Koon Yew Yin's Blog
Leon Fuat & Prestar are hopeless when steel price is rising - Koon Yew Yin
Koon Yew Yin
Publish date: Wed, 09 Mar 2022, 11:06 AM
Koon Yew Yin
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An official blog in i3investor to publish sharing by Mr. Koon Yew Yin.
All materials published here are prepared by Mr. Koon Yew Yin
All materials published here are prepared by Mr. Koon Yew Yin
On 25 February I post my article namely “AYS is Hopeless”. I should have written and posted this article earlier so that all my readers could have sold their holdings at higher prices. In any case, it is never too late to sell.
Rising steel price
Steel rebar futures rose further to above CNY 5,050 per tonne, its highest level since October on supply disruptions and expectations of stronger demand. Disruptions to steel exports from Russia and Ukraine encouraged buyers to seek alternatives particularly from China, the world's top steel producer. Meanwhile, demand in China is set to rebound strongly as the country is expected to unleash more fiscal spending and tax cuts to spur investment and consumption. The central bank has started cutting interest rates and pumping more cash into the economy, while local governments have sped up infrastructure spending in a bid to cushion a slowdown that looks set to worsen in the first half. As a result, steel price has been going up as shown on the chart below.
Rising steel price does not benefit steel products manufacturers
Many investors must be wondering why Prestar, Leon Fuat, AYS etc cannot make more profit when steel price is rising. Their share prices are dropping as shown on their down-trend price charts below.
Inventories appreciated in value
With the exception of Prestar almost all the steel products manufacturers reported reduced profit for their quarter ending December 2021. During the previous quarter their steel stock inventories have appreciated in value due to the rising steel price. As a result, they could report increased profit. Currently they have to buy steel at higher price to produce steel products and they cannot pass the additional cost to their customers. As a result, their profit will be reduced in the next few quarters.
Investors might be tempted to buy Prestar, Leon Fuat or AYS because they have reported fairly good profit in the last few quarters. All of them are selling below PE 2 or 3. But they do not have profit growth.
Among all the stock selection criteria such as cash flow, NTA, healthy balance sheet, debt free etc, the most powerful catalyst that can push the stock price up is profit growth prospect. Never buy any stock if the company cannot report increasing profit.
Prestar, Leon Fuat and AYS do not have good profit growth prospect and that is why their stock prices will not go up as shown on their down-trending price charts.
My sole purpose of writing this article is to inform all my readers why I sold all my Prestar, Leon Fuat and AYS to buy plantation stocks which are producing CPO.
Currently CPO price is at historical record high as shown on the CPO price chart below.
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Discussions
Be the first to like this. Showing 37 of 37 comments
Finally you understand why i said steel counters are just a pure hype.
They have to buy raw material at sky high price and stack into their inventories with no guarantee those high priced material could be offloaded at another high price or not. For those companies which take huge bank loans to finance their operations, it will be much worse. Cash flow will be severely affected. The good ones will survive at higher revenue but only slight increase in net profit. Only the upstream players will get the most benefits from commodity price increase. It happens to all industries.
Expect a lot of impairments soon. All these products are not basic necessities items. Like cigarettes, in Malaysia, there is always a way to get some cheaper alternatives elsewhere..
Time to ditch all your garbage financial advisors..
2022-03-09 11:29
Did Uncle read this two articles?:
NEW DELHI (March 3): The blistering rally in palm oil is starting to turn away customers in India, the world’s biggest importer.
Buyers have canceled as much as 100,000 tons of planned palm oil purchases in the past seven days, according to Sandeep Bajoria, chief executive officer of Sunvin Group, a Mumbai-based trader and broker of vegetable oils.
“We can’t buy at these prices,” he said. “Demand destruction is happening.”
Link: https://www.theedgemarkets.com/article/massive-palm-oil-rally-starting-turn-away-buyers-india
Another article:
"Jakarta has also been asked to reduce their biodiesel blending rules. Currently, 30 per cent of all biodiesel sold in Indonesia need to be derived from palm oil."
Link:
https://swarajyamag.com/insta/india-tells-indonesia-to-boost-palm-oil-exports-in-order-to-compensate-loss-of-supplies-from-black-sea-route-report
BLee: High prices do not necessarily get buyer/profit, and there are always solutions for any shortcoming??
Happy trading and TradeAtYourOwnRisk.
2022-03-09 12:16
Hihihaha! Grandpa Koon game us all! Anyway, do you know that China barely keeping up with demand now that Russia and Ukraine cannot export iron! Yeah, do you know half of world steel demand comes from China! And now that demand just added more! Hiaptek is the brightest star among steel stocks!
2022-03-09 12:32
Finally you can now start buying some steel stocks as better day ahead.
And please sell your TDM to KYY.
2022-03-09 13:56
Uncle yy is not buying tdm.
He is buying jtiasa, sop and taann...
He always trick people la
2022-03-09 15:12
Of all the plantation stocks and he choose the worst of the worst managed plantation stock TDM.
2022-03-09 15:38
Yeah, today is the best time to buy steel stocks! Sadly i ran out of capital!
2022-03-09 16:34
My sole purpose of writing this article is to inform all my readers why I sold all my Prestar, Leon Fuat and AYS to buy plantation stocks which are producing CPO. ------Yes, buy AZRB for they have huge oil palm plantations and lands. Now still trading at 21 sen per share.
2022-03-09 16:52
What a big u turn by uncle. Just only recently he was so sure that all steel stocks will increase profits in the coming quarters, Totally wrong reading of the market. Wonder if he still has any followers
2022-03-09 19:31
Hahaha I have less experience than Uncle Koon but TDM will be the last plantation stock I will buy. Loss making even with price of CPO at record high, litigation after litigation.
And he mentioned that he will only touch profit making counters. Hahaha don't be taken in by him. Btw, how many times have you heard him say that he should have told his followers to sell after he has disposed? It was the same with gloves where he asked them to hold on while he disposed everything.
2022-03-09 23:06
Uncle Koon goes heavy on palm oil stock. Perhaps he will come out with an article promoting Cepat??
2022-03-09 23:21
I suspect Grandpa Koon Prestar and Leon were force sell when he can't top up his margin! That's why he felt so hopeless and immediately wrote this article! Anway, cheers Grandpa! You can still buy steel stocks tomorrow before it gap up! Look at US and EU markets! Rebound strongly!
2022-03-10 04:30
And today plantations stocks drop like Siao and I don't know for what reasons.
2022-03-10 10:59
Grandpa koon, then which steel counter was hopeful when steel price was rising?!
2022-03-10 12:28
Because of your Feb report I go buy LFB, and thanks to your report, I made nothing and losses. Hard to trust your future report. Thanks, but no thanks
2022-03-10 15:58
Today all plantation stock drop like shit. I wonder every time uncle report come with the price coming down. Timing of loosing very good almost 100% probability of loosing money. ha ha ha
2022-03-10 16:16
i wonder how thick skin is this old man keep on posting inferior article and don't feel ashame.
2022-03-10 16:23
This oldman is useless! Wonder he could be piss or shit inside his pants also he Don know.
2022-03-10 19:09
I start notice him since the AT counter. After that he is a shit man to me onwards
2022-03-10 19:11
Same kind of old tricks, use again and again...still the best tricks....promote promote promote, the next day turn 180 degree. kakakakakaka...kikikikiki
2022-03-10 19:21
If sell already just move on....don't have to keep hantam the stocks u used to promote. Bad taste la
2022-03-11 13:29
AYS from good to hopeless now best stock to buy umder his pen within one year...
2022-11-09 16:13
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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....
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My sole purpose of writing this article is to inform all my readers why I sold all my Prestar, Leon Fuat and AYS to buy plantation stocks which are producing CPO <-- oh boy all of you KYY fanboys gonna get burnt again, enjoy
2022-03-09 11:23