MCS’s Strong Backlog to Support 2021 Earnings, Analyst Recomm. “BUY” with TP of ฿18.50
Maybank reiterated "BUY" recommendation on MCS with a target price of 18.50 baht in anticipation of having an outstanding 2021 earnings outlook.
Maybank reiterated "BUY" recommendation on MCS with a target price of 18.50 baht in anticipation of having an outstanding 2021 earnings outlook.
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Following the announcement of three new acquisitions totaling 51,600 tonnes, M.C.S. Steel Public Company Limited (MCS) is expected to have an outstanding 2021 earnings outlook with the expected profit of 1.031 billion baht.
Maybank Kim Eng (Maybank) reiterated “BUY” recommendation on MCS with a target price of 18.50 baht per share, citing that stock is trading with a low P/E and a good dividend, and also that new project acquisitions will ramp up MCS’s backlog to 100,000 tonnes, which will be recognized until 2023.
MCS informed the market on June 7) that it has signed contracts to produce 3 new projects with a total weight of 51,600 tonnes. The first project has a volume of work of 15,200 tonnes (including  additional  works). The  production  period  is  Jan 2022  to Oct 2022 with Kajima Corporation as its customer. The second one has a volume of work of 14,800 tonnes (including additional works). The production period is Dec 2021 to Sept 2022, Shimizu Corporation is the customer. 
And the third, the volume of work is 21,600 tonnes (including additional work). The production period is Mar 2022 to Feb 2023 with Obayashi Corporation as the customer. Consequently, the backlog increased to 100,000 tonnes. MCS will announce new future projects, with a few projects are in the process of negotiating.
MCS has a current backlog of 100,000 tonnes and will announce a few new projects to support revenues until 2023, making the 2021-2023 earnings outlook stand out. For 2021, it will recognize Toranormon, Azabudai and Toranomon projects 1,2 chome more fully. Given they are S-Grade type projects with good profit, Maybank believed the profit for the rest of the year will grow better. 
As for the rising steel price issue, MCS will not be affected as there are currently 42,000 tonnes of steel in stock and another 7,000 tonnes in transit to support all the current backlog. Maybank maintained its estimation of revenue recognition of 4.502 billion baht, (+5.9% YoY), expecting a net profit of 1.031 billion baht, (+8% YoY).