Ann Joo Resources: Downgrade to Hold - Clouded By Soft Global Steel Outlook

• Below expectations. AJR returned to the black with a 2Q12 core net profit of MYR14m (1Q12: MYR15m core net loss).
• However, margin recovery has been weaker than expected and the cumulative 6M12 core net loss of MYR2m was significantly below our and street estimates. We cut our FY12-14 EPS forecasts by 30-35% on lower margin assumptions.
• We also downgrade AJR to HOLD (from BUY) with a lower TP of MYR1.60 (from MYR2.20) on a mid-cycle P/BV of 0.7x (1x P/BV previously). Investors should stay sidelined until a better
• global steel market outlook emerges.

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Source: Maybank Research - 30 August 2012