I was flabbergasted to receive the following circular from Mr Ooi Teik Bee last night.
Dear valued clients,
Please note that US government will impose 25% import tax on steel products. Many investors were worried today and the prices of Masteel, Lionind, Choobee and Leonfb are dropped very drastically today.
Many investors are not aware that Malaysian manufacturers hardly exported their steel bars or products to US, hence I feel that we should ignore this new regulation. This panic selling should be ignored today if we knew the facts well.
In this modern world, the biggest manufacturer of steel bars or products is China. According to latest news, China is no longer big exporter of steel bars or product because there is a shortage currently in her domestic market.
Due to this regulation in US, will other manufacturers cut their price to compete since it is not possible to sell to US market anymore ? I think it may be possible for many manufacturers to cut price to get market share.
However, Malaysian government had imposed a law for next 3 years to impose 15% tax on import of steel bars or products into Malaysia. Hence I do not believe the sales of local steel bar or products will be affected and the margin of local manufacturer will be squeezed.
We can view the next quarter result to assess the impact of revenue and profit of Masteel, Lionind, Choobee and Leonfb. To jump the gun at this early stage is too early to tell. Let the market decides the fair market price of the aforesaid stocks.
I believe the latest quarter results of Lionind and Choobee are very good, you can buy cheap when the market is fearful. You should hold on to Masteel and Leonfb because the drastic drop in price in last 2 days was overdone.
Final decision to buy is always you.
His last advice “final decision is always you” is not an excuse for his mistake of misleading all his clients who have to pay for his weekly circulars.
As everyone can see there is an oversupply of buildings in every town and city in Malaysia, investors should know how this situation will affect all the steel manufacturers.
Malaysia Steel makes steel bars for the concrete construction. If developers and contractors cannot sell their properties, they will not buy steel bars. That is why Masteel’s 4th quarter EPS was only 4 sen, very much lower than all the other 3 quarters of the year 2017. Masteel’s future profit will continue to reduce.
That is why a lot of smart shareholders are dumping their holdings to cut loss. The share price has dropped from Rm 1.80 in early January to close at Rm 1.14 per share. It has dropped 66sen, 37 per cent in less than 2 months. No one knows what the bottom is. I advise all readers not to bottom fish because Masteel’s profit will continue to drop for many more years until all the unsold properties are sold.
Of course, there will be still a few stubborn investors who refused to admit their mistake and cut loss. They are hoping for some miracle that can improve the price of their holdings.
Beside financial and technical analysis, investors must have some business sense to be really successful. All you need is common sense and you do not need an accountant to make money from the stock market. I am not an accountant and I can hardly understand a balance sheet, cash flow etc.
My intention of writing this article is to prevent people from losing money by following Mr Ooi Teik Bee blindly.
The price chart below shows that the price is down trending and the latest reduced profit announcement shows that the company will continue to report reduced profit for a long time until all the unsold properties are sold so that developers and contractors will start to buy steel bars to construct properties.
Surely Mr Ooi can see that the FA and TA indicators cannot satisfy his FA and TA criteria.
Why doesn’t he admit his mistake?
Why is he continue to promote Masteel?
There must be a lot of stupid followers who had bought Masteel and they are leaking their wounds. I was shocked to see one stupid commentator told me to shut up because I did not own even one Masteel share. It is not my business to discourage investors to buy Masteel.
I recommend them to cut loss, otherwise they will lose more money in the next few years until all the unsold properties are sold.
At my age, I am not afraid to tell the truth even though Mr Ooi will be very angry with me for cracking his rice bowl.