RHB Research reduces Southern Steel FY13-14 net profit forecast by 16-23 pct

Business & Markets 2013
Written by Bernama
Tuesday, 30 April 2013 15:19
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KUALA LUMPUR (April 30): RHB Research Institute Sdn Bhd has
reduced the net profit forecast for SOUTHERN STEEL BHD [] in the
current financial
ending June 30, 2013 and for the 2014 financial year between 16 and
23 per cent due to lower sales volume assumptions.
It said the company's nine months net profit of RM18 million only
reached between 34 and 48 per cent of its full-year consensus forecast,
respectively.
"We believe the key variance against our forecast came mainly from
lower-than-expected sales volume," it said in a note today.
Southern Steel returned to the black with a net profit of RM18 million
compared with a net loss of RM7.5 million, a quarter ago, mainly driven
by improved selling price of wire rods after the introduction of
anti-dumping
measures by the government since February.
On outlook, RHB Research believed the road to recovery for the global
steel sector would be long and winding against a backdrop of a highly
uncertain global
economic outlook.
It said on-going mega projects like the Klang Valley Mass Rail Transit,
Light Rail Transit extension line, KLIA2, Warisan Merdeka Tower and
Tun Razak Exchange would continue to stimulate demand for steel in the local
market.
RHB Research is maintaining a 'neutral' call on Southern Steel at an unchanged fair value of RM1.14.