Posted by moneySIFU > 2016-10-18 12:14 | Report Abuse

Good effort to share your findings, Well Done, Chelsea.

Posted by moneySIFU > 2016-10-18 12:15 | Report Abuse

Spot on! The margin spread between CRC & HRC has been increasing, it means better profit margin.

http://klse.i3investor.com/files/my/blog/img/bl2858_s.jpg

Posted by moneySIFU > 2016-10-18 12:17 | Report Abuse

Latest CRC price in China is RMB3,621.11 @ 17/10/2016, from your chart RMB3,952, up again...

http://www.100ppi.com/vane/detail-318.html

Posted by moneySIFU > 2016-10-18 12:20 | Report Abuse

4 major CRC Producers in Malaysia purely based their financial results & cash flows performance.

The 4 CRC producers' yearly production capacity:
1. CSC Steel Bhd (620,000 tonnes)
2. Mycron Steel Bhd (260,000 Tonnes)
3. YKGI Bhd (220,000 Tonnes)
4. EonMetal Group Bhd (120,000 tonnes)

And the utilisation of the capacity are as follows:
1. CSC Steel Bhd (64.5%)
2. Mycron Steel Bhd (78.1%)
3. YKGI Bhd (54.5%)
4. EonMetal Group Bhd (20.8%)

To know respective CRC companies' utilisation of the production capacity, please read page 7 of the following report: http://cdn1.i3investor.com/my/files/dfgs88n/2015/11/06/1483789631--639706738.pdf

Posted by Chelsea > 2016-10-18 12:24 | Report Abuse

Welcome moneysifu. I only can paste the graph yest coz my company have blocked the access. Daty i have limitation time to paste the graph with latest crc price. Fuyoh crc 3621rmb equal to rm2280.
I believe crc will ramp up their ulitisation (current 64.5%) as the price crc now is attractive.

Moneysifu hope it break the second resistance 2.25
Bear in mind pressmetal front runner pe now is 18.

Posted by Bruce88 > 2016-10-18 12:25 | Report Abuse

Good infor, CSCStel has started flying this morning...

Posted by shareshareknowledge > 2016-10-18 12:30 | Report Abuse

i will estimate the eps for the 3q2016 at around 6 cents as the3 quarter is traditionally the weakest quarter of the year due to long holidays.
also, the total benefit from megasteel closure will only come in after 3-4 months.

long term investors will fully benefit the impact from megasteel closure and anti dumping ruling from the 4q onwards.
the 4q2016 result will provide a clear picture what will csc normal operating profit margin.

i believe csc will not used the above 2 advantages to make abnormal profit at the expense of their customers as abnormal profit will not last.
csc is known in the market as a reliable supplier of quality cold roll coil.

the 4q2016 result will be out in feb 2017. assuming(conservative) for the final 2 quarter of this year, CSC EPS total 14 sen with average of 7 sen per quarter.

with that 2017 EPS will be around 28 sen. csc had a record of good dividend paymaster.

the questions are;
1) at what PE will market price CSC after the 2016 full year report is out next feb together with their generous dividend which had always above FD rate except for last last year.
CSC will easily price above RM3 if market price it at PE of 14 and above.
2) the full effect of anti dumping will start to flow in the last quarter of this year as all ruling takes time to show the benefits. therefore, long term investorswhom believe the above should not sell too early.

Posted by Ooi Teik Bee > 2016-10-18 12:32 | Report Abuse

Very good report, good job done.
Thank you.

Posted by moneySIFU > 2016-10-18 12:43 | Report Abuse

Very good observation, shareshareknowledge

Posted by shareshareknowledge > 2016-10-18 12:46 | Report Abuse

moneysifu and sifu ooi teik bee,
with a level playing field ahead for CSC to do business for the next 5 years, what PE is reasonable for CSC? hopefully both of you can share ....

Posted by ilovehits > 2016-10-18 12:58 | Report Abuse

Spread between HRC & CRC is the main point for CRC players to post superb results. Currently spread 800 rmb, previous just 500 - 600 rmb.

Posted by chonghai > 2016-10-18 12:59 | Report Abuse

If US or Europe impose Anti Dumping on China product and CSC get ready for export, then sky is the limit for CSC. Choo Bee is already mulling the possibilities of export.

Posted by Ooi Teik Bee > 2016-10-18 12:59 |

Post removed.Why?

Posted by Chelsea > 2016-10-18 13:02 | Report Abuse

Thank you all the sifu and sifu otb.
One question want to verify does higher usd will affect thier sales and profit?

Posted by Ooi Teik Bee > 2016-10-18 13:08 | Report Abuse

Personally, I do not think that USD will be strong. Too strong USD is a major concern in US, US government will not want a strong USD.
If USD is strong, sale will be affected a bit because of China.
It is only my personally opinion.
Thank you.

Posted by soojinhou > 2016-10-18 13:22 | Report Abuse

"If US or Europe impose Anti Dumping on China product and CSC get ready for export, then sky is the limit for CSC. Choo Bee is already mulling the possibilities of export."

US has already slapped tariff against Chinese CRC.

Posted by WealthWizard > 2016-10-18 13:30 | Report Abuse

Good article with good analysis, thank you for sharing, Chelsea

Posted by SuperMan 99 > 2016-10-18 13:35 | Report Abuse

I will think CSCSteel & Mycron will both do good in coming months

Posted by mbs7633 > 2016-10-18 13:40 | Report Abuse

Good sharing. Many heavyweight members here. Congrats to all of us, CSC so hits today.

Posted by probability > 2016-10-18 15:17 | Report Abuse

Thanks for the posting Chelsea...just saw!

Posted by Chelsea > 2016-10-18 17:03 | Report Abuse

Good closing altough other steel stock in profit taking.
At least break 1st resistance 2.10
Waiting to break 2nd resistance 2.25

Posted by SALAM > 2016-10-18 17:16 | Report Abuse

Thank you for your effort and the sharing Chelsea...great!!

Posted by LA777 > 2016-10-18 17:24 | Report Abuse

Thank you for sharing with us, Chelsea.
Well done!

Posted by moneySIFU > 2016-10-18 17:51 | Report Abuse

Chelsea, wonder how do you get the CRC price in Malaysia? Appreciate if you can share the link or source to us?

Posted by Chelsea > 2016-10-18 17:55 | Report Abuse

Hi moneysifu,
Actually i get the CRC price from the link u send and then convert the RMB to MYR based on the exchange rate on that day.

Posted by moneySIFU > 2016-10-18 18:30 | Report Abuse

I mean CRC price per tonne for respective quarters since 2014

Posted by Chelsea > 2016-10-18 18:36 | Report Abuse

Hi Moneysifu, i obtained the CRC price since 2014 from article shared by wealthwizard part 3. It stated the source analysis from mycron's annual report.

Price of CRC & competition among CRC producers in Malaysia
Table 3: Average CRC Selling Price in Malaysia

TABLE HERE (I CANT PASTE)


Source: Analysis from Mycron's Annual Reports


Explanation:
As refer to Table 1, price of China CRC has been increased from RM1,825 (3/7/2016) to RM2,138 (10/9/2016), an increase of RM313 (using conversion rate of RM1 = RMB1.63)

For quarter ended 30/6/2016, the average CRC price in Malaysia was estimated at RM2,059.

Currently, CRC products was said to have transacted at range of RM2,150 - RM2,200, due to

Posted by moneySIFU > 2016-10-18 18:52 | Report Abuse

Thank you very much, Chelsea, you have done really great job, trust you must have worked for long hours for the article, truly admire.

Posted by Chelsea > 2016-10-18 20:43 | Report Abuse

Without all sifu like moneysifu, probability, wealthwizard, smartrader2020, otb and kyy, i not able to come out this article. The most important is sharing and earning together.

Posted by Ricky Yeo > 2016-10-18 21:08 | Report Abuse

Good analysis but seriously concerned with how valuation is done. If you did a DCF, over half of the value lies in terminal value, and some between 5-10 years. The market even though is a beauty contest in short term, but nonetheless a weighting machine in long term.

On the basis where majority value of a business is derived from 5 years and beyond to terminal, how does PE 10 play a role? Unless you are confident CSC deserve that PE level for next 10 years and beyond, that it would be valid, but you're applying it to 4 recent quarters, or one year. And how does one define PE 10 as conservative? on what basis? Something to think about. If on the basis of 10% discount rate, that PE aint conservative with the return on capital CSC got over past 5 years; if based on future forecast that ROC will fly to 15% and stay there for 10 years, that is truly conservative. Had any steel co achieve 15% ROC over 10 years? Something to think about.

My alternate view is given that valuation is driven by profitability, which in turn driven by steel price, which is affected by countries policies, macro economics, currency movements and so on. Let's say you're fairly confident you can get 80% for each of these main things correct, what's your chance of being right? 0.8 x 0.8 x 0.8 = 51%

Now you have an outside side that you're dealing with something that is as complex as forecasting next month's weather, 50% is a good starting point, and you start incorporate inside view like megasteel closure, tariff, these and that, you might increase your probability of being right to 60% or 70%.

Posted by ronnietan > 2016-10-18 21:14 | Report Abuse

Thanks again, wealthwizard, smartrader2020 and now, Chelsea.
On PE, OTB suggests PE of 12-15x in a strong cycle of a highly cyclical industry?
Btw, CSC's oft quoted utilisation of 64.5% is historical. I understand it's around 80% since Q2/16.

Posted by hsong > 2016-10-18 21:43 | Report Abuse

Moneysifu if eonmetal utilization is only 20% this means it has more upside potential in relative term. Pls correct me if i am wrong.

Posted by zefftan > 2016-10-18 23:09 | Report Abuse

beware of q3, might not up to expectation

Posted by KLCI King > 2016-10-18 23:11 | Report Abuse

Ricky Yeo, if a share price can solely be determined DCF or any kind of calculation/method, then you must be billionaire.

Posted by KLCI King > 2016-10-18 23:13 | Report Abuse

Ricky, when a doctor said the chance of surviving is 80% for a simple surgery, what is the chance of dying?

Posted by KLCI King > 2016-10-18 23:14 | Report Abuse

Or should I change my question, if doctor said chance of getting dead is 20%, will you still want to go ahead with the surgery?

Posted by KLCI King > 2016-10-18 23:21 | Report Abuse

Fair comment, zefftan, many do not know, so when result out, time to collect again. It's always like that.

Posted by zefftan > Oct 18, 2016 11:09 PM | Report Abuse
beware of q3, might not up to expectation

Posted by Benjamin_8888 > 2016-10-18 23:37 | Report Abuse

Chelsea, ur TP for next qrt eps is quite close. Thank you

Posted by Ricky Yeo > 2016-10-19 06:57 | Report Abuse

KLCI King, no one will be billionaire using DCF. But it is way robust than using PE 10, and that means richer. Trust me.

Well, of course I'll ask my probability of dying for not going ahead with surgery duh. If that's 90%, would be pretty dumb to go surgery right?

Posted by KLCI King > 2016-10-19 10:38 | Report Abuse

Good, Ricky, so now, if the chance of going down is 40% & up is 60%, will you buy? Or you rather wait until 90% then only you buy?

Posted by KLCI King > 2016-10-19 10:46 | Report Abuse

As you have mentioned somewhere that market is part art part science, sometimes % is just a general calculation for chance, it does not guarantee anything.

See the one who died on the dental clinic, no one expected that but it just happened this way.

When it is too relying on % to make investment, it will divert the attention from looking at the bigger picture.

I believe most successful businessmen are taking risks on their daily business decisions, after calculating all risks & rewards.

That's the job of accountants to advise. That's the reasons most accountants are working for businessmen.

Posted by Why_ > 2016-10-19 10:48 | Report Abuse

If DCF so good why KC still lose money in TGuan?

Posted by Ricky Yeo > 2016-10-19 10:57 | Report Abuse

Yea you're right, one needs to have a good grasp of the magnitude and frequency of both upside & downside. All business looks at the bigger picture, the story or narrative ie. let's move into adjacent market, expand etc, but ultimate they have to simplify it to a yes or no answer to go ahead. How do they do that, most use net present value NPV, by calculating capital outflow on year 0 (present) and cash inflow from the investment return every year after for say, 10 years. NPV applies the same principle as DCF.

Posted by Ricky Yeo > 2016-10-19 11:03 | Report Abuse

@ Why- because im Ricky not KC

Posted by KLCI King > 2016-10-19 11:07 | Report Abuse

Ricky, thank you for reply, we as investors are always handicapped when come to investment in stock markets.

Most people don't realise that many of us have to rely on all information made available via newspapers, announcements & reports from the management and we have to rely on the credibility of the those so called directors, even though we know that many of them are having low morale.

Posted by KLCI King > 2016-10-19 11:09 | Report Abuse

All calculation/methods are merely tools used to reduce the risks of making mistakes but these are not decisive when come to share investment. People is still the key factor.

Posted by 007 > 2016-10-19 11:26 | Report Abuse

KLCE King, Yes, you are right, beside looking at the figure, you have to look at chair person and the management team. For CSCsteel so far very reliable

Posted by Ricky Yeo > 2016-10-19 11:36 | Report Abuse

Tools are not be all end all. You're right the person using the tool is the key. Anyone can manipulate a tool to work the way he wants, PE 10 would win the most abused tool in financial industry hands down.

If a person choose to be ignorant, no tools save that man, not even Thor's hammer. And look at this page, how many people is expressing constraint and thread carefully? None.

Posted by 007 > 2016-10-19 11:43 | Report Abuse

From the spread alone, 13jun RMB457 12sep RMB752 difference is RMB295 equivalent to RM183/ton which is the figure CSCstel capable of making profit for coming quarter.
Taking 70% capacity utilization, coming quarter CSCsteel will able to produce 108500 ton. The equivalent additional profit should be 19.8 millions or EPS 5.2 sen
If average of EPS is assumed with additional profit, the next quarter EPS should be 9.35

Posted by probability > 2016-10-19 11:58 | Report Abuse

aiya Ricky...if i am sure about the near term earnings...whats the harm in giving PE 10? Its kinda useful when you estimate your rewards giving a dividend payout of say 50%....

and in no way anyone can predict correctly long terms returns....
if one is to really use the correct-realistic figure...i dont see why they should use a figure more than the GDP growth rate of say 4% only...as the ROC itself....unless they have the ability to make an in-depth analysis of the business...and its long term competitive advantage. Who can do that?

I think 99% investors cant...and they are not interested also...furthermore what certainty we have on the long term returns?

...the uncertainty builds up exponentially the longer - your 'time frame' of estimates.