Take a look at Masteel's price chart above, it has dropped rapidly in the last few days and finally being supported at RM0.955. I would conclude the three main reasons which led to the plunge of the share price, down to the far South, as follows:-
1. Trump Announces Tariffs on Steel & Aluminum Imports
2. Hidden Threat of the Emerging of Alliance Steel
3. Panic Selling - Heavy Margin Calls & Subscription Group Members Selling
Here are the reasons why the above would not cause a significant impact to MASTEEL and why a strong U-Turn should be expected:-
1. Malaysia's Exports to the US only took up 0.28%
According to the President of Malaysia Iron and Steel Industry Federation, Datuk Soh Thian Lai, the impact of the planned tariff on steel would be minimal because Malaysia only exported 96,000 tonnes to the US out of 34 million tonnnes in 2017. A consensus view on this - minimal impact to Malaysian steel companies can be found on local press release and research reports - google it.
2. Local Steel Market's Demand is Large Enough to Absorb this New Capacity
Domestic Steel demand is circa 10 tonnes per annum while the capacities of all rebar manufacturers locally are at 8.3mt per annum. Also, with the additional demand from the mega infrastructure development in place, this new capacity from Alliance Steel would have minimal pressure towards selling prices for 2018 - Kenanga Research says.
3. Good Buying Opportunity caused by Panic Selling
Based on some reliable source of information and data analysis, get to know that the huge drop in the share price of MASTEEL (dropped more than any other steel companies) is mainly due to margin calls by bankers, and partly due to the heavy sell calls issued by some subscription-based groups. These are known as irrational selling, and historically, all these moments provide a opportunity of value buy. Most importantly, most of them haven't bought back the share yet.
Last Friday, Masteel has announced on Shares Buy Back, bought back 514,000 units of shares between RM0.965 - RM0.985.