4^th Quarter results for Lsteel released on 24-2-17, the net profit is shrinked  around RM900,000 compare to previous quarter, the decrease of profit mainly due to rising of material cost such as HRC and CRC and safeguard tax and anti dumping policy. From first sight view, the results are slightly disappointed. Nevertheless, the revenue is increased by RM6.5 million, this reflects that demand of steel products are getting greater from 2016. The EPS for 2016 is 5.3 sen compare to -2.73 sen in 2015.

Extract from the coverage by STAR, the group MD of Lsteel expects the trend of higher demand of steel products to maintain in 2017. The prices of steel should maintain also. Lsteel expect a strong double digit percentage growth for the group in 2017. Lsteel plan to increase production capacity by about 20% for 2017 to produce more various of steel products in different size especially from the newly set up plant in Sg Bakap. The outlook for the trading of mineral which contribute about 20% of the group revenue is very bright in 2017 due to it price has rising more than 50% since 2016. The management foreseen the profit of trading of mineral shall persist in 2017 and we may looking forward to the management to reissue of dividend since 2011 prior to the AGM.

From the technical chart views, Lsteel prices has further advance to 0.53 sen in fifth straight day from 0.405 sen. On the daily chart, a ROUNDING BOTTOM pattern appear to taking shape. This is a long term reversal pattern that signals a shift from a downtrend to an uptrend pattern. The basic formation of a rounding bottom comes from a down price movement 0.44 sen to a low of 0.35 sen , follow by a rise from the low back to the start of downward trend price of 0.44 sen forming what look like a rounded bottom. The increase volume is last few days during breakout has confirmed this pattern with rising volume, further helps to strengthen the signal formed by the breakout. The downward trend is confirmed to have reversed and a buy signal is formed. The 0.44 sen level is now becoming the support level. Although the price has retracted to .46 sen on 27-2-17 to reflecting the poor 4th quarter results, as far as the 0.44 sen support level is not breached. The upward trend pattern shall continue should the selling pressure is reduced. Another support level is pegged at 0.40 sen . Cut loss shall take place should this two support level is violated.

Bali

27-2-17