STOCK FOCUS OF THE DAY
Ann Joo Resources: Sales remain robust, but cost pressure mounts BUY
We cut our FY18-20F earnings forecasts by 18%, 20% and 13% respectively, trim our FV by 20% to RM3.55 (from RM4.34), but maintain our BUY call. The earnings downgrade is largely to reflect a weaker sales volume growth of 2% in FY18F (from 5% previously) and higher input costs throughout FY18-20F. Our FV is based on 10x revised FY18F EPS, in line with the average of its three midcycles’ PE multiples during Jan’12–Sep’13, Jun’05–Jun’08 and Sep’10 till now.
We came away from a recent visit to Ann Joo feeling cautious on the company’s prospects especially in FY18. The company has highlighted that its FY18 performance would not be as robust as expected largely due to the lower-than-expected sales volume for its long product (i.e. construction steel). On a brighter note, the company remains upbeat in 2H18 and beyond as it expects demand for steel construction to pick up strongly on the back of the “full rollout” of infrastructure projects and a modest growth in the property segment.
Others :
UMW Holdings: UMW buys another 6 months HOLD
QUICK TAKE
Plantation Sector: News flow for week 23 – 27 April NEUTRAL
RETAIL RESEARCH
Stocks On Radar: Borneo Aqua Harvest, Luxchem, AirAsia Group, Globetronics Technology
NEWS HIGHLIGHTS
Globetronics Technology: Explains why it is splitting shares
Hock Seng Lee: Steps up work on mega projects
Uzma: Secures contract from Petronas Carigali
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