Fong Siling: "Buy at Low... Down Turn... Go against the Norms..."
The outlook for flat product players in Malaysia is at best only stable due to the muted growth prospects for the local automotive, manufacturing and export sectors over the short term. However, we see a tactical angle in owning CSC by virtue of the possibility of it being taken private given its huge cash reserve of RM231.7m or 61sen/share as at 30 Jun 2012. Also lending credence to CSC’s privatisation story is the rumour of CSC’s parent company looking to acquire a stake in Lion Group’s steelmaking business, Megasteel. Indicative fair value for CSC is RM1.66 based on 0.8x book value of RM2.08, at a premium to its historical average of 0.7x to better reflect its strong balance sheet and possible privatisation by its parent company.
Reasons:
- EXECUTION OF SHARE SALE AND PURCHASE AGREEMENT AND SHAREHOLDERS' AGREEMENT IN ESCROW BY CSC STEEL HOLDINGS BERHAD (“CHB”) IN RESPECT OF PURCHASE OF 8,000,000 ORDINARY SHARES OF RM1.00 EACH REPRESENTING 20% OF THE ISSUED AND PAID-UP SHARE CAPITAL OF TATT GIAP STEEL CENTRE SDN. BHD. FROM TATT GIAP GROUP BERHAD. 9-11-2012
- Despite the Depressing Steel Market, its EPS increased!!!(http://www.bursamalaysia.com/market/listed-companies/company-announcements/1114437)
- Cash Rich! IT is time to Rock! by acquiring the smaller Steel maker!
- TA: Higher High Higher Low! Oss!!!
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