Hot Stocks Steel shares rise suddenly after TA’s view

by **Cals** Tue 09 Apr 2013, 17:26

Hot Stocks Steel shares rise suddenly after TA’s view
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Tuesday, 09 April 2013 16:22

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KUALA LUMPUR (Apr 9): Steel counters, charged by TA Securities’ latest valuation of the sector, saw renewed interest as investors seek to pick up shares thought to have been undervalued, said analyst and dealer.

An analyst told theedgemalaysia.com that the sudden spike in steel counters comes after TA told minority shareholders on Monday Lion Corp Bhd’s proposed disposal price of RM1.40 per Lion Industries Corp Bhd’s (LICB) share was “not fair”.

The disposal to Lion’s key shareholder Tan Sri William Cheng and Dynamic Horizon Holdings Ltd was also seen to be low compared to the industry’s price to book value (PBV).

The independent adviser opined the disposal price implied a PBV ratio of 0.31 times LICB’s net assets as at mid-2012.

The RM1.40 proposed disposal price thus represented a discount of 40.38% over the average PBV of 0.52 times of comparable companies.

At 3:16 pm today, Lion Industries Corp Bhd (LICB) catapulted to the fourth most active as its shares rose by 12.5 sen or a whopping 13.66% to RM1.04. It also had gone as high as RM1.10 earlier, with 14.99 million shares traded.

At the same time, KINSTEEL BHD []’s counter was trading at 34.5 sen, up four sen or 13.11%. With an intraday high of 36 sen, the counter saw 13.57 million shares traded.

Perwaja Holdings Bhd, linked to Kinsteel, also rose four sen or 10% to 44 sen, with a total of 2.01 million shares traded.

Malaysia Steel Works Bhd (Masteel) was up by 2.5 sen to 84.5 sen, with trades of 1.57 million.

“TA’s views have become the guide for steel counters. This is why LICB was up and other counters follow suit,” said a senior dealer.

“Most of the steel counters were trading at a steep discount to their PBV prior to the independent circular. As TA said that the proposed disposal price was ‘not fair’, we are seeing investors doing a re-evaluation of the counters to follow the benchmark of 0.52 times PBV,” said the analyst.

According to TA, Perwaja was trading at 0.38 times PBV as at December 6, 2012 and Kinsteel was trading at 0.5 times PBV, while Masteel was trading at 0.37 times PBV.

SOUTHERN STEEL BHD [] and ANN JOO RESOURCES BHD [] were the only two companies which traded above the average 0.52 times PBV, at 0.72 times and 0.64 times respectively.