ECM Rates Lion Industries Strong Buy,Targets MYR2.16

ECM Libra rates Lion Industries (4235.KU) a Strong Buy with a target of MYR2.16 noting the growth in its assets during the past five years; over the period, Lion Industries' net asset value per share has risen to MYR4.54 from MYR2.88, it says. 

The cyclical nature of the steel industry translates into supernormal profits during peaks and supernormal losses during troughs; the house says Lion Industries still racks up an earnings per share of MYR1.77 on a net basis after adding up the losses and profits since FY06 with two troughs and two peaks.

 "Lion Industries stands to benefit as Malaysia's largest integrated steel manufacturer," says ECM Libra, adding that the stock may trade closer to its RNAV/share of MYR4.31 in the absence of risks such as provision of financial assistance to related parties. The stock is currently flat at MYR1.34.