CSC Steel shares up after firm undervalued, says Insider Asia

by **Cals** Fri 21 Nov 2014, 01:45

CSC Steel shares up after firm undervalued, says Insider Asia

KUALA LUMPUR: CSC Steel Holdings Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) shares rose as much as one sen or 0.9% yesterday, after Insider Asia Ltd said the firm was one of the most cash-rich steel companies listed on Bursa Malaysia.
CSC Steel closed at the day’s high of RM1.12, with 73,100 shares done. Its market capitalisation stood at RM416.04 million.
Insider Asia said CSC Steel’s cash position stood at RM237.2 million, with no borrowings as at end-June 2014. This is unusual for players in the steel industry, according to Insider Asia.
“That is equivalent to 64 sen per share or more than half of its current share price of RM1.12. This is a rarity for the steel industry, in which companies typically have high borrowings to fund huge capital expenditure,” Insider Asia said in a report.
The report was published in The Edge Financial Daily and theedgemarkets.com yesterday.
On valuations, Insider Asia said CSC Steel was trading at a significant discount of 44% to its book value of RM1.99 as outlook was dim for the steel segment. The dim outlook was due to restrictions on material import and the global steel glut.
CSC Steel posted a net loss of RM9.1 million in the first half ended June 30, 2014 versus a net profit of RM25.1 million a year earlier amid lower selling prices for its steel products.
Despite that, Insider Asia expects CSC to maintain its dividend payments.
“Positively, the company is likely to maintain dividends, which totalled at least 7 sen per share annually in the last five years, thanks to its strong balance sheet.
“That translates into higher than market average net yield of 6.3%. It has a dividend policy of distributing at least 50% of net profit,” said Insider Asia.

This article first appeared in The Edge Financial Daily, on November 20, 2014.