Ann: 30 September 2022 Quarterly Market Update, page-2

OM Holdings with better ASP mix and operation efficiency


Wednesday, October 26th, 2022 at Business | News
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by M JAY SHEILA / pic source: OM Holdings
OM HOLDINGS Ltd (OMH), the largest manganese and silicon smelter in South-East Asia, has received an ‘Outperform’ call in the initiation coverage by Kenanga Investment Bank Bhd (Kenanga Research).
The research house gave it a target price of RM2.54 based on its financial year 2023 forecast (FY23F) prospective price earnings ratio of five times, which is in line with its international peers’ average.Kenanga Research said it expects OMH’s FY22F net profit to jump 53% year-on-year attributable to better average selling price (ASP) mix and operation efficiency, despite a 10% contraction in revenue due to cessation of OM Qinzhou (OMQ) and Bootu Creek Mine.
The report released today said that OMH’s main ferroalloy smelting plant in Samalaju, Sarawak, powered by Bakun hydroelectric plant, has the lowest cost structure in the region and is highly environmentally friendly.
It said OMH’s fortunes are tied to global steel demand which is projected by the World Steel Association to grow by 2.2% in 2023. It added that it expects OMH’s FY22F/FY23F earnings to surpass that of FY21’s driven by capacity expansion and elevated ASP.
Primarily listed on the Australia Stock Exchange, OMH is a vertically integrated manganese ore and ferroalloy player, engaged in the business of trading raw ores, smelting and marketing of processed ferroalloys.
It has two smelters, namely OM Sarawak in Samalaju and OMQ in Qinzhou, China. Its 100%-owned Bootu Creek Mine in Australia had ceased operations last December, while it also has an effective 13% interest in the Tshipi Borwa Mine in South Africa.
The report said OMH has a huge cost advantage over its international peers given the long-term hydropower supply contract with Bakun Dam entered into at competitive rates, while its peers, especially European smelters, face high electricity costs as fuel prices surge.

https://themalaysianreserve.com/2022/10/26/om-holdings-with-better-asp-mix-and-operation-efficiency/