OK, firstly I shouldn't even be here in the 'Investment' zone.
But here is a stock in which I lost money trading it, and which a dihard 'buy-n-keep' friend ask to take a look at. So, after tor-tor chee kau by all the sifu here (yes Ahboi, you may take a bow ) I give some background on Huann. Firstly, the chart.
Its been drifting down since relisting (formerly Antah) and does not seem to have any support, even after the latest Q3 report on 21/Nov. What do the reports contain? Here:
Its only 3 quarters I know, but I was hoping to see some reason for the non-support of the price. See.. revenue is increasing, profit margin increasing. Cash is down, but mainly because they reduced their loans and purchased new equipment. Inventories, payables and receivables increasing.. but this is a side effect of increasing sales, no?
So what gives?
(I need to know.. you know hor.. I need to give an 'intelligent' answer to my friend who's shitting some brickwork right now )
Sorry - just did not know what to comment except too new of a stock.
(Is this a world record? The longest ever time to get a reply to a posting? Never too late hor? Better than none )
Anyway, now we have a little more earnings...
As u can see... the earnings is so flat and NO GROWTH.
Cash balances: 72.999 million
Loans: Zero
receivables is at 83.7 mil.
Cash flow: nice.
Company said the following:
For the first quarter ended 31 March 2008, the Group recorded a consolidated revenue of approximately RM290.8 million and consolidated profit before tax of approximately RM41.9 million.
The relatively higher revenue registered in the current quarter under review compared with that of the preceding year corresponding quarter can be attributed mainly to the contribution from the additional by-products following the commissioning of the coal washing facility in May 2007. Also contributory to the higher revenue is the strong and positive pricing of metallurgical coke and the by-products enjoyed by the Group in the current quarter. The average prices of metallurgical coke, ammonium sulphate, crude benzene and tar oil during the current quarter under review have increased by approximately 65%, 116%, 15% and 11% respectively compared with those of the preceding year corresponding quarter. However, the price of coal gas has reduced by approximately 7% in the current quarter compared to the same quarter last year.
The favourable pricing of metallurgical coke and the by-products as mentioned above, is offset by the higher cost of sales, with the price of raw materials (coal) increasing quite significantly by an average of approximately 63% in the current quarter compared to the average prices registered in the preceding year corresponding quarter. Additionally, in view of the escalating fuel costs and inflation generally experienced in China, the transportation cost has also increased significantly. These had caused an increase in the overall cost of production resulting in a slight reduction in the Group’s gross margin to approximately 18% in the current quarter compared to approximately 19% in the preceding year corresponding quarter.
Profit before tax for the current quarter however increased by approximately 88% to RM41.9 million from RM22.3 million in the preceding year corresponding quarter. The relatively higher profit before tax figure is attributed to the absence of the one-off restructuring expenses (which were incurred in the preceding year corresponding quarter) of approximately RM8.9 million in the current quarter ended 31 March 2008.
Hmmm...
What's most interesting is the bold red font....
Comments:
1. As it is... it's uninteresting for the bottom line, there is NO Growth.
2. Still new. 4 quarters of earnings simply is too little.
ps. The other nagging issue was... why did this company choose to list in Bursa? Surely from an owner of view, the owner would have gotten a better valuation if they chose to list in China.... so why Bursa?
Sorry - just did not know what to comment except too new of a stock.
(Is this a world record? The longest ever time to get a reply to a posting? Never too late hor? Better than none )
Anyway, now we have a little more earnings...
As u can see... the earnings is so flat and NO GROWTH.
Cash balances: 72.999 million
Loans: Zero
receivables is at 83.7 mil.
Cash flow: nice.
Company said the following:
For the first quarter ended 31 March 2008, the Group recorded a consolidated revenue of approximately RM290.8 million and consolidated profit before tax of approximately RM41.9 million.
The relatively higher revenue registered in the current quarter under review compared with that of the preceding year corresponding quarter can be attributed mainly to the contribution from the additional by-products following the commissioning of the coal washing facility in May 2007. Also contributory to the higher revenue is the strong and positive pricing of metallurgical coke and the by-products enjoyed by the Group in the current quarter. The average prices of metallurgical coke, ammonium sulphate, crude benzene and tar oil during the current quarter under review have increased by approximately 65%, 116%, 15% and 11% respectively compared with those of the preceding year corresponding quarter. However, the price of coal gas has reduced by approximately 7% in the current quarter compared to the same quarter last year.
The favourable pricing of metallurgical coke and the by-products as mentioned above, is offset by the higher cost of sales, with the price of raw materials (coal) increasing quite significantly by an average of approximately 63% in the current quarter compared to the average prices registered in the preceding year corresponding quarter. Additionally, in view of the escalating fuel costs and inflation generally experienced in China, the transportation cost has also increased significantly. These had caused an increase in the overall cost of production resulting in a slight reduction in the Group’s gross margin to approximately 18% in the current quarter compared to approximately 19% in the preceding year corresponding quarter.
Profit before tax for the current quarter however increased by approximately 88% to RM41.9 million from RM22.3 million in the preceding year corresponding quarter. The relatively higher profit before tax figure is attributed to the absence of the one-off restructuring expenses (which were incurred in the preceding year corresponding quarter) of approximately RM8.9 million in the current quarter ended 31 March 2008.
Hmmm...
What's most interesting is the bold red font....
Comments:
1. As it is... it's uninteresting for the bottom line, there is NO Growth.
2. Still new. 4 quarters of earnings simply is too little.
ps. The other nagging issue was... why did this company choose to list in Bursa? Surely from an owner of view, the owner would have gotten a better valuation if they chose to list in China.... so why Bursa?
1. They are planning on production capacity expansion, which i am looking good at it.
2. Yeah ,it was indeed quite new. Need to observe carefully.
It choose to list at bursa as they are the only china based red chips. 2nd, the listing cost are much more cheaper as compare in China , HK or Singapore as it was a reverse take over from pn4 co, antah. I presume that their major shareholder bring a lot of convenient for them to list here. In my opinion, buying at current price are relatively cheap taking into account that the income which generated from its capacity expansion.
Last edited on Thu May 29th, 2008 17:07 by goodluck
It choose to list at bursa as they are the only china based red chips. 2nd, the listing cost are much more cheaper as compare in China , HK or Singapore as it was a reverse take over from pn4 co, antah. I presume that their major shareholder bring a lot of convenient for them to list here. In my opinion, buying at current price are relatively cheap taking into account that the income which generated from its capacity expansion.
Goodluck,
The lack of earnings growth despite all the positiveness in the steel sector is rather a worry for me.
Is the list cost much cheaper here?
But it's what does not make sense for me. Maybe my thinking or my sense of reasoning is flawed but based on the current earnings trend, Huann is trading probably less than 10x (pls confirm - i am merely basing on my last memory recall).
In China, stocks could easily trade around 50x earnings.
Surely it would make more sense to list over there when the stocks could trade at many, many, many times higher?
Moolah wrote: It choose to list at bursa as they are the only china based red chips. 2nd, the listing cost are much more cheaper as compare in China , HK or Singapore as it was a reverse take over from pn4 co, antah. I presume that their major shareholder bring a lot of convenient for them to list here. In my opinion, buying at current price are relatively cheap taking into account that the income which generated from its capacity expansion.
Goodluck,
The lack of earnings growth despite all the positiveness in the steel sector is rather a worry for me.
Is the list cost much cheaper here?
But it's what does not make sense for me. Maybe my thinking or my sense of reasoning is flawed but based on the current earnings trend, Huann is trading probably less than 10x (pls confirm - i am merely basing on my last memory recall).
In China, stocks could easily trade around 50x earnings.
Surely it would make more sense to list over there when the stocks could trade at many, many, many times higher?
Hi Moola,
I am thinking on the factor of the ease to be listed here. Check on their major shareholder background - one of the royal family members from N9. Not to deny,your points are valid also.
However, I am looking into it on the value basis,balance sheet, cashflow & profits. This stock reminds me abt masteel some years ago (2004) when IPO was 1.4, open high and all the way down to 0.50 in the same year.
For me, i am monitoring closely at its FR every quarter ,and simply attempt to be fearful when others greedy and to be greedy only when others are fearful.
Last edited on Fri May 30th, 2008 08:03 by goodluck
For me, i am monitoring closely at its FR every quarter ,and simply attempt to be fearful when others greedy and to be greedy only when others are fearful.
Classic Warren teaching... but... this simple words of wisdom has been abused so often.
for example, can it be used in Huann?
Is Huann really a fantatstic company where u can be fearless?
And how about the issue regarding the pricing power of its product? And in an environment where it's main product, metallurgical coke, is enjoying favourable pricing, the good prices was offset by high raw materials.
Perhaps I am wrong in my interpretation... perhaps my understanding of the situatuion is flawed... but doesn't this say... that despite favourable selling price of the coke, Huann was not able to enjoy better profits?
) I give some background on Huann. Firstly, the chart.
)
