Basically , Cscsteel now is beneficial the closed down of Megasteel and gain supply from their mother company from oversea (Vietnam, China ?)  


From some steel counter and also CSCstell last quarter result , we knowing that actually the company facing shortage of supply of the HRC from the Megasteel even though cscsteel can manage to gain raw material from oversea but due to the quota and lead time of material to flow in. CSCsteel revenue drop by 30 percent YoY ( offset by lower CRC price , maybe will be around 20 percent) , Inventories drop and cash increase definitely effected by the shortage of the material.

  


News from ChooBee.
http://www.theedgemarkets.com/en/node/285105

We can’t export when we purchased raw materials from Megasteel [Sdn Bhd]. If our raw material prices are cheaper, we will be more competitive in terms of pricing,” the group’s chief financial officer Mark Tan said in a phone interview with The Edge Financial Daily.

Nonetheless, it is a different scenario now for Choo Bee after Megasteel, a 79%-owned subsidiary of Lion Corp Bhd, has suspended its production again since March this year due to financial and technical issues.

But how long will this situation last, most industry players, including Choo Bee, have no clue to that.

Tan opined that, based on Megasteel’s current financial situation, it could last until the end of the year or even longer. However, he pointed out that once Megasteel resumes operation, Choo Bee will still source from it if the prices are deemed reasonable.

According to Tan, Megasteel will normally charge RM400 to RM500 premium per tonne for HRC over international prices. Raw materials are Choo Bee’s biggest cost, which accounts for about 85% of the group’s operating expenses.

Mean by now, Cscsteel is enjoy a very cheap raw material supply from it sister and mother company by 400- 500 cheaper from Megasteel itself.

And China HRC price as below, the higher price of HRC mean that CRC price will eventually gone up as well. Like the co-relationship between Iron-ore and steel price.


http://www.miti.gov.my/index.php/pages/view/3343
The Royal Malaysian Customs Department will enforce the collection of anti-dumping duties and this measure will be effective for five (5) years, from 24 May 2016 to 23 May 2021.

for further information please look on the link.

Highlights

-        Material supply solved. ( revenue should back to normal assuming demand of the CRC remain constant)

-        Cheaper material supply by sister/ mother company

-        World hrc , rebar , crc price when up since early of year and remain volatile still (40 percent higher from the bottom).
 

-        Strongest balance sheet and excellent management among all the steel company

-        Whether will give out special dividend.
 

-        Implement of the anti dumping law against CRC product .http://www.miti.gov.my/index.php/pages/view/3343

-        China had promised to reduce the production to overcome the oversupply of steel. And kill those zombie steel production company.

 

Risk
- Reopen of Megasteel ( may need to top up all the quota back that taken from the oversea supplier)
The longest Megasteel shut down the more cscsteel will beneficial on that. To reopen Megasteel will need help from our government or Big company like China steel and it take time to reproduction.
 

-        World steel price

- Ppl dont give cscsteel high Pe from the historical.

- 2nd shareholder ( Mr Gan Thiam Chai - no in board of director ) disposed shares  

Expectation

This coming quarter result Q2 will be good for cscsteel and the better one will be on Q3 as the the implementation of ADD and the increase of the CSC product ( CRC) 

From the YGKI result that improved alot and we can really expect CSCsteel coming result to be around good as well.