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Affin IB Research maintains Reduce on Lafarge, target price RM8.50

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Affin IB Research maintains Reduce on Lafarge, target price RM8.50 Empty Affin IB Research maintains Reduce on Lafarge, target price RM8.50

Post by Cals Thu 12 Sep 2013, 08:48

Affin IB Research maintains Reduce on Lafarge, target price RM8.50
Business & Markets 2013
Written by theedgemalaysia.com   
Thursday, 12 September 2013 08:41

KUALA LUMPUR (Sept 12):  Affin IB Research has maintained its Reduce rating on Lafarge Malaysia Bhd at RM9.49 with a target price of RM8.50 and said Lafarge was embarking on a capacity expansion program which will increase its cement capacity by 1.2 million tonne a year.
In a note Thursday, the research house said CONSTRUCTION [] was expected to start by 4Q13 and the new capacity is expected to come on stream by 1H15.
“Given that Lafarge has minimal borrowings and is currently in a net cash position, we are not concerned on its funding ability. In addition, with an annual free cash flow of circa RM500 million, we believe the group is able to maintain its high dividend payout ratio. All these positives however, are well reflected in its share price, which is currently trading above its 3-year historical PER average.
“As such maintain our Reduce recommendation, with an unchanged target price of RM8.50 (based on 18x CY14 PER),” it said.
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