Important time-tested proven market rules or tips
All steel stocks - Buy on weakness, hold or cut loss
OTB
Publish date: Tue, 13 Jul 2021, 09:12 PM
Dear valued members,
Special note:
This is an educational program, stock selection criteria is based on TA and FA facts.
This article is strictly for reference only. Never trust anyone as far as your investment is concerned. Please do your homework before you decide to invest. It is your money, you make your own decision and you are responsible for the final outcome.
I have a certain code of ethic when I write my article in I3.
If the article is beneficial to all the readers here, I will write and post it.
If it is harmful to majority, I will avoid it at all times.
I have followed this code of ethic since day one I posted my article in I3.
Many of the readers in I3 are asking me this question, "should we cut loss on all steel stocks and get out of KLSE ?".
I decided to answer this question as follows.
FBMKLCI is bearish only but not Ind/prod index
Reasons
- Investors are fearful about Covid-19 pandemic.
- Investors are fearful about the unstable and fragile Malaysian government.
Two articles written by "Super investor" in I3
Why_should_investors_get_out_
One article written by KC Chong
Investors are fearful about Covid-19 pandemic
- Looking at the USA as a good example, we need to have lockdowns and vaccinations to stop the spread of this disease.
- Lockdowns can improve to a certain extent only because long lockdowns will affect the economy of our country.
- I believe we have a very long lockdown, I hope this lockdown will stop after 16/7/2021.
- Malaysia administered 421,479 doses of Covid-19 vaccines yesterday (July 12) — the eighth day in a row that over 300,000 jabs were given. This is also the highest number of shots recorded per day.
- At least 22.07% of the population had gotten their first dose, while 9.75% of the population were fully inoculated as of yesterday.
- In my view, with the current speed and arrival of 12 million vaccines in July, we can expect 60-80 per cent of the population completing their doses by the end of September 2021.
- NBA basketball stadiums in USA are full of spectators once the US government vaccinated > 60% of her people.
- Britain will lift MCO lockdown on 19/7/2021 and Singapore will lift MCO lockdown in August 2021. They will lift MCO lockdown once more than 60% of the population is vaccinated.
- I believe Malaysian government will lift MCO lockdown once more than 60% of the population is vaccinated.
- Based on high administered of more than 300,000 jabs per day, I believe more than 60% of the population will be vaccinated by September 2021.
- I am very confident this Covid-19 pandemic fear will be over by September 2021.
Malaysian economy
- Malaysian exports and trade numbers are still strong.
- Malaysia’s total trade in May 2021 expanded by 48.7 per cent year-on-year to RM170.9 billion as the country’s exports and imports maintained strong double-digit growth, according to the Department of Statistics Malaysia.
- Exports, imports and total trade posted a growth of 47.3 per cent, 50.3 per cent, and 48.7 percent respectively.
- The country’s 2021 gross domestic product growth at between three and four per cent, budget deficit at six to seven per cent, while the ringgit is expected to hover at between 3.67 and 4.10 per US dollar.
- I am cautiously optimistic about the economic growth and outlook for Malaysia.
- The Malaysian economy has that resilience to bounce back due to its productive labour force, modern technological infrastructure, and consistent economic policies for global and local investors.
- However, as long as there is continuing focus by the administration, especially the civil service on containing the pandemic, reopening businesses and factories, and maintaining social order and stability, the negative consequences on markets and the economy will be limited.
- Brent crude oil is at USD 76, palm oil is selling at 3,795 per/MT. Malaysia is the world biggest exporter of rubber gloves. I believe Malaysian economy is very strong.
- As long as the economy is performing well, the stock market (KLSE) will perform well too. The current setback is temporary and it can be resolved after Covid-19 pandemic is under control. I believe we will see a better KLSE in September 2021.
All steel stocks belong to Ind/Prod index
Ind/Prod index is still bullish, the index is still above 200-day SMA.
Enclosed is Ind/Prod index for your perusal.
TA reading
- The index is inside a horizontal channel, the trend is sideways.
- According to the TA definition of an up trending, the index must stay above the 200-day SMA. Hence the index is still in up trending mode.
- The index is below the "Golden Cross Sell" signal which is bearish.
- Force index is bearish.
- MACD and Parabolic SAR are bullish.
Good steel stocks listed in KLSE
I will use the following rules to project PAT and EPS.
- I will assume the next half year, the projected PAT is only 1 quarter earning.
- 3 months PAT is wasted due to MCO lockdown. I believe the impact is less than 3 months because many of steel industries were operating full force in May 2021 and some production in the following 2 months.
- This quarter's earnings are equal to the average of last 2 quarter PAT.
| Price | Q Before | Latest Q | Next half | Projected | Forward | PER=10 | ||||||
| Stock | 31/12/20 | 13/7/21 | % Up | Highest | % drop | EPS | EPS | EPS | EPS | PER | Target | Gain % |
| Choobee | 1.65 | 1.75 | 6.06 | 2.54 | 31.10 | 8.81 | 20.93 | 14.87 | 44.61 | 3.92 | 4.46 | 155 |
| Hiaptek | 0.46 | 0.49 | 6.52 | 0.705 | 30.50 | 2.21 | 4.79 | 3.50 | 10.50 | 4.67 | 1.05 | 114 |
| LeonFB | 0.595 | 0.865 | 45.38 | 1.22 | 29.10 | 5.84 | 11.65 | 8.75 | 26.24 | 3.30 | 2.62 | 203 |
| Melewar | 0.52 | 0.475 | -8.65 | 0.715 | 33.57 | 3.21 | 3.87 | 3.54 | 10.62 | 4.47 | 1.06 | 124 |
| Prestar | 0.875 | 1.01 | 15.43 | 1.53 | 33.99 | 8.12 | 9.45 | 8.79 | 26.36 | 3.83 | 2.64 | 161 |
My comments :
- I purposely make the EPS to be low to reflect the effect of current EMCO imposed by Malaysian government.
- Based on international news, steel stocks will perform very well in the next 2 years. We need to buy and hold them for a bit longer period.
- The prices of steel and iron ore dropped from the peaks is about 4.26% and 5.93% respectively, but the share prices of steel stocks dropped ranging from 29% to 34% which is not reasonable.
- I believe the share prices of steel stocks are very undervalued. The share prices dropped very badly are due to MCO and bad market sentiment in KLSE.
- I believe the share prices of steel stocks will come back after this MCO is over, just invest them on a bit longer term.
- I like Hiaptek because there is a 100% expansion in capacity in 2022. The ESOS for directors and exercise price for warrant is 0.50 respectively, the present price is also 0.49, the downside risk is very small now.
Is steel price still good in June 2021 ?
Please read the below link.
Based on the readings, I still think that the steel price is still good in June 2021 despite MCO imposed by Malaysian government.
Steel price will increase in the next 12 months
-
Please read the link below. https://
tradingeconomics.com/ commodity/steel - The steel price closed at 5,005 Yuan/MT today, a very good sign.
- According to an analyst, he forecasts the steel price to trade at 5,167.25 Yuan/MT by the end of this quarter (Q3 2021). He believes that the steel price will trade at 5,772.32 Yuan/MT in the next 12 month.
- I had a long discussion with a friend who is involved in the steel industry in Malaysia, we feel that the steel price will go up about 15% in the next 12 months. We forecast the steel price to be around 5,750 Yuan/MT in the next 12 months.
International events to confirm a high steel price
The biggest producer of crude steel is China, followed by European unions, Japan, USA, India, Russia and South Korea.
The biggest producer of crude steel is China, followed by European unions, Japan, USA, India, Russia and South Korea.
- China is facing a shortage of coal, steel production is affected.
- China is cutting production of steel products by 30% from 1/7/2021 till 31/12/2021.
- China was dumping steel products below cost previously, it is the main reason to cause the steel price to drop. China has stopped exporting steel products to the world now. This bad news will disappear permanently by now.
- Steel production in European Unions and India are reduced drastically due to Covid-19 pandemic.
- Japan is booking all steel products for her ship building sector until May 2022. demand is greater than supply.
- The US President is starting to spend USD1.2 trillion on top of USD579 billion on infrastructure projects over 8 years. When the US President announced this news, all steel stocks involved in Construction and Electric Vehicle (EV) in the US hit new highs.
- The Properties Index in the US is already up 28% since 2021.
- Electric Vehicle (EV car) production in the US is already up 98% since 2021.
- In the US, most of the steel industries are in shutdown to install new machines for expansion. There is a big reduction of steel production in the US now.
- Russia imposed 15% export tax effective 1/8/2021. 26 steel stocks listed in Russia stock exchange hit limit up after this announcement.
- South Korea is focusing on exporting steel products to the US market only and stopping selling to other parts of the world.
- There is more demand than supply of steel products in the current world market, hence the steel price will go up in price. No way China is able to control it.
- Previously, Malaysia bought steel from China. Presently, China buys steel from Malaysia. The economy of China is still very strong, infrastructure projects are many, the demand from steel products from China is very high. Malaysia should export more steel to China after this MCO lockdown is over.
- All steel stocks listed in KLSE should perform very well after this MCO lockdown is over.
My comments
- When a stock is trading at a PER of less than 5, the chance for the share price to drop a lot is not possible. To me it is a buying opportunity rather than cut loss.
- All the aforesaid stocks are trading at a PER of less than 5.
- I still believe the current drop in the share prices of steel stocks is temporary due to sluggish market sentiment in KLSE.
- I feel that the share prices of the steel stocks are cheap enough after a steep correction, I think it is time to bargain hunt rather than to cut loss.
- Since China is no longer dumping steel products below cost in Malaysia, the share price of steel stock will rise up surely and slowly. I will select those stocks which showed good latest quarter results. I want to see a strong growth in the latest quarter result compared against the earlier quarter result. All 5 stocks are very good steel stocks to invest. It is my selection criteria for steel stocks.
- You must also need to note the trading volume of the stock, the share price will not go up fast if the trading volume is very low.
- The share price of steel stock began to run up in December 2020, it is still in the infant stage. I strongly believe this run up will last at least 1 to 2 years down the road.
Should we cut loss and get out of KLSE totally ?
- Malaysia administered 421,479 doses of Covid-19 vaccines yesterday (July 12) — the eighth day in a row that over 300,000 jabs were given. This is also the highest number of shots recorded per day.
- I believe Malaysian government will lift MCO lockdown the latest by September 2021 or earlier.
- I have 2 sleepless nights to think about this question. One minute I want to cut loss and get out. The other minute I want hold on to these stocks and fight it out. After reading items 1 and 2 carefully, I had made the below final decision.
- FA of all steel stocks are very good, they are trading at a PER less than 5. We cut loss means I did not follow FA rule to invest.
- Based on TA, we must get out once the share price drops below 200-day SMA. It is the rigid TA rule to follow.
- I think I will stick to this TA rule since my strategy is TA comes first and FA comes second.
- Please cut loss and get out if the share price of the steel stock is below 200-day SMA.
| Below | |||
| Stock | 200 Day | ||
| Choobee | 1.45 | ||
| Hiaptek | 0.39 | ||
| LeonFB | 0.63 | ||
| Melewar | 0.41 | ||
| Prestar | 0.87 |
The final decision is always yours, please decide yourself.
Thank you.
Ooi
寧可天下人負我, 休教我負天下人
Disclaimer :
This is an educational program, stock selection criteria is based on TA and FA facts.
Please be informed that the aforesaid stocks are solely for the purpose of education only ; it is neither a trading advice nor an invitation to trade. For trading advice, please speak to your remisier or dealer representative.
The final decision to buy is always yours.
More articles on Important time-tested proven market rules or tips
Jaks - Annual net profit of Hai Duong power plant in 2021 is RM 248 million
Created by OTB | Mar 04, 2020
Discussions
5 people like this. Showing 46 of 46 comments
This article is professionally written. You are a respectable person OTB.
2021-07-13 22:07
LeonFB - 1.05
Hiaptek - 0.55.
Both are losing money.
I will buy on weakness on LeonFB and Hiaptek later.
Thank you.
2021-07-13 22:09
Posted by samwise7890 > Jul 13, 2021 10:07 PM | Report Abuse
This article is professionally written. You are a respectable person OTB.
------------------------
I write with facts and figures.
Please note that Ind/prod index is not a down trending.
Likewise all steel stocks.
The share prices of all steel stocks and Ind/prod index are above 200-day SMA (definition of up trending according to TA).
Thank you.
2021-07-13 22:16
this old man very tricky , said no buy call but obviously here make buy call
2021-07-14 13:24
Mr Ooi, maybe you were once a journalist years back? Appreciate your clarity, straight-forwardness, simplicity, & factual points written with much sincerity and effort. Thanks for helping me see the steel counters from a different perspective. Will sure consider it.
2021-07-14 23:01
I am not an accountant, an analyst or a journalist.
I am a very hardworking person and willing to learn through hard way.
I read a lot of local and international news on steel stocks.
I record down all the facts in my computer.
Thank you.
2021-07-14 23:08
IMPORTANT WARNING: DO NOT LISTEN TO THIS MAN
WHY? REMEMBER WHEN HE PUSH GLOVE STOCKS, PETRON/HENGYUAN AND JAKS
2021-07-15 09:48
yktay1, this round you could listen to OTB recommendation, we must have brain lah do homework, selective taking advice is wise lah while reviewing the existing and forward looking global steel demand that is very positive growth to local steel manufacturers/exporters, no harm lah we diversify our portfolio investment into steel stocks ~ 30%. Good luck everyone
2021-07-15 10:19
Posted by yktay1 > Jul 15, 2021 9:48 AM | Report Abuse
IMPORTANT WARNING: DO NOT LISTEN TO THIS MAN
WHY? REMEMBER WHEN HE PUSH GLOVE STOCKS, PETRON/HENGYUAN AND JAKS
-----------------
Ans : I am just a small fry in the stock market, I do not have so much money to push up shares.
I think you have mistaken me.
Thank you.
2021-07-15 10:43
OTB I do not intend to post this article here.
I post it because the super investor attacked all steel stocks and LeonFB.
All my clients are worried and want me to tell the actual story with facts and figures.
I write with facts and figures to dissipate all negative false news.
Thank you.
14/07/2021 11:19 PM
============================================================================
Thank you OTB for coming forward to defend the steel stock. KYY shouted SELL {after non stop promoting buy days and weeks before he sell] , OTB says Buy Steel ,especially Hiap Tek. Today Hiaptek is 50 sen. We shall see the price in 12 months time.
I will keep track. My bet is with OTB.
It is interesting to read the following article from KCCHONG:--
https://www.facebook.com/1238461152861295/posts/6052893511418011/
2021-07-15 16:32
2 more weeks whole Malaysia will enter National Recovery Plan (PPN) Phase Two, and all steel factories will be allowed to operate :)
2021-07-15 16:40
China market:
周四，钢铁板块强势拉升。
业绩表现方面，截至7月15日，钢铁板块内共有29家上市公司发布了上半年业绩预告，抚顺特钢、三钢闽光、新钢股份、柳钢股份等16家公司净利润同比预增超100%，其中，包钢股份预计上半年实现归母净利润约20~28亿元，同比增长2281%~3233%，增幅最大。
近期，多地发布钢铁下半年限产政策，叠加原材料价格见顶回落，钢价触底后出现明显反弹。
对此，中信建投研报称，各区域的限产风声再起，宝武系钢厂以及安徽、江苏、甘肃等地区都进行了相关会议下放指标，要求产量不能高于2020年。考虑到上半年各钢企均有增产，全年产量不高于2020年会导致下半年的减产。此次限产更多的是把指标逐步下放到企业，对完成的节奏没有做过多的规定，如果严格执行，供给端会面临比较大的收缩。
2021-07-15 19:23
On Thursday, the steel sector pulled up strongly.
In terms of performance, as of July 15th, a total of 29 listed companies in the steel sector have issued performance forecasts for the first half of the year. The net profit of 16 companies including Fushun Special Steel, Sangang Minguang, Xingang, and Liugang will increase year-on-year Over 100%, Baotou Iron & Steel Co., Ltd. is expected to achieve a net profit of about 2 to 2.8 billion yuan attributable to the parent in the first half of the year, a year-on-year increase of 2281% to 3233%, the largest increase.
Recently, many places have issued policies to limit steel production in the second half of the year, and the prices of superimposed raw materials have peaked and fallen, and steel prices have rebounded significantly after hitting the bottom.
In this regard, the CITIC Construction Investment Research reported that production restrictions in various regions have resumed. Baowu steel mills and Anhui, Jiangsu, Gansu and other regions have conducted relevant conferences to decentralize indicators, requiring production not to be higher than 2020. Considering that all steel companies have increased production in the first half of the year, the annual output not higher than 2020 will lead to a reduction in production in the second half of the year. The current production restriction is more about gradually decentralizing the indicators to the enterprise, without making too many regulations on the pace of completion. If strictly implemented, the supply side will face a relatively large contraction.
2021-07-15 20:18
The reason the share prices of all steel stocks move up north is because the steel price goes up 408 today to 5,458/MT.
Please read the below link.
https://tradingeconomics.com/commodity/steel
The share prices of all steel stocks will perform very well in 2021/2.
The correction and consolidation of all steel stocks will be over soon.
Buy Hiaptek and hold tight until September 2022.
2021-07-16 17:14
SEE MY WARNING ON 15TH JULY 2021 BELOW:
yktay1 IMPORTANT WARNING: DO NOT LISTEN TO THIS MAN
WHY? REMEMBER WHEN HE PUSH GLOVE STOCKS, PETRON/HENGYUAN AND JAKS
15/07/2021 9:48 AM
2021-08-06 09:53
Hi Mr.Ooi,
thanks for the info sharing.
if enter Hiaptek now 0.60, its the price too high?
2021-09-07 12:11
@MandyLee2728,
Although you did not ask me, I would like to give my opinion too. I think Hiaptek will reach RM1 eventually. Short term speculation may have loss, long term (around 6 month) should reach RM1.
Disclaimer: I am not recommending you to buy or sell shares. All investment is your own decision and your risk only. :)
2021-09-07 12:46
Post a Comment
Featured Posts
Apps
Top Articles
1
Nuclearinvestment
2
AmInvest Research Reports
STRATEGY - Local Institutional Support Drive Upward Momentum
3
Good Articles to Share
4
5
THE INVESTMENT APPROACH OF CALVIN TAN
6
M+ Online Research Articles
7
KLSE Traders Update and Ideas
#
Stock
Score
Daily Stocks
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
Stock Name
Last
Change
Volume
MQ Trading Signals
Stock
Time
Signal
Duration
Stock
Time
Signal
Duration
Featured Advertisers / Partners
Ride The Bull Short The Bear
CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
soros228
well done OTB. Excellent write up.
will add more tomorrow.
Thank u very much indeed.
2021-07-13 21:23