STOCKWATCH: Angang New Steel sharply higher on div yield/outook
HONG KONG (AFX-ASIA) - Angang New Steel was sharply higher, extending yesterday's gains against a weak broader market on the company's positive business outlook after releasing its results yesterday, dealers said. At 12:05 pm, Angang New Steel was up 0.06 hkd or 7.05 pct at 0.91 on volume of 42.65 mln units. The Hang Seng index was down 431.39 points at 12,723.05. The company posted 2000 net profit of 491.395 mln yuan compared with 295.421 mln a year earlier, according to international accounting standards. Investors bought the company's shares since it is expected to continue to provide a high dividend yield in 2001, Phoebe Wong, analyst of Nomura International (HK), said. "The dividend yield in 2000 was about 10.7 pct and we expect it will be around 9.7 pct in 2001 based on Tuesday's closing price," she added. Wong said Angang New Steel's dividend yield is close to the highest in the sector. In addition, the company is expected to maintain steady single-digit growth in earnings over the next two years, she added. She said she forecast the company to post about 510.25 mln yuan in net profit for 2001 and about 662.3 mln yuan for 2002. The company was also attractive in terms of its cash level with about 0.61 hkd per share in 2000 and estimated 0.42 hkd per share in 2001, Wong said. Although the slowdown of steel prices may undermine the company's revenue in 2001, Wong said the profit margin will not be affected if the company can effectively control costs. "We recommend the stock with an outperform rating at a target price of 1.3 hkd," she said. Salomon Smith Barney analyst Pitzi Lau said the earnings forecast for 2001 was maintained at 394 mln yuan and an average price of 2,504 yuan per tonne, which will be revised if there is an increase in the volume during 2001. She said she is recommending n "underperform" rating despite the 2000 results being above the market consensus.
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