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ShareCast News - Liberum cut its stance on AIM-listed windows and doors specialist Safestyle to 'hold' from 'buy' after it warned on revenue and profits on Wednesday, reducing the target price to p from p. Safestyle cautioned earlier that revenues and underlying profit for will be "materially below" the previous year's levels and current market expectations as the market continues to deteriorate.
It also said that the activities of "an aggressive new market entrant" have added to an already competitive landscape and hit certain areas of the group's operations. Liberum said that while the valuation is supportive, the share price performance is likely to be subdued until investors feel that the full impact of the new entrant is understood, and that Safestyle's cost savings programme has been successfully implemented.
It expects gross margins to be broadly maintained, with the impact of the new entrant offsetting the benefits from cost rationalisation measures undertaken by Safestyle, and estimates a reduction in overheads due to management actions to rationalise the group. Exploration is ongoing and further resource additions are expected in , Liberum said, as is the financing of its initial 25, tonnes per year SX-EW mine at Beruang Kanan Main, in Kalimantan. Raising the entire equity portion required for development of BKM on AIM would be particularly dilutive, they admit, but believe Asiamet will look to sell a minority stake in its Kalimantan Surya Kencana KSK license to a local partner, "which should contribute materially towards the equity required for development of BKM and be highly accretive".
Their sum-of-the-parts valuation of 20p was double the last closing price, with comparisons with other stocks in the region "imply similar levels of mispricing", said analysts, pointing to a recent bid for ASX-listed Finders Resources, which operates in Indonesia. The marine services company has a year record of almost uninterrupted rising earnings and dividends, a balanced business and an established strategy, the analysts said as they upgraded the shares to 'buy' from 'hold'.
The company's offshore oil business will probably do better this year and the consensus for earnings is on the low side, the analysts said. Please use this form to get in touch with our experts if you have any questions or would like more information. If you would like one of our investment professionals to call you, please fill out your details and one of our team will be in touch. Home Investment Research Broker tips: Safestyle, Asiamet Resources, James Fisher. Happy new tax year!
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