Tuesday, June 2, 2009

CIMB bullish on JAKS, says share may worth up to RM1.46 (ext:Edge)
CIMB RESEARCH says that JAKS Resources Bhd’s order book could swell tenfold if it manages to win a contract to supply pipes for the Pahang-Selangor interstate water transfer project. JAKS Resources, which is Malaysia’s largest mild steel (MS) pipe producer, is a member of one of the four consortiums shortlisted for the supply of water pipes for the upstream portion of the interstate water transfer scheme. The project, which has a value of around RM800 million, could start in March next year.
“We estimate its net profit to surge from RM6 million in FY09 to RM40.3 million in FY10 largely due to the inter-state water transfer and Langat 2. JAKS Resources’ earnings could hit an all-time high of RM81.1 million in FY2011,” noted the research house. It added that JAKS Resources’ entry into Vietnam’s power sector at this juncture would be a good move as the company can lock in cheaper coal supply and a lucrative tariff. The coal-fired power plant will be the largest in Vietnam.
CIMB also noted that JAKS Resources’ shares could be worth up to RM1.46. “Applying discounts of 0%-20% to our CY10 13.5 times target market P/E (price earnings), we arrive at a lower range value of RM1.17/share and an upper range of RM1.46/share. This implies 46%-82% share price upside.”
Posted by Smartbiz at 3:34 PM