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Stock: [MASTEEL]: MALAYSIA STEEL WORKS (KL)BHD
2017-11-28 11:49 | Report Abuse
Long Steel Companies profit for the next 3 years will be supported by:
1. Affordable Housing - No doubt the sale of high end condominium is slowing but the sale of affordable housing which our government encourage is strong. The tonnage of steel use by a unit of affordable housing is not much difference from a unit of high end condominium, however the demand for affordable housing is much higher than high end condominium. Developer needs to work hard to build 10 units of affordable houses in order to make the same profit margin of a unit high end condominium.
2. Unprecedented government spending on infrastructure, ECRL, LRT, MRT, HSR, WCE, PanBorneo highways, hospital..........
3. Higher price of steel - due to cut of steel production in China. China latest rebar price hits RMB4,400/mt (RM2750/mt)
4. Higher Volume - Government safeguard duty 13%, import duty 5%, transportation cost and importer profit of RM100/mt causing import of long steel no longer profitable.
5. Imagine how much additional cost/mt local importer have to pay :
RM2750x18%+RM100=RM595/mt.
6. "If" local long steel companies can make RM595/mt, how much is their annual profit ?
7. Masteel - RM595/mt x 700,000 =RM416,500,000
8. In fact, a lot Chinese steel companies are making more than RMB1000/mt.