de-bottleneck its production process. With minimal capex spending going forward, Lafarge's strong operating cashflow will be sufficient to support its dividend payout (estimated 34sen/share in FY11, translating to a decent yield of 4.9%).
'We cut our FY11-13F earnings forecasts by 3-7%, having adjusted our domestic cement demand growth assumptions, domestic vs. export sales ratio, domestic net selling price, and coal price assumptions.
'Indicative fair value is reduced to RM6.02 (from RM6.36) based on 14x revised FY12/12 EPS of 43.0 sen, in line with our one-year forward target PER for the cement sub-sector,' it said.
November 2, 2011
Lafarge a strong proxy to construction sector
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Lafarge Malayan Cement Bhd
(Nov 2, RM6.90)
Maintain buy with revised target price of RM7.60 from RM7.85: As the largest cement producer in the country, Lafarge is undoubtedly a proxy to, and a major beneficiary of, the high-growth construction sector, which should see robust activity once projects under the Economic Transformation Programme (ETP) take off.
In addition, we expect its share price to be supported by its decent net dividend yield of 5%. Maintain 'buy' with a marginally lower target price of RM7.60 (RM7.85 previously) on 17 times 2013 price earnings ratio (PER) as we roll forward valuations after trimming earnings forecasts by 11% per year.
Results for 3QFY11 are due to be released in the third week of this month. Earnings are likely to mirror 2QFY11 (net profit: RM77 million) on flattish sales volume, given the Hari Raya Aidilfitri festivities in 3QFY11. Margins are expected to match 2QFY11 as both net average selling prices (ASP) and coal cost were stable.
While electricity tariff was raised by 8% in June this year, the overall impact is minimal as electricity makes up 20% of production cost, hence, we estimate the net impact to be only a 2% increment in its electricity bill. At flattish sequential 3QFY11 net profit, we estimate 9MFY11 net profit to hit RM207 million (-4% year-on-year).
As it stands, coal prices are off about 16% from their high this year. Accounting for 40% of production cost, we estimate that every 1% decline in coal cost contributes to a 0.8% increase in earnings for Lafarge. With the prospect of slower global economic growth into 2012, coal prices could potentially slip further, which in turn would have a positive impact on LMC's bottom line.
Price competition has picked up of late, and as a result we are imputing a lower market share of 38% (-2 percentage points) for Lafarge. This in turn results in a 4% downward revision of its sales volume.
Overall, however, we expect Lafarge to weather the situation well with its strong cash pile and with an annual free cash flow generation of more than RM400 million (against an annual dividend payout of RM290 million), we expect the company to be able to sustain a dividend per share of 34 sen to 36 sen over the next two years, which translates into prospective net dividend yields of more than 5%. ' Maybank IB Research, Nov 2
This article appeared in The Edge Financial Daily, November 3, 2011.
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 7.60 |
Lafarge Malayan Cement Bhd
(Nov 2, RM6.90)
Maintain buy with revised target price of RM7.60 from RM7.85: As the largest cement producer in the country, Lafarge is undoubtedly a proxy to, and a major beneficiary of, the high-growth construction sector, which should see robust activity once projects under the Economic Transformation Programme (ETP) take off.
In addition, we expect its share price to be supported by its decent net dividend yield of 5%. Maintain 'buy' with a marginally lower target price of RM7.60 (RM7.85 previously) on 17 times 2013 price earnings ratio (PER) as we roll forward valuations after trimming earnings forecasts by 11% per year.
Results for 3QFY11 are due to be released in the third week of this month. Earnings are likely to mirror 2QFY11 (net profit: RM77 million) on flattish sales volume, given the Hari Raya Aidilfitri festivities in 3QFY11. Margins are expected to match 2QFY11 as both net average selling prices (ASP) and coal cost were stable.
While electricity tariff was raised by 8% in June this year, the overall impact is minimal as electricity makes up 20% of production cost, hence, we estimate the net impact to be only a 2% increment in its electricity bill. At flattish sequential 3QFY11 net profit, we estimate 9MFY11 net profit to hit RM207 million (-4% year-on-year).
As it stands, coal prices are off about 16% from their high this year. Accounting for 40% of production cost, we estimate that every 1% decline in coal cost contributes to a 0.8% increase in earnings for Lafarge. With the prospect of slower global economic growth into 2012, coal prices could potentially slip further, which in turn would have a positive impact on LMC's bottom line.
Price competition has picked up of late, and as a result we are imputing a lower market share of 38% (-2 percentage points) for Lafarge. This in turn results in a 4% downward revision of its sales volume.
Overall, however, we expect Lafarge to weather the situation well with its strong cash pile and with an annual free cash flow generation of more than RM400 million (against an annual dividend payout of RM290 million), we expect the company to be able to sustain a dividend per share of 34 sen to 36 sen over the next two years, which translates into prospective net dividend yields of more than 5%. ' Maybank IB Research, Nov 2
This article appeared in The Edge Financial Daily, November 3, 2011.
September 12, 2011
LM Cement's demand augers well for next year
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Lafarge Malayan Cement Bhd
(Sept 12, RM6.91)
Initiate coverage at RM6.91 with neutral rating and target price of RM6.80: LMC is the country's largest cement producer with 46% market share in terms of capacity. LMC's annual rated capacity clinker production currently stands at 8.2 million tonnes against the total industry's clinker of 17.8 million tonnes.
LMC is also the largest listed cement company on Bursa Malaysia with RM5.6 billion in market capitalisation, ahead of YTL Cement Bhd (RM2.3 billion) and Tasek Corp Bhd (RM993 million).
As the largest cement player in Malaysia with more than 40% market share, we believe LMC's cement demand augurs well next year driven by mega projects under the Economic Transformation Programme ETP, namely MyRapid Transit and KL Financial District in Greater Kuala Lumpur and Iskandar Malaysia, Johor, infrastructure projects and other big projects. Apart from that, the ongoing projects under the 10th Malaysia Plan are expected to continue to drive the overall cement demand.
As a multinational company, LMC has a wide distribution network around the world and it is well connected with its parent company, Lafarge SA of France. We see this as an advantage against its peers as the group can take advantage of any pickup in construction activities in other countries.
Thanks to its current strong operating cash flow, LMC's financials are very clean with a net cash balance of RM127 million in FY10. We believe LMC will continue to be in a net cash position since the group keeps maintaining its working capital requirement through improvement in production efficiency and minimal capital expenditure.
The group has been able to dish out dividends to shareholders of 70% to 99% of net profit in FY08 to FY10 or at 34 sen to 38 sen per share per year, resulting in a gross dividend yield of 5.6% to 5.07%. We expect LMC to continue to pay at least 80% of its net profit as dividend throughout FY11E to FY13F or an average of 30 sen to 43 sen per share per year, resulting in a gross dividend yield of 4% to 6%.
We are initiating coverage on LMC with a target price of RM6.80 pegged to its five-year historical average price-earnings multiple of 16 times to FY12F earnings per share of 42.4 sen. ' MIDF Research , Sept 12
This article appeared in The Edge Financial Daily, September 13, 2011.
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: MIDF | Price Call: HOLD | Target Price: 6.80 |
Lafarge Malayan Cement Bhd
(Sept 12, RM6.91)
Initiate coverage at RM6.91 with neutral rating and target price of RM6.80: LMC is the country's largest cement producer with 46% market share in terms of capacity. LMC's annual rated capacity clinker production currently stands at 8.2 million tonnes against the total industry's clinker of 17.8 million tonnes.
LMC is also the largest listed cement company on Bursa Malaysia with RM5.6 billion in market capitalisation, ahead of YTL Cement Bhd (RM2.3 billion) and Tasek Corp Bhd (RM993 million).
As the largest cement player in Malaysia with more than 40% market share, we believe LMC's cement demand augurs well next year driven by mega projects under the Economic Transformation Programme ETP, namely MyRapid Transit and KL Financial District in Greater Kuala Lumpur and Iskandar Malaysia, Johor, infrastructure projects and other big projects. Apart from that, the ongoing projects under the 10th Malaysia Plan are expected to continue to drive the overall cement demand.
As a multinational company, LMC has a wide distribution network around the world and it is well connected with its parent company, Lafarge SA of France. We see this as an advantage against its peers as the group can take advantage of any pickup in construction activities in other countries.
Thanks to its current strong operating cash flow, LMC's financials are very clean with a net cash balance of RM127 million in FY10. We believe LMC will continue to be in a net cash position since the group keeps maintaining its working capital requirement through improvement in production efficiency and minimal capital expenditure.
The group has been able to dish out dividends to shareholders of 70% to 99% of net profit in FY08 to FY10 or at 34 sen to 38 sen per share per year, resulting in a gross dividend yield of 5.6% to 5.07%. We expect LMC to continue to pay at least 80% of its net profit as dividend throughout FY11E to FY13F or an average of 30 sen to 43 sen per share per year, resulting in a gross dividend yield of 4% to 6%.
We are initiating coverage on LMC with a target price of RM6.80 pegged to its five-year historical average price-earnings multiple of 16 times to FY12F earnings per share of 42.4 sen. ' MIDF Research , Sept 12
This article appeared in The Edge Financial Daily, September 13, 2011.
August 25, 2011
2QFY11: Disappointing quarter, clearer skies ahead
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 7.28 |
June 27, 2011
Lafarge feeling the heat
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Lafarge Malayan Cement Bhd
(June 27, RM7.37)
Maintain fully valued at RM7.58 with revised target price of RM6.50 (from RM6): LMC's operating costs will continue to rise with persistent high coal prices (2011/12F: US$113 [RM344.65] to US$117 per tonne), utility rate hikes (+8%), rising raw material costs (+10%), and higher transport costs (+5%). But the impact should be mitigated by: (i) average selling price (ASP) hikes (strong pricing power due to oligopoly market); and (ii) stronger demand growth (2011/12F: 6% to 7% against 2010: flat) with increased construction activity (low-cost carrier terminal, second Penang Bridge, double tracking railway, LRT extension, MRT) and property starts (robust 2010 sales).
Rebates have surpassed RM40 per tonne against 2010's RM25 to RM30 per tonne, despite improving demand (1Q11: +6% year-on-year). Competition could worsen with: (i) enforcement of Competition Act 2010 from Jan 1, 2012, which bans cartels (LMC can leverage on parent's experience overseas); and (ii) new supply post-2013, that is 1.5 million tonnes each by Hong Leong Industries (acquired Hume Cement Sdn Bhd), Cement Industries of Malaysia Bhd, and possibly YTL Cement Bhd (LMC is unlikely to expand given its 30% spare capacity that is currently exported).
We slash FY11/12F earnings by 13% to 17% after factoring in: (i) higher rebates (2011/12F: RM30 to 40 per tonne); and (ii) tax rate (25% against 15% previously) with the exhaustion of LMC's reinvestment allowance (given minimal capital expenditure). Amid a changing sector landscape and higher demand from Economic Transformation Programme spending, LMC's historical trading band no longer applies. We now value LMC at 15 times FY12 price-earnings ratio, a 10% discount to the construction sector average of 17 times, to derive a RM6.50 target price (from RM6). Although valuation exceeds replacement cost (US$212 against US$155 per tonne), LMC's share price should be partly supported by 4.3% dividend yield (against FBM KLCI average of 3.2%). ' HwangDBS Vickers Research, June 27
This article appeared in The Edge Financial Daily, June 28, 2011.
Company Name: LAFARGE MALAYAN CEMENT BHD
| Research House: HWANGDBS | Price Call: SELL | Target Price: 6.50 |
Lafarge Malayan Cement Bhd
(June 27, RM7.37)
Maintain fully valued at RM7.58 with revised target price of RM6.50 (from RM6): LMC's operating costs will continue to rise with persistent high coal prices (2011/12F: US$113 [RM344.65] to US$117 per tonne), utility rate hikes (+8%), rising raw material costs (+10%), and higher transport costs (+5%). But the impact should be mitigated by: (i) average selling price (ASP) hikes (strong pricing power due to oligopoly market); and (ii) stronger demand growth (2011/12F: 6% to 7% against 2010: flat) with increased construction activity (low-cost carrier terminal, second Penang Bridge, double tracking railway, LRT extension, MRT) and property starts (robust 2010 sales).
Rebates have surpassed RM40 per tonne against 2010's RM25 to RM30 per tonne, despite improving demand (1Q11: +6% year-on-year). Competition could worsen with: (i) enforcement of Competition Act 2010 from Jan 1, 2012, which bans cartels (LMC can leverage on parent's experience overseas); and (ii) new supply post-2013, that is 1.5 million tonnes each by Hong Leong Industries (acquired Hume Cement Sdn Bhd), Cement Industries of Malaysia Bhd, and possibly YTL Cement Bhd (LMC is unlikely to expand given its 30% spare capacity that is currently exported).
We slash FY11/12F earnings by 13% to 17% after factoring in: (i) higher rebates (2011/12F: RM30 to 40 per tonne); and (ii) tax rate (25% against 15% previously) with the exhaustion of LMC's reinvestment allowance (given minimal capital expenditure). Amid a changing sector landscape and higher demand from Economic Transformation Programme spending, LMC's historical trading band no longer applies. We now value LMC at 15 times FY12 price-earnings ratio, a 10% discount to the construction sector average of 17 times, to derive a RM6.50 target price (from RM6). Although valuation exceeds replacement cost (US$212 against US$155 per tonne), LMC's share price should be partly supported by 4.3% dividend yield (against FBM KLCI average of 3.2%). ' HwangDBS Vickers Research, June 27
This article appeared in The Edge Financial Daily, June 28, 2011.
March 10, 2011
LMCEMNT - 'Reduce' call on LaFarge Cement
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Research House: AFFIN
Company Name: LAFARGE MALAYAN CEMENT BHD
Research House: AFFIN
Given the rising coal prices, KL Affin thinks there could likely be another round of price hike over the next three to six months.
Given historical trend, KL Affin expects it would likely be another 10 per cent hike in gross selling price. The most recent hike was in May 2010, where Ordinary Portland Cement average gross selling price (ASP) was raised by 10 per cent to RM305 per tonne.
Based on our simulation, all things being equal, for every RM5 per tonne hike in cement price, it will raise our earnings by 8 per cent.
Going forward, as we expect demand to at least remain stable, if not improve, rebates would also likely to be lower. recommendation.
We believe at current price level, we believe the market has already imputed the positive construction newsflow, while any potential hike in selling prices will likely be offset by the rising coal prices.
La Farge Cement continues to offer a decent yield of around 4-5 per cent , based on 80-90 per cent payout ratio. However, this is insufficient to offset the expensive valuation.
Currently, at 16.5 times current year 2011 price earnings ration, it is trading at a premium to its high of 14 times forward P/E during the last peak of construction sector growth in Q3 2007.
Hence, we maintain our 'Reduce' recommendation with a slightly lower target price of RM6.60, based on an unchanged target PER of 14.5 time. - Reuters
Given historical trend, KL Affin expects it would likely be another 10 per cent hike in gross selling price. The most recent hike was in May 2010, where Ordinary Portland Cement average gross selling price (ASP) was raised by 10 per cent to RM305 per tonne.
Based on our simulation, all things being equal, for every RM5 per tonne hike in cement price, it will raise our earnings by 8 per cent.
Going forward, as we expect demand to at least remain stable, if not improve, rebates would also likely to be lower. recommendation.
We believe at current price level, we believe the market has already imputed the positive construction newsflow, while any potential hike in selling prices will likely be offset by the rising coal prices.
La Farge Cement continues to offer a decent yield of around 4-5 per cent , based on 80-90 per cent payout ratio. However, this is insufficient to offset the expensive valuation.
Currently, at 16.5 times current year 2011 price earnings ration, it is trading at a premium to its high of 14 times forward P/E during the last peak of construction sector growth in Q3 2007.
Hence, we maintain our 'Reduce' recommendation with a slightly lower target price of RM6.60, based on an unchanged target PER of 14.5 time. - Reuters
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