That means the GPM will be about US$660m at 75% capacity and US$875m at 100% capacity

Current Ferroalloy prices translates to average GPM of US$1,700-1,800 /ton. OMH produces 380k ton currently at 75% capacity. It will produce 500k ton in 2022 when Malaysia opens its border in Dec 21.

Both FeSi and MnSi China futures up 6-7% yesterday

https://www.thestar.com.my/business/business-news/2021/10/18/om-holdings-poised-for-bumper-earnings

“OMH poised for bumper earnings” - The Star (18 Oct)

Usually the buying up comes in the afternoon session

UOBKH would have to keep re-adjusting it’s TP as it now takes just days/weeks to hit each TP being set.

2. Forward PE of only 7-8x

- Market PE should be around 20-25x under current bull market for commodities/Industrial material sector
- This is way below its peers like PMetal (PE 20-40x), Lynas (PE 40x), Ferroglobe (PE negative yet market cap US$1.5b)

1. Assumed Alloy Prices too conservative
- UOBKH uses Ferroalloy prices US$2,000 (2021), US$1,900 (2022), US$1,700 and MnSi of US$1,500 (2021), US$1,400 (2022) and US$1,300 (2023)
- FeSi prices is now above US$4,000 and MnSi is above US$2,500
- These prices are now being contracted for 1Q2022 is above US$4,000
- Prices are expected to stay firm or even higher in light of current global energy crunch and China control on pollution/climate target commitment.

UOBKH TP of RM4 was too conservative on the following:

Latest TP is RM 4.21 (14 Oct)

Hopefully we can see it pop above RM 4, with the help of some short covering

Nice pop! With just 100-200k shares, OMH is up 5%

Since 22jun when UOBKH initiate first coverage on OMH, it has re-adjusted OMH Target Price upward 3 times in 3 months!
I am not sure I see so frequent TP upgrade for most companies

The short seller will realise soon that there isn’t a lot of people wanting to sell at 3.65. Most of Bursa buyers know the high alloy prices will translate into super profits and dividends.

Based on my calculation of FeSi Us$3,000 and MnSi US$2,000
GPM for smelter would be around US$430m at 75% production level.
We can expect 100% production in early 2022 when Malaysia opens up in 4Q21

The short playbook here is so standard and obvious for people who are observant about their short strategy;
1) ramp down the price from Rm 4 over 3-4 days
2) make it seems like market sell down, although it’s just buying n selling with some big blocks among own parties
3) queue to buy back around rm 3.60-3.66
4) very little sell vol above rm 3.67 - 3.8, short seller doesn’t want to be selling at this Low level in case buying kicks in.
5) maintain below rm 3.7 to buy back and cover short position

Just to share my experience and observant so that you don’t get caught up in this trap.

The share price would recover base on OMH fundamental as alloy price even at US$3000 is record profit for OMH at any standard.

I am looking forward to a short squeeze haha…

Standard short seller playbook. Ramp it down aggressively and try to shake the confidence of the weak hand, and buy back cheap.

Looks like a very aggressive short seller on the move…

Agree with you fully!

And towards 3.70…

Someone seems to be ‘guiding’ the price down to 3.80 - 3.75…
Will be interesting to watch

I can see why PMetal could be interested from business diversification perspective.
From economic angle, OMH is only RM 3b, while PMetal is RM 50b in mkt cap.
If acquired, PMetal profit would be more than doubled or trebled immediately.
Can you imagine what the market cap for PMetal will be with is acquisition?

Aluminium uses magnesium as raw material and magnesium in turn uses ferroalloy as input material.
Magnesium prices is driven record high mainly due to the prices of ferroalloy.

China energy crunch will have significant positive impact for OMH:
- restrict supply from China
- raise the cost of production of ferroalloy in China.
- China will reduce power to energy intensive industries, and electricity prices to increase by 20% with no cap for ferroalloy industry
- Ultimately, China will only want to produce just for domestic consumption, or even start to import such high energy intensive industries.

Impact on OMH: higher sustained ferroalloy prices which will elevate OMH profit significantly to US$300-500m in the next few years.

OMH share price will have to increase or otherwise be acquired by hostile party through offer of a much higher price than now

Promising start for OMH this week.
Expect it to trade RM 4 - 4.50, before advancing to RM 5 - 5.30 range

This will in turn provide more liquidity to the stock. It’s self fulfilling prophecy…

One of the criteria for fund manager is liquidity. The stock liquidity just picked up, so you can expect more fund managers to be able to buy into this stock over the next 1-2 months

I think fund managers need some time to get it through their investment committees. I believe some are already in the approval stage.

I agreed fully with you. This is the stock RHT fund manager will buy and hold. It has strong fundamental, super undervalued, big profits, growth story with more furnaces. And now liquidity is back

Once the bigger funds starts to get in as well, you will the price will pop up even more

I think some Malaysian funds are starting to buy into OMH now, just the beginning stage. Asx is following the lead…

You are right, the price now is lagging the fundamental for this stock. I think the gap is closing up fast!!!

OMH could be a 5, 10 or even 20 bagger stock. Just to catch up PMetal valuation

You can see the big disparity in valuation for PMetal and OMH!!!

OMH at current ferroalloy prices, Profit could be between RM2-4 billion.
Yet market cap is only RM2.8b. !!!!!

PMetal 1H2021 profit is RM461m (very good result by any standard) Projected FYE2021 RM461m X 2 = RM922m
Market cap at RM47b

This is insane profit!!!!unheard of

Total combined gross profit would be US$725m - US$1 billion. At current alloy prices.

At current MnSi price of US$2,500/ton, GPM for MnSi is US$1,500/ton, OMH current production (75%) of MnSi is 250k ton pa. Total GPM for MnSi would be US$375m at 75% capacity.
At 100% capacity (ie 330k ton pa), GPM would be US$500m

At FeSi price of US$4,125/ton, GPM is US$3,000/ton, OMH current production (75%) is 118k ton pa. Total annual FeSi GPM would be US$350m at 75% production capacity. At 100% capacity (ie 160k ton pa), GPM would be US$480m

Nice run up

Another good day! Up 11.5%
Let’s see how the market go tomorrow
Commodities prices continued to power up

Up another 10%, buying is back

OMH profit would be US$200-300m

PMetal PE is 74x. OMH forward PE is only 3x!!! Based on current spot ferroalloy price, OMH price would be US$200-300m
Imagine OMH PE of 20x only, this stock would be RM 20. Now it’s still only RM3.7. It can be 5-7 bagger

Up 7% now

OMH up 4% on good volume. Yest up 15%
Price surge supported by sky rocketing alloy prices, hitting all time high of US$4,125/ton. Up 300% from Low of US$1,000 during COVID.
OMH cost is only US$1,000/ton. Huge huge margin!!!

A gauge of commodities soared to an all time high as a resurgence in demand for raw materials collided with supply constraints