Background:
- Hua-An Group is the first Red Chip counter listed on Bursa Malaysia
- Listed on KLSE on 26th March 2007.
- Principal activities are production and sale of metallurgical coke.
- What is metallurgical coke?? It is a critical raw material used as energy source for the manufacturing of steel.
My View:
This share has drop around 43% recently since Feb 2011.
You can see from the graphs below which show the main reason why the share drop so much. Since the last so called "Recession" in 2008, construction industry in Middle East, UK & Europe drop dramatically and this reduced the consumption for steel in the World.
As mentioned above Huaan main business is "production and sale of metallurgical coke" which is a critical raw material used as energy source for the manufacturing of Steel.
Therefore,
less Steel Consumption = less production and sale of metallurgical coke = less profit to Huaan
I have invested this share for some time now. The reasons for my investment are as follows:
- Value drop significantly after the so called "Recession" 2008
- Net asset per share is 0.6238 ~ higher than current share price. Stay steady between 0.60 to 0.70 since 2008.
- One of the major shareholder is Lembaga Tabung Haji with approx. 8.35%
To me, Steel is one of the main item within Construction Industries, thus invest in companies related to steel business still a plus for long term investment.
Huaan's production plant is located in China which give them better opportunity to market its production to nearby countries which required major construction now:
a) China (still booming at the moment)
b) Japan (re-construction due to Tsunami)
c) New Zealand (re-construction due to Earthquake)
You might want to consider other shares which related to steel business too:
a) Kinstel
b) Masteel
c) Ssteel
d) Lion Group
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