AYS (5021) - AYS Ventures Berhad can be your November's Bargain
AYS Ventures Berhad (AYS - 5021) came from humble beginning, founded by Mr Oh Chiew Ho in 1982 which started as a trader, stockist and distributor of various steel and construction material before expanding into manufacturing of it's own wire products. To date, AYS has evolved into one of the major steel trader and stockist in Malaysia, specializing in structural steel products.
With the recent equity shake up in the global market due to the US presidential election that shocked the world with a Donald Trump victory, some good bargain had emerged in the equity market. For this instance, I would believe that AYS would be one of the qualified counter which is suitable to see good bargain at the current depressed level.
As a matter of fact, AYS had not been an interesting counter for the past 3 years. This can be reflected by it's business operation which is highlighted in the latest annual report, where the company is just able to trend at the range of 2 to 3 cents EPS per annum.
However, the recent price spike in base metal commodity could see AYS turning in the fortune. With just into Q1 of FYE 2017, the company had took in an EPS of 2.82 cents. Albeit the lower revenue compared to the previous correspondence quarter, the group had seen better profit margin albeit lower sales prices in their products. The earning of Q1 2017 is more than what AYS had managed for the whole financial year for FYE 2015 and FYE 2016.
While the market had mixed feeling and reaction towards the steel industry due to glut and slowing down consumption, it is cushion by safe guard tariff that is imposed by the MITI recently. Now, local steel player had protection in cold rolled coil and long HRC steel products.
As a matter of fact, the recent financial quarterly that is reported by Ssteel, generating 4.6 cents in earning from a loss of 12.38 cents on the previous correspondent quarter give comfort on the general steel market performance for their coming result announcement.
Taking into a conservative projection, we can estimate AYS to perform generally stronger for FYE 2017, estimation on a FYE 2017 total EPS of 6 cents, which can bring to valuation of RM 0.60 for AYS at PER x 10.
On a technical basis, it can be seen that the share had been hit down by volatility in equity market. However, at the current price, it is quite an interesting level to take position for the next coming quarterly result that AYS is going to release soon in November.
Should the result be satisfying, AYS can look towards trading above the resistant of RM 0.36.
Bone's Mid Term TP : RM 0.40
AYS (5021) - AYS Ventures Berhad can be your November's Bargain
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