MORNING CALL: 28/11/23

TA Securities expects CSC Steel’s sales volume to pick up in the upcoming quarters

Transcript

00:00 CSC Steel Holdings is out struck in focus this Tuesday morning.

00:06 TA Securities upping its recommendation on the stock to buy from hold,

00:10 with a target price of RM1.38.

00:13 The counter closed yesterday at RM1.24.

00:17 In its note, TA said,

00:18 "Excluding the provision for the inventories written down,

00:21 CSC's nine-month FY23 core profit of RM39.4 million

00:26 came in within expectations,

00:28 accounting for 70.1% of its full-year estimate.

00:32 Year-on-year, the figure is 15.5% higher,

00:35 although revenue was 11.6% lower,

00:38 largely due to lower average selling prices."

00:41 Overall, despite the global steel prices remaining lackluster,

00:45 TA expects sales volume to pick up in the upcoming quarters.

00:49 This is in tandem with the increasing domestic demand

00:52 from the construction and industrial sectors.

00:54 Meanwhile, MITI's two-year moratorium for the industry

00:57 will help to resolve some of the long-standing issues,

01:00 such as overcapacity and steel dumping.

01:03 The Research House updates target PE multiple for CSC

01:06 from eight times to nine times,

01:08 as it is more optimistic about the industry's long-term outlook.

01:12 Now what does the ST say?

01:14 According to the latest Bloomberg data, it's just TA,

01:17 so that's one buy call, target price RM1.38.

01:21 CSC last closed at RM1.24,

01:24 so that implies a potential return of about 11%.

01:27 ♪