Tuesday, November 8, 2011

RHB Research has underperform on CSC Steel, FV 90c

KUALA LUMPUR (Nov 8): RHB Research Institute has an underperform call on CSC Steel after its nine-month FY2011 net profit came in below expectations.

'We believe the variance vs. our forecast largely came from worse-than-expected margin contraction in 3QFY11 as a result of lower selling prices of its steel products,' it said on Tuesday.

RHB Research said the 3QFY11 net profit plunged 80.8% mainly due lower selling prices amid weak demand for its steel products.

'We are cutting our FY11-13 net profit forecasts by 8% to 32% largely to reflect lower selling prices of its steel products. Indicative fair value is reduced to 90 sen (from 98 sen) based on 7.0 times revised FY12 EPS of 12.9 sen,' it said.

The research house said the saving grace for CSC Steel is its strong balance sheet with net cash position of RM213.5 million, translating to 56 sen a share.

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