How To Spot A Good Trade Part 2

There is earnings recovery, and then there is distinctive earnings recovery. There are still a number of issues which troubles the stock but overall its a concerted recovery over the past 18 months. Time for a major rerating. Its not a business I particularly like or fancy, just a trade in rerating.

A good indication of firmer footing, the company also declare a 2 sen dividend after paying nothing for sometime.

I only manage to get a report by RHB Research. This was dated February 2010, and their estimates have been surpassed, plus they had a target price of RM1.80. I am sure they would be revising that a bit higher now.

RHB Research:
Outlook. We remain positive on LFIB’s earnings outlook and on the back of:
1. The change in the National Automotive Policy in end-Oct that introduced incentives for local autoparts manufacturers, which is positive for SCB’s motorcycle parts and accessories business; and
2. Our projected total industry vehicle (TIV) sales volume growth of 8.5% in 2010, which will boost sales volumes at LFIB’s tyre manufacturing division;
and
3. The implementation of the two stimulus packages that will boost demand for building materials.

Earnings forecasts. We are raising our FY06/10-12 net profit forecasts by 43.4-51.5% to RM56.3m, RM62.0m and RM65.3m respectively, to reflect higher sales volume at the tyre manufacturing division.

♦ Investment case. Following the upward revision in our net profit forecasts, indicative fair value is raised by 43.9% to RM1.80 based on 7x revised CY2010 core EPS of 25.7 sen. Upgraded from underperform to Outperform as valuation has become attractive.

8486 LIONFIB, LION FOREST INDUSTRIES BHD

Quarterly rpt on consolidated results for the financial period ended 30/6/2010 23 Aug 2010, 18:33 Report Status UnAudited Quarter 4th Quarter For Financial Year End 30/06/2010 Individual Period Cumulative Period Current Year Quarter Precending Year Corresponding Quarter Current Year to Date Precending Year Corresponding Period 30/06/2010 30/06/2009 30/06/2010 30/06/2009 RM'000 RM'000 RM'000 RM'000 Revenue 241,648 190,782 873,619 598,037 Profit/(Loss) before Tax 56,145 17,574 183,667 170,351 Profit/(Loss) after Tax and Minority Interest 46,318 12,435 150,817 167,495 Net Profit/(Loss) for the Period 47,976 13,087 163,745 160,885 Basic Earnings/(Loss) per Shares(sen) 20.03 5.40 65.38 75.38 Dividend per Share(sen) 2.00 0.00 2.00 0.00 As At the End of Current Quarter As At the Preceding Financial Year End NTA per Share(RM) 4.6800 4.0900

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