The outlook is stable. The key aluminium product continues to drive growth, but the tone of the management commentary is less upbeat compared to the most recent two quarters. We believe this is due to uncertainties in global developments over trade tariffs. Nonetheless, the company expects to remain profitable this year. We are not so certain for revenue growth and expect it to moderate in 2H18. We currently assume 8.5% YoY revenue growth for 2H18. Catalyst for the stock would be contract wins for the building products business, following the ramp-up in infrastructure projects and collective sales activity.
Maintain Buy; unchanged target price of $0.56
Following the strong 1H18 revenue growth and weaker than expected PATMI, we adjust our FY18e revenue assumption higher by 8.1% from previous, and PATMI assumption lower by -6.9% from previous.
Our target price represents an implied 11.9 times FY18e forward P/E multiple and 0.97 times FY18e forward P/B multiple. We currently forecast 2.5 cents dividends for FY18e (higher than FY17 2.0 cents) and maintain our view of Nam Lee as a yield-play. We like the stock for its strong balance sheet and high-yield of 6.8% (based on 2.5 cents dividend over the last close of $0.37).