Reuters, Monday June 8 2009
SHANGHAI, June 8 (Reuters) - China is offering a 9 percent value-added tax rebate on exports of several high-end steel products, the Ministry of Finance said on Monday, in what analysts saw as the latest move to support domestic steel mills.
The country, the world's biggest steel maker, will refund the tax on flat-rolled steel products and hot-rolled ferro-alloy products effective from June 1, the ministry said in a statement on its website.
The rebate cuts more than half off the value-added tax rate of 17 percent, giving producers a strong incentive to export the products covered by the rebate.
Chinese steel mills are facing losses this year, as exports have shrunk due to weakened overseas demand and relatively high export costs, since the central government had capped rebates in the past few years to try to restrict production.
"I think many steel mills can take advantage of this. They can apply for rebates on products if minor metals were added during production," said Henry Liu, an analyst at Macquarie Bank in Shanghai.
The China Iron and Steel Association, the industry group that monitors all China's major steel mills, has urged the government to adopt more generous export tax rebates for steel products to bolster the industry.
China has already encountered friction with its trading partners over its steel export tax rebates, including an anti-dumping investigation over steel pipe imports in the United States.
The collapse in export demand cut China's shipments of steel products to the rest of the world by 60 percent in the first four months of the year and left China in an unusual position -- as a net importer of steel products -- in March and April.
Losses at 72 large and mid-sized Chinese steelmakers in the first four months of this year reached 5.18 billion yuan ($758.2 million), compared with 63.40 billion yuan in profit last year. ($1=6.832 Yuan) (Reporting by Alfred Cang and Tom Miles; Editing by Ken Wills)
9 comments:
No trading today. Tanjong up 20sen to 13.30. Although already siting on paper gain, but i'll still wanna to wait for its upcoming result by end of this month.
If upcoming first quarter result of tanjong do not post any one-off surpirse item, the expected EPS should be around 38-40sen, annualize 152-160sen. Based of current share price of 13.10, the PE is 8.2-8.6, yield is around 7%.
The current valuation is lowest in last 10 years hostorical PE! If one to re-rating tanjong at 10x in par with its average 10yr low range PE, the share price should be around RM15.20-16.00, or upside potential of 15-20%.
Me either, thought of try getting it lower but don't think i'm able to get now.
Well, i do hope the 1Q result is good, if EPS stay around 30sen & below, then it will represent a PE of around 11sen. This valuation is more or less realised.
Lets hope for the best.
I still believe if nothing one off item incur, EPS should be around 38-40sen, perhaps even more than 40sen.
The dividend is also subject to upside potential. After storm in final quater 2009, i think management could reward shareholder with higher interim dividend in upcoming first quarter 2010.
Another thing just wan to clarify, previous posting in regard to banned Da Ma Cai in Sarawark was not true. In fact Da Ma Cai has not even have right to operate their outlet in the whole East Msia. The news is just some illegal person trying to use Da Ma Cai trademark and illegally operate there.
Tanjong is my biggest investment so far. With fully 100% capital invested + 100% margin line. If perform as expected within a 2-3wk, it will be biggest leap ROE.
Hng,
Really interested to learn why u so confident in tanjong. Wht ur TP for tanjong? WIsh u hit big time with this. Cheers.
Steve
The main selling point of Tanjong is its defensive buiness; predictable earning and undemanding valuation as well as respectable dividend yield.
Tanjong share have been underperform, largely due to its non-beta, high in absolute share price, non-cyclical stock and unexciting earning growth. This is justificable by the fact that most of stock are hitting year high, while tanjong just retest year low last week.
With current bullish market, it is understandable that most of fund manager are chasing penny stock that offer high return, cyclincal stock: oil and gas, plantation, steel and cement maker.
Nevertheless, when these stock are rally to limit, eventually, fund manager have to rebalance their portfolio to lock profit and back to more fundamental blue-chip and high yield stock.
I think tanjong stand to benefit if there is re-rating after its first quarter release by end of this month. This however, provided that tanjong won't have any more one-off items and projectable earning should be relatively intact.
My estimation of tanjong Q1 EPS 2010 = 38-40sen; annualized: 152-160sen, dividend: 100-110sen. If based on last 5yr historical lower range PE of 10x; target price for tanjong is RM 15.2
Tanjong today up another 20sen to RM 13.50. Although already sitting on handsome paper profit (Average cost: RM 13.08), but still prefer to wait.
Although as full time trader/investor, i really dislike waiting period, but i think tanjong deserve it. I'll hold utill clearer picture once tanjong release Q1 result by end of this month, which will also declare interim dividend + current cum-final dividend should provide comfort zone.
ya, it is not too much of worry dealing with Tanjong. should hold till the 1Q result and see if the earning improve. Very likely that if profit reinstated to previuos state, then your hold is far more profitable than in out strategy...
Market manage to make last minute U-turn, swing back to positive territory. However, most Asian and just open European market fall by 2%.
Most penny stock in top volume counter are in red, profit taking acivities surge.
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