RECENTLY, Malaysia’s one-man institutional investor Koon Yew Yin a.k.a. Uncle Koon has cut short his stock market ‘sabbatical’ to predict that steel counter Hiap Teck Venture Bhd “will shoot like a rocket”.
Interestingly, both Uncle Koon and stock market guru Ooi Teck Bee (OTB) have also put behind them a love-hate relationship to rally behind Hiap Teck with OTB describing the counter as “Miss Universe Hiap Teck”.
“Hiap Teck is mining iron ore to produce steel and steel products which is very different from Leon Faut Bhd, Choo Bee Metal Industries Bhd, Prestar Resources Bhd, Astino Bhd, Leader Steel Holdings Bhd, Mycron Steel Bhd and Tashin Holdings Bhd,” justified Uncle Koon in his posting dated Aug 29.
“All these steel companies do not produce steel. They have to buy steel from Hiap Teck to make steel products for sale. They also buy steel from Hiap Teck to sell as traders.”
Uncle Koon further rationalised that steel price has gone up more than 300% in the past 12 months because China which is the biggest steel producer and exporter in the world wants to stop exporting steel in its quest to improve its air quality and environment.
As for Hiap Teck, Uncle Koon is impressed with the company’s earnings per share (EPS) of 4.79 sen for its quarter ending April 30, 2021 and 2.21 sen in its previous quarter ending Jan 31, 2021.
“Its profit has more than doubled from its previous quarter. Based on the fact that steel price has been shooting up so rapidly,
Hiap Teck’s profit for its next quarter ending July should be another new record high. Its next quarter result will be announced before end-September,” projected Uncle Koon.
In comparing Hiap Teck’s latest EPS of 4.79 sen with Press Metal Aluminium Holdings Bhd EPS of 3.16 sen for its quarter ending June 30, 2021, Uncle Koon – in an earlier blog posting dated Aug 25 – has put a price tag of RM1 for Hiap Teck which is currently trading at its four-week high of 60 sen.
However, some market observers are not buying Uncle Koon’s and OTB’s fascination with steel stocks outright.
One critique deemed the “buy” call as a ploy orchestrated by those who had bought earlier and are desperately trying to unload because next quarter’s results would be disastrous.
“The main reason for this is the FMCO (full movement control order) where they are only allowed to operate at 10% capacity – this is more or less shut down,” reckoned the critic. “Besides, the collapse in steel prices will start to hit them in the third quarter.” – Sept 1, 2021
