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Archive for December, 2006
“Life is difficult.
This is a great truth, one of the greatest truths. It is a great truth because once we truly see this truth, we transcend it. Once we truly know that life is difficult – once we truly understand and accept it – then life is no longer difficult. Because once it is accepted, the fact that life is difficult no longer matters.
Most do not fully see this truth that life is difficult. Instead they moan more or less incessantly, noisily or subtly, about the enormity of their problems, their burdens, and their difficulties as if life were generally easy, as if life should be easy. They voice their belief, noisily or subtly, that their difficulties represent a unique kind of affliction that should not be and that has somehow been especially visited upon them, or else upon their families, their tribe, their class, their nation, their race or even their species, and not upon others. I know about this moaning because I have done my share…”
THE ROAD LESS TRAVELED by M.SCOTT PECK, M.D., a worth reading book about new psychology of love, traditional values and spiritual growth.
22
Dec
MASTEEL
An article from InsiderAsia. Postive outlook for construction materials manufacturer and at current price of 94 cents, it is traded at PE of 3.7 times for year 2007. At the same time, a stromg buy call by Standard & Poor’s with 12 months target price of RM 1.16
22-12-2006: Masteel to maintain double-digit growth
Share price for Malaysia Steel Works (92 sen) has done fairly well of late, gaining some 26% since beginning October. This was due, in part, to improved investor confidence in the broader market’s outlook. More importantly, Masteel’s latest results for the third quarter of 2006 (3Q06) have offered further evidence of the unfolding recovery in the steel sector — and positive prospects going forward.
Good 3Q06 results
Masteel recorded strong sales and net profit growth on the back of higher demand and selling prices. Sales were 18% higher from the previous corresponding quarter and 24% higher than that in 2Q06.
Operating margin continued to improve from the preceding quarters, rising to 16.8% from 12.6% and 14.5% in 1Q06 and 2Q06, respectively. Prices for steel bars were strong in 3Q06 supported by improved domestic demand. There were visible stocking up activities ahead of the 9th Malaysia Plan project’s rollout.
Positive outlook for steel
Prices for steel products are expected to remain firm in 2007. The domestic construction and infrastructure industries should see increased activities in the coming quarters, which will drive demand for steel bars.
The global steel market has been on a broad uptrend in recent years, despite bouts of profit-taking. Although some observers suggest prices may decline in 2007, the dominant view is that the steel market will remain resilient, if not strengthen further. Demand has been, and will continue to be, fuelled by China’s booming economy.
For instance, the price for billets is now about 30% higher than at the beginning of the year. Masteel’s export of billets is an important earnings contributor. Exports accounted for about one-fifth of sales in 2005, almost double that in the previous year, and is expected to double again this year.
Valuations remain attractive
Despite recent gains, Masteel remains very attractively valued. Based on its results for the first nine months, full-year earnings are estimated at some 22 sen per share or up 26% from the previous year. Growth in 2007-2008 should remain in the double-digit.
Aside from recovering demand and selling prices, the company is also expected to gain from cost savings upon implementation of the Supersonic Lancing System (SLS) — which will improve operating efficiency — at its billets plant early next year.
At the current price, the shares are trading at just 3.6 times our estimated earnings of 25.4 sen per share for 2007. That’s far below the estimated average P/E (price-earnings ratio) of 15 times or so for the broader market.
Investors can also take heart from Masteel’s track record at maintaining profitability even during difficult periods. For instance, the company made RM23 million net earnings in 2005 when many steel companies fell into the red. Its balance is in fairly good shape with gearing at about 51%. Dividend is estimated at two sen per share for 2006, giving shareholders a gross yield of 2.2%. – InsiderAsia
