I wanted to write about LB ALUMINUM BHD a long time ago already, but wasn’t sure about it as I hold a sizeable position and many people can call my article non-independent or even try to manipulate share prices. Be assured it’s not my plan at all, as always I am using the same system and valuation formulas which are based mostly on hard data from financial reports. This is not a trading call, please do your own research and use your judgment when deciding if you want to invest or not.
LBALUM got first some attention when Mr. Koon Yew Yin wrote about it and on Friday 12. June 2021 there started to be some more increasing interest, perhaps because of upcoming financial report, which is expected to be very good, and not only because of increasing aluminium prices during this reporting QR, for which I post previously chart which you can see HERE.
I leave out too much unnecessary text for the reason mentioned above and get to the “hard data” and fair price calculation.
Before I get to my whole year EPS prediction, get back to the reason why people can speculate LBALUM will show excellent 4QR. They are doing quite good already actually. Some people can argue, high aluminium prices are not good for them, because its increasing their material cost, but in this case prices are not exactly high all the time, they are slowly increasing over time(as can see in the chart I mentioned above), another factor here is, we are talking about “international aluminium prices” which are elevated in other countries because of shortage. Lastly the favorite saying now for everything – economic recovery, huge order backlog etc. Here again some people may say, now FMCO – but wait, this QR ended before that, for the next QR/ next FY maybe there can be some impact, but most probably short lived anyway. Don’t worry about it for now, lets concentrate on what is coming out very soon.
Price on 11 June 2021: RM 1.01
Trailing EPS for 3QR: 11.49 sen
What we can expect from the upcoming QR? I can tell you at least the same as the last QR, should be actually up at least between 10-20% NP, but again I don’t want to be accused as manipulator so lets assume it will be the same as previous QR – 6 sen.
Expected EPS FY21: 17.5 sen (I think can round it little bit)
Fair P/E Ratio? For sure not 50 as for MRDIY, again I will keep it down, everyone must agree that P/E of 8 for this type of company is more than enough discounted and fair.
Target P/E ratio: 8
Target Fair Price: 1.4 RM
I personally have my own target price bit higher, but as I said, keep it within (very) realistic levels only.
Have a look at PPHB too.
Prefer steel? Read HERE.
More on my blog: http://miloshtrading.blogspot.com/
Disclosure: Im holding ALBUM
Disclaimer: Im not a professional financial advisor, analyst, economist or an accounter.
This is not a trading recommendation / advise, just my personal view.