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Is CSC Steel a Value Trap? (Part 2 of 2)

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Case Study 04-2:  This post focuses on the intrinsic valuation of CSC Steel. It is a continuation of the fundamental analysis carried out in Part 1. 
Steel is a commodity.
As a commodity company, CSC Steel sells its products at the prevailing international market prices. CSC Steel’s profitability will be affected by the prices for its raw materials (hot roll coils) and its finished cold roll coils. 
When commodity prices are on the upswing, all companies that produce that commodity benefit. 
During a downturn, even the best companies in the business will see the effects on operations.
In Part 1, I have shown that despite being in the down cycle and with minimum trade protection policies, CSC Steel has managed to be profitable. 
With a price that is below its Graham Net Net (a proxy for its liquidation value), is the market suggesting that there is no upturn in sight? 
In Part 2, I will argue that the CSC Steel has the financial resources, track record, and technology to meet the challenges o…

Is CSC Steel a Value Trap? (Part 1 of 2)

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Case Study 04-1:  Company analysis and valuation of CSC Steel, a cold roll company listed on Bursa Malaysia. This post focuses on the business fundamentals
CSC Steel Holdings Berhad (CSC Steel) is currently trading at RM 0.835 (as of 1 Sep 2020) per share compared to its Graham Net Net of RM 1.53 per share (as of 30 Jun 2020). 
The Graham Net Net is often considered a proxy for the company’s liquidation value. 
In fact, Ben Graham spent most of his time investing in Net Net companies. 
Why is CSC Steel trading below its liquidation value then? Is the market suggesting that it is not even worth its liquidation value? 
Is this a value trap or a steal? 
A value trap is one side of the value investing coin. The other side is that it is a steal, a hidden gem.
CSC Steel has RM 0.80 cash per share (as of 30 Jun 2020), zero borrowings, and a good operating track record.  Its value is intact.  It is not a value trap.
Join me in a 2-parts post as I lay out my case on why the market is wrong. 
There is d…

Baby Steps into the Investment Universe: Beginners: Part 1 of 3

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Fundamentals 04-1: This is a post for those who don't know anything about investing but want to start investing. I frequently come across questions on Quora likeI have $ 100, how do I start investing?I want to learn to invest, but where do I start?These are beginners learning how to invest. We sometimes forget that there is a large investment universe out there. There are different asset class eg stocks, bondsThere are different investing styles eg technical vs fundamentalIt can be confusing for someone without any investing knowledge. How do you start if you want to learn to invest as a beginner?1)  First get an overview of the various aspects of investing eg fundamental vs technical, active vs passive, etc2)  Once you have some basic understanding, chose your path.  This will depend on your personality, the amount of time you have, your educational background, etc 3)  Thereafter you proceed with a more in-depth study of the chosen investing path. This article is to help you go th…

UOA – will it continue to create shareholders’ value? (Part 3 of 3)

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Case Study 03-3:  Continuation of the analysis and valuation of UOA Group. This post focuses on valuation and risks.  At AUD 0.63 per share (as at 30 Jul 2020) UOA Ltd is trading below its intrinsic value that I estimated to range from AUD 1.06 per share to AUD 2.20 per share.  At the current price, there is an ample margin of safety.With most of its activities in Malaysia, is the market saying the there is no future for the Group in the country?UOA has shareholders in Australia, Singapore and Malaysia.  Are all the 3 markets behaving like lemmings or are there wisdom in the crowd? Join me in the 3-parts post as I lay out my case on why this time it is not the wisdom of the crowd.Part 1, published on 2 Aug, showed how the Group got to where it is today. Part 2 published on 16 Aug focused on the future and the performance of top management. Part 3 presented here will cover valuation and risk mitigation. I will show you that there is definitely mispricing.  Hence an investment opportunit…

UOA Ltd – it is a bargain or value trap? (Part 2 of 3)

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Case Study 03-2:  Continuation of the analysis and valuation of UOA Group. This post focuses on the prospects of the Group and the performance of top management. Value traps and bargains are opposite sides of the value investing coin.  Which side of the coin you are on depends on the company analysis. UOA Ltd is currently trading at AUD 0.63 (as of 30 Jul 2020)  per share compared to its Book Value of AUD 1.06 (based on 31 Dec 2019) per share.Is this a bargain or a value trap?This is a property group where the cash, land and buildings accounted for about 88% of the total assets in the books. Surely the market is not expecting these assets to be impaired. We all know that the property sector is cyclical and we are experiencing a long trough of the cycle. But strong property companies like UOA Group can withstand the down period of the cycle. Join me in the 3-parts series as I lay out my case on why the market is wrong.  Part 1, published on 2 Aug, showed how the Group got to where it is…