KUALA LUMPUR: KINSTEEL BHD [] shares rose on Monday, Aug after OSK Research said that the time had come to rerate the stock as its income stream was expected to improve via upstream operation in the form of 37% owned Perwaja.
At 9.45am, Kinsteel was up three sen to 72.5 sen with 810,000 shares traded.
OSK Research in a note Aug 1 said that aside from the progress towards the commissioning of Perwaja's concentration and pelletisation plant in 1HFY12 which may potentially contribute to savings of USD50 per tonne of iron ore pellet, it was also excited over the Terengganu state government's readiness to consent to Perwaja's application to mine iron ore in Bukit Besi, Terengganu.
As iron ore fine currently costs over USD160 per tonne free-on-board (FOB) vs the local cost of less than USD50 a tonne, the concession would certainly be lucrative, said the research house.
'Our back-of-envelope calculation shows that any such concession may translate into a DCF of 89 sen per Kinsteel share based on its 37% stake.
'Meanwhile, we are incorporating 10% of the iron ore mining DCF to our original fair value pending official award of the concession, from which we arrive at a new FV of 82 sen, and an upgrade on our rating on Kinsteel to Trading BUY,' it said.
''
At 9.45am, Kinsteel was up three sen to 72.5 sen with 810,000 shares traded.
OSK Research in a note Aug 1 said that aside from the progress towards the commissioning of Perwaja's concentration and pelletisation plant in 1HFY12 which may potentially contribute to savings of USD50 per tonne of iron ore pellet, it was also excited over the Terengganu state government's readiness to consent to Perwaja's application to mine iron ore in Bukit Besi, Terengganu.
As iron ore fine currently costs over USD160 per tonne free-on-board (FOB) vs the local cost of less than USD50 a tonne, the concession would certainly be lucrative, said the research house.
'Our back-of-envelope calculation shows that any such concession may translate into a DCF of 89 sen per Kinsteel share based on its 37% stake.
'Meanwhile, we are incorporating 10% of the iron ore mining DCF to our original fair value pending official award of the concession, from which we arrive at a new FV of 82 sen, and an upgrade on our rating on Kinsteel to Trading BUY,' it said.
''
No comments:
Post a Comment