Kinsteel Berhad : 2QFY12/10 Net Profit Falls 64% On Higher Input Costs And Weaker Sales Volumes - 30/08/2010

♦ Below expectations. 1H reported core net profit of RM30.7m came in below
expectations, accounting for only 37.8% of our and 32.8% of the concensus
full-year estimates. The variance against our forecast came largely from
lower-than-expected sales volume at the downstream operations.

Kinsteel Berhad : 2QFY12/10 Net Profit Falls 64% On Higher Input Costs And Weaker Sales Volumes - 30/08/2010

RHB Equity 360° - 30 August 2010 (Banks, Property, PetGas, Ta Ann, Kinsteel, Perwaja, KLCCP; Technical: CIMB, K.Euro)

Sector Update
- Jul loan growth moderated slightly to +11.9% yoy (Jun: +12.5% yoy). This was largely due to lower disbursements during the month, especially to the business segment. The household segment saw outstanding loans accelerate further to +13.2% yoy (vs. Jun: +12.9% yoy) with growth still broad-based.
- Jul loan applications rose further to RM58.4bn (+13.6% yoy; +9.9% mom), a new high for the banking system. Absolute loan approvals, meanwhile, moderated to RM28.9bn (+7.9% yoy) vs. RM33.3bn (+24.2% yoy) in Jun. Jul’s statistics suggest that demand for loans has not been dampened by the three hikes in the Overnight Policy Rate (OPR) by BNM thus far.

RHB Equity 360° - 30 August 2010 (Banks, Property, PetGas, Ta Ann, Kinsteel, Perwaja, KLCCP; Technical: CIM...

Mandarin Version : Kinsteel Berhad : It Could Lead A Retest Of RM0.97 Soon… - 05/08/2010

Kinstel closed firm at RM0.915 after recapturing the RM0.86 level earlier.
Kinstel fell off the previous uptrend in Jun 2009, and moved into a fresh sideways trend after it rebounded to above the RM0.86 level in Jul 2009. The stock has since fluctuated between RM0.86 and RM1.08 levels until May 2010, when it plunged to a low of RM0.77 on strong selling pressure. However, following a series of recovery attempt in the past few months, the stock finally regained the RM0.86 level on Monday. It closed Wednesday at RM0.915 with relatively firm buying support.

Mandarin Version : Kinsteel Berhad : It Could Lead A Retest Of RM0.97 Soon… - 05/08/2010

Kinsteel Berhad : It Could Lead A Retest Of RM0.97 Soon… - 05/08/2010

Kinstel closed firm at RM0.915 after recapturing the RM0.86 level earlier.

Kinstel fell off the previous uptrend in Jun 2009, and moved into a fresh sideways trend after it rebounded to above the RM0.86 level in Jul 2009. The stock has since fluctuated between RM0.86 and RM1.08 levels until May 2010, when it plunged to a low of RM0.77 on strong selling pressure. However, following a series of recovery attempt in the past few months, the stock finally regained the RM0.86 level on Monday. It closed Wednesday at RM0.915 with relatively firm buying support.

Kinsteel Berhad : It Could Lead A Retest Of RM0.97 Soon… - 05/08/2010

RHB Equity 360° - 5 August 2010 (Sime Darby, Market, Affin, AirAsia, KFC; Technical: TDC, Kinsteel)

Top Story : Sime Darby – Is the worst over? Not yet, in our view - Underperform
Visit Note
- In the first few weeks of his appointment, Sime Darby’s new CEO, Dato’ Mohd Bakke Salleh, has visited all the divisions, met with all the Heads of Departments, reviewed the Group’s long term 4-year plan and set out a strategic plan for all the divisions. On 24 Aug, the Board will meet to review the plan and the results of the forensic audit for the oil & gas division, after which the results for 4QFY10 will be released on 26 Aug. Any further provision required for the two uncompleted projects, (ie. MOQ and Bakun, which are 96% complete), would be done in the 4QFY10 results.

RHB Equity 360° - 5 August 2010 (Sime Darby, Market, Affin, AirAsia, KFC; Technical: TDC, Kinsteel)

RHB Equity 360° - (Steel, BAT; Technical: Faber)

Sector Update

Ann Joo Resources : Target PER raised from 7x to 9x Market - Perform (up from UP)
CSC Steel : Target PER raised from 7x to 9x - Outperform (up from MP)
Hiap Teck Venture : Target PER raised from 7x to 9x - Market Perform
Kinsteel : Target PER raised from 7x to 9x - Underperform
Perwaja : Target PER raised from 7x to 9x - Outperform
Sino Hua-An : Target PER raised from 7x to 9x - Underperform

- We believe prices of steel products will likely stage a rebound in 4Q, as: 1) steel consumption is seasonally stronger in 4Q; 2) concerns on overcapacity in the steel sector are likely to ease in the near term; and 3) spot price of iron ore fines (key steelmaking input for most large steel mills in the world) has bottomed.

RHB Equity 360° - 23 July 2010 (Steel, BAT; Technical: Faber)

Corporate Highlights...-26/05/2010

♦ Shifting Trends
Market update : Seeking Shelter In Domestic Plays

♦ Consumer Sector - Tobacco
Sector Update : Industry Changes From AFTA-Cept

♦ Building Materials
Sector Update : Steel Sub-sector Running Out of Steam

♦ Perwaja Holdings
Results Note : In Line, Expecting Weaker 2H

♦ Kinsteel
Results Note : In Line; Anticipating Weaker 2H

♦ Malaysian Pacific Industries
Results Note : FY11 Earnings Growth To Be Driven By X3-MLP

Corporate Highlights...-25/05/2010

Kinsteel Berhad : In Line; Anticipating Weaker 2H - 26/05/2010

In line. 1QFY12/10 reported core net profit of RM22.6m came in at 27.1% of our full-year consensus. However, we consider this within our expectation as we expect Kinsteel’s performance to weaken in 2H on the back of weaker restocking activities arising from weaker price outlook. As against the market expectations, the results came in below, accounting for only 22.0% of the full-year market consensus.

Kinsteel Berhad : In Line; Anticipating Weaker 2H-26/05/2010

RHB Equity 360° (Market, Consumer, Steel, Kencana, Sunway, MPI, HSL, KFC, Kinsteel, Perwaja, KNM; Technical: Genting Malaysia)-26/05/2010

Top Story : Shifting Trends – Seeking shelter in domestic plays
Market Update
♦ The FBM KLCI has erased all its gains and more during the first five months of 2010 since turning downwards on 13 May. We expect the market to remain volatile, with the risk on the downside.
♦ We have used historical valuations and market data in order to find possible fundamental support levels for the FBM KLCI:
1) Average one-year forward PER for FBM KLCI stocks since 2000 is estimated to be around 15x, and one standard deviation (SD) below the mean is estimated to be around 13.3x, which is coincidentally the same valuation at the next technical support of 1,154 for the FBM KLCI; and
2) Annual returns for the FBM KLCI over the last 32 years have averaged around 13% and 1SD below the mean would imply a pullback of around -17.6%. However, we note that a 1SD fall has only occurred seven times over the last 32 years. As it stands, the FBM KLCI has already fallen by 7.2% from the peak this year.
♦ Having painted a near-term bearish picture for the market, we highlight that the correction is driven more by external factors relating to fears over global macroeconomic conditions especially in the EU. We acknowledge that these concerns could result in some of our earnings forecasts coming under pressure.

Therefore, in our view, companies that have little or hedged exposure to overseas markets or imported costs are likely to be more resilient. These domestic plays include Maxis, TNB, PLUS, Allianz, AEON, KFC, KPJ and B-Toto.

RHB Equity 360°(Market, Consumer, Steel, Kencana, Sunway, MPI, HSL, KFC, Kinsteel, Perwaja, KNM;Technical: ...

Corporate Highlights - 10/03/2010

♦ Plantation : All For CPO Prices Crossing RM3,000/Tonne
♦ Perwaja Holdings : Better Quarters Ahead
♦ Kinsteel : Better Demand Ahead
♦ Gamuda : Served A Request For Arbitration Amounting To RM51.5m
♦ WCT : Served A Request For Arbitration Amounting To RM49.5m

Corporate Highlights - 10/03/2010

Kinsteel Berhad : Better Demand Ahead - 10/03/2010

Yet to see signs of a pick-up in demand for downstream steel products. YTD, Kinsteel has yet to see signs of a pick-up in demand for downstream steel products (such as steel bars and wire rod). However, Kinsteel feels that demand for downstream steel products will pick up in 2HFY12/10, underpinned by:
(1) The implementation of the remaining projects under the two stimulus packages;
(2) Increased property development activities; and
(3) More intense restocking activities by steel stockists ahead of the announcement of 10MP.

Kinsteel Berhad : Better Demand Ahead - 10/03/2010

RHB Equity 360° (Plantation, Perwaja, Kinsteel, KPJ, Gamuda, WCT; Technical: Faber) - 10/03/2010

Top Story : Plantation – All for CPO prices crossing RM3,000/tonne mark Overweight
Sector Update

• We came away from the first day of the 2010 POC (Palm and Lauric Oils Conference) with a “bullish vibe”,as three of the speakers who made price forecasts had relatively bullish expectations, projecting CPO prices to cross the RM3,000/tonne mark this year.
• We admit most of the price forecasts given today were slightly more bullish than our expectations. While we believe it is possible for CPO prices to touch or cross the RM3,000/tonne mark, based on the current bullish momentum, we do not discount the potential for prices to fall back down in the normal seasonal peak period in 2H2010, assuming normal weather conditions. We believe Dorab Mistry’s projection for stronger CPO prices in 2H2010 would only come through if the impact of El Nino on production is relatively severe. As such, we maintain our average CPO price assumptions of RM2,500/tonne for 2010 and RM2,700/tonne for 2011. YTD average spot prices of CPO of approximately RM2,550/tonne is in line with our projection, which assumes stronger CPO prices in the first half of the year versus the second half, following the CPO production cycle.
• No change to our earnings forecasts. We maintain our Overweight stance on the sector as a whole and reiterate our recommendation for investors to stick with the more liquid stocks given the anticipated volatile market conditions in 2010. We maintain our Outperform recommendations on IOIC, KLK, Sime Darby and CBIP, and Underperform recommendation on Genting Plantations and IJMP.

RHB Equity 360° (Plantation, Perwaja, Kinsteel, KPJ, Gamuda, WCT; Technical: Faber) - 10/03/2010

Mandarin Version : Kinsteel Berhad : Successful Rebound Will Retest RM1.08 and RM1.18…-01/03/2010

Kinstel seems to have found its support base near RM0.97. After a successful rally from Apr to Jun 2009, the share price of Kinstel started to trend sideways. Although it managed to reach RM1.10 in Aug 2009, it has largely ranged bound between RM0.86 and RM1.08 from Jun 2009 to Jan 2010. It removed the RM1.08 level and hit RM1.18 in Jan 2010, but suffered a steep correction thereafter. But with a close near RM0.995 in recent trading, the stock seems to have found its support base near RM0.97 for a potential technical rebound in the near term.

Mandarin Version : Kinsteel Berhad : A Successful Rebound Will Retest RM1.08 and RM1.18…

Kinsteel Berhad: 4QFY12/09 Dragged Down By Perwaja; Bumper Profit Ahead - 01/03/2010

Below expectations. Stripping off EI gains of RM32m, Kinsteel reported FY12/09 net loss of RM23.7m that missed our and market expectations of a net profit of RM4.1-4.3m. We believe the variance against our forecast came mainly from the lower-than-expected contribution from 37.4%-owned .Perwaja on the back of lower-than-expected steel billet selling prices.

Kinsteel Berhad: 4QFY12/09 Dragged Down By Perwaja; Bumper Profit Ahead - 01/03/2010