Below expectations. 9M11 core net profit of RM94m (-18% YoY) was 56% of our full-year forecast and 67% of consensus. We are turning negative on AJR: (i) sequential quarterly earnings is likely to slow on weaker export sales and margins; and (ii) we believe the global steel market is at the beginning of a contraction mode given the negative global economic outlook. We cut our 2011-13 EPS forecasts by 27-59% and downgrade Ann Joo to Sell. TP is now RM1.30 (from RM3.30) as we apply trough-cycle P/BV valuation of 0.6x (from 11x 2012 PER).

Maybank research (25 November 2011)

Click here for full report