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

Value Investing 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 t