Posted by Damien88 > 2021-06-17 13:30 | Report Abuse

OM Holdings (OMH.MK) is the first ASX-Bursa secondary listing which will happen on 22 June 2021. Background: OMH is one of the world’s top integrated manganese ore and ferroalloy producers involved in mining, smelting and trading through its operation in Australia, China, Japan, Malaysia, Singapore and South Africa. It runs the lowest cost quartile smelter complex in Sarawak, the largest in Asia (ex China). Further details at www.omholdingsltd.com Investment Summary (UOBKH Initial Coverage Jun 2021): - Eco-friendly (ESG play) and the world’s lowest-quartile-cost manganese smelter operator. - Prime beneficiary of the commodities supercycle, amid strong demand fuelled by the economic recovery and structural supply shortage created by the global decarbonisation trend. - a major recovery play in 2022, as herd immunity against COVID-19 will allow production to recover. OMH: Grossly Undervalued Commodity/Material Industrial Stock i) FeSi / MnSi Alloy Prices Surge >50%, GPM >50% Stock Price is trading at 50% discount from its recent high of A$1.70 (RM 5.35). Currently, the stock price has not factored in the recent surge in commodity prices (FeSi/MnSi GPM >50%) since December 2020, which will generate expected gross profit of US$150-210m based on the recent alloy prices increase. Projected net profit for FYE2021 = > US$50m-US$100m (or about RM 200m – 400m) and FYE 2022 (full production year) = > US$100m – 180m (RM 400m – 700m). This is achievable and in the range of profit achieved for FYE 2018 (Profit A$160m or RM 500m) when the FeSi prices surge. FeSi Alloy Alloy Price: U$1,500-1,700/ton Cost: US$1,000/ton GPM: US$600/ton (or 50%) A) Current Capacity (75%): 130k ton Gross Profit ~ US$78m B) Full Capacity (100%): 170K ton Gross Profit ~US$102m MnSi Alloy Alloy Price: US$1,200 – 1,300 Cost: US$850/ton GPM: US$450/ton (or 50%) A) Current Capacity (75%): 250K ton Gross Profit ~ US$112m B) Full Capacity (100%): 330K ton Gross Profit ~ US$148m Total Gross Profit A) 75% Capacity = US$190m (RM788m) B) 100% Capacity = US$250m (RM1,035m) (Note: Factory currently shutdown due to MCO/Covid. Expected to re-start operation (75% capacity) in July 2021 after MCO and at full capacity by 4Q 2021 due to labour shortage as a result of Covid.) ii) OMH is grossly undervalued at forward PE 3-5x (FYE 2021/22) compared to Press Metal (PE 80x), Lynas (PE 60x) Based on the projected profit of >A$100m (RM 315m) for FYE 2021/22, the forward PE is only 3-5x. Both Press Metal / Lynas has large PEs due to the fact that they are more well covered by analyst and institutional funds. The upcoming Bursa secondary listing for OMH (expected in 22 Jun 2021) should bring about re-rating of OMH valuation as its current ASX listing was not able to attract any analyst coverage/institutional fund followings and thus suffer from low liquidity. Even at PE 20x @ FYE 2021/22, OMH could be trading at > A$3-5 (> RM10) vs current price of only A$0.88 (RM2.7). This could be a multi-bagger. OMH should revisit its recent high of $1.70 leading up and after the Bursa listing, while riding on high smelting profit margin in 1H2021. The upcoming Bursa listing will provide a further boost up for its share price as the stock is being re-rated by the Malaysia market with similar peers trading at PE 60-80x