KUALA LUMPUR (Oct 16): Hong Leong IB Research has initiated coverage on Ann Joo Resources at RM1.65 with a “Hold’ rating and target price of RM1.82 and said Ann Joo is the largest steel counter listed on Bursa and is often regarded as one of the lowest cost producers of long products in the steel industry.

In a note today, the research house said while Ann Joo has a defensive cost structure and is a beneficiary of China’s local supply cuts coupled with narrowing domestic-import price gap, this is offset by the weak domestic construction outlook post GE14 and the risk of China expanding its overseas production.

“We initiate coverage on Ann Joo with a Hold recommendation and target price of RM1.82 based on 8x P/E multiple pegged to FY19 EPS,” it said.