Lee Metal Group

[NTL]

Lee Metal has just release their result for the quarter. Revenue remains pretty flat, but net profit increase by 48% due to better margin. The performance continue to be dragged down by the Merchandising Biz.

Will be declaring a dividend of 0.3c for this quarter.

http://infopub.sgx.com/FileOpen/20131108...eID=263296

[Greenrookie]

Merchandising arm contribute only about 49 million in this quarter, continuing the freefall. FM arm is stable at 100 million, in terms of NP, merchandising arm has become insignificant, although no margin for the 2 segments I would haphazard a guess of 1.3 % margin for Trading, which would give a NP of 8 plus % for FM, any lower margin or assumed loss for trading would mean FM has margin of about 10% which is too optimistic IMO.

Then this begs the qn of how dependable or significant is the trading operations to their FM business. Their FM business is now twice the size of trading and there do not seem to have a significant impact on margins. Also, how much lower can trading arm go before it is loss making and start to affect overall margins?

[NTL]

Looking at past quarters for their FM, the revenue goes like this:

75.7m - 76.8m - 77.0m - 88.6m - 93.7m - 102.5m - 90m - 102.6m - 100.7m

Look like it hitting a plateau. Will be interesting to see if for next quarter, the revenue can exceed the "high level" of $102.5M. Guess there is only so much the industry can take.

[Greenrookie]

Looking at past quarters for their FM, the revenue goes like this:

75.7m - 76.8m - 77.0m - 88.6m - 93.7m - 102.5m - 90m - 102.6m - 100.7m

Look like it hitting a plateau. Will be interesting to see if for next quarter, the revenue can exceed the "high level" of $102.5M. Guess there is only so much the industry can take.

It can be due to them hitting capacity, that's why they bought 2 buiildings at tuas to expand. Next quarter is too early to tell, when the expanded capavity come on line, then would we be able to tell.

[NTL]

Looking at past quarters for their FM, the revenue goes like this:

75.7m - 76.8m - 77.0m - 88.6m - 93.7m - 102.5m - 90m - 102.6m - 100.7m

Look like it hitting a plateau. Will be interesting to see if for next quarter, the revenue can exceed the "high level" of $102.5M. Guess there is only so much the industry can take.

It can be due to them hitting capacity, that's why they bought 2 buiildings at tuas to expand. Next quarter is too early to tell, when the expanded capavity come on line, then would we be able to tell.

Could be, else they won't spend the money buying them.

[NTL]

Maybe we can see if the industry can take more by looking at their competitor.

The revenue goes like this:

67.3m - 74.0m - 88.4m - 83.4m - 102.0m - 114.6m - 111.6m - 101.7m - 104.2m

They also plateau!

[Clement]

Looking at past quarters for their FM, the revenue goes like this:

75.7m - 76.8m - 77.0m - 88.6m - 93.7m - 102.5m - 90m - 102.6m - 100.7m

Look like it hitting a plateau. Will be interesting to see if for next quarter, the revenue can exceed the "high level" of $102.5M. Guess there is only so much the industry can take.

It can be due to them hitting capacity, that's why they bought 2 buiildings at tuas to expand. Next quarter is too early to tell, when the expanded capavity come on line, then would we be able to tell.

Agreed. The company has most likely hit production capacity. The revenues themselves cannot tell us much about demand, as they are impacted by steel prices.

Volume wise, the company might be fabricating and delivering the same quantity of products as they did in the high revenue quarter, but revenue is lower as the average selling price is lower.

[NTL]

With the price of steel declining over the the past 1 yr, only to increasing recently, so likely the volume is higher, and the average selling price is lower, in recent announcements. If that is the case, then they have yet to hit their production capacity yet.

[Clement]

With the price of steel declining over the the past 1 yr, only to increasing recently, so likely the volume is higher, and the average selling price is lower, in recent announcements. If that is the case, then they have yet to hit their production capacity yet.

The company does not seem to provide tonnage figures, so we cannot be sure. The expansion of premises gives a clue as to the situation. In either case, by focusing on higher value added services and products, the company has been able to protect their margins.

[Greenrookie]

China eliminating steel capacity to boost fundamentals

http://www.hellenicshippingnews.com/News...4503580ee6

Impt paragraph:
The Chinese State Council in mid October instructed local governments to stop approving new production facilities, suspend the construction of unauthorized projects and order the closure of inefficient capacity in the steel industry.

The government’s goal is to eliminate more than 80 million tonnes per annum in steel production capacity. We estimate, using World Steel Association data that represents about 11% of 2012 domestic production.

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After shipping, now the consolidation to close off the weaker mills, but market forces play a part in the consolidation of shipping companies with yards having different capabilities, although there are different mills, mini-mills, etc, I doubt how different their products can be, and how demand side can lead to consolidation