Profit jump 11 folds on YUNKONG from year 2006 to 2007

As promised, taking a closer look on steel related counter. Here, i am evaluating one named "YUNKONG" a manufacture, sale of galvanised & coated steel products, though this guy is not a major steel player but based on demand of steel product in the industry, i believed no matter big or small, these companies are tend to benefit from the increasing demand of this commodity.

First, let take a look of the Profit & Loss for the past 5 years :-

The sales increasing every years to almost about 20% to 30% range which indeed a healthy growth. Earnings or profits vary but registered the highest net profit in year 2007, this interpret 11 times more than year 2006. Current market with increasing steel demand may last for 2 years at least i believed. Yunkong also reported its 1st quarter net profit report with a whopping 500% increase, that represent a 6.77sen EPS, 30% of year 2007 earnings achieved in just 1st quarter result alone. Conservatively, if we take half of its gross EPS from year 2007, this will represent a gross EPS of 11.05sen for year 2008 which i believed it worth far more than this figure. In this context based on current price at 0.66sen the PE ratio should stand around 6sen is about 30% cheaper than the current valuation. Bear in mind this calculation already a discounted figures, additional bonus of 5sen yearly dividend paid for last financial year indeed looks very attractive. Again, if this discounted figures stay for this year 2008, i think Yunkong should worth around 0.88sen which represent 30% undervalue on current valuation.

As usual, buy and sell is totally on your own risk. The above does not recommend a buy call from me. Take your own responsibilities with your own act. Till then happy trading.