Monday, September 10, 2012

Steel: Downgrade to Underweight- Sliding Into Depression

  • A bleak outlook. Despite our expectation of stronger domestic demand, Malaysian steel-makers are facing a more challenging outlook in 2H12-2013: (i) domestic and export steel ASPs are under pressure to track closer to China's depressed ASPs, which will squeeze margins; (ii) dumping activities from China will result in lower sales volumes. We lowered AJR and Kinsteel from BUY to HOLD during the 2Q12 results season and now further downgrade AJR to SELL with a lower MYR1.30 TP (-19%); Kinsteel remains a HOLD with an unchanged MYR0.40 TP.
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Source: Maybank Research - 10 Sept 2012

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