Lion Industries Corporation - Back On Track

Lion Industries’ 1QFY10 annualised profit came in spot on with our estimates. While the recovery in the coming quarter will be bumpy and its profit will contract on the sharp plunge in China’s steel prices, we are hopeful of the company staying on track to achieve normalized profit in FY10. With that, we reiterate our BUY recommendation with an unchanged 12-month target price of RM2.11, derived from a blended valuation of 6x FY10 EPS and 0.43x FY10 NTA/share.