Stockman blogs
Steel counters.......Choo Bee vs CSC Steel
stockmanmy
Publish date: Mon, 28 Nov 2016, 09:10 AM
stockmanmy
0 76
Trade at your own risk. I am here only to vomit out my feelings
Choo Bee CSC
Price $ 1.86 2.05
Market cap $ million 200 750
Last quarter eps sen 9 7
Last 12 months eps sen 10 25
NTA $4.04 $2.18
Net cash 82 sen 70 sen
Both look good to you?
Both can buy?
Careful, it is called false equavalence.
Formulas and figures is only one story.
it is static
you need to know the dynamic story, the history, , the business, the reason you are interested
its more than FA and TA you need to know...............it is a business sense you need to have and the reason why you are interested.
First..............discounts to NTA is not margin of safety.....it is inefficient assets.
Never never buy shares for the discounts to NTA. ..I know a lot of FA sifus always preach you the wrong stuff about this margin of safety.
Next............why interested?
You are interested because the closure of MegaSteel is a game changer for the steel industry.
You are interested because since end Sept, we have an anti dumping duty against China steel imports.
You are interested because every steel counter has reported good and improving profits for the first half of this year due to improving steel prices. ...yesterday, MA Steel quarterly results have broken this bubble and falsehood.
Next......what they do...........and who actually benefits from the closure of Megasteel and import duty imposition?
The answer, my friend is CSC Steel and CSC Steel only, and not MA Steel , not Choo Bee.
You see...CSC is into Cold rolled sheets which Megasteel used to produce and dump into the market .....now, that Mega Steel is dead...it is a game changer for CSC.
As for Choo Bee...........more than 50% of its turnover is actually trading, steel products and steel pipes trading which it sourced from every where . , including MegaSteel. The closure of MegaSteel has no benefit for CB.
Cyclical
CB core product is pipes used in property development. , housing estates and condominiums. This is the wrong sector to be in right now.
CSC is involved in cold rolled sheet which is used for all sorts of purposes, it is a general usage products by auto manufacturuers, electronic, electrical, mechanical, civil engineering.....you name it, they use it.
CSC benefits in many ways from the closure of MegaSteel and the duty imposition on China imports.
It is allowed by the government to source cheaper HRS from China, its final product is protected by higher import duties, major competitor now dead.
For CB..............after the recent run up in share price....it is only waiting to die.
Mark my word.....very soon, this very well managed Taiwanese company, CSC....is the next Blue Chip on the KLSE.
Buy both? Only silly people who cannot look beyond the audited accounts buy both....smart people buy CSC Steel and avoid CB like the plaque.
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Discussions
1 person likes this. Showing 32 of 32 comments
Yes.....this article is to re introduce the article by KYY earlier telling people to avoid Choo Bee......and focus on CSC Steel.
Friday's MASTEEL results compared to CSC Sept results is clear proof of his wisdom....and the sincerity and wisdom of the earlier article.
2016-11-28 09:51
compare chicken and duck? these two companies are not in same caregory in the industry...
2016-11-28 09:59
I dare u to check my mouth in JHM before,
proven u are far imcompetent.So, dont mix up this round .
2016-11-28 10:07
Rubbish loh....if CSC result good....than choobee will be good too mah...!!
What type of rubbish one good n one bad ??
They are the same industry use....same raw material....face the same industry mah....!!
Of course CSC better management on the otherhand Choobee has a better undervaluation loh....!!
Dividend wise...CSC is excellent...Choobee so so loh....!!
2016-11-28 10:30
raider...I really thought I wrote it clear enough even for a kid to understand ....
That the closure of Megasteel is a game changer for CSC but not CB.
Megasteel produces both HRS and CRS . The death of Megasteel removes a direct competitor of CSC.
CB is principally a steel trader, more than 50% of revenue....it buys and sells....the other core business of CB is manufacturing of pipes...it buys the steel from CSC/ Megasteel....CB is just a margin taker.
2016-11-28 10:37
Both good lar, juz i'm prefer mid stream more.
See Prestar really good results,
i hope Mycron & Melewar (the best CRC proxy) also deliver.
2016-11-28 10:37
He posted this yesterday. and deleted it.
Then repost it today? why? because he thinks that repost it on trading day will have effect of pressing the price of choobee
2016-11-28 10:39
raider....you know how many listed pipe makers there are in Malaysia? I think at least 5.
It is a very competitive and now very cyclical industry. The closure of Megasteel is not a game changer for CB but a big game changer for CSC.
2016-11-28 10:50
Choobee business quite diversify in steel related business, it is not only pipe making mah....!!
But anyhow...even pipe making...prospect will be good too, bcos alot of water works infra project coming up loh...!!
Choobee quite efficient in pipe manufacturing loh...!
2016-11-28 10:53
The main challenges facing csc and choobee...are strong usd and rising iron ore prices loh....!!
Both will face higher cost inputs and both need to past the cost to end users mah....!!
2016-11-28 10:55
But rising cost of inputs...is better than falling cost of inputs bcos....this mean....financial strong company has the pricing power loh.....!!
Therefore both will do well loh....!!
2016-11-28 10:58
@Stockmanmy Both CSCSTEEL and CHOOBEE will benefit from closure of Megasteel.
1). MEGASTEEL is both supplier to CSCSTEEL and CHOOBEE, not a major competitor.
2). Closure of MEGASTEEl will allow CSCSTEEL and CHOOBEE to import cheaper HRC from international market.
3a). If an investor is looking for quality, then CSCSTEEL is the right choice.
3b). If an investor is looking for undervalue stock, then CHOOBEE is the right choice.
3c). If an investor is looking for technology leader, then probably ANJOO would be the correct choice.
2016-11-28 11:29
chong
wrong...Megasteel do not produce CB products. NO GAME CHANGER WHEN mEGASTEEL DIES.
2016-11-28 12:20
CB, AJ, MASTEEL all operate under very competitive situations and no pricing power.
You can see from their Chairman's Statements.
when Megasteel dies, it is such a game changer for CSC, that CSC can fly
fly like an angel.
2016-11-28 12:22
Aiyah u think CSC got pricing power meh ??
It also compete with people like Mycron and import too loh....!!
The good thing....nowadays no....mega steel....can source cheaper raw material loh....!!
2016-11-28 12:25
Choobee sell downstream products which will have higher margin. Upstream products usually have fierce competition compare to downstream players. Btw choobee definitely used to buy raw materials from megasteel. Being an good accountant nor strong business sense doesn't make you know better with steel industry. Being rich or being good in the past doesn't make you a good fortune teller.
2016-11-28 12:48
Blue chip?
This business with very high competition and no moat,
I highly doubt it can compete with some of the biggest blue chip in Klse, Axiata, pbbank, maxis, digi which is highly moated blue chip
2016-11-28 13:01
its the fight for market share.
When Megasteel dies...their customers become CSC customers....that is called a game changer.
2016-11-28 13:04
ven
I study accounting only not marketing.
but even a kid also knows about fights for market share and what happens when a major competitor dies.
2016-11-28 13:06
Bonus
To be a blue chip....first I consider market cap must exceed a billion dollars.
Stable earnings and sells to many industries. Many industries use their products.
Well managed, plenty of cash, market leader, biggest in its industry and......it is not a small industry.
2016-11-28 13:27
Why we should not avoid choobee when looking into csc ??
This is bcos is highly undervalue....had plenty of cash....most important it is a very small cap mah.....!!
Thus profit rebound....choobee....will make a bundle loh...!!
CSC is also a good company, got alot of cash and pays good dividend..but it is a bigger cap compare to choobee loh...!
2016-11-28 13:51
Blue chip usually have more quality than any small company
Most of the time blue chip is determined by the business nature
For example bank is destinated to be blue chip no matter how badly they are managed,
The good management is just helping the company to grow faster to be blue chip.
If the business nature is very niche, no matter the best management will not make them the blue chip.
2016-11-28 14:37
It was stated very clearly in all quarterly & annual reports, wonder people read these reports before buying CB
stockmanmy CB is principally a steel trader, more than 50% of revenue....it buys and sells....the other core business of CB is manufacturing of pipes...it buys the steel from CSC/ Megasteel....CB is just a margin taker.
28/11/2016 10:37
2016-12-01 00:18
Raider again accumulated some choobee...all the waydown with average price of Rm 1.62....the buyer had become stronger & stronger mah...!!
2016-12-01 22:25
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Stockmanmy, clearly you have grown up. Congrats! Many doubt Uncle K's sincerity, unfortunately only a few manage to pick the positives from every event taking place. Share market is a long learning journey. The more you learn the lesser mistakes you make.
Would like to take this opportunity to thank Uncle K for his unconditional sharing of knowledge.
2016-11-28 09:29