Quick take: Pantech gains marginally in early trading
KUALA LUMPUR: Shares in Pantech Group Holdings Bhd rose over 2.6% in early trade Wednesday following the resumption of its exports to the US.
The steelmaker rose 2.68%, or 1.5 sen to 57.5 sen with 1.5 million shares traded. Pantech-WA gained 4.33%, or 0.5 to 12 sen while Pantech-WB up 12%, or 1.5 sen to 14 sen.
Pantech said its steel products manufacturing unit will resume exports to the US after the company said it was not subjected to anti-dumping duty.
Pantech said the resumption of exports is expected to have a positive impact on group revenue, with contribution from Pantech Steel Industries Sdn Bhd (PSI) projected to normalise by fiscal quarter ending Nov 30, 2019.
Pantech had suspended for almost a year all shipments of carbon steel butt-weld fittings having an inside diameter of less than 14 inches. This is after the US Department of Commerce (DOC), on July 20, 2018, issued a preliminary affirmative anti-circumvention determination carbon steel butt-weld fittings from Malaysia
In its final determination on June 14, DOC had verified PSI’s ability to trace country of origin of its shipments of its butt-weld pipe fittings and allowed PSI to continue exporting to the US, without being subject to antidumping duty.
Kenanga Research is positive on this, seeing it as a restoration of earnings, and falling broadly within our base-case assumption of the suspension uplift coming in before 2HFY20.
“We are extremely positive on this announcement, as it once again restores earnings visibility back to the company,” it said.
It added the announcement also potentially implied that Pantech employs good business practices and that the DOC had found no evidence of export circumvention
“Nonetheless, we kept our FY20-21E numbers unchanged as we deem the announcement falls broadly within our base-case assumption of the shipment suspension uplift to be materialised before 2HFY20.
“That said, expect 2H numbers to be stronger, with 3QFY20 serving as the first full quarter to benefit from the restored U.S. shipments,” Kenanga said.
The research house has reiterated its “outperform” call on Pantech with an unchanged target price of 69 sen.
Source: TheStar