FW: AmBank Research - LUXCHEM CORPORATION : Expansions going smoothly, 15 Feb 2018

 

 

Stock focus of the day

 

LUXCHEM CORPORATION : Expansions going smoothly                                                 Buy

 

We reiterate our BUY recommendation on Luxchem Corporation (Luxchem) with an unchanged fair value of RM0.91/share, based on 15x FY18F FD EPS. We have tweaked our FY18F-FY19F net profit forecasts by 0.1-0.7% for housekeeping reasons. At this price, Luxchem appears undervalued with CY18F PE of 12x vs. its peer average of 15x. Dividend yield remains attractive 3-4%, especially for a company with decent growth.

 

We continue to like Luxchem because of its: 1) good earnings visibility backed by large clientele (~1,000 customers) and wide applications of its chemical products; 2) exposures in industries with stable and commendable growth such as its Latex and PVC segments, demand of which is tied to the glove and construction sectors respectively; and 3) capacity expansions in the group's manufacturing arms, LPI (+33%) and TMSB (+44%).

 

 

Others :

DIALOG GROUP                : Boost from PDT2’s back-end construction cycle                               Buy

PROTASCO BERHAD        : Bags federal road maintenance concession                                       Buy

CARLSBERG BREWERY    : Gains offset by trade rebates and commercial spending              Hold

HEINEKEN MALAYSIA     : FIFA World Cup year could be a boost for FY18                                 Hold

 

 

STOCKS ON RADAR

MyEG Services, CSC Steel, HSS Engineering, Hibiscus Petroleum

 

 

ECONOMIC HIGHLIGHTS

Malaysia : GDP met our expectation

 

 

 

DISCLAIMER:

The information and opinions in this report were prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

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