not vested
Ann Joo's prospects may be overpricedQuick take: Ann Joo falls 5.3% as 4Q net profit plunges
Ann Joo to boost exports amid rising steel prices
Ann Joo expects steelier demand from China
KUALA LUMPUR: Ann Joo Resources Bhd's share price may be overdone despite the positive surprise in 4QFY20, which resulted in an unexpected turnaround in earnings.
In the fourth quarter of its financial year, Ann Joo posted a core net profit of RM17.3mil, which narrowed its full-year core net loss to RM54mil.
According to Kenanga Research, this was above its loss estimate of RM98mil and consensus loss estimate of RM103mil.
For the upcoming quarter, Kenanga said earnings are predicted to be stronger quarter-on-quarter due to higher steel price and lagging COGS effect from higher raw material prices.
The research house anticipates 1QFY21 to record a core net profit of RM40mil based on an average selling price of RM2,675 per tonne. However, Kenanga has kept its reservations for a bullish outlook.
"We think that the rise in global long steel prices may have reached its peak as supply tightness would ease once plants (which were idle) ramp up production. "Also, we think that long steel demand from China’s construction activities may gradually ease for the remainder of the year," it said.
Meanwhile, the recent divergence of flat steel prices and long steel prices could also mean a margin squeeze for long steel producers.
With steel manufacturers consuming the same pool of raw materials (i.e. iron ore, scrap, coke), the huge demand for flat steel could mean elevated (or higher) raw material costs in which long steel producers may not possess the capability to pass through, said Kenanga.
The research house raised its FY21 earnings forecast to core net profit of RM89mil and introduce an FY22 core net profit forecast of RM67mil.
It maintained its "underperform" call on the counter based on Monday's last trading price of RM2.23 a share.
Source: The Star
https://www.thestar.com.my/business/bus ... overpriced
It's all about "how much you made when you were right" & "how little you lost when you were wrong"