Delong   

Strong outlook

Delong Holdings ? a manufacturer of hot-rolled steel coils in China - has reported Q3 revenue of $399.3 million, an increase of 63.7 per cent. Net profit, however, decreased to $24.7 million, from $37.8 million a year ago. It attributed this to higher raw material prices.

 

any up side on this burger is a golden SHORTING opportunity !!!! what are u waiting for !! today last day of CD...better still !!! hee.... :)))))))))

 

This is what I think. It made sense to put your money somewhere until they come up with better result. The STI index will goes up. Opportunities at other counters will be lose if parked money in this counter until better times.

 

Delong's recent profit warning for 3Q07 was its 2nd consecutive warning. The surge in iron ore prices had been faster than HRC selling-price increases in 3Q, squeezing margins.

CIMB-GK are also assuming delays in management's acquisition plans to increase its production capacity. They now expect gross margins to decline from 16.3% in 2Q to 12% in 3Q, with a $433.2m revenue and $32.7m net profit.

They have cut their FY07-09 earnings forecasts by 35-43%, producing a new tp of $3.67 (previously $4.70), based on a new CY08 P/E target of 10x (previously 12x) to reflect higher execution risks and Delong's inability to mitigate exposure to higher raw material prices. Maintain Outperform nevertheless for its sound longer-term fundamentals.

 

well...this burger got it up and downs...i think mgt didnt foresee the spike in STEEL price..so lan lan..now have to desperate tie for a stable raw material at the suppilier source end...well...just curious..why cant it just jack up it's product PRICING and pass it to consumers??!??! hee....that will SPIKE up the stock price hor?!?! hee..

well...dream on...hee

 

Below is Delong's planning and if failed, maybe can next quarter will be equally bad. 

Delong has suffered a cut in gross margins. To offset this, the company is negotiating long-term supply agreements with iron ore producers so it can import directly and significantly cut the purchase price of ore.

 

Look at my 2 postings on 15th Oct. Careful with "BUY" rating.

 

BBs squeeze balls?? haha...well..squeeze more then :P

 

Hold horses 1st - BBs now squeezing today's shortists in the market.

 

aya...to play stock go with the trend...the trend for Oct is SELL !! be forth warned !! :P

can oni SHORT but no BUY !! hee..

DELONG is a gd stock...but trading at the WRONG time...will be back again to scoop low...btw...last day of CD today har? hee....many awaiting to unload fast and fury siah.... :P

 

I thought annoucement wasn't a bad one, it explained the rationale to invest in Cape Lambert.

 

Wah this counter bad luck, i bought at 3.72 on citigroup upgrade on bogus 7.5, and took another blow on profit warning 3 after trading Halt.  sold off my lots and took big hair cut on my account.  major over reaction due to low volume trading making it volatile, may drift lower Reminder avoid this counter!

 

Thought that the news weren't that bad.. Not sure if market has over-react to this news. If you look into the details, co is expanding and integrating their production which should cut costs in the long run.

 

when in DOUBT !!! always just SHORT lah...cant be wrong ! :P

 

Whether they issued buy calls and then off-load is anybody's guess. But there's a profit warning now.

Delong fell as much as 11.8% to $2.98 after the steel coil maker issued a profit warning. Delong said on Wed that it expects Q3 net profit to be lower than that for the previous quarter and the same period last year.

"With a tighter global raw material supply scenario, raw material costs grew faster than product selling price increases, resulting in a contraction of gross margins," the firm said in a statement.

 

From SGX: 

03-Sep-2007 http://info.sgx.com/webcorannc.nsf/64158e18bc6f085348256f36001b78a9/4e3a3d2343ad16264825734b003f0a2a?OpenDocument


Proposal to invest in Cape Lambert Iron




05-Sep-2007 http://info.sgx.com/webcorannc.nsf/64158e18bc6f085348256f36001b78a9/9196e3e1721194e74825734d003becc2?OpenDocument

1. Cape Lambert Iron Ore Ltd :  Exercised option on 4.4% stake in Cape Lambert


2. Anketell Pty Ltd (subsidary of Cape Lambert): Proposed 70% stake.

 

05-Oct-2007
http://info.sgx.com/webcorannc.nsf/64158e18bc6f085348256f36001b78a9/3ce41c581fdcc52a4825736b00183ecd?OpenDocument


Proposal to acquired Anketell Pty Ltd DID NOT REACH AGREEMENT





Conclusion:

Did Citigroup made a Mistake???

Anyone wants to clarify?

 

Extract: 

05-Oct-2007


Further to the announcement of 5 September 2007, Delong Holdings Limited (the "Company") would like to announce that the Company has not been able to reach an agreement with Cape Lambert Iron Ore Ltd ("CFE") on the proposed acquisition of 70% of the capital of Anketell Pty Ltd ("Proposed Acquisition") from CFE. Accordingly, the Company will now not proceed with the Proposed Acquisition.

 

I suspect Citigroup's research is not accurate.

Where does the 70% come from???

I suspect they mix up the propsed aquisation of its subsidary Anketell Pty Ltd whic did not materialise.

Anyone like to clarify. Im still reading the announcments..

 

OCBC issued a "buy" rating on 1 Oct 2007 price up on 1 Oct and then down the next few days.

http://www.ocbcresearch.com/Article.aspx?type=market_pulse&id=20071001084045_75214

 

This is interesting. Does stock price rises due to Citigroup's coverage of "buy"? Or did Citigroup issued "buy" and quickly purchased to bring up the price and with hope to off-load to the market at a higher price?