The principal activities of the Group consist of manufacturing and trading of ductile iron pipes, steel and plastic pipes and fittings and waterworks related products, construction work and project management for waterworks and sewerage industry.
from what I understand, steel price has tracked china sudden surge in demand, which is then followed by iron ore prices increase (the raw material). so would it be correct to assume that local steel producers are benefiting from higher selling prices due to increase in global steel price and enforcement of anti-dumping, while raw material cost didn't increase as much mainly because they don't need to source from megasteel anymore? or is it also possible that the recent quarter results increase in margin is because the steel players are drawing down from old inventories (purchased at last year's price, cheaper than now even if it's was from megasteel) while steel price (selling price) has increased? so the timing mismatch resulted in higher margins? and if steel price (selling price) correct down together with iron ore (raw material price), do you think local steel producers can maintain their current margins? sorry for a lot of questions, just hoping to get a better understanding of the industry dynamics since you seem to have done quite some homework. thanks
I have read the Mycron annual report and some other quarterly commentaries. basically most quarterly statements summarise the better performance due to better selling price and lower costs (more or less) without giving the underlying factors (except Mycron AR). that's why I wanted to confirm my 1st question based on what I understand from wealthwizard's articles.
for the 2nd question, I can't find any confirmation except from observing the HRC/CRC/steel rebar/iron ore prices. it's my speculation. if it's true, then the better margins in 2Q could last shorter than expected.
3rd question actually is a bit tricky. probably even the companies also can't have an exact answer on how they could cope with prices fluctuations but I just wanted to see what everyone thinks about it.
Thanks, moneySIFU & Jay, for having good discussion over here.
I am working on Part 3 article which will dig deep into Mycron accounts, from there we may have better & true picture about CRC & HRC industry. Hope to have it completed by tomorrow.
Wealthwizard, could you share the supply chain of steel? From hrc to crc to??? Who are the big buyers for cscsteel? Are they in construction segment? Tq in advance :)
Hi chl1989, I can only analyze based on annual reports from those CRC companies and try to figure out the true pictures from those accounts.
Most of my findings are based on CSCSteel & Mycron, these 2 are very generous in sharing the info & details of their businesses, especially Mycron.
For Eonmetal, nothing much thing can be digged out because they are giving too little info from their reports.
See what the eonmetal management explained on increase in profits: "This segment recorded PBT of RM0.6 million, a rise of RM1.3 million is in line with the increase in revenue." - Plant & Machinery Division
"This segment recorded PBT of RM3.8 million due to lower production costs" - Steel Division
YKGI was up & down, also not much things to be digged out.
There is priority issue need to be set for respective stocks, I think Mycron should go first since there was misunderstanding by many in reading their latest QR.
Hi moneySIFU, WealthWizard, May I know how Mycron "Projected Next 4Q" profit RM63,282,000 being calculated? As normal calculation, it will take latest quarter profit 9,336,000*4=37,344,000. Can you show me how to get accurate value RM63,282,000? Just wish to learn from you. Thank you.
@Wealthwizard Thanks for the sharing! Could you please enlighten me about your estimated value in table 7(projected 12 months cash flow)? 1) Adjustments 2) Tax, interest paid and received
It will be great if any weaknesses, incorrect calculation or basis can be pointed out for discussion rather than giving a general opinion or telling where price should go.
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.
only reason it failed to show spectacular earnings as WW had projected was due to USD->RM exchange and the speed the raw material price rise was way too faster than the local market could accept the CRC products rise...
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Posted by i4investor > 2016-09-07 15:11 | Report Abuse
How about YLI?