KSA makes waves as the new kid on the block

The medium outlook for the Hamico Binh Thuan Minerals Company (KSA), expected to be the biggest provider of ground sand in Vietnam, is positive as the company is offering future stable growth potential.

The Ho Chi Minh Stock Exchange (HoSE) newly listed KSA shares have caught investors’ eyes thanks to its leading position in the sand exploration field in Vietnam. KSA also set an ambitious business plan with 128 per cent growth on-year and a targeted after-tax profit of VND129 billion for 2011.

KSA also plans to pay 20 and 25 per cent dividends in 2011 and 2012, respectively, compared to 15 per cent in 2010.

Established in 2006, KSA has engaged in minerals exploration with sand products accounting for the majority and 91 per cent of its revenue and profits from exports of products to Singapore and China. KSA was licenced to explore five sand mines in Binh Thuan and is the owner of the Vietnam’s biggest white sand mine.

“With the encouraging numbers, KSA is offering stable growth in medium to long-term,” said Hoang Thi Thanh Thuy, chief analyst with Tan Viet Incorporated (TVSI).

Le Huy Cuong, an analyst with Hoa Binh Securities Company (HBS), said with the KSA’s business plan for the next three years and its earnings from current projects, KSA’s medium to long-term growth potential was positive and the company could have “suddenly high earnings” in the next few years.

“With the estimated earnings per share (EPS) for 2010 is VND4,021, the reasonable valuation for KSA shares is between VND58,300 and VND62,300,” said Cuong.

KSA debuted 12.9 million shares on the HoSE on July 27 at a reference price of VND60,000 each share. On July 30, KSA closed at VND57,000 each, or price-to-earnings (P/E) ratio is 114.3, according to StoxPlus statistics.

Thuy said KSA’s financial capacity was the same as other mining companies but the returns-on-equity (ROE) and returns-on-assets (ROA) were lower than that of its rivals like KSH and MIH.

“Investors can expect KSA positive earnings in the long-run but in the short-run, there is not much hope,” said Thuy.

Currently, the company staff is holding 31.4 per cent while others 68.6 per cent of KSA stake, according to KSA listing documents.