The murky outlook in the next two quarters also suggests that investors should avoid cyclical steel stocks. However, as the recent selldown may have fully priced in the negative developments, we are mostly NEUTRAL on the sector and companies under our universe except Lion Industries, on which we have a Trading BUY.
If you are going to invest in Stell Stocks now, remember the following
- Average selling prices (ASP) of steel products are diving after peaking in April 2010.
- Energy subsidy cut just around the corner.
Taking the above factor into consideration, below are the target price for steel sector.
| Stock | Price (RM) | Target (RM) | Rating |
|---|---|---|---|
| Ann Joo | 2.35 | 2.27 | Neutral |
| Kinsteel | 0.84 | 0.86 | Neutral |
| Lion Ind | 1.56 | 2.01 | Buy |
| Masteel | 0.9 | 1 | Neutral |
| Perwaja | 1.17 | 1.06 | Neutral |
| Ssteel | 1.86 | 1.94 | Neutral |
Source : OSK Research