Stockman blogs
Steel counters.......Choo Bee vs CSC Steel (2) and general musings
stockmanmy
Publish date: Tue, 29 Nov 2016, 09:12 AM
stockmanmy
0 76
Trade at your own risk. I am here only to vomit out my feelings
Choo Bee CSC
Price $ 1.86 2.05
Market cap $ million 200 750
Last quarter eps sen 9 7
Last 12 months eps sen 10 25
NTA $4.04 $2.18
Net cash 82 sen 70 sen
Both look good to you?
Both can buy?
Careful, it is called false equavalence.
Almost all commentators of Choo Bee Versus CSC Steel (1) still consider Choo Bee a good stock to own or buy because its NTA is Rm 4.04, it has Rm 99 million cash or cash equivalent and it is selling Rm 1.82 per share.
Perhaps these people who are still wanting to buy Choo Bee did not read koon yew yin’s 2 articles namely “Is Choo Bee a Miss Universe Stock?” posted on 21st Sept 2016 and “Why Choo Bee share price falling?” posted on 5th Oct 2016.
I will reproduce / reiterate / adapt from KYY's two previous articles on the subject because of its specific message as well as more general application in share investments.
"Let me try to prevent you from losing more money:
1. Choo Bee buys thin steel plates from CSC Steel to make small diameter water pipes for houses and condominiums and hollow box beams for building construction. As every investor should know there is an oversupply of properties in every town and city in Malaysia. As a result, the demand for small diameter water pipes and box beams will be reduced. That is why its revenue is reducing. But you must not be attracted by its reported profit because the profit was from previous sales. The future sale will definitely be less. Remember buying Choo Bee share is the same as buying any property company share.
2. You might be attracted by its NTA and net cash holding. But these figures do not matter. The most powerful catalyst for moving share price is profit or EPS growth prospect. If you buy the share now, the price will surely drop when it announces its annual profit which will be reduced. Have you ever seen any share price goes up when the company reported less profit?
3. Moreover, it is down trending. Never buy down trending stock because you don’t know when the price will turn around or reversed. You can wait for a long time to see the price goes higher than your purchase price.
4. If you have money, it is better to buy CSC Steel because it can make more profit this year than last financial year. When it reports increased profit at the year end, the price will surely go up. "
Since those articles appeared, various steel companies have released their interim results and conclusively shows that :
- cold rolled coils players will continue to benefit from the closure of Megasteel. Elimination of a major competitor is a game changer
- that pipe makers and other downstream players are being squeezed by both cost increases and reduced demands on their products.
and the general applicability of the following........... its NTA and net cash holding do not matter. The most powerful catalyst for moving share price is profit or EPS growth prospect. If you buy the share now, the price will surely drop when it announces its annual profit which will be reduced. Have you ever seen any share price goes up when the company reported less profit?
the conclusion.....after the recent surge, shares of Choo Bee and the like, including steel traders is only waiting to die.
.......and cold roll coil players like CSC Steel will continue to fly fly fly as their profits increase even further with the introduction of anti dumping duty on Chinese imports from end Sept.
You need to take action.
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1 person likes this. Showing 42 of 42 comments
During the speculative up phase, CSC has been the under performer. People think big back side. Too big, cannot move
They prefer the smaller ones.
But precisely because CSC is the largest, they attract the strongest . The strongest shareholders Weak holders are not attracted here.
Look at the smaller ones. They die die already, this CSC still standing tall.
Strong shareholders.
2016-11-29 18:50
Juz let Kyy be the king of Cscstel alone.
Syndicate foresee the volatility during Us elaction and seasonal low demand by year end period. So, syndicate decide to slap down steel sector. This is going to change by March 2016.
If u follow the trending , u will know why I say so. Steel sector awaiting their leader to March 1st . Guess who is it ? Definitely not Cscstel .
Simply Art of Goreng.
2016-11-29 19:24
Narrow minded people will see everyone disqualified.
Great peoples see potentiality of the unseen .
Apparently, need not to say which are u .
2016-11-29 19:47
Want to play ?
I choose Comcorp & Melewar on today's closing price.
U choose your so call golden selection counter .
Final results reviewal set at End June 2017.
Then, u shall conclude who is not qualified .
I dare u not accept it.
2016-11-29 19:52
I don't see the point.
No conflict at all.
U got higher hand.
I pick the loosers (at least for now).
I promise u , this is a gentleman challenge.
I have my own measure too.
2016-11-29 19:58
Closing for my pick as on 29/11/17
Comcorp : $0.690 (almost neutral)
Melewar : $0.395 (-24%)
2016-11-29 20:27
wow...both counters also fall loh....!!
Thats why raider says both csc and choo bee are inter-related...if 1 don do well....the other will follow loh...!!
2016-11-30 14:24
wait for 3 months....CSC $3, Choo Bee $ 1.50
stockraider > Nov 30, 2016 02:24 PM | Report Abuse
wow...both counters also fall loh....!!
Thats why raider says both csc and choo bee are inter-related...if 1 don do well....the other will follow loh...!!
2016-11-30 14:28
Choo bee cannot be red...if choobee red....csc will be read too loh...!!
Cannot runaway....they are linked loh....!!
2016-11-30 14:57
latest quarter CB revenue already lowest since 2006.....next quarter margin squeeze and even reduced demand means CB is almost certainly red.
Lulu La > Nov 30, 2016 02:53 PM | Report Abuse
how u sure choo bee will be in red next quarter?
2016-12-01 00:34
For CSC, Dec quarter will be better than Sept quarter because the 15% anti-dumping duty on crc only starts from end Sept
2016-12-01 12:22
for Choo Bee, it is going into the red as demand for their product has dried up and they have cut down their operations operations drastically.
No effect on CSC because Choo Bee uses hrc to make their pipes.
2016-12-01 12:24
Raider says is a rubbish to says CSC is good when choobee no good loh....!!
They are twin mah.....!!
Don buy the arguement....if CSC do well....choobee would not loh..!!
If u want to sell choobee...bcos u know ....business will be bad...then u better think of selling CSC too loh...!!
If vice versa.....both would be good too mah....!!
Raider think both would do well for the next 2 Quarter loh..!!
2016-12-04 12:49
Venfx,
Lets be fair too, Csc has its advantage too
1.Good div
2. Better Corp governance
3. Bigger company
4.Got more tax incentive since it is 100% manufacturing
5. Got strong financial parent
Choobee had its advantage too...maybe u can list out..!!
2016-12-04 13:00
ChooBee vs CSC
High Nta vs high business potential
ChooBee will die as all other similar stocks have died.........
Wait next quarter, CHoobee babies will cry cry until no tears.
2016-12-04 13:09
business sense investing
vs book worm investing
in 3 months, we shall see who laughs, who cries.
2016-12-04 13:26
The chart don mean a thing loh....!!
If u look back at CSC when it was Rm 0.90 to 1.00....and compare to choobee....u can see CSC under performed loh....!!
It is lately CSC performed....now touted...as if very superior loh..!!
If u read chart properly....u can paint a different picture of relative under or over performance over time...it depend how u use the chart time frame loh....!!
Thats why stock operators use chart to manipulate loh...!!
People say chart don lie...!! In a way true...!! But it is short term don lie loh....!!
In longer term it can lie also mah....!!
Remember chart depend on time frame loh...!!
2016-12-04 13:43
And by the way, this article was written before the latest quarterly results....
That adds power to business sense investing or Dynamic Investing.
2016-12-04 13:48
In THE INTELLIGENT INVESTOR Warren Buffet wrote a par excellence chapter on The Superinvestors of graham-and Doddsville
I quote from page 544 4th paragraph
"It is extraordinary to me that the idea of buying dolar bills for 40 cents takes immediately with people or it doesn't take at all. It's like an inoculation. If it doesn't grab a person right away, I find that you can talk to him for years and show him records, and it doesn't make any difference. They just don't seem able to grasp the concept, simple as it is.
A fellow like Rick Guerin, who had no formal education in business, understands immediately the value approach to investing and he's applying it five minutes later. I've never seen anyone who became a gradual convert over a ten-year period to this approach. It doesn't seem to be a matter of IQ or academic training. It's instant recognition or it is nothing."
IF U FOLLOW INTELLIGENT INVESTMENT ABOVE....CHOOBEE ACTUALLY HAVE MORE MARGIN OF SAFETY COMPARE TO CSC LOH....!!
2016-12-04 14:05
There is no margin of safety in Nta discounts.
Nta is destroyed is it is not a going concern.....high NTA is not margin or safety....it is inefficient assets and low ROE.
2016-12-04 14:22
With Cash of more than Rm 1.00 & no borrowing in choobee...how u see Margin of safety destroy leh ??
2016-12-04 14:25
n THE INTELLIGENT INVESTOR Warren Buffet wrote a par excellence chapter on The Superinvestors of graham-and Doddsville
I quote from page 544 4th paragraph
"It is extraordinary to me that the idea of buying dolar bills for 40 cents takes immediately with people or it doesn't take at all. It's like an inoculation. If it doesn't grab a person right away, I find that you can talk to him for years and show him records, and it doesn't make any difference. They just don't seem able to grasp the concept, simple as it is.
A fellow like Rick Guerin, who had no formal education in business, understands immediately the value approach to investing and he's applying it five minutes later. I've never seen anyone who became a gradual convert over a ten-year period to this approach. It doesn't seem to be a matter of IQ or academic training. It's instant recognition or it is nothing.
U NEED UNDERSTAND MARGIN OF SAFETY LOH.....BUYING SOMETHING WORTH RM 1.00....FOR RM 0.40 LOH...!!
CLASSIC EQUIVALENT CASE OF BUYING CHOOBEE FOR RM 1.64 FOR RM 4.10 NTA WORTH MAH...!!
2016-12-04 14:28
Raider
There is no margin of safety in equity investments. Just hold cash tight tight and use it when you find a Business Sense opportunity, a Dynamic Investment.
What seems low can trade lower....what seems to be consolidating at a low base can have the base broken suddenly and dive down.
Equity is not margin of safety....it is a place for you to make a difference.
2016-12-04 14:38
Further quote from page 547 5th paragraph
"You also have to have the knowledge to enable you to make a very general estimate about the value of the underlying businesses. But you do not cut it close. That is what Ben Graham meant by having a margin of safety. You don't try to buy businesses worth $83 million for $80 million. You leave yourself an ernomous margin.
When you build a bridge, you insist it can carry 30,000 pounds, but you only drive 10,000-pound trucks across it. And that same principle works in investing."
BEN GRAHAM AND WARREN BUFFET SAYS ALOT OF MARGIN OF SAFETY IN CHOOBEE V CSC NOT RAIDER SAYS MAH....!!
CHOOBEE NTA RM 4.10 V SHARE PRICE RM 1.64
CSC NTA RM 2.20 V SHARE PRICE RM 2.00
LOOK LIKE CHOOBEE GOT BIG MARGIN OF SAFETY WHEREAS CSC SMALL MARGIN OF SAFETY LOH...!!
ON CSC; QUOTE U DON BUY A BUSINESS WORTH RM 800M FOR RM 740M U DEMAND A HIGHER MARGIN OF SAFETY LOH....!!
2016-12-04 14:46
From the bible of Dynamic Investing,
Get out the moment you conclude the business is not doing well
Of course value can be destroyed fast when things not doing well....it has fixed costs, stocks and debtors and machineries all of which can be destroyed very fast.
2016-12-04 15:06
ASK YOURSELF LOH....IS THE BIBLE OF GREAT SIFU BEN GRAHAM INTELLIGENT INVESTMENT BETTER OR BIBLE KYY/MAMMY DYNAMIC INVESTMENT BETTER LEH ??
RAIDER SAYS BGRAHAM AND W BUFFET BETTER MAH.....SO MANY YRS OF PROVEN TRACK RECORD....HOW TO ARGUE LEH ??
HAVING SAYS THAT....RAIDER NOT SAYING KYY/MAMMY DYNAMIC INVESTMENT NO GOOD...BUT BEN GRAHAM MARGIN OF SAFETY BETTER LOH...!! ALREADY CREATED MANY MANY BILLIONAIRES MAH....!!
2016-12-04 15:11
Dynamic Investing is localised for local conditions.
Of course it is the best.
2016-12-04 18:16
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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....
stockmanmy
recent interim results of steel players suggest.......
with the exception of CRC producers who benefited from the elimination of Megasteel, a major competitor..............all other players like traders, and downstream players , steel bars, steel pipes and steel tubes all die die squeezed by CRC producers , cost increases and declining product demand.
2016-11-29 15:03