Pantech’s growth cast in steel

by **Cals** Tue 20 May 2014, 09:07

[size=32]Pantech’s growth cast in steel[/size]

[size=13]Posted on 20 May 2014 - 05:37am

[size=14]PETALING JAYA: Pantech Group Holdings Bhd stands a chance to bag RM1.8 billion worth of order over the next six years with about 15% of the RM90 billion capital expenditure allocated to Refinery and Petrochemical Integrated Development (Rapid) for pipes, valves and fittings (PVF).
This would translate to RM300 million in additional revenue for its trading division each year.
"We made a conservative assumption, i.e. assuming 5% (or RM4.5 billion) of the RM90 billion total is slated for local PVF players, and based on Pantech's local market share of 40%, the company should be able to bag RM1.8 billion worth of orders over the next six years," RHB Research Institute said in a report yesterday.
The RM300 million additional revenue is "almost double the sales of Pantech's trading division booked in FY14."
RHB Research also noted that there is great potential for Pantech to grow bigger in the overseas market via its UK unit, Nautic Steels (Holdings) Ltd (Nautic Steel), which has been the main growth driver for the company.
It said that Pantech is expanding to Brazil via Nautic Steels to provide copper nickel fittings to Petrobras.
In Indonesia it is also establishing a business relationship with Pertamina for Pantech's products like carbon steel fittings and induction long bends.
"This opens up the opportunity for the company to secure more orders from Indonesian oil companies like Pertamina, especially after the national oil company has approved its products," it said.
Meanwhile, the US government's tribunal to decide whether to impose stainless steel pipes anti-dumping duties against Malaysia, Thailand and Vietnam is expected to be known on July 1, 2014.
"Pantech ought to be able to ramp up stainless steel production to the US if the outcome is favourable. If not, there is a backup plan to increase production and sales in place," it said.
RHB Research said it remained bullish on Pantech's long-term outlook, and maintained a "buy" recommendation with RM1.25 future value.
"The latter is based on 12 times FY15 forecast price to earnings ratio (P/E), which is a discount to Malaysian small-mid cap oil and gas stocks' average of 15 times P/E," it said.[/size][/size]