Pantech set to ride on oil and gas boom with expansion plans

0

KUCHING: Pantech Group Holdings Bhd’s (Pantech) prospects looks bullish this year capitalising on the oil and gas boom.

According to a research report by OSK Research Sdn Bhd (OSK Research) it remained upbeat on the oil and gas sector which was expected to see heightening activities in 2013 amid stable oil prices.

The research firm noted that, “As a one-stop provider of pipes, fittings and flow controls (PFFs), Pantech is well-positioned to ride on this oil and gas boom.

The company’s strength as an alternative player puts it in a sweet spot despite the headwinds facing the steel industry.

” OSK Research also stated that Pantech’s expansion plans for Nautic Steel were progressing well.

Its loss-making stainless steel division was recovering and was expected to break even by end of financial year 2013 (FY13).

Going into FY14, the research firm expected to see Nautic Steel and its stainless steel division strengthen further.

“We think the company will continue to report good second half FY13 earnings, in line with our forecasts.

Furthermore, Pantech may offer investors a decent dividend yield of 6.6 per cent for FY13, assuming a 40 per cent payout ratio at the current share price of RM0.72 per share.

” The research firm was currently reviewing its valuation model and adjusting the company’s share base.

Assuming that all its irredeemable convertible unsecured loan stock (ICULS) would have been converted into Pantech shares, OSK Research pegged Pantech’s valuation at nine times FY14 forecasted price earnings (PE) instead of six times PE, with a fair value of RM1 per share.