Metalnewsnet 26 Jan:

Pipemaker Pantech Group Holdings Bhd's financial year forecasts for this year and 2011 were maintained on the back of sales recovery in its manufacturing division.

OSK Research said with crude oil price trading above US$60 per barrel, improved sales were expected from its trading division in the upcoming quarters.

It also maintained its "neutral" rating on Pantech.

"We expected demand for Pantech's manufactured products to recover gradually as stockists, particularly in the US, start to replenish stocks," it added.

It said this was seen from the sharp 51 per cent, quarter-on-quarter, jump in manufacturing sales although expensive raw materials eroded margins.

"With crude oil price gradually moving up, we believe new exploration jobs will slowly flow back to Pantech's trading division as it is a leading oil and gas pipe supplier in the region," OSK Research said.

It also said Pantech's nine months financial year 2010 bottomline was within expectation, making up 79 per cent of its full year forecast.

However, Pantech's third-quarter financial year 2010 revenue of RM92.2 million was 22.7 per cent lower than that of the previous quarter, mainly due to a 35.6 per cent dive in trading sales quarter-on-quarter.

This, however, was partly cushioned by improved sales from the manufacturing division.

Net profit declined by 20.2 per cent, quarter-on-quarter, to RM11.7 million because of timing difference between raw materials and steel prices between July and August 2009.

OSK Research said it believed Pantech would continue to maintain its quantum of dividend in future as the company had no plans to expand further in the medium-term.

Pantech declared a special second interim single tier dividend of 1.5 sen, for a total dividend of three sen per share. This translated into a dividend yield of 3.1 per cent.

The company has also pared down its debts, from a net gearing of 0.64 times last year, to 0.36 times currently. -

- Bernama