Lion Ind, S. Steel, Masteel to benefit from steel demand recovery (Edge)

OSK Investment Research has Buy calls on Lion Industries, Southern Steel and Masteel as sentiment shore ups following the expectations of a recovery of global steel demand, including that of the domestic market.
The research house said on July 24 that it thinks global steel demand, including that for the domestic market, is on the track of gradual recovery from the anaemic levels of the fourth quarter last year.
"We have high expectation of the rollout of projects under various stimulus packages that may spur steel millers' bottom-lines, especially in the upcoming year (CY10). Local steel mills may continue to export billets within the South-East Asia (SEA) market as China creates a vacuum after the imposition of 25% export tax," it said.
OSK Research said the Middle East, Australia, Pakistan, Bangladesh markets would also be a boon to Malaysia's billet exports if these economies improve.
"With that, we maintain our Overweight stance on the steel sector with focus on the long players. We advise investors to focus on the steel counters that still offer a decent valuation despite after the sharp run-up in their share prices over the past few months," it said..
OSK Research had a buy on Lion Industries with fair value of RM2.11, while other Buys were Southern Steel and Masteel, with 12-month target prices of RM2.12 and RM1.20 respectively.
It maintained its Trading Buy for Perwaja with a fair value of RM1.78. Despite upgrading our valuation parameter to 8x FY10 EPS and  +1 standard deviation of historical trading range.
The fair value for Ann Joo and Kinsteel of RM2.02 and 91 sen respectively only justified its Neutral recommendation.