MOST analysts are upbeat on LCL Corp Bhd despite the shares falling to a low of 90 sen last Friday compared with RM2.49 three months ago (July 31).
A local analyst said LCL’s fundamentals and management expertise were good, and growth potential looked promising.
“But like most stocks on the exchange, it has been hit hard by the poor market sentiments and investors (local and foreign) are pulling out of the stock market driven mainly by fear,” she said.
In a Bursa Malaysia filing dated Sept 29, Goldman Sachs ceased to be a substantial shareholder in LCL on Sept 22 after disposing of 8.06 million shares at undisclosed prices.
An analyst with Kenanga Research maintained a “buy” call with a lowered target price of RM3.90 using the regional international interior fit-out companies’ FY2009 price-earnings ratio (PER) of 10 times and FY2009 earnings per share of 39.2 sen.
He said LCL was currently trading attractively at 6.3 times and 5.1 times FY2008 and FY2009 PER, respectively
An analyst with Netresearch-Asia Sdn Bhd also has a “buy’”call on the stock.
He said LCL’s prospective revenue and earnings per share (EPS) were expected to register strong compound annual growth rates of 51% and 91% respectively from 2007 to 2009.
The research house said the growth was backed by the company’s strategy to “go where the oil flows” via the booming real estate sector in the Middle East.
However, he said the brokerage had lowered its forecasts for FY2008 and FY2009 net profit by 19% and 8% to RM45.3mil and RM56.1mil from RM56mil and RM60.5mil respectively.
This is on the assumption of slower contract billings and reduction in Malaysian contracts.
An analyst with CIMB was even more optimistic with LCL’s performance going forward saying it was business as usual for the company with no worrying signs such as difficulty getting project financing or slowdown in recruitment.
The analyst, who has an “outperform” call on the stock with a target price of RM4.05, said LCL’s clients were either premium clients or the Government.
He said Dubai and Abu Dhabi would increasingly play an important role going forward and 80% of LCL’s current earnings were from there.
“However, LCL’s valuations are at depressed levels,” he said.
He added that foreign shareholding had dropped to 29% from a high of 44% at end-2007.
Did you find this article insightful?