PMETAL (8869), MSM (5202), KIANJOO (3522) : Press Metal 'buy', MSM Malaysia 'reduce'. Kian Joo 'buy'
PRESS METAL BHD
By RHB Research Institute
Buy (maintained)
Target Price: RM5.75
RHB Research said it was positive on Press Metal Bhd’s plan to double its Samalaju, Sarawak, plant’s capacity, which would lift the company’s total smelting capacity to 760,000 tonnes per annum (tpa) that was about 1.5% of global primary aluminium consumption.
Press Metal’s 80%-owned subsidiary, Press Metal Bintulu SB, recently inked a term sheet with Syarikat Sesco to supply additional 500 megawatts (MW) of power to PMB to undertake its proposed Phase III expansion, which would double the present aluminium smelting capacity at its plant in Samalaju to 640,000 tpa.
RHB Research said it was excited over the news of the capacity expansion, as it was timely for Press Metal to ride on the bottoming out of aluminium prices and expand its presence in the aluminium industry.
The research house noted that Press Metal’s projected record earnings indicated that the company could fund this project using internally-generated funds together with bank borrowings, while maintaining its generous dividend payout policy of 30% to 50%.
RHB Research said the first drawdown of 330MW would start in end-2015, while the remaining 170MW would be drawn down from early-2018 onwards.
It imputed the new capacity into its financial model, which assumed contributions only from 2016 onwards together with some higher costs. Thus, it added, its financial year 2016 estimates rose by 27.7% to RM555mil.
MSM MALAYSIA HOLDINGS BHD
By Affin Hwang Capital
Reduce (maintained)
Target Price: RM4.90
MSM Malaysia Holdings Bhd’s nine-month period earnings were in line with its expectations, said Affin Hwang Capital.
It added that MSM Malaysia revenue for the period remained flat at RM1.6bil due to weaker sugar demand from both domestic and export markets.
Moving forward, Affin Hwang Capital believed that domestic sugar demand would continue to be weighed down by the abolition of the 34 sen per kg sugar subsidy coupled with the permission for refined sugar imports at zero duty for other local companies.
It said MSM Malaysia would only be re-rated if the Government ended the issuance of newly approved permits (APs) for sugar imports as this would help MSM Malaysia Holdings regain market share.
Affin Hwang Capital said with results coming in line within its expectations, it made no changes to its core assumptions.
It maintained “reduce” rating on MSM Malaysia shares as it remained unexcited on the group’s outlook, with the unchanged target price of RM4.90 pegged to an unchanged 12.5 times price-earnings on calendar year 2015 earnings per share.
KIAN JOO CAN FACTORY BHD
By PublicInvest Research
Trading Buy
Target Price: RM3.30
IN light of continued operational challenges, PublicInvest Research said it had lowered its financial year ending Dec 31, 2014 (FY14) to FY16 estimates between 12% and 14% to account for the one-off expense (FY14) and lower capacity utilisations, given weaker demand regionally.
It said with the share continuing to capture imagination amid sporadic trading interest, it saw opportunities particularly on market weaknesses, and retained its “trading buy” call with an unchanged target price of RM3.30.
PublicInvest said that since Nov 17, Kian Joo Can Factory Bhd’s (KJC) share price had risen 9.4% to a recent high of RM3.14 before settling at the current RM3 after the Kuala Lumpur High Court struck out Datuk Anthony See’s suit against the company, which essentially cleared the way for Aspire Insight to proceed with its proposed takeover, shareholder approval notwithstanding.
It added that there was still the slight issue of an injunction barring the calling of any shareholder meetings until the resolution of that earlier lawsuit, which was expected to see case management on Nov 24 being largely academic given the recent court decision.
Nonetheless, the research house said it continued to believe in the fundamental value of KJC.
It noted that if the proposed transaction materialised, it would have a certain RM3.30 per share in the pockets (netting a gain of 30 sen or 10%).
If not, it said it would still see that value materialising, but over the longer term as it remained imperative parent-company Can-One Bhd squeezed out further operational improvements (and essentially stronger earnings, thereby increasing its intrinsic value) from KJC for greater dividend income.
http://www.thestar.com.my
PRESS METAL BHD
By RHB Research Institute
Buy (maintained)
Target Price: RM5.75
RHB Research said it was positive on Press Metal Bhd’s plan to double its Samalaju, Sarawak, plant’s capacity, which would lift the company’s total smelting capacity to 760,000 tonnes per annum (tpa) that was about 1.5% of global primary aluminium consumption.
Press Metal’s 80%-owned subsidiary, Press Metal Bintulu SB, recently inked a term sheet with Syarikat Sesco to supply additional 500 megawatts (MW) of power to PMB to undertake its proposed Phase III expansion, which would double the present aluminium smelting capacity at its plant in Samalaju to 640,000 tpa.
RHB Research said it was excited over the news of the capacity expansion, as it was timely for Press Metal to ride on the bottoming out of aluminium prices and expand its presence in the aluminium industry.
The research house noted that Press Metal’s projected record earnings indicated that the company could fund this project using internally-generated funds together with bank borrowings, while maintaining its generous dividend payout policy of 30% to 50%.
RHB Research said the first drawdown of 330MW would start in end-2015, while the remaining 170MW would be drawn down from early-2018 onwards.
It imputed the new capacity into its financial model, which assumed contributions only from 2016 onwards together with some higher costs. Thus, it added, its financial year 2016 estimates rose by 27.7% to RM555mil.
MSM MALAYSIA HOLDINGS BHD
By Affin Hwang Capital
Reduce (maintained)
Target Price: RM4.90
MSM Malaysia Holdings Bhd’s nine-month period earnings were in line with its expectations, said Affin Hwang Capital.
It added that MSM Malaysia revenue for the period remained flat at RM1.6bil due to weaker sugar demand from both domestic and export markets.
Moving forward, Affin Hwang Capital believed that domestic sugar demand would continue to be weighed down by the abolition of the 34 sen per kg sugar subsidy coupled with the permission for refined sugar imports at zero duty for other local companies.
It said MSM Malaysia would only be re-rated if the Government ended the issuance of newly approved permits (APs) for sugar imports as this would help MSM Malaysia Holdings regain market share.
Affin Hwang Capital said with results coming in line within its expectations, it made no changes to its core assumptions.
It maintained “reduce” rating on MSM Malaysia shares as it remained unexcited on the group’s outlook, with the unchanged target price of RM4.90 pegged to an unchanged 12.5 times price-earnings on calendar year 2015 earnings per share.
KIAN JOO CAN FACTORY BHD
By PublicInvest Research
Trading Buy
Target Price: RM3.30
IN light of continued operational challenges, PublicInvest Research said it had lowered its financial year ending Dec 31, 2014 (FY14) to FY16 estimates between 12% and 14% to account for the one-off expense (FY14) and lower capacity utilisations, given weaker demand regionally.
It said with the share continuing to capture imagination amid sporadic trading interest, it saw opportunities particularly on market weaknesses, and retained its “trading buy” call with an unchanged target price of RM3.30.
PublicInvest said that since Nov 17, Kian Joo Can Factory Bhd’s (KJC) share price had risen 9.4% to a recent high of RM3.14 before settling at the current RM3 after the Kuala Lumpur High Court struck out Datuk Anthony See’s suit against the company, which essentially cleared the way for Aspire Insight to proceed with its proposed takeover, shareholder approval notwithstanding.
It added that there was still the slight issue of an injunction barring the calling of any shareholder meetings until the resolution of that earlier lawsuit, which was expected to see case management on Nov 24 being largely academic given the recent court decision.
Nonetheless, the research house said it continued to believe in the fundamental value of KJC.
It noted that if the proposed transaction materialised, it would have a certain RM3.30 per share in the pockets (netting a gain of 30 sen or 10%).
If not, it said it would still see that value materialising, but over the longer term as it remained imperative parent-company Can-One Bhd squeezed out further operational improvements (and essentially stronger earnings, thereby increasing its intrinsic value) from KJC for greater dividend income.
http://www.thestar.com.my
