Posted on 09 Jun 2008
It declared a gross final dividend of 12 sen per share for
year ended Dec 31, 2007 (FY07), translating into a yield of 7.9% based on
Friday’s closing price of RM1.52. It has not fixed the ex-date but dividend
payment is on July 11.
It has a good dividend payment track record since the
listing in December 2004. It has a dividend policy of paying at least 50% of
profit after tax, and dividend per share had gradually increased to 12 sen for
FY07 from 5 sen for FY05.
This is likely to continue given its net cash position,
little capital expenditure planned and improving earnings outlook.
Its net cash amounted to RM75.4mil as of end March, which
would allow it to weather through times of economic uncertainties and rising
interest rates scenario.
Ornasteel is trading at attractive valuations of 6.9 times
price-to-earnings ratio based on FY08 estimated earnings.
The flat steel producer is unlikely to be as strongly
impacted by the recent hikes in energy prices as the upstream players.
An analyst with OSK Investment Bank said Ornasteel’s energy
consumption is not as high as that of upstream players.
“Ornasteel does not have furnace plants that need a lot of
energy to heat up,” he said.
Besides, international steel prices had jumped by a huge
quantum; hence Ornasteel would still see attractive margins, he added.
OSK, in a separate report, said demand for flat steel
products was anticipated to remain buoyant given the wider applications.
“Contribution from the new cold-rolled coil mill, which adds
about 180,000 tonnes a year, will improve competitiveness, reduce imports and
enhance profit margins because it would move up the value chain,” it said.
Ornasteel was anticipated to capitalise on import discounts and better material supply from China Steel Corporation, the research house added. The Taiwan-based company owns 45.4% of Ornasteel.
