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I am interested in investing in the Delong convertible zero coupon bonds due 08.06.2012 ISIN code XS0302330344.
In Frankfurt they quote with an inacceptable bid/offer spread of 19.75 / 25.75 .
Do they quote also in Singapore ? any link to monitor prices ?
SINGAPORE, Jan 7 (Reuters) - Singapore-listed steel firm Delong Holdings (DELO.SI) said on Wednesday it will report a loss for its 2008 full year results.
China-based Delong said in a statement that falling steel prices and slowing global demand resulted in the loss, but that the firm has sufficient resources to meet working capital requirements and access to credit.
Delong reported in October it had put a few hundred workers on leave and shut several furnaces in China's northern Hebei province, because of weak demand.
http://www.reuters.com/article/marketsNews/idINSIN40416120090107?rpc=611
3rd Quarter Ended 30/09/2008
Loss after tax ($'000)
http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_C7BEA328C2494BD9482574F800450507/$file/3Q2008.pdf?openelement (11,883)
Published October 24, 2008 BT
Delong sees Q3 loss due to poorer margins
CITING the worsening global economic climate, Delong Holdings said that it expects to incur a loss for the third quarter ended Sept 30 due to eroding margins.
The Chinese manufacturer of hot rolled steel coils also confirmed a Reuters report that it has cut back on steel production and put some workers on unpaid leave given weaker demand for its steel products.
Production at four of its older blast furnaces were reduced. The four blast furnaces contribute about 30 per cent to the group's total annual production capacity.
Delong said that it will gradually increase its capacity utilisation rates when the demand situation for steel products improves.
But it assured shareholders that despite the tighter credit market, it has sufficient financial resources to meet its working capital requirements.
'The Group has existing secured and unsecured credit facilities with various domestic and foreign financial institutions which can be called upon if any such need arises,' Delong said in a SGX announcement.
Delong blamed the profit drop on higher raw material costs and a translation loss of $3.4 million because of the weakening of the US dollar against the yuan for unused proceeds from the convertible bonds issued in Jun last year.
Report from CIMB.
Delong's 1Q08 net profit of $9.2m (-73.4% yoy) was far below consensus and our annualised forecasts, which was already the lowest in the market. The shortfall was mainly due to raw material prices, which shot through the roof. Net profit constituted only 6.3% of market and 8.7% of our full-year forecasts.
Higher costs all around. Gross margins slumped to 6.6% from 18.5% in the previous year. Iron ore was the main cause. However, we note that finance costs also surged 378% yoy to $15m, mainly on higher borrowings and interest rates. Operating cash flow turned from $21m to a negative $1.5m, reflecting a worsening operating environment. Accounts receivable leapt from $83.7m to $142.4m while payables remained fairly steady. Net gearing was 67.5% vs. 70% in FY07. HRC prices have only risen 15.8% YTD, compared to an estimated 85% rise in iron ore prices and a 200% jump in coking coal prices.
The Evraz offer made in 2/08 still stands and is pending approval from the Chinese authorities. The offer deadline is 18/8/08. We take the view that the deal will not go through as the Chinese government appears to prefer a domestic-led consolidation for the steel industry. Having foreign players could disrupt the industry further, and reduce Chinese steel mills' bargaining leverage in their negotiations with suppliers of iron ore and coking coal.
Maintain Underperform. Overall, this was a weak set of results. We have cut our earnings forecasts by 50-60% to reflect the severe margin squeeze all round. We recommend investors to switch to FerroChina (Outperform, target price $2.11), or to accept the Evraz offer if the Chinese authorities approve the Evraz deal. Our target price is reduced to $2.09 (from Evraz's offer price of $3.95) based on 2.3x CY09 P/B, in line with industry peers.
1Q08 FS
Profit -73.4% (vs 07)
http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_B925F27C193F37D0482574430015DE84/$file/1Q2008.pdf?openelement
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| MUMBAI (Thomson Financial) - Standard & Poor's Ratings Services affirmed its ratings on Russia-based steel producer Evraz Group SA and its core unit Mastercroft Ltd, after Evraz said it plans to buy a majority stake in Singapore-listed steel producer Delong Holdings Ltd
"The affirmation reflects our view that the acquisition will further incrementally strengthen Evraz's business risk profile by expanding its production and improving geographic diversification into foreign markets," said S&P's credit analyst Alex Herbert. The agency added that while individually its impact on the group is small, it follows the acquisition of Claymont Steel Inc and various Ukrainian assets announced in Dec 2007, and is consistent with management's acquisition-led growth strategy. "Furthermore, we regard the cost of up to 1.5 bln usd (assuming 100 pct ownership) as being in line with the group's financial policy and within the leverage levels assumed for the ratings," said Herbert. Evraz and Mastercroft's 'BB-' long-term corporate credit and senior unsecured debt ratings were affirmed. Their national scale rating was affirmed at 'ruAA'. The outlook is positive S&P said the positive outlook reflects the possibility of a one-notch upgrade to the long-term corporate credit ratings on Evraz and Mastercroft in the next year or so, if strong cash flow generation continues and leverage remains moderate, despite higher debt caused by recent acquisitions, other investments, and capital expenditures S&P also assigned its 'BB-' long-term debt rating to a 3.2 bln usd structured credit facility. Evraz is the borrower, guaranteed by Mastercroft. TFN.newsdesk@thomson.com jro COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News MMMM |
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short till die liao why suddenly rebound @$#%!#$%#@$@#$%#$%
SHORT AHhhh!!
wow....deal gone sour?!??! heavy SHORTING detected for this burger siah !!!
let's join in the fun !?!??! :P
shinmark, thx for comment. yes, there is a risk of takeover failure there. On a positive note, the PRC government recently allowed Mittal Steel to takeover another chinese steelmaker.
nicky, SHORT! in doubt... the last 2 days look like it. Did you try shorting delong?
The takeover is subjected to approval by the Chinese Authority. If not approved, price likely the fall. Hence, there is risk and probably reason for the price gap
when in doubt....SHORT !! :D
hee...
funny hor... still an existing price gap of over 50cents between evraz offer price and today price... why?
Market is supposedly vvery efficient but seem something wrong here. IS there something that the market know about that's causing the gap... Feel free to comment why you think cause the gap...
Puzzled...
evraz offer is $3.94 per share.
why is delong trading at $3.38 today?
anyone any comments on the big price gap? very strange... can buy or not???
very mysterious... i doubt it has to do with delong profit warning... how is the lower profit got to do with the $3.94 offer price.
Agreed that to take profit now if holding any (there is always chance to buy in but unlikely sell at higher price at such a volatile mkt)......after all they have also issues profit warning which will release next week...Delong Holdings said it will report a lower net profit for FY2007 due to a tighter global supply of raw materials causing pressures on gross profit margins. Also, volatility in foreign exchange rates will lead to a poorer performance for FY2007.
CIMB downgrades Delong to Underperform from Neutral after company receives $3.9459/share bid approach from Evraz Group. Previous target price was $1.89; no new target price set. Says offer price looks fair, is close to Delong's all-time high of $4.02, represents similar multiple to that paid in recent comparable deals. Advises investors to accept offer or take profits now; "given that the outlook for steel producers like Delong remains challenging, we believe investors should sell into strength." Suggests investors switch into FerroChina. rated Outperform with $2.62 target price.
Russian steel producer Evraz Group SA Tue said it is seeking to buy Delong in a move to expand in China - the world's fastest-growing market.
It has entered into a pact to buy 51% of Singapore-listed Delong Holdings Ltd., said Evraz, adding that it will make an offer to buy the remaining shares.
The company will pay $3.9459 a share for the 51% stake and will offer the same price for the remaining shares, valuing Delong at about $2.1 billion (US$1.49 billion).
At midday the company issued a statement saying that net profit after tax for the year ended Dec 31 will be lower than a year ago because of rising prices for raw materials.
It said also that a weak U.S. dollar hurt its profit. Revenue, however, "continued to grow, driven by growth in demand for steel products" in China, the statement said.
Earlier Tue, Evraz Chairman and CEO Alexander Frolov said in a statement: "This investment by Evraz in the Chinese steel sector, our first in the Asia-Pacific region, is a critical strategic move to expand our global footprint."
The Russian company said it doesn't intend to change Delong's management following the acquisition.
Evraz said it is buying the stake from Best Decade Holdings Ltd., which owns 77.08% of the steel products maker. Delong Chairman Ding Liguo owns a majority stake in Best Decade.
The acquisition includes an initial buy of about 10% of Delong shares for $3.9459 each, and a call and put option to buy an additional 32.08% at the same price under certain conditions. The options will last for six months.
In addition, Best Decade will sell about 8.97% of Delong to Evraz after certain restrictions are lifted.
"This seems to be a good price and the right size bite for Evraz" in China, said Cimb-GK analyst Lawrence Lye, adding that the offer is close to the all-time high of $4.02 that Delong shares hit in Jul.
Merrill Lynch (Singapore) Pte. Ltd. is acting as a financial adviser to Evraz while Citigroup is advising Best Decade.
The acquisition of the 51% stake is subject to antitrust clearance by the Chinese government.
Evraz, partly owned by Russian billionaire Roman Abramovich, has been expanding to markets including Africa and the U.S. Most recently, it bought U.S.-based Claymont Steel Holdings Inc.
The company that is acquiring Delong belongs to none other than billionaire boss of Chelsea football club