As we projected in our results preview, CSC Steel’s 3Q numbers were pretty impressive, making up about 84.8% of our full-year projection. Y-o-y, net profit jumped 312.3%, mainly attributed to the lag impact of lower HRC prices and higher prices of its finished goods, namely CRC, GI and PPGI. We maintain a Trading Buy at an unchanged TP of RM1.68 despite being cautious over CSC Steel’s 4Q numbers as we reckon investors should focus on the company’s potential recovery in FY10.
Maintain Trading Buy. While CSC Steel’s 3QFY09 performance is impressive, we are keeping our FY09 and FY10 forecasts as we remain cautious over its 4Q numbers whereby the lagging impact of higher HRC prices may bite into margins. Nonetheless, we think investors should focus on the potential recovery in FY10. Hence, we recommend a Trading Buy on this stock with a TP of RM1.68, based on 6x FY10 EPS. That aside, we are impressed by the company’s strong balance sheet and its net cash held of RM239.8m as at 30 Sept 2009. The company also paid off its long-term borrowings during the quarter.
