Pantech Group Holdings Bhd
(Oct 16, RM0.945)
Maintain buy with target price (TP) of RM1.25: Pantech is scheduled to announce its first half of financial year 2015 (1HFY15) results next week and we are of the view that the numbers — which could be flattish on a quarter-on-quarter basis — may dip in a year-on-year comparison. We advise investors to look beyond its FY15, as the long-anticipated Refinery and Petrochemical Integrated Development (RAPID) projects should propel the company’s earnings to the next level. We maintain our earnings forecast, as we expect the numbers to pick up more strongly in 2HFY15.
The RAPID project is picking up pace, although its execution is slower than expected. We believe its momentum will accelerate, and the initial jobs are in progress. We learnt Pantech has recently installed two machines in its UK Nautic Steel plant to improve production efficiency. We expect more margin enhancement from its manufacturing division. As we are still upbeat on the company’s long-term outlook, we maintain our “buy” call and TP of RM1.25, based on 12 times FY15F price-earnings. We believe Pantech will maintain its dividend payout of at least 40% (no dividend policy), which translates to a dividend yield of 4% at its current level. — RHB Research, Oct 16
This article first appeared in The Edge Financial Daily, on October 17, 2014.