Ornasteel

Ornasteel (彦钢控股, 5094) posted its 1st quarter result for financial year 2008 today. It has shown a strong recovery from the relatively poor results of last 2 quarters in 2007. Its revenue increased by 14.7% from preceding quarter, and profit before tax increased by 65.7%. Its net profit also increased by 60.36% as a result of net profit margin improved to 7% from 5% in preceding quarter. Its NTA grown to RM1.90 per share, which is 15.85% above its closing price of RM1.64 today.

Ornasteel has been renowned in excellent cash flow management. When it was first listed on Bursa Malaysia at 30 December 2004, it had net borrowings of about RM130 million. It managed to turn into net cash position within a short period of time, and its net cash has accumulated to RM75.4 million as reported in today's quarterly report, grown by 40.15% from previous quarter (RM53.8 million). In fact, it is now among the financially healthiest steel companies in Malaysia, backed up by a blue chip controlling shareholder of Taiwan largest steel maker, which is also one of the top 5 most profitable steel player in the world.

During the 2nd quarter of the year, which result will be posted 3 months later, Ornasteel has adopted to offer their products to customers on a monthly pricing basis instead of the usual quarterly pricing basis. Beside that, the Malaysia steel market was also liberized starting from 12 May 2008. Ornasteel also proposed to change the company name to CSC Steel Holdings Berhad which shows the prominent relationship with its mother company, China Steel Corporation (中钢公司). It is showing sign of moving towards stronger fundamental and better result.

Disclaimer: This article is intended for sharing of point of view only. It is not an advice or recommendation to buy or sell any of the mentioned stock counters. You should do your own homework before trading in Bursa Malaysia.