Lion Industries Corp Bhd BUY
Price target RM3.00
Share price at 27 Aug RM1.98
Investment summary
Full-year FY08 earnings were 80-90% ahead of forecast and consensus, re-affirming our BUY rating on the stock. We continue to like LionInd because of: (1) A sharp 34% discount to its SOTP, based on market prices of its LionDiv, Parkson and LionForest stakes. (2) Sub-market FY09 PE of 3x, even when factoring a sharp drop-off in steel prices from their Jun08 peaks. We are positive on Malaysia’s steel sector due to: (1) a rebound in domestic demand from the construction sector; (2) Chinese steel export curbs, which create a benign pricing environment for Malaysian producers.
An amazing <1x PE
Share price is down -36% YTD, trading at 3x FY09E PE. Current mkt value of Parkson/LionDiv/LionForest stakes is RM1.26/share, and investors get LionInd’s steel business at <1x FY09E PE.
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Friday 29 August 2008
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