SINGAPORE (Dec 3): Phillip Capital is ceasing coverage on Nam Lee Pressed Metal Industries due to a “re-allocation of internal resources”.
The research house’s last rating for Nam Lee was “buy” with a target price of 51 cents.
Commenting on the group’s financial performance for FY18, analyst Richard Leow notes in a Nov 29 report that Nam Lee’s PATMI came in line with expectations, although revenue was 5.1% lower than forecast.
He adds that Nam Lee’s total full year dividend of 2.5 cents is higher than that of FY17 (2 cents), which gives a 6.7% yield based on the group’s last closing price of 37.5 cents. Further, Leow highlights Nam Lee’s 6.7% yield on an unlevered balance sheet as superior to the STI and S-REIT index yields of 4.2% and 6.2%, respectively.
Going forward, Leow believes the aluminum segment will continue to drive revenue growth for Nam Lee as demand for refrigerator containers remains relatively resilient, in its view.
He also reckons profit before tax (PBT) margins should be maintained at around 10% in FY19, after the PBT margin level was lifted from 8.8% last year due to lower other operating costs.
“Barring unforeseen circumstances, we believe the ordinary dividend component would be maintained at 2 cents for FY19 as well. That translates to a 5.3% yield based on the last close price of 37.5 cents,” concludes the analyst.
As at 11.30am, shares in Nam Lee are trading flat at 39 cents.
