The outlook is stable to positive. The tone of the management commentary is noticeably upbeat compared to a year ago. Management expects the recovery in the US economy to bring positive impact on the aluminium industrial product business. This refers to the aluminium frames for container refrigeration units. We had highlighted this at the end of FY17, and the 1Q18 results have reflected the positive demand.
However, weakness in the building products segment is expected to persist.
Maintain Buy; unchanged target price of $0.56
Our target price represents an implied 11.1 times FY18e forward P/E multiple and 0.96 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 positive business outlook, strong balance sheet and high-yield of 6.6% (based on 2.5 cents dividend over the last close price of $0.38).