Ornasteel

My Dearest Ngok Yee,

As per requested the following is Ornasteel track record.



The fy 2005 numbers are slightly distorted because Ornasteel made a change in their financial year end. Hence the Fy 2005 numbers shown above are represented by 13 months of earnings.



And the following table shows the quarterly earnings performance from OrnaSteel. The very first column, 05 Q1 earnings is muddled, it represented 4 months earnings as explained earlier.

Some views.

First the minus point.

1. As you know, OrnaSteel belongs in the highly cyclical steel industry. And as seen above, the past 2 years were rather disappointing in terms of earnings performance.

2. The company dabbles in the share market! Yuckos dude! Currently the company holds some 30.389 worth of marketable securities. According to their quarterly earnings reported on 16/8/2006. Quarterly rpt on consolidated results for the financial period ended 30/6/2006

• During the quarter under review the Group has invested RM20.240 million in AmIncome Fund and the status of this investment as at the end of the reporting quarter is as below:-

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 .

Ok, that quarterly earnings was up to 31st Jan 2007. AmIncome Fund manages company marketable securities. And up to Dec 2006, that Fund did not look like it performed...

The better points.

1. Although Ornasteel earnings performance was disappointing for fy 2005 and fy 2006, it held up strongly during times when demand and prices were poor. So the assumption is when the good times come, surely Ornasteel would perform much better.

2. How the company transformed itself from a net debt to a net cash company is most impressive.

3. Dividends. Last year, Ornasteel paid a 5% less tax ( First and Final Dividend ). This year, a 10% less tax had already being proposed. ( RECOMMENDATION OF A FIRST AND FINAL DIVIDEND OF 10% OR 10 SEN PER SHARE LESS 27% )

4. The market. Market till today is around 1350 points. Surely AmIncome Fund would have performed some little bitsy bit of wonder for Ornasteel's investment, right?

How?

What say you my dearest Ngok Yee?