May 26, 2010

KINSTEEL : Buy On Dip by Maybank IB

75px-Siemens_Martin_Ofen_Brandenburg[1] Kinsteel Stock Code 5060 RM0.78: Buy TP of RM1.23

- Cheaply-priced positive fundamentals
Buy on dips.
After adjusting for seasonality, 1Q10 results were within expectations, at 20% of our full-year forecast and 22% of consensus. The share price fell 23% within 3 weeks on a broad-based market sell-
down. We view this as buying opportunity given that: (i) domestic pump-priming has yet to fully play out in terms of order-flow; and (ii) long steel remains practically the only sector on Bursa to have a positive fundamental story, yet with cheap valuations (Kinsteel: 5x 2011 FD PER). Maintain Buy, with a TP of RM1.23 (8x 2011 FD PER).

by Maybank Investment Bank

The Group manufactures and trades in a complete range of long steel products used in the manufacturing, construction and infrastructure industries.