Pantech’s 9MFY13 results beat consensus but were in line with our estimates. The good showing was due mainly to strong demand from the O&G sector and a bigger contribution from Nautic Steel. We expect more earnings upside from Nautic Steel and Pantech’s stainless steel division. The board has proposed an interim single-tier dividend of 1.2 sen, which is in line with our expectation. The recent market correction opens a window of opportunity for investors to accumulate this stock. Maintain BUY, with FV unchanged at RM1.00.
Solid as usual. Pantech recorded a commendable 3QFY13 net profit of RM15.6m (+9.1% q-o-q, +51.2% y-o-y), which is well within our expectations. The company’s 9MFY13 cumulative earnings improved by 77.9%, mainly due to its investment in UK-based Nautic Steel bearing fruit. By segment, the 9MFY13 profit before tax (PBT) at its trading division improved by 55% y-o-y, buoyed by higher sales from the oil and gas (O&G) sector as well as a wider profit margin due to better cost control. Meanwhile, PBT at its manufacturing arm soared 221%, again mainly boosted by Nautic Steel’s contribution, as well as an improved product mix at its carbon steels manufacturing division.
Future still looking bright. As we highlighted in our previous report, “Brighter Prospects For 2013”, Pantech may continue to ride on the O&G boom with Nautic Steel continuing to contribute the bulk of profits while its trading division leverages on the latter’s brand name to expand the group’s business. As we expect its stainless steel division to potentially start contributing positively to its bottomline in the next financial year, we may see more upside in the company’s earnings.
Reiterate BUY, RM1.00 FV stays. We continue to like Pantech’s exposure in the booming O&G sector. We keep our BUY recommendation and FV unchanged at RM1.00, based on 9x FY14f EPS. We think that the recent correction in the share price presents an opportunity for investors to accumulate the stock.
Solid as usual. Pantech recorded a commendable 3QFY13 net profit of RM15.6m (+9.1% q-o-q, +51.2% y-o-y), which is well within our expectations. The company’s 9MFY13 cumulative earnings improved by 77.9%, mainly due to its investment in UK-based Nautic Steel bearing fruit. By segment, the 9MFY13 profit before tax (PBT) at its trading division improved by 55% y-o-y, buoyed by higher sales from the oil and gas (O&G) sector as well as a wider profit margin due to better cost control. Meanwhile, PBT at its manufacturing arm soared 221%, again mainly boosted by Nautic Steel’s contribution, as well as an improved product mix at its carbon steels manufacturing division.
Future still looking bright. As we highlighted in our previous report, “Brighter Prospects For 2013”, Pantech may continue to ride on the O&G boom with Nautic Steel continuing to contribute the bulk of profits while its trading division leverages on the latter’s brand name to expand the group’s business. As we expect its stainless steel division to potentially start contributing positively to its bottomline in the next financial year, we may see more upside in the company’s earnings.
Reiterate BUY, RM1.00 FV stays. We continue to like Pantech’s exposure in the booming O&G sector. We keep our BUY recommendation and FV unchanged at RM1.00, based on 9x FY14f EPS. We think that the recent correction in the share price presents an opportunity for investors to accumulate the stock.
Source: OSK
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