CIMA - S&P strong BUY

BROKER CALL - Malaysia's CIMA at 'strong buy' on better earnings prospects - S&P
21/05/2007 15:11:00
KUALA LUMPUR (XFN-ASIA) - Standard & Poor's Equities Research said it has kept
its ''strong buy'' call on Cement Industries Of Malaysia (CIMA) with a target
price of 7.50 rgt on expectations of improved earnings ahead after the company's
first quarter results were ''in line'' with its expectations.
"We expect CIMA to report better earnings in the following quarters given
expectations of higher demand to follow through once the Ninth Malaysia Plan
(9MP) projects are implemented and the increase in production capacity by about
150,000 tons per annum from July 2007 to cater to expected stronger demand,'' it
said, noting that the current capacity is 3.4 mln tons
"The upgrade of its two cement plants in Perlis and Negri Sembilan will improve
production efficiency and reduce costs. Furthermore, as volume sales improve, we
expect the increase in pricing to flow through to the group's bottomline,'' S&P
said in a note to clients.
The research house said the risks to its recommendation and target price
''include slower demand arising from a longer-than-expected rollout of 9MP
projects, higher-than-expected raw material and energy costs, and an unexpected
round of cement price war.''
At 3.00 pm, CIMA was flat at 5.55 rgt.

Source: OSK wirenews