Ann Joo Resources update - Green shoots to pop up in 2H (CIMB)

Production is back to normal after a plant shutdown for upgrading works. Ann Joo is also seeing a pick-up in export orders, mainly from the Middle East and Southeast Asia. As the outlook for the steel sector has turned positive with the rollout of stimulus packages across the region, we are lowering our discount to our revised target market P/E of 13.5x from 50% to 20%, giving us a revised target price of RM2.10 (RM1.20 previously). FY10-11 earnings are unchanged but we are chopping FY09 by 22% for the slowdown in 1H and weaker steel prices. The stock remains a NEUTRAL as the share price has almost doubled since end-Mar and largely reflects the positives. More newsflow on the rollout of infrastructure projects or a recovery of property markets in the region would be needed to drive a further re-rating of the stock.