Koon Yew Yin's Blog
How does MCO affect steel industry? Koon Yew Yin
Koon Yew Yin
Publish date: Tue, 13 Jul 2021, 06:17 PM
Koon Yew Yin
0 1,431
An official blog in i3investor to publish sharing by Mr. Koon Yew Yin.
All materials published here are prepared by Mr. Koon Yew Yin
All materials published here are prepared by Mr. Koon Yew Yin
After I posted my article to advised investors to get out of the stock market as soon as possible, I thought I have nothing more to say. But after I read the Malaysian Steel Association Chairman, Tan Sri William Cheng statement to The Star, which supported my reasons for getting out of the stock market as soon as possible, I have decided to write this useful piece to help investors.
The RM45bil domestic steel sector has been severely impacted by the prolonged Covid-19 led lockdowns with many players unable to operate and fulfil their outstanding orders, despite the current robust export market.
According to Malaysia Steel Association (MSA) president Tan Sri William Cheng, most steel manufacturers are facing tremendous financial losses, especially those operating in Selangor and Kuala Lumpur, the powerhouses of industries and services that contribute over 40% of the country’s gross domestic product (GDP). “Any extension of the enhanced movement control order (EMCO) will have dire consequences on almost all the manufacturers and businesses,” he said.
How does MCO affect the steel industry?
There are 3 principal players in the steel industry:
1 Steel makers
2 Steel products makers
3 Steel products consumers
MCO is movement control order. MCO is affecting all the 3 principal players because workers cannot to go to work.
1 Workers cannot go to the steel factories to make steel.
2 Workers cannot go to the steel products makers to make steel products.
3 Workers cannot go to work in construction companies to work to consume steel products such as steel bars, stell plates, angle iron etc .
As a result, all the 3 principal players, the steel makers, steel products makers and the steel products consumers (construction contractors) cannot make profit.
1 Steel makers are Lion Industry, Melewar, CSC Steel etc.
2 Steel product makers are Leon Fuat, Choo Bee, Astino, Haip Teck etc.
3 Steel products consumers are IJM, Gamuda, Mah Sing, Mudajaya, SP Setia etc
As I said earlier, Covid 19 is affecting everybody’s movement and listed companies. Until Covid 19 pandemic is fully under control, all listed companies will not be able to report increasing profit in the next few quarters.
Among all the stock selection criteria such as NTA, dividend yield, cash flow, debt, healthy balance etc profit growth is the most power catalyst to push up share price.
In fact, MCO affects not only the steel industry. It affects almost all the listed companies. That is why KLCI chart has been dropping in the last 6 months as shown on the chart below.
Investors must not buy shares of steel makers, steel products makers and steel products consumers because all of them cannot report increasing profit in the next few quarters. As I pointed out, MCO affects almost all the listed companies, investors should get out of the stock market as soon as possible.
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Discussions
Be the first to like this. Showing 12 of 12 comments
Everyone knows steel industry is operating at 10% capacity only since FMCO but kyy.
#SmartInvestorMyAss
2021-07-14 19:47
Why is not saying this when he was holding leonfb but keep promoting the stock.
2021-07-14 19:59
KYY ask SELL
OTB ask BUY
hmmm...but everyone know KYY is follow OTB jalan punya...
See the games?
2021-07-15 11:55
After reading Uncle's article, it is good to read the following article.
https://www.facebook.com/1238461152861295/posts/6052893511418011/
2021-07-15 16:45
The beauty of KYY is he will post articles after he has sold to tell you you have been conned to buy when he sold!!!
2021-07-15 16:54
Posted by ming > Jul 15, 2021 7:23 PM | Report Abuse
China market:
周四，钢铁板块强势拉升。
业绩表现方面，截至7月15日，钢铁板块内共有29家上市公司发布了上半年业绩预告，抚顺特钢、三钢闽光、新钢股份、柳钢股份等16家公司净利润同比预增超100%，其中，包钢股份预计上半年实现归母净利润约20~28亿元，同比增长2281%~3233%，增幅最大。
近期，多地发布钢铁下半年限产政策，叠加原材料价格见顶回落，钢价触底后出现明显反弹。
对此，中信建投研报称，各区域的限产风声再起，宝武系钢厂以及安徽、江苏、甘肃等地区都进行了相关会议下放指标，要求产量不能高于2020年。考虑到上半年各钢企均有增产，全年产量不高于2020年会导致下半年的减产。此次限产更多的是把指标逐步下放到企业，对完成的节奏没有做过多的规定，如果严格执行，供给端会面临比较大的收缩。
2021-07-15 19:37
On Thursday, the steel sector pulled up strongly.
In terms of performance, as of July 15th, a total of 29 listed companies in the steel sector have issued performance forecasts for the first half of the year. The net profit of 16 companies including Fushun Special Steel, Sangang Minguang, Xingang, and Liugang will increase year-on-year Over 100%, Baotou Iron & Steel Co., Ltd. is expected to achieve a net profit of about 2 to 2.8 billion yuan attributable to the parent in the first half of the year, a year-on-year increase of 2281% to 3233%, the largest increase.
Recently, many places have issued policies to limit steel production in the second half of the year, and the prices of superimposed raw materials have peaked and fallen, and steel prices have rebounded significantly after hitting the bottom.
In this regard, the CITIC Construction Investment Research reported that production restrictions in various regions have resumed. Baowu steel mills and Anhui, Jiangsu, Gansu and other regions have conducted relevant conferences to decentralize indicators, requiring production not to be higher than 2020. Considering that all steel companies have increased production in the first half of the year, the annual output not higher than 2020 will lead to a reduction in production in the second half of the year. The current production restriction is more about gradually decentralizing the indicators to the enterprise, without making too many regulations on the pace of completion. If strictly implemented, the supply side will face a relatively large contraction.
2021-07-15 20:17
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CS Tan
4.9 / 5.0
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
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Investors should SLOWLY over long period of time to accumulate steel stocks as they are cheap now ?
2021-07-14 13:04