KUALA LUMPUR (Jan 13): RHB Research Institute estimates CSC Steel is likely to record a net loss of RM10 million to RM15 million in the upcoming 4Q11 results due to narrowing margins as well as a write-down in inventory value.
It said on Friday that CSC Steel has a huge cash reserve of RM213.5 million, or about 56 sen a share (as at Sept 30, 2011).
At RM1.41, it would only cost the controlling shareholder about RM295 million to buy out all minority shareholders, and this amount could be substantially funded with CSC Steel’s cash reserve.
“We are cutting FY10-12 net profit forecasts by 2%-39% largely to reflect the potential write-down in inventory value in FY11 as well as narrowing spread between HRC and CRC.
“We are also rationalising our valuation method to book value. Fair value raised to RM1.66 (from 90 sen) based on 0.8 times book value, at a premium to its historical average of 0.7 times. Upgrade to Trading Buy (from underperform),” it said.
It said on Friday that CSC Steel has a huge cash reserve of RM213.5 million, or about 56 sen a share (as at Sept 30, 2011).
At RM1.41, it would only cost the controlling shareholder about RM295 million to buy out all minority shareholders, and this amount could be substantially funded with CSC Steel’s cash reserve.
“We are cutting FY10-12 net profit forecasts by 2%-39% largely to reflect the potential write-down in inventory value in FY11 as well as narrowing spread between HRC and CRC.
“We are also rationalising our valuation method to book value. Fair value raised to RM1.66 (from 90 sen) based on 0.8 times book value, at a premium to its historical average of 0.7 times. Upgrade to Trading Buy (from underperform),” it said.
