Review on OrnaSteel Again

My Dearest Ngok Yee,

Many thanks for your comments.

• A respectable Q result.
  However, there are something which is not so spectacular.
  
  1)Rise receivable and short term investment...
  
  Other than this, really nothing much to prick upon.Now, the only problem is its current price still atractive to go in? That's a million dollar Question which i need you to answer :) ?

Here is my review of OrnaSteel. And the best way I think is to review my last review mentioned previously. ( See OrnaSteel )

I will add in new comments in purple italic fonts.

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. ( There is a clear turnaround in earnings! )

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...

And the current quarter, OrnaSteel reported the following!

OrnaSteel purchased another 10 million of securities. Some questions.

1. Is this a concern?
2. Is this getting out of hand?
3. Why so poor results in such a hot market?
4. Does the fund manger know what he/she is doing?
5. Does this bug you??

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. ( Performance is decent!)

2. How the company transformed itself from a net debt to a net cash company is most impressive. (this now not a better point as OrnaSteel turned into a net debt company of 5.999 million!

Took some screen shot of the cash flow...

See where the cash went?

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% ) ( Still waiting! )

4. 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? ( Do they know what they are doing! )

How?

What say you my dearest Ngok Yee?

rgds