lenglui

Weakening in ringgit affect steel company?

2016-09-12 20:52

moneySIFU

It's double edged sword, lenglui, but seem CSCSteel benefited most from weakening RM while Mycron has been actively hedged its currency exposure, no so much gain or loss last year.

See table 6
http://klse.i3investor.com/blogs/wealth123/103812.jsp

2016-09-12 21:08

lenglui

Thanks sifu

2016-09-12 21:13

WealthWizard

Thanks everyone for great discussion & sharing

2016-09-12 22:25

ronnietan

The reason Megasteel didn't ramp up production of CRC could be due to no money.
The same reason Kinsteel couldn't increase production, and Perwaja stayed at 0 output, of HRC. Steel price recovery came too late for them. Creative destruction.
In contrast, Ann Joo had surplus inventory to sell into the high prices.

2016-09-12 22:52

probability

ha ha..glad to have the update comparing the CRC manufacturers...those PE used seems so conservative. Thanks WealthWizard :)

2016-09-13 01:57

WealthWizard

haha, probability, the CRC industry is merely at the stage of turning up, no many appreciate what's coming, so better conservatively set. :)

2016-09-13 08:00

WealthWizard

Most countries have imposed Anti-Dumping Duties for Cold Rolled Steel Coils (CRC), not for rebar yet. So the first wave should be CRC.

2016-09-13 08:02

WealthWizard

I never worry on Dow Jones performance, there are always individual stocks shining during bad time.

2016-09-13 08:05

resilient911

based on news is temporary shut down due to no fresh order since Jan ~ Aug causing 1 shift running…

steel mill HRC shd preferred 24 hours running for production effiency and energy cost wise

running for CRC not worth as compete with other CRC manufacturer… it will be better running HRC which is monopoly biz… in addition no infringement to LIONCOR for monopoly case…possible backdoor resolve with CRC miller? settle

2016-09-13 08:28

ronnietan

Congrats, WealthWizard, enough investors are persuaded by your articles to buy into Mycron and CSCstel, both major gainers today.
Annjoo and Prestar there too.
A strong Steel Day.

2016-09-13 10:07

WealthWizard

Thanks, resilient911 & ronnietan.

2016-09-13 10:43

WealthWizard

A senior manager from Megasteel said they need miracle to revive. It's true as Megasteel has been trying to return to profit for so many years with full supports from government but yet couldn't make it.

See below news: http://www.thestar.com.my/business/business-news/2016/09/10/megasteel-closes-banting-plant/

However, despite the protection, Megasteel continued to record huge losses. As at Dec 31 last year, Megasteel had racked up RM2.43bil in accumulated losses.

So far, Megasteel has gone through four debt restructurings, the latest of which in 2014, when it only had consent from two of its seven US dollar term loan creditors.

As at Dec 31 last year, Megasteel owed RM895.7mil to secured creditors, while unsecured creditors and suppliers were owed RM3.28bil.

2016-09-13 10:45

WealthWizard

I believe CSCSteel & Mycron will continue to shine due to their positions in CRC market.

Eonmetal has done very well in manufacturing of plant & machinery, need to catch up in their CRC division.

YKGI is doing ok, need more results to prove their potential.

2016-09-13 10:49

WealthWizard

I received an email from one of i3 fellow member, where a famous remisier in i3 has a buy call to his subscribers on Mycron with target price of RM1.61, using 5 methods of calculation.

2016-09-13 10:52

Vizhai

TP 1.61. Thank you for sharing.

2016-09-13 10:55

murali

Sifu must be crazy...but i have yet to receive such info

2016-09-13 10:57

WealthWizard

While all developments pointed to one good direction, the CRC market leaders such as CSCSteel & Mycon will be the natural choices for investors.

2016-09-13 11:36

i4investor

this half year is steel stock performance...must hold one steel stock

2016-09-13 13:09

paperplane2016

agree

2016-09-13 13:15

WealthWizard

Thank you, i4investor & paperplane

2016-09-13 14:46

moneySIFU

hehe, paperplane is here

2016-09-13 14:56

moneySIFU

Most people tends to sell profitable stocks & retain loss making stocks.

Reason: afraid of losing the profit & hope for the bleeding stock to overturn

Normal outcome: flying stock continue to fly & falling stock continue to fall

2016-09-13 15:48

Albukhary

Very well said, money sifu. It took me 15 years in stock market to understand this theory.

2016-09-13 17:14

MuttonCurry

esok jatoh ... loh

2016-09-13 17:15

moneySIFU

Haha, MuttonCurry, yesterday you said today crash, now said tomorrow jatoh, it's fun to see you around.

2016-09-13 17:27

moneySIFU

Oh, forgot you have said today designated.

2016-09-13 17:27

moneySIFU

Ha, Albukhary, I am still learning.

Said is always easier than done, when come to making decision, every time have to struggle, do or not to do, that's the problem, haha

2016-09-13 17:35

moneymoneycome

salute but I missed the boat, sob sob...

2016-09-13 18:07

WealthWizard

You must know where is your destination when winning, surely you don't want to jump out of the bus at Tanjung Malim if you want to go Penang.

It's ok to get on board at Bidor, because it is only half way.

As long as you don't get to the wrong bus to Johor instead of Penang, that's still fine.

If you are not sure where the bus go, better take a deeper look & decide later. No make money but also won't lose money.

2016-09-13 21:38

resilient911

wealthwizard did a good post...salute....
it is not easy to make metal vibrant..
looks like your metallic post already magnetized most of the metal peers...

good job...

2016-09-13 21:51

WealthWizard

Thank you, resilient911

2016-09-13 22:55

lavenderong

Thank you for the explanation. Understand a bit more abt the steel industry.

2016-09-14 12:06

WealthWizard

Thank you, KLCI King & lavenderong

2016-09-14 12:30

WealthWizard

I guess no many people realise the powerful effect of Anti-Dumping Duties. Thank you again, KLCI King.

2016-09-14 12:33

gthhh

wow wealthwizard, i think this is a damn good article leh, clear cut and detailed.. with articles and explanations

Onz la! thumbs up

2016-09-14 13:41

probability

Actually THE SINGLE MOST POWERFUL information... is shown below:

(affects all the counters above.....note that the Forward 12 months Earnings caclculated above is before the Megasteel closure).


According to Choo Bee CEO Mark Tan, Megasteel will normally charge RM400 to RM500 premium per tonne for HRC over international prices.

http://www.klsescreener.com/v2/news/view/81555


Choo Bee hopes for cheaper input to resume export

TheEdge Mon, Jun 13, 2016


This article first appeared in The Edge Financial Daily, on June 13, 2016.

KUALA LUMPUR: Choo Bee Metal Industries Bhd is among the beneficiaries of the government’s decision to knock down trade barrier for imported hot rolled coil (HRC) in the downstream segment.

The Ipoh-based flat steel product manufacturer had to stop exporting hollow and gas pipes to the United States, Australia and the Middle East in 2009 as the locally sourced HRC, which is its key raw material, had weakened the company’s competitiveness in the international market due to high input costs.

“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.

As of now, the group has started to source 80% of its raw materals from other Asian countries since Megasteel, the country’s sole HRC maker, has stopped production. This may in turn help Choo Bee resume its export business to the US and Australia after the third quarter this year, according to Tan.

The group also plans to allocate about RM20 million to expand its capacity for its main factory Pengkalan plant this year, which includes adding new production line. Total output is expected to increase by 20% when the new line is completed by 2017.

“We are upgrading and streamlining production processes to enhance production efficiency for our future growth,” he said.

Choo Bee’s current capacity could produce up to 9,000 tonnes a month when supply of raw materials is available. This works out to be about 108,000 tonnes of output a year.

With an additional tube mill line, Tan expected output to increase by 2,000 tonnes per month or 25,000 tonnes annually.

Tan, however, remained cautious about the group’s financial year ending Dec 31, 2016 (FY16) outlook, as steel prices remain volatile and stiff competition is squeezing margin.

Choo Bee achieved a net profit of RM2.85 million for the first quarter ended March 31, 2016 (1QFY16), decreasing by 27.04% when compared with RM3.91 million in the previous year. Its revenue declined 30.47% to RM100.74 million from RM144.89 million in 1QFY15.

Steel prices that have come off again recently are also Tan’s concern. He foresaw steel prices to drop further after the rebound in recent months as supply levels remain high from idle capacity.

“Thus, we need to manage our cost, and make sure we are competitive in terms of raw material pricing,” he added.

Other than the resumption of export markets, Tan saw the government water pipe replacement project, which will be rolled out this year, as another potential earnings driver for Choo Bee.

Based on historical record, Tan estimated the government’s water pipe replacement project could provide a boost of about 30% of Cho Bee’s revenue.

FY15 was not a good year for Choo Bee. Its net profit halved to RM6 million. Besides lower average selling prices compressed profit margin, the group was also hit by unfavourable foreign exchange rate and impairment loss.

However, Choo Bee has a healthy balance sheet which has the attention of some fund managers. As at March 31, the group’s cash balance stood at RM62.93 million against borrowings of RM2.1 million. The rather big cash coffer has enabled Choo Bee to regularly declare dividends. Choo Bee declared a single-tier dividend of four sen per share for FY15.

Choo Bee’s share price staged a mild rally in March in tandem with the spike in interest in steel stocks in the past three months. Its share price climbed to a five-month high of RM1.61 in mid-April from RM1.34 in early March.

2016-09-14 13:51

股海無涯

appreciate this detail analysis

2016-09-14 13:53

WealthWizard

Thank you, gthhh & 股海無涯

probability, thanks for sharing

2016-09-14 15:14

WealthWizard

See something before many others see, know deeper before many others aware, look further when many others still look here & there, you will earn more than many others.

Try to look up to everyone that talk positive & negative, judge yourself, don't blame anyone if you don't get it.

Opportunities are always for those who are ready AND have ability to grab it.

2016-09-17 14:14

Jingyang

Thank you for the sharing ,appreciate this alot =)

2016-09-21 13:25

smartrader2020

http://klse.i3investor.com/blogs/discoverychannel/104895.jsp

2016-09-22 23:24

WealthWizard

My new article:
EKOVEST: Doing Great & Ready To Shine, Are You Ready? (Part 1)
http://klse.i3investor.com/blogs/wealth123/104926.jsp

2016-09-23 11:40

smartrader2020

http://klse.i3investor.com/blogs/wealth123/104163.jsp

2016-09-23 15:12

bukithot

superb article with fact-based projection, very convincing! well done WealthWizard master. Looking forward to reading more of your articles!

2016-10-15 13:32

moneySIFU

hi bukithot, long time no see, how are you?

2016-10-16 00:45

WealthWizard

China CRC price has increased 3.4% since my my first article was published on 5/9/2016, the price was RMB3,480 now it is RMB3,597.

Bright Future for CRC Steel Producers: CSCSteel, Mycron, Eonmetal & YKGI (Part 1)
Author: WealthWizard | Publish date: Mon, 5 Sep 2016, 11:02 AM
http://klse.i3investor.com/blogs/wealth123/103741.jsp

2016-10-17 16:16

moneySIFU

China CRC price continue to climb due to increase in car sales in China

2016-10-20 - 3716.67
2016-10-19 - 3681.11
2016-10-17 - 3621.11
2016-10-05 - 3508.89
2016-09-10 - 3485.56
2016-08-22 - 3421.11
2016-07-20 - 3111.11
2016-06-23 - 2950.00

http://www.sunsirs.com/uk/prodetail-318.html
http://www.100ppi.com/vane/detail-318.html
http://klse.i3investor.com/files/my/blog/img/bl2751_crc_price_in_china.jpg

2016-10-21 01:19

moneySIFU

China CRC price continue to climb due to increase in car sales in China

2016-11-04 - 4013.33
2016-10-05 - 3508.89
2016-09-10 - 3485.56
2016-08-22 - 3421.11
2016-07-20 - 3111.11
2016-06-23 - 2950.00

http://www.sunsirs.com/uk/prodetail-318.html
http://www.100ppi.com/vane/detail-318.html
http://klse.i3investor.com/files/my/blog/img/bl2751_crc_price_in_china.jpg

2016-11-05 07:18

probability

so much of information here....with hidden treasures.

2017-05-11 23:10