EMETALL (7217) - EMETALL Outlook - 29 July 2018 (Stevent Hee)


 After riding on the strong recovery for steel related counter. Emetall currently back to the radar of investors and traders.

There is recent news that we can find from online. Below is the news coverage that obtain from the star.

Eonmetall Group Bhd

image: https://cdn.thestar.com.my/Themes/img/chart.png

 is investing more than RM100mil this year and 2019 in its steel racking and machinery and equipment (M&E) business.



Group managing director Yeoh Cheng Chye said about 70% of the budget would go into the construction of 10 palm oil solvent extraction plants for a government-linked company in the plantation business.


“This is a built-operate-transfer project which will take effect this year,” he said. He expected the project start generating sales contribution from 2019.

The M&E segment is focused on the production of palm fibre oil extraction plant and palm kernel oil extraction plant, a patented specialist equipment designed to increase oil extraction rate for the palm oil industry.

image: https://content.thestar.com.my/smg/settag/name=lotame/tags=Int_Business_Finance,Int_Business_Finance_SME,Int_Property,all,Int_Property_Affluent



“The two plants should be ready for operation in 2019,” Yeoh said, adding that the company has secured the manufacturing rights for the raking system in Malaysia, Bangladesh, and China, as well as the distribution rights in other countries in Asia.

The contribution from this segment should start in the the final quarter of 2018, as the group is now producing the racks in Malaysia.

The group is the largest Malaysian steel rack manufacturer as its Eonmetall brandname has the largest market share in the country.

Yeoh said the group expected the revenue and bottom line for 2018 to improve significantly over 2017.

According to Yeoh, the global market for material handling business is expected to reach US$134.8bil by 2020 with Asia accounting for 38% of the market.

“Coupled with the existing ageing material handling systems and the enormous growth in e-business, more new distribution centres would create a huge demand for steel storage and racking requirements.

“The partnering will enable the group to supply a comprehensive range of static and dynamic storage racking solutions with a European certification.

“Presently, the steel storage business is the main contributor to the steel products and trading activity segment of the group,” he added.

The storage racking segment contributes 65% to the group’s revenue, while the machinery and equipment business generates 35%.

According to the Inkwood Research, the global material handling equipment market is estimated to grow at 6.53% compounded annual growth rate (CAGR) from 2018 to 2026.

In 2017, the group acquired a wholly owned subsidiary, Eonmetall Bio-Coal Sdn Bhd (formerly known as CSC Bio- Coal Sdn Bhd).

The company, with its available equipment and machinery, will facilitate the group’s aspiration to invest in the biomass industry for the manufacturing and distribution of bio-coal and biochar by utilising palm and other agricultural biomass.




Read more at https://www.thestar.com.my/business/business-news/2018/07/09/eonmetall-plans-to-invest-rm100mil-in-steel-racking-and-me-ops/#qegwBjcS8GBEFZpw.99



What this news telling us is that company venture into a business that showing a CAGR 6.53% from 2018 to 2026. On top of that, the revenue and profit should be start coming by 3 quarter 2018 financial year which is 4-5 months from now.

On top of that, the B-O-T project is on profit sharing basic which very much rely on the CPO price due to profit sharing scheme. However, the detail on how the profit sharing scheme was not reveal to public. Hence, the sharing ratio remain unknown. So, in order to know more on this. We focus on the price of FCPO which i obtain from investing.com.









Base on the chart, FCPO price still trending down. If it never violate the symetrical triangle then it may rebound from the price level 2100. However, we need to monitor closely of the development of FCPO price and relevant news.

TP given by CIMB last year is 0.78.

TP given by AMMB is 0.92 on 30 May 2018

 



Base on Technical chart reading. Below is the support/resistance for your reference.



Base on my chart reading, my resistance equivalent to profit taking level. If you prefer to capture short term movement then can take my resistance as your reference. If you wish to hold longer, then can take investment bank research report for your own reference.



Disclaimer : Above is my personal point of view. Trade at your own risk. This  is not a buy/sell call for the counter, kindly consult your dealer/remisier for any investment advise.

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