STOCK FOCUS OF THE DAY
Ann Joo Resources: Earnings not falling off the cliff HOLD
We cut our FY18-20F net profit forecasts by 11%, 13% and 31% respectively, reduce our FV by 20% to RM2.17 (from RM2.70), but maintain our HOLD call. Our new FV is based on 8x revised FY20F FD EPS of 27.1sen. We use FY20F (instead of FY19F) as our valuation base year to reflect the potential earnings downturn in FY20F with the completion of major mega infrastructure projects in about two years from now.
The downgrade in our FY18F earnings forecast is to reflect an expected soft 2QFY18 (April–June) as contractors held back from steel purchases on the heels of the surprise 14th general election outcome that threw various public infrastructure projects into limbo.
We also lower our outlook for sales volumes and prices in FY19-20F. We now assume FY18-20F sales volume growth of 0% to 2.5% per annum (from 3% previously) and average steel selling prices of RM2,465-2,565/tonne (from RM2,500-2,700/tonne previously).
QUICK TAKE
Plantation Sector: News flow for week 16 – 20 July NEUTRAL
RETAIL RESEARCH
Stocks On Radar: Cuscapi, WCE Holdings, Puncak Niaga, Dufu Technology
ECONOMIC HIGHLIGHT
Japan: BOJ may not achieve 2% inflation target in 3 years
NEWS HIGHLIGHTS
Plantation Sector: Tradewinds plan stirs concerns
MSM Malaysia: Eyes China and Africa markets
Econpile: Sees flow of jobs returning to normal in a year
Uchi Technologies: Sees FY29 harvest for new product aimed at US
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