Tuesday, May 18, 2010

Update on Sino Hua An Losses

Update on Sino Hua-An Lost Money.... Again

So Sino Hua-An lost money... again. I know it's just only 2.48 million. Yes only rm 2.48 million.

What's the big deal? Nothing really. :D

Anyway, as mentioned in the posting
Sino Hua-An Lost Money.... Again, KN Research said the following back on 1st March 2010.

  • Outlook. We remain positive of the China’s economy robustness.According to the Worldsteel, China will continue as the biggest driver of world steel demand, however, the domestic steel industry is expected to grow at moderation and at 5% growth . Nevertheless, we are lowering our FY10 net estimate by 9% to RM64.7m as we revised marginally lower of our assumption of coke price. We are also introducing our FY11 earnings estimates with net profit of RM70.6m. The pricing sluggishness of coke and short-term steel demand volatility remain as key risks to our earnings forecasts.

    Maintain BUY with lower target price at RM0.58 based on FY10 PER of 10x (in line with the small-to -medium size Malaysian steel players and 30% discount to its China’s peers).
Here's the screen shot.



Now with Sino Hua An losing 2.48 million and KN's estimates at 64.7 million, I wonder what KN will say in their report.

Sino Hua An back then, on 1st March 2010, was 48.5 sen. KN gave it a buy with a Target Price of 58 sen.

Sino Hua An is now 40 sen.

Will KN lower their ratings and target prices?

The answer? Yes they did.

The rating is now a HOLD with a target price of 37 sen.

  • FY10 net forecast trimmed lower by 29.4% to 42m. We maintain our expectations of Hua-An turning a profit in FY10. Despite lowering our FY10 net profit by 29.4% to 42m given a weak 1Q10, we are expecting a profit turnout in 2Q10 boosted by swift recovery in steel demand and favourable pricing of metallurgical coke at above RMB1,976 per tonne. Additionally, we are maintaining our net profit in FY11 at RM70.6m based on assumed annualised average price of RMB1,900 per tonne of coke and RMB1,240 per tonne of coal in our forecast. The unfavourable pricing of coal and short-term steel demand volatility however, remain as key risks to our earnings forecasts.

    Downgrade to HOLD with lower target price at RM0.37 (previously RM0.58) based on FY10 PER of 10x (in line with the small-to-medium size Malaysian steel players and 30% discount to its China’s peers).


Hmm... they lowered the net profit forecast by 29.4% to 42 million.

Hmmm... I dunno... do you think the net profit is still rather high?

Do you think this company is really, really under performing?

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As mentioned in the early posting, OSK's previous earnings forecast for Sino Hua An was much, much higher than KN, at rm 100.3 million. I am disappointed because I have yet to see OSK make an update on Sino Hua An's earnings today. I wonder... why... hmmm....

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