RHB Equity 360° - 8 October 2010 (Ann Joo, Dialog, Paramount, LPI Technical: Affin)
RHB Equity 360° - 8 October 2010 (Ann Joo, Dialog, Paramount, LPI Technical: Affin)
Top Story : Ann Joo – Mini blast furnace plant to start operation soon Market Perform
Visit Note
- AJR’s mini blast furnace is expected to commence its full operation by end-Nov/Dec 2010 after going
through cold commissioning currently.
- Management said that the average cost of its current inventory of scraps is below US$400/tonne and is
sufficient to last them till Feb 2011. So far, AJR has secured roughly 60k tonnes of iron fines domestically
and has imported about 50k tonnes of coking coal from Russian and Indian sources.
- Indications from AJR are pointing towards weak 3QFY12/10 results due to a lower sales volume. We
understand that sales volumes for Aug and Sep 2010 were the lowest so far this year, as both export and
domestic tonnages declined.
- We have tweaked our FY12/10-12 earning forecasts by -2.6%, -0.5%, and +2.2%. Indicative fair value for
AJR is revised slightly to RM3.14 (from RM3.16 previously) based on 10x revised FY12/11 fully-diluted
EPS of 31.4 sen. Maintain our Market Perform call.
Corporate Highlights
Paramount : Officially entered into SPA for the disposal of Jerneh Outperform
News Update
- Paramount announced that, together with Jerneh Asia, it had entered into a conditional share purchase
agreement with ACE INA for the disposal of their respective equity interest in Jerneh Insurance Bhd. The
total cash consideration amounted to RM654m – RM130.8m for Paramount (20%) and RM523.2m for
Jerneh Asia (80%).
- Tentatively, Paramount would realise a gain on disposal of about RM76.6m in 4QFY10, which is when the
deal is expected to be completed.
- While Paramount’s Board is still assessing the optimal utilisation of cash proceeds, we continue to believe
that the proceeds, which translate to RM1.08 cash per share, would give scope for a special dividend.
Assuming a 30 sen special dividend is paid, in addition to our FY10 DPS forecast of 29 sen, this would
translate to a generous yield of 13%.
- Normalised earnings remained unchanged, but a gain on disposal of RM76.6m is now included in our
headline net profit forecast.
- Fair value kept at RM5.80, based on an unchanged 35% discount to RNAV. Maintain Outperform.
Technical Highlights
Daily Technical Watch: Affin Holdings – The current uptrend appears sustainable …
- 10-day SMA: RM3.134
- 40-day SMA: RM3.09
- Support: IS = RM3.08 S1 = RM2.70 S2 = RM2.40
- Resistance: IR = RM3.45 R1 = RM3.80
Bulletin Board
Important Dates
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