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LSTEEL (9881) Another Steel Gem

 LSTEEL(9881) – Leader Steel Holding Bhd is my favorite choice between “steel players” among bursa. Previously I wrote already a few posts about steel (and aluminium) industry and other stocks within the sector (see bottom of this page for links). Recently there was a discussion about sustainability of elevated metal prices and how China is trying hard to control the shortage and in result hopes for prices to stabilize, without much success so far, because of strong metals supercycle in the making.
LSTEEL chart
LSTEEL chart

I will re-post comment from OTB, as he explain it really well (hope he doesn't mind):

“I believe the share price of steel stock will perform very well in the next 2 years because China is no longer dumping steel products to the whole world. I hope the next up cycle is started again after a minor correction is over. China steel price rebounded strongly in the last 3 days.

The share price of steel stock 20 years ago was very high because there was no dumping of steel products from China. I believe the share price of steel stock will rise up slowly and surely in the next 2 years after China stopped dumping steel products below cost.

I believe Covid-19 pandemic is slowly recovered in 2021 because of the effective vaccines. Once Covid-19 pandemic is under controlled, all industrial nations worldwide especially European nations and the US will start to spend money on infrastructure, it will boost up the usages and the selling prices of steel products.

US President Biden's infrastructure plan will cost USD 2.2 trillion. I believe the steel products worldwide will be in a bullish uptrend for the next two to three years. Hence I have very high hopes for steel stocks listed in KLSE since China is no longer dumping steel products below cost in the world markets."


"I believe the steel stocks will perform very well in next 2 years until 2023.
The growth of Malaysian steel stocks is just starting, still long way to go up. You can check the quarter results of Astino, LeonFB, Choobee, Melewar and Hiaptek. Market rumour is that the coming quarter result of Hiaptek is very good. Please read the recommendation report from RHB.

Please read the world news below.
Look at the spectators in football stadiums in Europe and NBA basketball stadiums in USA respectively, the stadiums are full of spectators and the worst of Covid-19 pandemic will be over soon. Once Covid-19 pandemic is over, European nations and American governments will spend money to improve infrastructures in their countries respectively. The US government will spend USD 2.2 trillion to improve infrastructures in America alone.
"U.S. President Joe Biden and other G7 leaders hope their plan, known as the Build Back Better World (B3W) initiative, will provide a transparent infrastructure partnership to help narrow the $40 trillion needed by developing nations by 2035, the White House said". So all building material price will increase so are many commodities price due to every country printing more money.
Moreover, China is committed on green energy and lower carbon environment policy, China is no longer produce steel products below cost to export to the whole world.
I strongly believe steel stocks will perform very well in the next 2 years. You need to be patient to wait for "durian to drop"."
LSTEEL financials
LSTEEL financials

Previously I was predicting trailing EPS with the next QR included to be at 16 sen, but because of re-imposition of FMCO I need to lower this to 14 sen only, with expectation that LSTEEL will “catch-up” later once FMCO is lifted and other sectors will follow exactly the same catch-up game.

Market Price 22. June 2021: RM 0.67

Expected 4QR Trailing EPS: 14 sen

Expected Trailing P/E Ratio: 4.78

Target P/E: 8

Fair Value based on P/E of 8: RM 1.12 [NOT a trading recommendation]

As you can see, even with expectation of lower EPS the upcoming QR, the share price is still heavy undervalued. For longer term outlook I remain very positive and expecting the growth to accelerate.

Read STEEL hype by KYY and OTB - HERE.

LEONFB (5232) - “The most under-valued stock on bursa” - HERE.

ALUMINIUM Prices to stabilize soon? - HERE.

Read more on my blog: https://miloshtrading.blogspot.com

Disclosure: I am holding LSTEEL


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