OSK Research is maintaining a Buy on Hock Seng Lee with a target price of RM2.32.
It said on Friday, Jan 14 HSL’s 4Q results will be announced sometime in February and management is confident of achieving about RM70 million in earnings for the full year FY10, which is pretty much in line with its forecast of RM72.2 million.
“We make no changes to our earnings estimate, which implies an FY10-12 CAGR of 21.3%. Our RM2.32 TP continues to be based on 14.5x FY11 earnings, which is 2 standard deviations above its historical mean PER.
“We argue that the stock’s premium valuations are warranted given: (i) its uninterrupted earnings growth for 8 consecutive years at a 25.1% CAGR, (ii) above-industry profit margins, (iii) net cash position, and (vi) expertise in marine engineering,” OSK Research said.
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