KSSC
KSSC - The Next PMETAL?
KSSC - THE NEXT PMETAL?
Company Info 
Stock Code :5192.KL
K. Seng Seng Corporation Berhad, an investment holding company, engages in the manufacture, marketing, and processing of secondary stainless steel long products. The company operates in four segments: Stainless Steel Products, Marine Hardware and Consumable, Other Industrial Hardware, and Investment Holding. It manufactures stainless steel tubes and pipes; stainless steel round bars, flat bars, and angle bar; stainless steel fasteners; and stainless steel sheets. The company also offers marine hardware and consumables, such as polypropylene ropes, and brass stern gland and propellers; and industrial fasteners comprising high tensile, mild steel, and galvanised bolts and nuts
The company sells its products primarily in Malaysia, as well as in the United Kingdom, Singapore, Thailand, Indonesia, and internationally. K. Seng Seng Corporation Berhad was incorporated in 1985 and is headquartered in Balakong, Malaysia.
Fundamental analysis
The above table shows the competitors with market capital below 90m. Although the revenue of KSSC is smallest amongst the competitor, its net profit margin and income is very competitive and amongst the best. The year-on-year net income change registered a whopping 530%. The company's PE ratio is relative low in comparison to average of small cap stocks at 16 and below average compare to its peers.
However, please note that the low PE is partly contributed by a one off disposal of a freehold land. The proceed will be used for further expansions and to improve the underlying profit in the future.
P.E (TTM) = 4.8 Please see note
ROE = 19.98
EPS = 14.82
NTA = 0.74
Par Value = 0.5
Dividend Yield = 5.58
Profit and Revenue
 |
| Profit and Revenue from 2010 to 2013 |
From the period of 2010 to 2011, both the company profit and revenue dropped and this is because the worldwide market were still suffer from the Lehman and Euro crisis. In 2012, we start seeing the company profit and revenue gradually turned around and exceeded year 2010.
 |
| Quarterly revenue from 2011 to 2014 |
 |
| Quarterly profit from 2011 to 2014 |
The above two charts further breakdown the revenue and profit and we can see that traditionally revenue in quarter 3 (Ending September) and quarter 4 (Ending December) are stronger. What's exciting to see is that the first two quarter of 2014 result has far exceeded previous years.
Note: There is a sudden spike of profit end of September 2013. The Group profit before tax of RM11.44 million for that quarter was 1,855.9% higher compared with the profit before tax amounting to RM0.59 million of the immediate preceding quarter. This was mainly attributable to the gain on the disposal of the company's freehold industrial land which was zero tax rate. This has reduced the PE ratio substantially. When this is returned to normal, FY PE can be stabilised between 15 to 18
Technical Analysis
From the above 6 month candle chart, we can see the stock has been traded in the range of 0.56 to 0.67 for quite sometime. On 24 of September, the counter gapped up with huge volume.
The moving average is very bullish and MACD has crossed convincingly with immense volumes.
 |
| Weekly chart |
The weekly chart shows that the counter's RSI has fall recently and Stochastic nearly touch 20%. This indicates that the stock is slightly oversold and create a buying opportunity. The weekly chart also shows that KSSC has been consolidating and forming a bull flag. This can mean that there is a potential of break up and the stock will continue to rally.
Final Notes
(a) The Group revenue has increased consistently both locally and overseas, OEM market for Stainless Steel Products segment, particularly the stainless steel tubes and pipes. We are about to see the greatest profitable year in 2014 with an excellent head start in first two quarters.
(b) With greater demand from India http://tinyurl.com/mj3k2qu
and the beginning of recovery of US and Europe, the company will be in the sweet spot of the recovery.
(c) The Malaysian economy is set to expand and is poised for higher growth in 2014-2015. The domestic demand will continue to anchor growth amid the continued moderation in external demand with the growth mainly driven by the private sector and supported by the public sector.
(d) Who would imagine PMETAL's price can rise from RM2 to RM6 in merely a few months? It started with a break out that has a great resemblance of KSSC chart and with several good factors such as aluminium price and revenue increase. Can KSSC become the next PMETAL given the same factor? By looking at current price and performance in comparison to PMETAL, I see great potential.
With the huge volume that we notice in the last two days, who knows the start of the long rally may be just around the corner and have just begun.
PMETAL has appreciated so much and showing it's age now. Will you not consider buying a greater undervalued stock, especially for those that missed the boat?
Will KSSC become the next PMETAL and are you going to miss the second boat? We shall see in next 6 months time.
Price closed at 0.71 25/September/2014
TeamZ TP : 0.85 (based on TA)
Support: 0.695
Source : http://teamzmalaysia.blogspot.co.uk/2014/09/kssc-next-pmetal.html
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Market Buzz
Discussions
9 people like this. Showing 19 of 19 comments
Bruce88. I have updated the article to include the reason of sudden spike in 2013. I also added comments about the low PE. Don't want to be misleading.
2014-09-26 21:45
teamzmalaysia....what about Melewar? Don't u think it is worth investing?
2014-09-26 22:07
Did you look at the company's cash position and receivables? Very interestingly. the marginal increased in sale in comparison to last year is exactly the same ie all in receivables.. Does it means that the company does not collect proceed from its additional sales..ie all in credits. And look cash position too, it dwindled. As an investor, I certainly worried.... Haha how could it be like pmetal ?
2014-09-26 22:18
Look good but l will start fishing when the price come down to 35 cent.
2014-09-26 22:24
kingcobra, Look at previous few years results, Melewar consistently making lost except last quarter, don't you think is risky?
Alex Chan, when steel become bullish, you will not get such price. Alumimium price hike a lot few months and that's why it contribute so much to the revenue of PMetal. PMetal immediatly gapped up when the news was out.
Currently, US is very bullish about STEEL. In India , traders very bullish about STEEL company. Will Malaysia be next, that's not what I can answer but potential is there.
Cnyang, it's something that need to ask in Annual meeting as I don't have access to information in detail. A lot of payments are made from export and FX risk has to be considered too.
If you don't like this company, there are hundreds of others out there. I will keep you posted for the next one soon and thanks for the feedback. If you have any good company to recommend, please post here and I will investigate.
2014-09-26 23:22
Teamzmalaysia, anyway thanks for sharing. Could you pls investigate CVIEW !
2014-09-26 23:52
PE of 15 to 18. dun you think is high? Y most of your comparisons only show loss making companies? wat about those like Masteel, leonfb, etc which are relatively have lower PE and more undervalue than KSSC.
And u are comparing with Pmetal? both are different industry.
2014-09-27 09:05
Hi team Malaysia, very interested to join this counter.
Just need to know 3rd quarter 2013 earning of 11.77 cent is contributed from what source?
Really interesting if its purely operation earning. If its only one-off then it will be less interesting.
However keep up analysis on hidden gem.... not many investor will do thorough analysis on each counter really need a lot of analysis contributor coming from investor itself than investment banking.
2014-09-27 11:27
You will regret if you don't enter now, the price is still low at 0.72.
2014-09-27 12:38
Limpek, my resource is limited. There are 8 steel company that I have omitted in my research and they all have large market capital. I choose low market capital mainly because I see more potential for further upside. Most of the large market capital stock has warrants attached that keep diluting the earning year after year and also the number of shares may also be great. This means there is more liquidity but at the same time less chance to go up significantly in comparison to small cap stock.
There is nothing wrong with both the company that you mentioned and if I spotted volume, then I may consider it. There are many company with good profit but unfortunately there is lack of buyer. In our research we give both basic fundamental and technical analysis for you to judge. There is no intention of any misleading and unlike some blogger with big fund backing them.
I am sure you will allow us to have our view and bias too or else we all end up buying one stock. You have to make up your mind.
Ahmad, the answer is in the note under until profit chart.
Hevea, we are hoping to spot stock before they rise. Unfortunately, there is a rare chance or else we would not be here. What we can do is to spot trend and notice fund is collecting so that we can catch the early phase before they push the price further up. We hope we can succeed and share our information with former here.
Apologies for missing other stock.
We will post more in the coming future and you can start buying if you start having confidence in our research.
2014-09-27 20:49
You can treat it as a joke and it may not be comparable to Pmetal, but for those who believe has made a handsome 10-11 % if bought on Friday after the post when the price was 0.71-0.72.
It's good to be sceptical as this is our first post. Watch out for the next one.
2014-09-29 17:08
Wow,great job , teamzmalaysia. Thanks for the sharing . Waiting for the next one whilst still holding onto KSSC.
2014-09-30 02:23
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Bruce88
The low PE may not correct. it may be due to one-off huge profit.
Based on the total of last two qtr eps of 2.1sen, annualize to 4.2sen
The forward PER could be 18. Trader is advised to be cautious.
2014-09-26 20:49