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Wednesday, November 25, 2015

Masteel: Losses increased

Results Update

Masteel has released its quarterly results for QE30/9/2015. Its  revenue rose 24% q-o-q but dropped 17% y-o-y to RM301 million mainly mainly due to lower selling price and sales volume as a result  of  the importation of low price Chinese made steel bars. Its losses increased due to lower margin and unrealized foreign exchange loss in the current quarter.


Diagram 1: Masteel's 13 quarters' PL & CF (Source: ShareInvestor.com)


Chart 1: Masteel's 13 quarters' PL (Source: ShareInvestor.com)

Financial Position as at 31/3/2015

Masteel's financial position is deemed acceptable with current ratio at 1 time & gearing ratio at 1.1 times. Looking at its current assets, we can see a swing in trade debtors & inventory, with debtors turnover period dropping from 86 days to 50 days while inventory holding period rose from 43 days to 112 days. This sharp swing could be due to new accounting treatment to address issue related to the qualification of its AFS for FY2014. For more, go to previous post.

Technical Outlook
Masteel's share prices had dropped in a step fashion. The last low at RM0.33 will serve as the support for the stock for now.
 
Chart 2: Masteel's weekly chart as at Nov 25, 2015_12.30pm (Source: ShareInvestor.com)
 

Chart 3: Masteel's monthly chart as at Nov 25, 2015_12.30pm (Source: ShareInvestor.com)

Conclusion

Due to the poor financial performance & industrial outlook for steel sector plus uncertainty surrounding this stock, Masteel is best to be avoided for now.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Masteel.

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