Despite the rising cost of natural gas last year, coupled with a higher minimum wage threshold, let many manufacturing companies earn a lot of erosion, but engaged in iron and steel processing of HONGDA resources (PRESTAR, 9873, motherboard industry unit), net profit margins do not fall back, at the same time, the benefits than currently only 6.96 times times, the performance of the company has a great impact on 3 major factors is the key.
The annual closing of the $2016 billion December 31, in the annual revenue of the $621.48 million, a year of 0.74%, but the net profit increased by 128% to 24.34 million Ji. The company's 5-year revenue in the 600 million ringgit between the annual composite growth rate (CAGR) is only 1.4%, but the net profit is increased year by the year, 5 years of annual compound growth rate of 38.9%, significantly higher than the growth of revenue.
Last year is hung Tatsu resources of the past year, net profit margin of 3.9%, is the financial turmoil in 8 years after the average earning 1.6% of 1 time times, Hongda last time can achieve such a high margin, is 2007 fiscal year of 4%.
Judging from past performance, the profit margins of the company are a watershed in the 2015 fiscal year-end (October-December) and the 2016 fiscal year (April-June). The 2015 fiscal year is the company's POSKO-MKPC, Inc., hung up to a deficit for a profit season. And the 2016 fiscal year in the quarter is the company in obtaining cheaper raw materials, gross margin after years of breakthrough 10 11 around the bottleneck, a stroke of 14.68% quarters.
It was these 2 turning points that allowed the company's net profit to increase by 128% last year.
Management also explained in the quarterly bulletin that last year's net profit growth was attributable mainly to 3 reasons, namely, the rebound in international steel prices, the lower supply of raw material prices, and the profitability of joint ventures.
1. International Steel Price rebound
As the middle and lower reaches of the steel processing industry, the higher price of steel can improve the average price of the company's overall product, thus obtaining a better profit. Hongda Resources is a holding company, its subsidiaries mainly produce the use of trolleys, casters, etc., also engaged in steel processing and production of steel products, metal and steel products trade. In addition, Hongda Resources for automobiles, electronics, electrical appliances in the field of steel coil (steel coil) processing services.
According to Bloomberg data, the steel composite price index has fallen since 2012, and in 2015 year reached the lowest level of RMB 2073 per tonne. At this time of China, in 2015, the steel production of up to 822 million metric tons, is the global steel production of 49.2%, can be said that this wave of overcapacity is the culprit.
February 2016, the Chinese government planned to reduce the capacity of 100 million-150 million tonnes of steel in the next 5 years. China has aggressively defused the excess capacity of steel and has made the steel price rebound 2016, and international steel prices from the 2015 average of 2451 billion per tonne of RMB, progress 14.61% to 2809 RMB, at present prices for 3465 RMB per tonne.
In last year's quarterly bulletin, Management said that because of the closure of local manufacturers, the company could buy finished products from other suppliers, and indirectly save a lot of costs. According to reports, the Golden Lion Group's best Steel (Megasteel) in the last year closed snow state Banting plant, breaking the past must buy a specific number of local hot rolled steel coil regulations, the local steel industry to lower prices from overseas imports of hot rolled steel coil.
Cold rolled steel coil is mainly used for the production of electrical products, and the main raw materials are hot rolled coil.
It should be noted that Mei Jia Steel is the first domestic hot-rolled steel coil producers, and in the United States, after the production of steel production, the current only South Tatsu steel (SSTEEL, 5665, motherboard industry unit) has produced hot-rolled steel coil, it is difficult to meet domestic demand.
According to the MA Steel Industry Federation (MISIF), the total production of hot-rolled steel and cold-rolled steel in 2015 is only 1.5 million metric tonnes, but the total consumption of 2 products is up to 3.97 million tonnes, so the domestic steel industry must rely on imports to fill the gaps.
Domestic hot rolled steel coil and cold rolled steel coil manufacturers of the average capacity utilization rate of only 22%, this is the cause of the Mei Jia Steel year after year loss, eventually have to shut down the plant, the future want to restart the plant will be time-consuming, the short-term possibilities, which also means that HONGDA will continue to import cheaper steel from abroad, and retain the current earning.
3. Joint ventures to profit
Hongda Resources company POSCOMKPC Company because of foreign exchange and steel price factors, since 2014 the fiscal year has plunged into a loss, indirectly drag hung Tatsu resources; POSCO-MKPC Company successfully transferred to the deficit last year, the annual contribution of 3 million Ji, accounted for the company's net profit of 12%. Obviously, although Hong Tatsu resources only hold 30% stake, but the performance of POSCO-MKPC company, but significantly affect the profitability of the company earnings.
POSCO-MKPC Company is mainly from the parent company South Korea POSCO (POSCO) Imports of raw materials, and steel coil cut and cut into the automotive, electronics and construction use of automotive steel, cold-rolled steel, hot-rolled steel, steel sheet, stainless steel, galvanized steel and other products. The fluctuation of the exchange rate and steel price of the won and the POSCO-MKPC company is about 2 major factors of performance, so long as the exchange rate and iron price can stabilize, it is not difficult to believe that the company will continue to surrender good grades in the future.
Huang Minghui, a securities analyst who accepts "Huiyuan", said that the highway guardrail, steel racks, stainless steel tubes and hollow profiles produced by Hongda Resources could benefit from the booming construction industry.
It is worth mentioning that the company's director, Du Youping, in the early 2016 to date, through the market to buy and subscribe to the employee's share allotment of 4.61 million shares, and the family control of its stake to a slight increase to 51.13%. Du clan is through Fabulous Essence Private Limited Company, and Y.K.TOH Industry Private Limited Company Control Hongda Resources. The amount of shares issued by Hongda Resources is 186.23 million shares
With the recent article quoting that the higher profit due to factor with cheaper import raw material but with higher USD and also import duty extended does not seem to favourable Prestar profit margin right? unless even with import duty added in the import price of the steel still cheaper than buy domestically?
Personally feel the profit margin for incoming result should be comparable with last quarter. Prestar can get the raw material from Posco . The material cost should be slightly cheaper than market price.
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Posted by Collin Soo > 2017-04-13 17:03 | Report Abuse
kentg03: good for steel counter?