KUALA LUMPUR: Ann Joo Resources Bhd
might not find a way to benefit from the strong margins it had seen in 2021 because the uptrend in metal costs has ended.
Following the metal producer’s latest FY21 earnings annnouncement, Kenanga Research stated in a report that Ann Joo’s earnings are anticipated to come off steeply due to decrease metal common promoting value (ASP) and rising prices.
In 4QFY21, Ann Joo’s core web revenue of RM16.5mil introduced full-year core web revenue to RM243mil.
The efficiency was beneath Kenanga’s and consensus full-year estimates at 93% and 79% respectively.
“The underperformance is basically due to the steep fall in Chinese metal costs (from c.RM3800/t to RM3100/t) throughout the quarter (attributable to the property debt disaster) which led Ann Joo to write down RM34.5mil price of inventories,” stated Kenanga.
The analysis agency stated the normalisation in metal costs was attributed to the property debt disaster in China, which has negatively impacted the prospects for property demand and not directly have an effect on the costs for lengthy metal merchandise.
“We imagine metal uptrend seen over the previous 12 months has ended and metal costs wouldn’t find a way to surpass peak costs seen in early May 2021 – additionally as a result of it’s within the Chinese authorities’s curiosity to maintain a lid on commodity costs so as to maintain inflation ranges in test,” it added.
Kenanga maintained its FY22 earnings forecast on the again of ASP of RM3,000 per tonne.
It launched an FY23 earnings estimate of RM94mil on ASP of RM2,950 a tonne.
It aso downgraded the inventory to “underperform” from “market carry out” with an unchanged goal value of RM1.70, pegged to unchanged 0.75 tims price-book worth.
