hi! Hewiester, O&G play in only bet in SKpetro these days and only for trading purpose. As for Wah Seong i'm quite neutral in it. Price wise i expect it to stable for the time being and needs new catalyst to boost up price. As for Prestar i will add more on weakness. Tips for u ... have a look on Penta Master. Me already in @ 1.21. If u interested lets discuss in Penta i3 cos not nice to disturb Prestar conversation here............Cheers!!
Posted by ronnietan > Dec 3, 2016 12:22 AM | Report Abuse
probability, you said Prestar now imports HRC from Posco with small duty? Howcome small duty. HRC at a lower price perhaps. So it might be similar for CSC which could import from Taiwanese parent.
The above lesser duty on CRC of ~ 3 % from POSCO Korea and Vietnam compared to other countries at 10 -20 over % appears to be specifically catered for PRESTAR.
POSCO based in Vietnam or Korea could procure HRC as their raw material without a high duty unlike Malaysian HRC consumers like Mycron & YKGI.... As such they can produce CRC at way cheaper pricing.
Posted by probability > Dec 3, 2016 11:10 AM | Report Abuse X
Raider, the duty above is for CRC and not HRC....
Key difference between (1) Mycron / Cscsteel/ YKGI with (2) Prestar:
- (1) uses Imported HRC now as their raw material due to Megasteel Closure
- (2) mainly uses CRC imported from its susbsidaries (this is the reason the Duty is placed very low relative to other supplier , refer link from MITI above).
- (2) also uses HRC to make the CRC but likely using Vietnam to acquire the cheaply imported HRC there in Vietnam with lesser duty and then convert to CRC.
- the last two phenomenon is indirectly disabling (1) excluding Cscsteel to raise their Selling Prices of CRC as their Buyers - end downstream manufactures need a competitive price of CRC as their raw material to compete with PRESTAR.
i believe this is the reason PRESTAR had mentioned that they stand to gain from the closure of Megasteel in their latest qtr report.
If one studies Mycron's latest quarterly results, one would know that their Steel Tube segment margin had significantly improved compared to their quarter ending 31March 2016 albeit marginally lower than the preceding qtr performance. This is purely due to Imported HRC and the rise in Steel Tubes pricing accordingly.
The Steel Tubes produced by Prestar are of similar specification to Mycron unlike Choo Bee's which are not suited to high end petrochemical or process plant applications.
In general, domestically CRC will up tandemly with China global CRC steel price.
Mycron's customers might had fill up their store with crc raw materials. Usually, restocking will repeat for every 2-3 months depend on their orders and store space.
Pay little bit of time, surely crc price will surge by next restocking activities.
TOTAL 16 MACHINES (RAWANG X9, KLANG X7) - 294,000 MT/YEAR
Imagine even if it operates at bloody HALF of the capacity - 50% discount, with an absolute margin of just RM 200 per ton, gross profit already hit 30 Million. This already translate to EPS of 13 cents! PE10 already 1.30...
And note that above is ONLY for the POSCO - MKPC Sdn Bhd placed at Klang & Rawang.
(Furthermore the above are tailored made end products which demands a better margin unlike commodity lie Rolling process in mycron or cscsteel)
...and WTF!, We have not even considered the highly profitable STEEL TUBE Tube segment below:
Prestar Steel Pipes Sdn Bhd, Prestar Precision Tube Sdn Bhd,
(Note Mycron is currently having Margin of more than RM 550 per ton - latest quarter).
Tashin Steel Sdn Bhd, Dai Dong Steel Sdn Bhd Prestar Manufacturing Sdn Bhd Prestar Engineering Sdn Bhd - road railing maker (clear value addition here) - fat margin! Prestar Galvanising Sdn Bhd - there is clear value addition here.
No wonder the owners & major shareholder bought the shares actively earlier..
Their CRC imported are produced by Manufacturers in Korea who does not have any duty imposed on their raw material HRC in Korea. As such POSCO Korea's CRC would be super cheap and competitive locally in Malaysia...
This partly answers why the local CRC producers are unable to raise the price effectively.
A manufacturer like Prestar who can import these CRC say at X% duty and enable further value addition like - machining will obviously have very high competitive advantage. This as a minimum will be the HRC duty Y% imposed locally - i.e , Y% - X% = 15 - 0% = 15% . This the margin edge over others...
and one more intelligent could ask...why they did not say the same thing (megasteel closure benefit) in their immediate preceeding quarter?...after all the results of Choo Bee & Myron was phenomenal on immediate preceeding qtr right?
I leave that to others to think and figure out / respond /query. Coz then people might say i am cuckoo talking alone here.
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Posted by hewiester > 2016-12-01 10:51 | Report Abuse
Here we go.. Prestar the superstar is charging up north again! Are we ready guys?!?