Key investor may cut stake in Ann Joo

OSK Research Sdn Bhd expects the Lim family, the major stakeholder of Ann Joo Resources Bhd, to pare down its stake in the company although they are not ready to give up the controlling stake currently.

OSK said taking the cue from moves by some overseas steel mills to snap up small stakes in their respective customers to ensure long-term customer relationship, Ann Joo may see its supplier acquire up to 15 per cent stake in the company.

"We think the market may still get excited with any potential strategic stake sale, especially since the current market is short on trading ideas," it said in a note today.

Ann Joo, a key trader of steel plates mainly imported from Japan, posted a lower net profit of RM32.7 million in the second quarter due to scrap costs catching up, despite the consolidation in average selling prices of its steel products during the period.

OSK said it expected a modest second half for the company with signs that the implementation of various 'mega' projects by the government remained slow, together with the recent power tariff increase that would further pressure the already thin margins.

It has maintained its 'trading buy' call on the company at a higher fair value of RM3.05 from RM2.89 previously. -- Bernama





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