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Top Calls
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Company Update � Lafarge (REDUCE,
maintain)
New supply in 2015E should lead to pricing pressure Based on our lower coal cost assumptions, we are raising Lafarge�s earnings forecasts by 11.4% for FY15 and 11.1% for FY16. Despite the earnings upgrade, valuation remains rich at 20x FY15E PER, which is above its 3-year average PER of 18.5x. We believe that the company�s strong fundamentals have already been reflected in its share price, while the FY15E dividend is only 4.0%. With new capacity likely to come on-stream over the next two years (from Lafarge and YTL Cement), we expect average net selling prices for cement to remain under pressure. As such, we maintain our REDUCE recommendation. Our fair value has been raised to RM9.50, due to the earnings increases, based on the stock�s 3-year average PER of 18.5x. Risks to our recommendation include a potential hike in domestic net selling prices and further declines in coal prices.
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Economy � ASEAN Outlook � Weekly Wrap (5 � 11 Sep 2014)
Economic growth in ASEAN region likely to slow in 2H14
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