Lee Metal – A Model of Consistency


Lee Metal (593.SI) is a steel supplier and fabricator based in Singapore, with a strong focus on the construction industry. There are at least 4 other similar SGX-listed companies, but Lee Metal stands out as a model of consistency.

Lee Metal has managed to stay in the black and paid dividends in at least the past 8 years, having weathered through the SARS crisis of 2003 and the global financial meltdown of 2009. In fact, 2009 was a record year of profitability for Lee Metal even though turnover declined by nearly a third.


Growing multiple pillars of profitability

Continued construction boom in Singapore

Stronger steel prices

Room for further acquisitions

Risk Factors or Weaknesses

Strong dependency on the construction industry

Delay of Indonesian venture and withdrawal from Middle East

High directors’ bonuses

Conclusion: Target Price at 53 cents

Lee Metal is currently the cheapest steel trader listed in Singapore. Its shares currently trade at a historic P/E of just 4.6, whereas the shares of Hong Kong-based Novo, which has a similar business model, trade at a forward P/E of almost 7.

Assuming a conservative 10% growth in net profits in 2010 and an equally conservative forward P/E of 6, Lee Metal can potentially reach 53 cents in the next 12 months. This represents a 43% upside. BUY.

Key Financial Indicators

Recent Key Developments

Peer Comparison

P/E P/NAV Remarks on profits
Lee Metal 24.5 5.32 21.30 4.61 1.15 Based on FY2009 (diluted)
HG Metal 12 -9.44 14.16 -1.27 0.85 Based on annualised FY2009 plus 1Q10 (basic)
Novo 21.5 3.11 11.54 6.91 1.86 Based on annualised FY2010 from 9M10
Hupsteel 27 1.60 31.90 16.88 0.85 Based on annualised FY2010 from 1H10
Asia Enterprises 32 2.98 24.34 10.74 1.31 Based on FY2009
Simple Average 7.57 1.20

Note: Share price, EPS and NAV are in Singapore cents. Share price as of 23 Apr 2010.

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Last Updated ( Friday, 04 June 2010 17:54 )