Posted by probability > 2017-02-18 14:05 | Report Abuse

http://www.thestar.com.my/business/business-news/2016/11/14/southern-steel-achieves-profit-for-first-time-in-2-years/

extract from not too old news above:

“However, (the) local market remains competitive as it will take a few months before the existing market inventory of cheap imports can be exhausted."


to me this means..they hope they can raise the selling price of their products in a "few months time"...when the cheap inventory of their competitors is exhausted...i.e, the true Selling Price of their products with respect International (China) market is yet to be reflected compounded by the effects of the 13.9% and 13.4% safeguard duties..

Posted by probability > 2017-02-18 14:34 | Report Abuse

in the following youtube 2 mins, one can see how from scrap steel it is melted and converted to billets and then extruded to produce rebars:

https://www.youtube.com/watch?v=J6n9sci8j-8

Question: if you are China who is trying to penetrate Malaysian local market on Rebars can you actually damage the margin of local rebar manufacturer's margin to go below 13.5%? Is this theoretically possible?


Say in my Country (China) i have Scrap steel valued at RM X/ton, and assuming i do not add any margin at all to my manufacturing plant sell the finished product at my Cost at Incoterms CFR, Port Klang: RM X/ton...(note: no Labor Overhead, Transportation and Insurance costs is added here).... this means the local (Malaysia) property & infrastructure constructors can at the most minimum only buy at 1.135*X RM/ton right?

So, wouldn't SS is assured to have a minimum 13.5% rock bottom gross margin? Note, this is even assuming they (SS) import the Scrap steel from China at their price RM X/ton and there are all the reasons for the Scrap steel locally to be cheaper than this value...after all they are the remnants of the years cheap steel injected by China to Malaysia.

To me as long as this safeguard duty of 13.5% remains - SS is in fact a solid investment.

Posted by probability > 2017-02-18 16:43 | Report Abuse

Say SS buys Billets from China instead of local Scrap Steel, these Billets are made from Scrap Steel (EAF route)..and there is no reason for the Billet price to go up unlike those billets produced from 'Iron Ore & Coking Coal' (BOF route) where the price had risen recently..

Except only due to competition which affects the price of Billets made via EAF route indirectly...but not due to its raw material itself.

I think considering the closure of many steel manufacturing facilities in China...cheap Scrap Steel will stay around for long time in China to produce cheap billets.

Posted by probability > 2017-02-18 16:50 | Report Abuse

http://www.tenaris.com/ProductsServices/IndustrialAutomotive/de/flash/AceriaENG.swf

Note the above process does not involve 'coking coal' - the main raw material which had caused the steel price to rocket sky high.

Posted by Triple > 2017-02-18 21:49 | Report Abuse

Just keep this in portfolio, I believe that SS share price will surge anytime since the latest result is too good. I guess SS should worth around RM1.73 or above.

Posted by probability > 2017-02-19 15:41 | Report Abuse

Tiger Shark..is certainly knowledgeable:

to me greatest eye-opener is the fact that to produce Rebars you are not dependent on Coal..you only need Scrap Steel.


Posted by Tiger_shark > Feb 16, 2017 05:43 PM | Report Abuse

ss only buy 50% of scrap just to keep melting shop busy, cannot make money but the rolling mill to produce rebar running 3 full-shifts. Billets source from China still at a very good price.

Question of high material cost is not a concern for SS, so far construction bar demand is not slowing down looking at the on going government projects

Posted by Tiger_shark > Feb 17, 2017 05:40 PM | Report Abuse

many people still think SS will have the same faith as CSC after the cheap raw material depleted.

With 4 rolling mills, daily steel consumption is 6000ton. if 50% is imported, 3000ton/day need to be imported, If there is any cheap raw mat left in the store??? Those were last year concern, with this good quarter result, SS already turnaround and will continue to make profit.

Posted by erkongseng > 2017-02-19 17:37 | Report Abuse

http://www.thestar.com.my/business/business-news/2016/12/21/steel-could-shine-in-2017-as-china-expands-capacity-controls/

Posted by probability > 2017-02-19 18:50 | Report Abuse

thanks for sharing erkongseng....

you know what this means?

all those steel producers who uses scrap steel as their raw material base and intermediate processors will have fattening margins.

Why? Coz they will use the same excuse of steel price has risen to jack-up their product price...they are the hidden beneficiaries.

This reminds me of an incident recently when i wanted to buy some durians in Muar...the musangking was selling at RM50 per kilo..i asked why so damn expensive??

He said...coz RM exchange to USD jatuh...lol!

Posted by probability > 2017-02-19 21:12 | Report Abuse

since Megasteel had closed down, it would be a strategic decision if SS can accumulate these cheap Scrap steels (presumably) as much as possible. Guess that is the reason they are not reducing the debts...

wondering if competitive demand for these is only from Ann Joo side?

Posted by Albukhary > 2017-02-19 23:42 | Report Abuse

Forward PE = 8.6 x 4 = 34.4 sen

Based on PE 9 times, the share price can go as high as RM3.10.

Let put a discount of 30%, SSTEEL should be at RM2.16 level.

So short term target RM1.60 is achievable.

Long term target is RM2.16, if next quarter SSTEEL produce the same or better result as current quarter.

Posted by MrPauper > 2017-02-20 00:26 | Report Abuse

If Ssteel is able to maintain the current EPS throughout the remaining 2 quarters, most probably the management will declare dividend at the end of the financial rear ending 30 june 2017.

A dividend paying company should be able to attract a pe of 10 and above.

Just look at annjoo is enough

Posted by Tiger_shark > 2017-02-20 09:56 | Report Abuse

In steel industries, meltshop like blast furnace, EAF are not able to generate profit. These are mainly to ensure supply ability to rolling mill to produce rebar. SS has 4 rolling mills vs Annjoo 2 rolling mills. SS has 2 EAF Vs Annjoo 1 EAF/blast furnace (so call hybric blast furnace). In term of capacity SS double of Annjoo.

EAF and blast furnace wastage around 12%-meaning scrap or Iron ore melted will only produce 88% billets and rolling mills wastage is about 1% meaning 99% rebar will be produced from billets (raw mat for rolling mill)-This the reason why I said EAF or blast furnace cannot make money.

Furthermore with high EAF/blast furnace wastage, environment issue is very severe. The is the main reason China government instruct all steel mills to stop production due to pollution. Steel mills around city area will have to move to a lesser populated area.
(Steel mills in China now are facing dilemma, and construction of new mills, one would probably need two to three years or they will be coming to south east asia to take over liquidated steel mills like perwaja, mega steel etc)

In long run, SS will be the winner against Annjoo-I believe

Posted by Tiger_shark > 2017-02-20 15:33 | Report Abuse

From the last quarter result, SS was selling around Rm1700/ton. Next quarter with the increase in rebar selling price to Rm1800. The predicted quarter result will be double to 80 mils eps 16 provided the USD remain stable

Posted by Tiger_shark > 2017-02-21 10:56 | Report Abuse

SS production 133K ton each month of rebar (400K each qaurter) additional of RM100/ton of profit means additional of 40mils each quarter. now one can see the quantum of price increase, is gigantic figure.

Posted by probability > 2017-02-21 11:13 | Report Abuse

Was checking on Danieli who had supplied the Thin Slab Caster earlier:

https://en.wikipedia.org/wiki/Danieli

http://www.danieli.com/en/products/products-processes-and-technologies/thin-slab-casters_26_58.htm

They are not a conman company. They had supplied hundreds of such machines and the world third largest manufacturer - i dont think the product quality issue something that cannot be resolved.

Imagine if they can start making HRC coils after the rectification..

Posted by Tiger_shark > 2017-02-21 11:15 | Report Abuse

now can sit back and see the profit run, but we must not also forget, We only harvest the profit of many years of struggling of steel mills due to steel dumping by China product couple with in decisive weak government until the collapse of mega steel with thousands workers jobless.

Posted by nicky11 > 2017-02-21 11:29 | Report Abuse

Hi probability, as SSteel just terminated the contract with Danieli and wrote off such a huge lost. If in future they want to continue the HRC project, maybe they will find another vendor.

Posted by nicky11 > 2017-02-21 11:30 | Report Abuse

Finally it hit 1.50...

Posted by probability > 2017-02-21 11:35 | Report Abuse

yes nicky..i am aware. Just stressing that the equipment defect issue can definitely be rectified probably with assistance from another vendor.

Posted by nicky11 > Feb 21, 2017 11:29 AM | Report Abuse

Hi probability, as SSteel just terminated the contract with Danieli and wrote off such a huge lost. If in future they want to continue the HRC project, maybe they will find another vendor.

Posted by nicky11 > 2017-02-21 11:44 | Report Abuse

Yes, all the equipment and materials are there. If some vendor able to modify it, it will be another profit line. Only thing is which vendor will accept this mess. hmm~

Posted by Zai Zai > 2017-02-21 11:54 | Report Abuse

Probability,MrPauper

I confirm again. Competitor has been stop operation more than 1w due to accident.
They have direct switch to ssteel

Posted by moneySIFU > 2017-02-21 11:59 | Report Abuse

Good discussions from all & I diam diam wait for more to come

Posted by moneySIFU > 2017-02-21 12:02 | Report Abuse

Good to see probability join the boat, let's huat together :)

Posted by moneySIFU > 2017-02-21 12:03 | Report Abuse

The extraordinary profit registered by ann joo for QR30/6/2016 was something happened once in the blue moon & is not repeatable.

Posted by moneySIFU > 2017-02-21 12:06 | Report Abuse

So something has to be come down & something ought to be going up if both are put on the scare.

Posted by probability > 2017-02-21 12:08 | Report Abuse

you lead the way in identifying gems $$-sifu ;)

Posted by moneySIFU > Feb 21, 2017 12:02 PM | Report Abuse

Good to see probability join the boat, let's huat together :)

Posted by moneySIFU > 2017-02-21 12:11 | Report Abuse

There is so much more for me to learn from you in terms of technical aspects when come to business operations :)

Posted by elvingan > 2017-02-21 12:34 | Report Abuse

run already tp rm 1.80 coming soon..

Posted by MrPauper > 2017-02-21 12:37 | Report Abuse

Thanks Zai Zai for the useful info

Posted by nicky11 > 2017-02-21 13:48 | Report Abuse

Personally feel if competitor paused the production for 1 & 2 weeks, their supply to customer won't stop as they have inventories for few months. It is quite normal for a factory. The direct benefit to SSteel seems is not high.

Posted by Ahbeng11 > 2017-02-21 13:56 | Report Abuse

This is the only steel counter which still far lagging behind the others. There is more room to rise in share price compare to others .

Posted by Tiger_shark > 2017-02-21 14:21 | Report Abuse

production stop for two weeks means a lot of losses in term revenue, estimate rm 62mils for annjoo. 16% of revenue will be deflated in next quarter result. But I doubt the whole factory will stop production unless it is really catastrophic

Posted by probability > 2017-02-21 16:30 | Report Abuse

wondering if Masteel exploding because of rising rebar price..

Posted by elvingan > 2017-02-21 16:35 | Report Abuse

focus ssteel and masteel and annjoo-pa now,hihi...

Posted by elvingan > 2017-02-21 17:01 | Report Abuse

yes ! today close new high......cheers..

Posted by WealthWizard > 2017-02-21 17:16 | Report Abuse

Congratulation to all shareholders!

Posted by WealthWizard > 2017-02-21 17:18 | Report Abuse

I have to say sorry that I have been busy on family, work & income tax before & after CNY, the article that I planned to write is actually out of date now following the announcement of latest QR.

I wish all enjoy the re-discovery of SSteel & ride on the move. CHEERS!

Posted by Tiger_shark > 2017-02-21 17:30 | Report Abuse

congratulation to all, cheers

Posted by erkongseng > 2017-02-21 18:56 | Report Abuse

Ssteel 多几个月就可抵这rm2 的路程,買入与守住是良策！

Posted by probability > 2017-02-21 19:19 | Report Abuse

Ann Joo EPS almost matching SS.
I think the show has begun..

Posted by mbs7633 > 2017-02-21 19:24 | Report Abuse

AJ latest EPS 9.18c, SS 8.67c. I think long steel counters will perform starting from tomorrow.

Posted by Johnnys > 2017-02-21 19:24 | Report Abuse

just be patients, BIG return is coming.

Posted by Up_down > 2017-02-21 19:36 | Report Abuse

Just in time to enjoy spillover effect of AnJoo's good earnings. Go go go

Posted by erkongseng > 2017-02-21 20:36 | Report Abuse

黑色系普涨 铁矿石大涨4.5%刷新历史新高。
http://m.wallstreetcn.com/node/291044

Posted by nicky11 > 2017-02-21 20:49 | Report Abuse

Tomorrow long steel industries will gap up again due to Annjoo result.

Posted by moneySIFU > 2017-02-21 22:01 | Report Abuse

If both earning the similar profits, then Mr Market will adjust the difference accordingly.

Posted by erkongseng > 2017-02-21 22:16 | Report Abuse

http://www.100ppi.com/news/detail-20170221-1010148.html

Posted by elvingan > 2017-02-22 01:43 | Report Abuse

if annjoo can hit rm 3.00, ssteel also can hit above rm 2.00...watch show 22/2/17

Posted by erkongseng > 2017-02-22 07:08 | Report Abuse

http://www.100ppi.com/news/detail-20170221-1010126.html

Posted by erkongseng > 2017-02-22 07:12 | Report Abuse

http://www.100ppi.com/news/detail-20170221-1010133.html