Yeah, but since when did Kinsteel make a PROFIT?

The quarterly report shows loss of RM63m before tax.

http://www.thestar.com.my/Business/Business-News/2015/06/23/Two-Kinsteel-audit-committee-members-resign/?style=biz

QUOTE
Kinsteel, which is left with two audit committee members, staged a turnaround by reporting a net profit of RM23.54mil for the first nine months ended March 31, compared with a net loss of RM546.81mil in the preceding year’s corresponding period.
UNQUOTE

Huh?

Kinsteel makes profit by deconsolidation - Kinsteel reduces its share in Perwaja changing it from a subsidiary to an associate, so with this change it wash hands off the liabilities of Perwaja and result in a paper gain???

I was wondering how they got the RM200million estimate or what exactly it is for. Just to have an idea how much money is required for the MOA's proposed "installation of new blast furnace facilities and related downstream manufacturing facilities and related infrastructural work", here are the costs announced by other steel companies in their annual reports for their blast furnace projects :

Lion Diversified Holdings / Lion Blast Furnace Sdn Bhd : USD500 million

Ann Joo Resources : RM650 million

Hiap Teck Venture Berhad / Eastern Steel Sdn Bhd : RM750 million

Looking at the MOA, seems like they are going to build more plants to save the old ones. This is a repeat of the Eric Chia story two decades ago when he built plants in Gurun to save those in Kemaman.

The RM200 million mentioned in the MOA is way below what other steel companies spent for similar blast furnace facilities in Malaysia.

Perwaja management did not submit workers' salary deductions to income tax, EPF...?

http://www.utusan.com.my/berita/jenayah/bekas-pekerja-perwaja-buat-laporan-polis-1.39030

We refer to the article titled “Perwaja to close shop, lay off 1,500” published by The New Straits Times on 12 December 2014.
The Board of Directors (“Board”) of Perwaja wishes to clarify that its wholly-owned subsidiary, Perwaja Steel Sdn Bhd (“PSSB”) has in fact ceased all material operations since August 2013 when its dry gas and electricity supplies were curtailed. Given the cessation of operations, PSSB intends to undertake a company-wide retrenchment programme for its employees (“Proposed Retrenchment Programme”).
As at the date of this announcement, PSSB has about 1,000 employees under its employment. All the employees have been informed on the Proposed Retrenchment Programme, and PSSB is currently undertaking a consultation process with the employees via their appointed representatives.
The financial impact of the Proposed Retrenchment Programme on Perwaja group can only be determined upon finalisation of the terms of the Proposed Retrenchment Programme, and which will be announced in due course.
This announcement is dated 15 December 2014.

"Perwaja to close shop, lay off 1,500"
see :http://www.nst.com.my/node/61776

So it is finally confirmed.

Terengganu Wants Eastern Steel To Employ Perwaja Workers?
http://www.bernama.com/bernama/v7/ge/newsgeneral.php?id=1092859

1) TOTAL ASSETS = 3,010,371 x 1,000RM
2) Total liabilities = 2,960,421 x 1,000RM
3) So NET Asset = (1)-(2) = 49,950 x 1,000RM

4) Number Of Shares Issued And Fully Paid-up = 1,049,358 x 1,000

5) NTA per share = 49,950 / 1,049,358 = 0.048 RM = 4.8 sen

You are right, it is not RM4.80

Kinsteel escape PN17 because of revaluation of plant machinery?

"Notis pemberhentian kerja" memo to the workers of Perwaja?

http://cipantapirtenuk.blogspot.com/2014/11/selamat-jalan-perwaja.html

Notis pemberhentian kerja to the workers of Perwaja?

http://cipantapirtenuk.blogspot.com/2014/11/selamat-jalan-perwaja.html

In about 2 and half weeks time, Kinsteel & pPerwaja will submit accounts for the quarter July-Sept, we will see their latest financial situation.

Comparing the positions (major items) from 31-Dec-2012 to 30-Jun-2014:

Trade payables decreased from RM0.93billion to RM0.56 billion.

If you read the audited accounts, you find that Perwaja have sold off almost all the stocks of raw materials and finished goods to generate cash to pay creditors. What else will they sell to pay the banks, or will there be any cash injection from other parties.

The auditors have been making statements of concern since the 2012 report for both Kinsteel & Perwaja, and repeating it for the current report.

Kinsteel & Perwaja submitted reports just at the last moment, so no suspension.
As expected, huge losses + negative net assets + negative cash flow.

In 1997, Malaysian government sold Perwaja after absorbing RM2.98 billion in losses, thereby completely cutting itself off from this unhappy episode. see
http://news.google.com/newspapers?nid=1309&dat=19970123&id=rPxOAAAAIBAJ&sjid=PRUEAAAAIBAJ&pg=1757,3086774

The government is not going to go back to rescuing Perwaja.

It would be interesting to see how they are going to rescue the company, if any party wants to takeover and attempt it. Just injecting money is not going to help much. Even if Malaysia ban China imports, they still have problems.

Steel plants are expensive to operate and maintain, and those plants inherited by Kinsteel from the original Perwaja are big ones compared to smaller players like Masteel. In the steel industry, if you are unable to run 24/7 you incur huge overhead losses. Masteel can consistently make money because it is lean, its plants can run at higher utilisation levels, and in bad times it can adapt to market situations with lower overheads.

Furthermore, Kinsteel/Perwaja plant equipment set-up is at a disadvantage compared with other steel companies; it is huge, their beam section products are having marketability problems; their upstream plant is in Trengganu and the downstream in Kedah which incurs big transportation costs from coast to coast.

From 5 or 6 years ago, the plants have been running on & off, there was talk of shifting the Gurun plants to the East coast, finally they shutdown and retrenched in 2012 (see workers demo at http://www.youtube.com/watch?v=hvVLRH1EnOM).

What you mentioned about Southern Steel making more money using less capital is not only true for last quarter, it is also true if you add up the last 4 quarters or the last 8 quarters.

Compare last 4 quarters profit before tax
Southern Steel = RM30.9million
Ann Joo Resources = RM13.0 million

Compare last 8 quarters profit before tax
Southern Steel = RM75.3million
Ann Joo Resources = RM3.3 million

In the local integrated steel industry, ignoring the loss making ones of Kinsteel/Perwaja and Lion Corp, the profitable ones are Ann Joo, Southern Steel and Masteel. In 2011 Ann Joo added a mini blast furnace as a kind of upstream hybrid process, thus require more capital, but the revenue is more-or-less the same. Masteel is adding another rolling mill which is a downstream process in the same market, and Southern steel is adding a hot-roll-coil plant which is in a different market (similar to the Lion Corp one), so this we have to watch. I believe Masteel will be the most lean and profitable of the lot.

I bought Ann Joo shares when they are starting their BF project, with high expectations of good future performance. But now I am sitting on a major paper loss, as the share price have dropped as their performance have been very discouraging.
Ann Joo is supposed to have an advantage over others who do not have BF, but now more than 2 years of BF operation, the results show otherwise.
How come Masteel makes twice the profit with about half the turnover? Southern Steel's profit is more than 4 times with roughly the same turnover. Both these competitors operate in the same market environment too.
If your add up the performance for 4 or even more quarters (to even out short-term fluctuations) it is the same story : Ann joo is lagging way behind.

Ann Joo Resources profits are disappointing compared with Southern Steel Bhd or Malaysia Steel Works, despite having advantage of the blast furnace.