Good insights Andre, I would say definitely the steel price could hurt profitability in near future especially for MLT.
I think this the following is something that can be done by the management to reduce risk exposure to this:
1. Since DANCO's subsidiary is involved in pump/valve manufacture and some components can be passed on from MTL, such moves can reduce costs drastically.
2. As a portion of DANCO's business involves import and exporting equipments, USD's strength may or may not play in favor for DANCO.
3. Looking into the balance sheet and inventories, perhaps the management did have a good stock at hand before the steel price rallied.
4. Otherwise, I would expect them to pass on the costs to end customer.
Overall, the influx of liquidity into the economy causes inflation, I would say this effect might be felt throughout other industries as well. This coming quarter would be a good fit to test out DANCO's management for this type of exposure.
@andre kua the steel price will not be big problem for danco，my family business is also steel stamping，customer still need your product，price will be mark up，doesnt mean steel price go up，everyone dont need to use steel right？
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