Thursday, November 6, 2008

Huaan new update from RM

Dear WK,

Good day.

Thank you tracking the coal n coke price in custeel. Our Sept08 coal price was RMB 1,737 & coke price was RMB 2,500.

As for Oct08 one, i am still waiting from my Chinese accountant for the official figure. Usually 15th of the month. Anyway, i did my own simple average on the weekly figure from custeel, coal Oct08 was RMB 1,644 & coke was RMB 2,000.

Ya, ytday, i had phone conversation with my Chinese accountant, he was telling me the average selling price of coke was RMB 1500-RMB1,600 for 1st week of November. We recognize that the drop of coke price is fast which is very much in line with the downtrend of steel price in China. FYI, billet steel prices on 25 June 2008 in Shanhai was RMB 5,300 and on 4 November 2008, the price has dropped to RMB 3,150 which indicates a drop of 40% in 4 months.

During the 1H08, in view of skyrocketing of steel price in China, many building / infrastructure contractors have stock pile their steel (bought more than their requirements, which is natural human reaction) and caused oversupply of steel situation after Beijing Olympic. The oversupply situation is expected to persist until the end of the year, although we believe it will be to a lesser extend with demand gradually creeping up. This is because the steel stock would have been run-down by then and that the users of steel will have to start to re-stock. Infrastructure projects in China will not vanish overnight as once started or launched, it will need to be completed within a timeframe, although the said timeframe may be stretched out a little longer in view of the prevailing economic condition. As such, these users should begin to re-stock, if not by the end of the year, 1Q of 2009. That is where demand for steel will slowly recover and thus that of coke.

Our demand (of coke) started to slow down since August 2008 (Apr, May, June & July, there is no apparent sign of slowing down in demand). We expect slowdown in the demand for 4Q08. The recent global economic slowdown, coupled with a domestic housing slump in China has naturally hit China’s domestic demand and export of steel. Mittal group has recently accounced to cut down steel production by 15%. 4 large steel in northern China have announcedto cut down steel production by 20% (approximately 100 million tons).Malaysia steel manufacturers (listed co) are currently running capacity of approximately 50% and according to steel analysts, some are runnning at 33% only. ( According to a forecast by Shanghai-based Orient Securities recently suggested that Baosteel could see a loss of approximately RMB 500 million in the 4Q08 They expect EPS for 2008 and 2009 to be RMB 0.68 and RMB 0.41 respectively.Source: Starbiz dated 31 October 2008).

Sino Hua-An's coke business is very dependent on China steel industry as we sell all of our products to China domestic market. According to the Mr Tai, MD of a Masteel, a Malaysian steel maker, the international steel industry would likely rebound positivrly in the 1Q09 or 1H09, in tandem with other commodity prices. Steel is a commodity and also a necessity in any developing countries like China, should there be any rebound, we strongly believe, steel industry would be the first few industries to improve significantly. Therefore, we are very much in line with the performance of China steel players there. Eg during the good year like 2006 & 2007, we also enjoyed good GP margin of 20%.

Sino Hua-An's management will do the best to run the business effectively and efficiently. Sino Hua-An has no external bank borrowing and is a net cash company since Oct 2007. (As at 30 Aug 2008,the net cash position was more than RMB 120 mil).

Bursa Malaysia invited 7 listed companies from Malaysia (in fact 8, including Bursa itself) to present to retail investors in Singapore. This is the 3rd year Bursa Malaysia is actively helping to promote potential Malaysia companies in overseas. Dato' Yusli (CEO of Bursa Malaysia) will attend as well. The companies that are attending are HELP, Kossan Rubber, Muhibbah, QL Resources, Sino Hua-An, Pelikan, LCL & Bursa.


Thank you for your concern & best regards.

Best regards,
Bernard Tan

30 comments:

Anonymous said...

Market give back some gain after a consecutive runup lifted CI >910pt. Today market reflect its reality, volatility come back! Relatively silent and low volume suggesting downside bias. Crude oil dip may exaggreates selling pressure on CPO. Will adpot wait and see for the moment.

horse said...

i've unloaded most, now sitting tight with cash ready to strike again. It is true, market is slow and low vol.. still patiently waiting..

Anonymous said...

good move guys...

Anonymous said...

i think it will recover later... those miss the first boat will wanna get into the game...

lets wait n see...

toto

horse said...

will recover later ? why is that so ? any reason to it ?

Anonymous said...

...those miss the first boat will wanna get into the game...

toto

Anonymous said...

hopefully lar.. kekek

horse said...

toto, still have high hope on Huaan? Their qtrly result coming out soon, need to see how they being bash down since the coke & coal price has been bashed so badly. Like BT said hopefully 1H09 will recover when the demand is back in pace...

Anonymous said...

i think this quarter should register a small increase in nett profit.

but for 4Q, i'm not surprise if they will see "red"... due to high cost of coal & shrinking demand...

toto

horse said...

btw, r u still accumulating ? i'm waiting for another round of < 20c.

Anonymous said...

i think they can achieve a 45m PAT for coming quarter... i emailed bernard again, what is the running capacity for huaan now... hope they reduce else the coal cost will kill them...

next quarter huaan sure kena coz coke price is only 20% higher than the coal... dun think sufficient to cover the coke production...

lets see how accurate i m... hehe

toto

Anonymous said...

yea... i m continuing to average down... any price between 20-30c is a good buy... of coz below 20c will be a bargain...

cash at hand 62million around 6c... i believe the turn around in china will come soon...

toto

Anonymous said...

market volume is super low today... only panic sellers?

market can turn easily... buy! hehehe...

horse said...

i noticed as well, market is extremely slow today. Vol is low, stay sideway...

Anonymous said...

however, another wave of bad news will push the retailers to the exit door, tat is when another round of sell down...

heard US is having their unemployment data out this friday, opportunity to buy back?

horse said...

before a stormy weather, there is always a quiet and peaceful scene before that. market will turn but not sure it is up turn or down turn....tomorrow is Friday, likely that market will stay flat...

Anonymous said...

Market tumble again as recession fear resurface and profit taking set in. Crude oil dip to its lowest level US61, may due to down below 60 as slow demand outmatch production cut! This is typical market reaction toward uncertaintly and selloff when news confirmed. Will still adpot wait and see, perhaps take dayoff and enjoy life by doing other thing!

Anonymous said...

I'll agree to that. Let's see how US performs tonight.

P!

horse said...

have placed orders on Huaan & TNB. not done yet.

horse said...

hng & toto, any trades today?

Anonymous said...

nope.. this maybank hang during afternoon session.. &^&&%&%&&*(

looks like the selldown is very well absorbed... good for market in the coming days...

placed order in the morning for resort but i guess i put in too low.. haha

tomolo huaan is having some investor thingo in singapore... i think they tryin to promote to singapore investors... will try to attend n c wat they have to offer...

toto

horse said...

same to me, trying to catch Huaan and TNB, price set too low.
please update here, when you catch something from the meeting...

Anonymous said...

Market still lack of momentum, trading sideway with no immediate catalyst. Nov is Q3 result announcement, will try to digest company future prospect.

horse said...

hng, eyeing any stocks ??

Anonymous said...

Just completed contra trade on Pelikan and maybank. Sold partial Amfirst and bought some Hektar. Remain underweight on stock and prefer daytrade.

Anonymous said...

Market interest shifted from big cap to second liner e.g. timecome, MKland, terbau, equine etc..High risk as big player try to entrap innocent investor!

Anonymous said...

Manage to make contra on Sime and Pelikan. Market gain due to China stimulus plan to stir economy growth and increase domestic consumption.

Anonymous said...

horse, Huan enjoy very good run in tandem with china simulus plan, must make ton of profit ha!

horse said...

hng, i bot it quite high, try catching it at 0.23c (1000lots) but failed to match. now not even my average price yet, no point chasing, just wait for it to come back. Might ignore this counter for time being....

Anonymous said...

1000 lots? wow... abit wasted else u can break even liao loh... as long as lower than ur purchase price can buy in... i think they got a news clipping in the edge (publish in their website)

slowly slowly buy in loh... i think got a good chance to recover to 60c by year end... year end rally! too bad i m stuck with rsawit lar... mistake... arghhh...

toto

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