Excerpts from KGI Research report

Southern Alliance Mining (SAML SP): Iron ore back to the moon

  • RE-ITERATE BUY
    Entry – 1.10 Target – 1.40 Stop Loss – 1.00

  • SAML is a high-grade iron ore miner and processor in Malaysia.

    The company sells iron ore of low levels of impurities with total Fe grade of between 62% to 65% to steel mills and trading companies mainly located in Malaysia and China.

    It also sells pipe coating materials that are crushed iron ore with a natural characteristic of a higher density for subsea pipes. 

    SAM chart6.21

  • SAML’s primary mining asset, the Chaah Mine, is an open mine pit consisting of two mining leases and covering an aggregate area of 225.7 hectares. The Chaah Mine is strategically located near existing road networks to ports.

    The company’s established supporting infrastructure and facilities consist of four fixed crushing plants, two lines of mobile crushers and two beneficiation plants both capable of operating on a 24-hour shift. The company has an approximate monthly production capacity of 60,000 tonnes of iron ore concentrates (not including pipe coating materials).

  • SAML’s 1HFY2021 net profit surged 47% YoY to MYR 51mn from MYR 35mn in the prior year period, driven by higher average realised selling price (ARSP) of iron ore concentrate. While current valuations are expensive, we expect further upside to miners as iron ore prices remain elevated due to strong demand. 

  • Spot iron ore prices surged above US$200 for the second time this year on media reports that the Chinese steel hub of Tangshan may plan to ease requirements for production cuts at its mills.

    Earlier in May 2021, iron ore prices broke US$200/ton for the first time on record due to strong Chinese demand, but fell after the Chinese government stepped in to cool prices.

    However, steel demand, a key driver of iron ore prices, is surging as countries reopen, while large miners are hampered by operational issues, further tightening iron ore supply. The decarbonation trend in the US, Europe and China is also generating additional demand for metals. 

  • We expect a surge in China’s iron ore imports in around June or July 2021, which would help lift up prices. Read our industry report here.

You may also be interested in:


You have no rights to post comments

Counter NameLastChange
AEM Holdings1.840-0.020
Best World2.480-
Boustead Singapore0.950-0.005
Broadway Ind0.1450.005
China Aviation Oil (S)0.865-0.005
China Sunsine0.390-0.005
ComfortDelGro1.390-0.010
Delfi Limited0.875-
Food Empire1.120-0.010
Fortress Minerals0.310-
Geo Energy Res0.3000.005
Hong Leong Finance2.420-0.010
Hongkong Land (USD)3.4200.010
InnoTek0.505-
ISDN Holdings0.300-0.005
ISOTeam0.047-
IX Biopharma0.039-0.004
KSH Holdings0.245-
Leader Env0.049-
Ley Choon0.055-0.001
Marco Polo Marine0.068-0.003
Mermaid Maritime0.1350.002
Nordic Group0.305-
Oxley Holdings0.0900.001
REX International0.124-
Riverstone0.9300.005
Southern Alliance Mining0.480-
Straco Corp.0.490-
Sunpower Group0.230-
The Trendlines0.063-
Totm Technologies0.019-0.002
Uni-Asia Group0.810-0.035
Wilmar Intl3.160-
Yangzijiang Shipbldg1.750-0.020
 

We have 2056 guests and no members online

rss_2 NextInsight - Latest News