Source: The Edge
Hong Leong IB Research said Malaysia Steel Works (KL) Bhd (Masteel) is involved in the manufacturing of steel billets and steel bars.
It also has an associate company which manufactures radioisotopes for the imaging of cancer cells for hospitals in Malaysia, said the research house.
In a trading idea note today, HLIB Research said that for the upcoming 3Q17 results, market is anticipating steel rebars companies such as Masteel to perform better, taking cue from strong local steel rebars and expanding margins, as rebar prices hit multi-year high at RM2,700/tonne levels in September before retracing to RM2,450 currently while overall raw material prices remain muted.
It said that overall, steel prices are likely to remain strong, buoyed by gradual roll-outs of mega infrastructure projects, Malaysia’s government safeguard duties coupled with stable China rebar prices.
“At RM1.24, Masteel is trading at 0.66x P/BV (based on enlarged shares) and 8.3x FY17 P/E, which are 55% and 16% below its peers, respectively.
“We see limited downside risks amid undemanding valuations and early signs of bottoming up in technical indicators.
“A successful downtrend line breakout above RM1.29 will spur prices higher towards RM1.35-1.47 zones.
“Key supports are situated near RM1.16-1.19. Cut loss at RM1.15,” it said.