Posted by MonkeyBusiness > 2016-09-25 18:53 | Report Abuse

Before everyone feeling too excited about the steel industry, maybe author or someone can help to explain the following:

Prices of Rebar in Malaysia (Source: MITI)

----------Low-----High

21/9/2016 1,720 1,870
15/9/2016 1,720 1,870
8/9/2016 1,800 1,950
30/8/2016 1,750 1,990
26/8/2016 1,840 1,990
26/7/2016 1,780 1,930
24/6/2016 1,750 1,950
30/5/2016 2,180 2,380
22/4/2016 2,100 2,300
21/3/2016 1,650 1,800
26/2/2016 1,520 1,620
27/1/2016 1,450 1,550
22/12/2015 1,450 1,550
17/11/2015 1,500 1,600
27/10/2015 1,500 1,600
22/9/2015 1,600 1,700
26/8/2015 1,580 1,680
28/7/2015 1,650 1,750
30/6/2015 1,760 1,860
27/5/2015 1,840 1,940
28/4/2015 1,840 1,940
31/3/2015 1,850 1,950
24/2/2015 1,800 1,900
27/1/2015 1,900 2,000

Posted by MonkeyBusiness > 2016-09-25 18:55 | Report Abuse

The financial period ended 31/3/2016 were largely helped by forex gain of RM 6,049,000

The profit of RM5,076,000 would become loss of RM973,000

Posted by MonkeyBusiness > 2016-09-25 18:58 | Report Abuse

Malaysia experienced shortage of rebar in April & May, causing the price rocketed to sky level, but the revenue of Masteel for quarter (1/4/2016-30/6/2016) was RM268m, slightly higher than last year's same period RM242m.

Posted by MonkeyBusiness > 2016-09-25 19:01 | Report Abuse

Did the profit in that quarter helped by clearance of stocks at much higher prices because of cancellation of supplies from China?

Rebar price has since then gone down.

Posted by erkongseng > 2016-09-25 19:04 | Report Abuse

100%PROFIT:a full year EPS of 35.2 (4.4c * 4Q * 2) shouldn’t be too surprising. Assigning a PE of 5 would yield a TP of RM1.76
100% 净利：感恩你专业与诚实的分享，谢谢了。

Posted by MonkeyBusiness > 2016-09-25 19:06 | Report Abuse

How about cost of productions for rebar? Has it gone down as well? What is the margin before the sudden surge & after?

Not knowing the rebal prices in malaysia, not knowing the cost structure of producing rebar, not knowing the exact prices in China, what can we predict the performance of a company?

Posted by MonkeyBusiness > 2016-09-25 19:09 | Report Abuse

I knew this website way before this article, I did not trust this analysis because it has not stated the sources of data, users contributed towards the date & so on.

Nothing was mentioned in their website.

I have even registered with the website but getting the same report every week.

http://steelbenchmarker.com/files/history.pdf

Posted by MonkeyBusiness > 2016-09-25 19:10 | Report Abuse

I will publish an article to discuss further about this topic

Posted by PlsGiveBonus > 2016-09-25 19:14 | Report Abuse

Tighten the seat belt
:)

Posted by MonkeyBusiness > 2016-09-25 19:26 | Report Abuse

Please take note that MRT2 project won't help much because it is just continuous part of MRT1 project.

It's is not something new demand, it is just making demand for steel to continue sustain at previous level.

If during the execution of MRT1 project in previous did not make all steel producers profitable, what so special about MRT2 project to steel producers, especially those producing long products.

Posted by MonkeyBusiness > 2016-09-25 19:28 | Report Abuse

The article just touch on the face of industry, not deep discussion into prices & costs, then projected huge profits in coming months assuming rebar price is now still RM2,400 as in April & May 2016.

Posted by MonkeyBusiness > 2016-09-25 19:29 | Report Abuse

So tighten the seat belt to fall?

Posted by probability > 2016-09-25 19:35 | Report Abuse

wah..that means the whole pile of Inventory (double of the McaP) will be written down?

Posted by IBanker > 2016-09-25 19:36 | Report Abuse

Monkey Business, you're just a theory king. Pls go and get more knowledge about steel industry before talk like a pro.

Posted by probability > 2016-09-25 19:39 | Report Abuse

from 2400 drop to 1870..thats like 22% drop in the value of its inventory?

Posted by probability > 2016-09-25 19:42 | Report Abuse

ok..may be 4% drop in the value of inventory only since they must have accumulated it long time ago slowly...but at 4% margin on revenue...things can get very critical.

Posted by MonkeyBusiness > 2016-09-25 19:53 | Report Abuse

IBanker, you just want to listen to what you wanted to listen, never look at my points.

I am not pro, but judging from my comments & yours, I know more than you.

Posted by MonkeyBusiness > 2016-09-25 19:54 | Report Abuse

Argue my points, don't simply give general not relevant opinion

Posted by WB2F > 2016-09-25 19:56 | Report Abuse

WB2F Last year posted RM50 million losses. Are you all sure that this counter still can buy ??? Overall global steel industry still not so good. :(

Posted by MonkeyBusiness > 2016-09-25 19:56 | Report Abuse

probability, the author has not discussed about it.

But for me, I don't know, it could be worse, maybe.

Posted by calvintaneng > 2016-09-25 19:57 | Report Abuse

Posted by MonkeyBusiness > Sep 25, 2016 06:53 PM | Report Abuse

Before everyone feeling too excited about the steel industry, maybe author or someone can help to explain the following:

Prices of Rebar in Malaysia (Source: MITI)

----------Low-----High

21/9/2016 1,720 1,870
15/9/2016 1,720 1,870
8/9/2016 1,800 1,950
30/8/2016 1,750 1,990
26/8/2016 1,840 1,990
26/7/2016 1,780 1,930
24/6/2016 1,750 1,950
30/5/2016 2,180 2,380
22/4/2016 2,100 2,300
21/3/2016 1,650 1,800
26/2/2016 1,520 1,620
27/1/2016 1,450 1,550
22/12/2015 1,450 1,550
17/11/2015 1,500 1,600
27/10/2015 1,500 1,600
22/9/2015 1,600 1,700
26/8/2015 1,580 1,680
28/7/2015 1,650 1,750
30/6/2015 1,760 1,860
27/5/2015 1,840 1,940
28/4/2015 1,840 1,940
31/3/2015 1,850 1,950
24/2/2015 1,800 1,900
27/1/2015 1,900 2,000


Calvin replies,

Rebar prices are in middle range pricing BUT LOOK AT COST OF PRODUCTION WHICH FELL EVEN MUCH MORE DUE TO VERY CHEAP IRON & SCRAP STEEL PRICES. So the profit margin increases by a much bigger margin overall

And with Rm32 Billions New Mrt Orders Masteel's order book will scale and spike upwards

See

http://marketrealist.com/2015/02/latest-steel-industry-indicators-mean-investors/

http://www.indexmundi.com/commodities/?commodity=iron-ore&months=120

Posted by MonkeyBusiness > 2016-09-25 19:58 | Report Abuse

When existing price is similar to last year's price and last year suffering huge loss, what is the magic can make the profit double than even when price was RM2,400 in April & May 2016?

Posted by MonkeyBusiness > 2016-09-25 19:59 | Report Abuse

New production line does not guarantee lower cost, look at Megasteel, huge unutilised production capacity, finally dead.

Posted by MonkeyBusiness > 2016-09-25 20:00 | Report Abuse

Also look at China, increased production capacity to lower cost, end up lower selling price because too much capacity.

that's the reason China government has been working hard to cut down capacity.

Posted by probability > 2016-09-25 20:00 | Report Abuse

https://www.metalbulletin.com/Article/3458686/Domestic-rebar-prices-in-Malaysia-continue-to-weigh-down-by-imports.html


Domestic rebar prices in Malaysia continue to weigh down by imports

Domestic rebar offer prices in Malaysia continued to retreat over the past month as mills made cuts to compete against an influx of cheap imports from China, market participants said on Tuesday June 2.


Malaysian mills are offering 16-32mm rebar at 1,750-1,760 ringgit ($475-477) per tonne delivered this week, down from 1,820 ringgit ($494) per tonne a month ago. The price is not inclusive of a 6% goods and services tax, which came into effect on April 1. The premium for smaller-sized rebar remained unchanged at 100...

Posted by MonkeyBusiness > 2016-09-25 20:02 | Report Abuse

Calvin tan, please look at my earlier comment about MRT2 project:

Please take note that MRT2 project won't help much because it is just continuous part of MRT1 project.

It's is not something new demand, it is just making demand for steel to continue sustain at previous level.

If during the execution of MRT1 project in previous did not make all steel producers profitable, what so special about MRT2 project to steel producers, especially those producing long products.
25/09/2016 19:26

Posted by probability > 2016-09-25 20:05 | Report Abuse

MonkeyBusiness, it would be good if you can provide the link on the rebar prices you had presented.

Calvin, please don't link price of raw material with products at different time frame.......and confuse people.

Posted by MonkeyBusiness > 2016-09-25 20:05 | Report Abuse

probability, my price list below was extracted from Ministry of International Trade and Industry, so it is reliable:

Please visit http://www.miti.gov.my/index.php/pages/view/3060?mid=73 & read the MITI Weekly Bulletin.

Prices of Rebar in Malaysia (Source: MITI)

----------Low-----High

21/9/2016 1,720 1,870
15/9/2016 1,720 1,870
8/9/2016 1,800 1,950
30/8/2016 1,750 1,990
26/8/2016 1,840 1,990
26/7/2016 1,780 1,930
24/6/2016 1,750 1,950
30/5/2016 2,180 2,380
22/4/2016 2,100 2,300
21/3/2016 1,650 1,800
26/2/2016 1,520 1,620
27/1/2016 1,450 1,550
22/12/2015 1,450 1,550
17/11/2015 1,500 1,600
27/10/2015 1,500 1,600
22/9/2015 1,600 1,700
26/8/2015 1,580 1,680
28/7/2015 1,650 1,750
30/6/2015 1,760 1,860
27/5/2015 1,840 1,940
28/4/2015 1,840 1,940
31/3/2015 1,850 1,950
24/2/2015 1,800 1,900
27/1/2015 1,900 2,000

Posted by MonkeyBusiness > 2016-09-25 20:08 | Report Abuse

Page 9 MITI Weekly Bulletin 2016 : Volume 404 - 21 September 2016

http://www.miti.gov.my/miti/resources/MITI%20Weekly%20Bulletin/MITI_Weekly_Bulletin_Volume_404_-_21_September_2016.pdf

Posted by wallstreet82 > 2016-09-25 20:08 | Report Abuse

Monkey Business, in the recent QR of Megasteel under Prospect Section, the Company has hinted that the demand for next few months will be much higher. Apart from this, MITI safeguard on long products will benefit to the Company significant if it's approved.

Posted by calvintaneng > 2016-09-25 20:09 | Report Abuse

MonkeyBusiness New production line does not guarantee lower cost, look at Megasteel, huge unutilised production capacity, finally dead.
25/09/2016 19:59

5 Things Will Increase MASTEEL'S PROFITS EXPONENTIALLY:

1) Stoppage from illegal China's Rebar Dumping.

2) Imposing levy on China rebar.

3) Very Cheap Scrap Steel as raw material. Masteel capitalizes from even cheaper Scrap metal than imported iron ore. This sets its cost even lower than others.

4) Increase of Demand due to Many MRT, LRT & Heavy Infrar works.

5) Proximity to supply source saves on transport. The recent launch of MRT 2 with Rm32 Billions job is nearest Masteel's factories in PJ & Klang. It is far cheaper for Masteel than other steel cos.

MASTEEL IS ON TO GOLDEN YEARS AHEAD.

The very name means EMAS - STEEL

Posted by MonkeyBusiness > 2016-09-25 20:11 | Report Abuse

Fair said, wallstreet82, so please closely monitor the price via MITI website.

Posted by MonkeyBusiness > 2016-09-25 20:11 | Report Abuse

Calvin tan, No.1 is the most important one, others not so convincing.

Posted by wallstreet82 > 2016-09-25 20:12 | Report Abuse

To understand why Masteel can achieve better result, Monkey Business you'll have to do more homework. Not only keep quoting prices etc. A lot of analysts like you like to talk with figures without good business sense always bring investors to Holland.

Posted by probability > 2016-09-25 20:13 | Report Abuse

wallstreet82....anti-dumping duties would definitely improve the profitability of a company manufacturing products with low 'retention time' in their factory. i.e with a low inventory so that they can react on the supply pricing and selling prices according to the market.

im only worried due to the large pile of inventory Masteel, which acts as double-edged sword depending on the price trend of their products.

Posted by wallstreet82 > 2016-09-25 20:15 | Report Abuse

Let's compare the rebar price in 2015 and 2016 in the same period:
21/3/2016 1,650 1,800
26/2/2016 1,520 1,620
27/1/2016 1,450 1,550
31/3/2015 1,850 1,950
24/2/2015 1,800 1,900
27/1/2015 1,900 2,000

Prices in 2016 (Jan - March) is lower than previous year corresponding period. The profit in that period:
2016 Q1: RM5M profit
2015 Q1: (RM10M) losses

Why are they making more profit when the rebar price is lower? Monkey Business, do more homework lar!

Posted by probability > 2016-09-25 20:19 | Report Abuse

its not the absolute price that matters, it is the trailing 3 months pricing of raw material compared with the forward 3 months of the products pricing. Its like you buy something ingredients cook and then sell...there is processing time involved.

Posted by calvintaneng > 2016-09-25 20:25 | Report Abuse

PROSPECTS
The domestic steel industry is set to benefit from resilient demand of steel bars in 2016 and over the coming years,
driven by the implementation of key infrastructure projects throughout the nation by the Malaysian Government. This
includes the construction of various major expressways and the Klang Valley Mass Rapid Transit (KVMRT), as well as
increased property development activity in line with population growth.
A major part of this development boost would be centred in the Klang Valley, where our manufacturing facilities are
strategically located. Being one of the two players situated in close proximity to major construction activity in this region,

Posted by calvintaneng > 2016-09-25 20:26 | Report Abuse

Posted by calvintaneng > Sep 25, 2016 08:25 PM | Report Abuse X

PROSPECTS
The domestic steel industry is set to benefit from resilient demand of steel bars in 2016 and over the coming years,
driven by the implementation of key infrastructure projects throughout the nation by the Malaysian Government. This
includes the construction of various major expressways and the Klang Valley Mass Rapid Transit (KVMRT), as well as
increased property development activity in line with population growth.
A major part of this development boost would be centred in the Klang Valley, where our manufacturing facilities are
strategically located. Being one of the two players situated in close proximity to major construction activity in this region,


NOTE THESE WORDS,

TO BENEFIT FROM RESILIENT DEMAND OF STEEL BARS IN 2016

AND OVER THE COMING YEARS


DRIVEN BY CONSTRUCTION OF MAJOR EXPRESSWAYS & KLANG MRT


OUR MANUFACTURING FACILITIES ARE SITUATED IN CLOSE PROXIMITY TO MAJOR CONSTRUCTION ACTIVITY.

Posted by wallstreet82 > 2016-09-25 20:28 | Report Abuse

Hi Probability, you have a good question here. Whether the large pile of inventory hold is good, we must look at the China's continuous effort to cut their steel production, hence, price of steels will be maintained/go up higher to keep the margin much attractive.

Please read news as follows, published few days ago:
http://www.thefiscaltimes.com/latestnews/2016/09/21/Under-global-scrutiny-China-has-cut-steel-exports-industry-body

Posted by probability > Sep 25, 2016 08:13 PM | Report Abuse

wallstreet82....anti-dumping duties would definitely improve the profitability of a company manufacturing products with low 'retention time' in their factory. i.e with a low inventory so that they can react on the supply pricing and selling prices according to the market.

im only worried due to the large pile of inventory Masteel, which acts as double-edged sword depending on the price trend of their products.

Posted by probability > 2016-09-25 20:30 | Report Abuse

no one can predict the future price trend of their products...including management. Management could have overlooked this. They have no choice to buy raw material to continue running their factory - as there is cost involved by leaving the plant idle.

looking at the price trend, one should be cautiously wait and see the next qtr results.

Furthermore the effects of the recent duty imposed will take time to show the effects on the profitability..~ at least 6 months or more...

Posted by wallstreet82 > 2016-09-25 20:30 | Report Abuse

"Faced with global anger from Asia to the United States and Europe over a flood of cheap Chinese steel products, Beijing promised to cut steel capacity this year by 45 million tonnes and by 100-150 million tonnes over five years.By the end of July, China had only achieved 47 percent of its 2016 target"

Posted by MonkeyBusiness > 2016-09-25 20:41 | Report Abuse

wallstreet82, my homework is below, I said already but you pretend you never saw it:

MonkeyBusiness The financial period ended 31/3/2016 were largely helped by forex gain of RM 6,049,000

The profit of RM5,076,000 would become loss of RM973,000
25/09/2016 18:55

Posted by MonkeyBusiness > 2016-09-25 20:42 | Report Abuse

Why loss? wallstreet82, Since you are so clever, may be you can help to let us know the reason of loss?

And also the main reason for profit 10m in quarter from 1/4/2016 to 30/6/2016?

Posted by MonkeyBusiness > 2016-09-25 20:43 | Report Abuse

can that kind of profit repeat in the next quarter? i doubt it, but you can tell since you are clever than me.

Posted by MonkeyBusiness > 2016-09-25 20:44 | Report Abuse

You just need to answer, can or can not? That's simple, no skill required at all.

Posted by calvintaneng > 2016-09-25 20:52 | Report Abuse

Remember these sequences

The Eagle SEES First
Then followed by other flying birds
The chicken on the ground sees nothing at all until too late.

Last time when 9Mp projects were announced by the then Pm Badawi I went in to buy TASEK CEMENT at Rm2.90, YTL CEMENT at Rm2.40, CMSB at Rm2.20, CIMA at Rm2.20 LAFARGE At 66 CENTS.

All went up 300% to 500% in prices later! YTL Took YTL CEMENT PRIVATE!! UEM TOOK PRIVATE CIMA

So all Long Steel Stocks will do well Especially MASTEEL

Posted by probability > 2016-09-25 21:02 | Report Abuse

actually wallsteet82 gave some hope on Masteel after discovering the recent duty announcement...but with the 'cataract eagle' around...even the rabbits will laugh and hop away..

Posted by Hercules > 2016-09-26 09:45 | Report Abuse

MonkeyBusiness Before everyone feeling too excited about the steel industry, maybe author or someone can help to explain the following:

Prices of Rebar in Malaysia (Source: MITI)

----------Low-----High

21/9/2016 1,720 1,870
15/9/2016 1,720 1,870
8/9/2016 1,800 1,950
30/8/2016 1,750 1,990
26/8/2016 1,840 1,990
26/7/2016 1,780 1,930
24/6/2016 1,750 1,950
30/5/2016 2,180 2,380
22/4/2016 2,100 2,300
21/3/2016 1,650 1,800
26/2/2016 1,520 1,620
27/1/2016 1,450 1,550
22/12/2015 1,450 1,550
17/11/2015 1,500 1,600
27/10/2015 1,500 1,600
22/9/2015 1,600 1,700
26/8/2015 1,580 1,680
28/7/2015 1,650 1,750
30/6/2015 1,760 1,860
27/5/2015 1,840 1,940
28/4/2015 1,840 1,940
31/3/2015 1,850 1,950
24/2/2015 1,800 1,900
27/1/2015 1,900 2,000
25/09/2016 18:53

Hercules answer:-
You can notice that within Jan -June 2015 the price is around 1900 then the price started to drop from July 2015 till Jan 2016 to as low as 1450. The sharp drop is due to imported n smuggled steel oversupply in the market. You may ask why Apr-May 2016 price surge so high? Started early of Year 2016 the market demand is so low until many of the importers are facing lost n they forced to sell even below their cost because the price keep on dropping everyday and they can't take the risk if it continue dropping. Come back to why Apr-May 2016, price surge as high as 2180 is because during this time no more imported steel. With this safeguard, I believe their future earning would be better than this year which without imported steel as a competitor.

MonkeyBusiness actually u a good analyzer n not blindly follow the crowd without detail research, kudo for u! Also hope u can do more research and provide us more information.

Posted by ronnietan > 2016-09-26 10:52 | Report Abuse

Additionally, scrap metal costs were higher in 2015, and much higher in 2014.