Posted on 21 Nov 2022
Hiap Teck Venture Bhd’s medium-term prospects are increasingly positive as indicators have emerged that the steel sector may soon be out of the woods.
Among these indicators are the low inventory levels of iron ore and steel in China, which will likely support near-term restocking activities; and the relatively low crude steel output in the country.
According to Hong Leong Investment Bank (HLIB) Research, the property market recovery in the world’s second-largest economy could potentially boost demand for steel.
While that may take time to materialise as China is entering the winter season, which typically slows down construction activities and hence results in slower demand for steel, the brokerage said the fact that the worst may soon be over for the steel sector is reason enough to be optimistic about the outlook for Hiap Teck.
HLIB Research upgraded its rating for the company to “buy” from “hold”, with a higher target price of 33 sen, compared to 24 sen previously.
The improving prospects of Hiap Teck motivated HLIB Research to roll forward the valuation base to the financial year ending July 31, 2024 (FY24), from FY23.
So, the revised target price was valued at seven times estimated FY24 earnings.
Source:The Star
