RHBInvest Research

Sunday, June 5, 2011

Top Story : DRB-HICOM

Company Update
The Group is well positioned to post strong earnings growth across all three of its business divisions in the coming years.
The Group is making a significant effort to improve financial transparency and implementing investor outreach programmes that will help to improve the market’s understanding of DRB’s businesses.
We reiterate our Outperform call on DRB on the back of undemanding PER valuations and solid FY11-14 EPS CAGR of 21.1%. Our sum-of-parts derived fair value is RM3.05.

Sector Call

Building Materials:

The prospects of the cement sector will be good for the next two years. However, we are cautious about the sector’s prospects in 2013, as industry capacity will likely increase by as much as 25% due to the expansion by YTL Cement, CIMA and Hume Cement.
No changes to our forecasts. We believe Lafarge is fully-valued, and continue to like YTL Cement as a cheaper entry and proxy to the cement sub-sector. Given the rich valuation attached to Lafarge, it will be the most at risk when earnings subsequently decline in 2013 due to overcapacity in the industry.

Corporate Highlights


News Update
Disposes Of Shanghai Warehouse Land For RM30m Cash
Fair value is raised from RM1.55 to RM1.70, having imputed the disposal proceeds that reduce ILB’s net debt. Maintain Outperform.


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