Since the steel stocks are so hot and I had blogged on a steel stock before, here's an update to Review on OrnaSteel Again
Q-Q earnings have improved a lot from its dismal fy 2007 Q4 Earnings. Rather impressive considering the company only made 14.9 million the previous quarter.
Same quarter previous comparison.
Earnings improved marginally from 22.6 million to 24 million.
However, surely some would be disappointed. For other stock leaders like Ann Joo and Southern Steel showed darn impressive earnings recently.
Balance sheet is still as impressive as ever. Total net cash balances have increased yet again.
Understanding My Investment Risks. Every stock has it minus points or risks. So does Ornasteel.
If you refer to my earlier postings, my concerns were on the marketable securities issues with Ornasteel. Yeah, I absolutely hate it when our local corporate leaders dabbles in such investments. Why can't they return the extra cash baack to the shareholders?
And in their last reported earnings on Feb 2007, Quarterly rpt on consolidated results for the financial period ended 31/12/2006
- The status of the Group’s investment in marketable securities as at the end of the reporting quarter is as follows:-
(i) at cost: RM30.240 million;
(ii) at carrying value: RM30.388 million; and
(iii) at market value: RM30.388 million .
Now in yesterday earnings notes, Ornasteel has made much more investments!
- The status of the Group’s investment in marketable securities as at the end of the reporting quarter is as follows:-
(i) at cost: RM56.240 million;
(ii) at carrying value: RM56.956 million; and
(iii) at market value: RM56.956 million
56.2 million in marketable securites???
Seriously, that's massive yes?
This is a concern yes?
Is this getting out of hand?
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2 comments:
The investment in short term fund is not an issue/worry, it's a common practice for Company with excess fund to park their money in short term fund.( they operate just like a current account with an interest earning element)
Those STEEL company with excess cash (like Ornasteel)will be able to gain from this 'Price Uptrend' resulted from their capability to Build Up their holding stocks.
My Dearest KC,
Why shouldn't this be an issue or a concern?
Do you know exactly what OrnaSteel's investment of rm56.9 million consist of?
Isn't this the investment risk or investment concern of the stock?
Are you aware of Multicode issue? ( see
http://whereiszemoola.blogspot.com/2008/01/multi-code-files-suits.html
)
Quote: "The board had resolved that Toh was unable to account to the board and the company's auditors RM35 million to RM36 million of the company's funds had been properly invested in foreign financial institutions,"
Point is, Multicode too had 'plenty of cash' stated in its books a couple of years ago and the excess money was 'invested'. Now Multicode investments has turned into a huge farce!
Would it happen to OrnaSteel?
I do not know and I will NOT say it will or it will NOT happen.
All I will say is, it's a concern for me. I need to address this issue and so does every other investors. This issue should NOT discounted at all.
And last but not least... surely the investor of this company should address the issue of why can't the company return excess cash back to the minority shareholders?
Now wouldn't this be much better than seeing the company dabbling in investment such as martketable securities????
rgds
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