OPERATING conditions for CSC Steel Holdings (RM1.04) have brightened considerably over the past couple of months. Its stronger earnings results for the second quarter of 2009 (2Q09) underpinned the view that the worst is over for the company and the outlook going forward is upbeat.
CSC's shares appear fairly attractively priced for the cyclical recovery. The stock is trading at roughly 9.9 and 8 times our estimated earnings for 2009-2010. That's far lower than the broader market's average valuation — estimated at about 16-17 times.
CSC's shares appear fairly attractively priced for the cyclical recovery. The stock is trading at roughly 9.9 and 8 times our estimated earnings for 2009-2010. That's far lower than the broader market's average valuation — estimated at about 16-17 times.
The downside from hereon certainly appears limited. CSC has a strong balance sheet with net cash of RM250.7 million at end-June 2009 or a significant 67 sen per share. Its shares are trading 44% below net tangible assets of RM1.88 per share.
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