Upgrade to Buy. We are turning positive on AJR due to: (i) pent-up local
steel demand from 2H12 onwards; (ii) a potential long-term high-margin
vendor contract from Petronas; (iii) stronger earnings in 2H12 upon the
completion of the fine-tuning of its mini-blast furnace (BF) offsetting
continued expected losses in the upcoming 1Q12 results. We maintain our
forecasts for now but our TP is raised to MYR2.20 (from MYR1.30), as we
attach a mid-cycle 1.0x P/BV target (vs. 0.6x trough).
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Source: Maybank Research - 9 May 2012
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