Delong   

"DE LONG"(Get Dragon)

Any idea from who Evraz acquired theirs share of Delong each share at  current consolidated S$19.7?

 

I found out some of their new shareholders and some of their other stakes in listed companies.

Lim Ewe Ghee (Keong Hong Holdings), Seah Seow Cher, Atma Singh S/O Nand Singh (first REIT, Global Investment), Pho Boon Kher Melvin (MoneyMax, Roxy NF Pty). 

Here are some links (non-fundamental, more qualitative aspects of Ding Liguo)

1.  http://www.cefco.cn/Information.aspx?id=1789
2.  https://www.23yy.com/4090000/4086809.shtml
3.  http://jrzbd.com/cy/view.asp?newsid=879& id=128& did=21
4.  http://info.0800000601.com/cygs/893.shtml

 

Since posting, Delong has fallen over > 30%. On the other hand, China' s HRC price went up > 4%. 

http://www.sunsirs.com/uk/prodetail-195.html
 
 

 

Mr. Market has decided to give Delong a slap instead. This is very thin volume played counter by most likely certain individuals. There could be slight movement in   steel industry but Delong future is quite bleak. Ayou has been its life line. Instead of buying more capacity from others to sustain it sold the capacity. Net return from Ayou sale could be zero (0). It is going to buy a mill (no clue on percentage of completion) that is rotting for 3 years.

 

HG Metal and Union Steel share price rallied a bit despite the weak market today. 

I suppose it it could be due to the news of china steel price surge (hot rolled coil)

http://www.sunsirs.com/uk/prodetail-195.html

https://www.metalbulletin.com/Article/3718031/Surging-futures-steel-prices-return-some-spark-to-iron-ore-market.html

would Mr. Market recognise the profits of Delong and accord a right and proper valuation soon?
 

 

Wow, that' s a long time. Indeed, I do agree with you that company share price has been in languish for a long time because of the cycles. What is the valuation of Delong you bought back then.... and now?

Hope that the results will sustain all the way to Q2. 

https://www.metalbulletin.com/Article/3718031/Surging-futures-steel-prices-return-some-spark-to-iron-ore-market.html  - their main product hot rolled coil prices rebounded.

- vested, cyclical stock, DYODD - 

humayun      ( Date: 17-May-2017 18:39) Posted: I am vested in Delong since 2008. I have specific agenda and that agenda is to convey the message to rest of the retail investors not get trapped in this illiquid counter. Company has &ldquo plan&rdquo for stock buy this. If that ever happen it will further bring down the liquidity. Then investors will be waiting for mercy from Mr Ding to make an offer or bankruptcy.   By the way anyone knows what was the IPO price and how many rounds of consolidation this counter has gone through since IPO? Going for high IPO and then do an exist offer at lower price years later is not uncommon for S-Chips.

 

I am vested in Delong since 2008.
I have specific agenda and that agenda is to convey the message to rest of the retail investors not get trapped in this illiquid counter. Company has &ldquo plan&rdquo for stock buy this. If that ever happen it will further bring down the liquidity. Then investors will be waiting for mercy from Mr Ding to make an offer or bankruptcy.   By the way anyone knows what was the IPO price and how many rounds of consolidation this counter has gone through since IPO?

Going for high IPO and then do an exist offer at lower price years later is not uncommon for S-Chips.

 

I feel that you have a specific agenda against Delong. They felt that, by selling out, it was an good opportunity for them to realise some gains and move on. You can go on hammering on how Delong is such a crappy company. Being a cyclical company, it depends on the industry cycle as well. Let' s be fair -- yeah? All things equal, all companies -- humans included -- have our weaknesses and blind spots. I believe we should not be too emotional to companies, let' s just talk about fundamentals objectively. 

Honestly, I thought if we were to compare facts and whether recent activities were protecting shareholders' value would be more interesting than your ranting. 

humayun      ( Date: 26-Dec-2016 10:40) Posted: A hopeless company with hopeless management. First had to suspend operation then looks like forced to sell to Thai minority shareholders. Appears to have no management skills to deal with business partners.

 

I think you misunderstood. If you look at counters such as Sinostar Pec or Delong, they have not taken a single cent from the company. Look at Eratat Lifestyle, they did rights and took money from shareholders even after listing. In fact, for Sinostar Pec, the management bought back shares whenever he saw an opportunity. The management did not sell even a single share. 

1. How can you put out a statement irresponsibly and say that who is the director and that is not important? Ultimately, a company is managed by its people and people are the heartware that delivers the results. Mr Ding Liguo is not god and he definitely is unable to predict how people perceives his company and the steel industry cycles. 

2. If investors do look at the performance of Delong share price, then they are not true investors. What determines the share price? It is its fundamentals! Has Delong' s profits grown? Yes. Did they reduced their debt? Significantly! Yes, share price is important but what' s more important to look? 

3. Noting that this is a cyclical stock that is underpriced by market inefficiencies, I am willing to wait out. However, if the steel prices do collapse, I am out of the stock. 

4. For last twelve months, it generated 267.4mil (earnings before tax, excluding exception items). Apply a tax rate of 25%, it will be $200.55mil. Current market cap is S$170.78mil (based on S$1.55 closing price). Add net debt of 185.7mil, you will get an enterprise value of S$356.48mil. Taking enterprise value over net profit after tax, you will get 1.78x. Can you find any company that is on the same profitability plus valuations?

5. We do not drive looking behind, we drive looking forward. A non-performing company will also have its days to run as well. 

Cheers, of course, I am vested. DYODD. 

humayun      ( Date: 16-May-2017 23:34) Posted: Who owns a counter and who is company director has proven to be not a important factor . We can see that from recent share price performance of Nobel Group (i.e. Nobel is partly own by Chinese Investment Corp with deep pocket). Mr Ding might be very nice person but only thing investors look is the performance of Delong share price. Investors get nothing over the years to be specific from 2008 till to date from Delong except continuous  decline of share price. Evraz bought 15% of Delong each share at  S$19.7. They might have written off whatever reamining from theirs' balance sheet.

 

Who owns a counter and who is company director has proven to be not a important factor . We can see that from recent share price performance of Nobel Group (i.e. Nobel is partly own by Chinese Investment Corp with deep pocket). Mr Ding might be very nice person but only thing investors look is the performance of Delong share price. Investors get nothing over the years to be specific from 2008 till to date from Delong except continuous  decline of share price.

Evraz bought 15% of Delong each share at  S$19.7. They might have written off whatever reamining from theirs' balance sheet.

 

Apart from that, their steel mills are one of the better ones in terms of environment-friendly and I also believe they purchased their steel on spot rate. Almost 100% utilisation after doing my calculations. While this may not be a long term holding due to its cyclicality, there is some value offered in the price trading currently. I have vested interest. 
 

" Ding Liguo, a wealthy Chinese businessman and politician, thinks Chinese people will never be persuaded to stop eating shark fin soup without the power of the law.

As a member of China' s parliament, the 40-year-old is hoping to convince the government to ban the trade in sharks' fins.

" Materialism is well developed in China but other things, such as morality, haven' t progressed so well," said Mr Ding, a Buddhist who owns a number of steel mills."

http://www.bbc.com/news/world-asia-pacific-15007841

 

With steel prices likely to remain stable, I believe their Q2 FY2017 results would add another booster to their overall intrinsic value. Bear in mind that Delong is a cyclical stock, however, Enterprise Value / Operating Profit is roughly 1.3 to 1.5x which is severely undervalued compared to its peers such as LTC Corporation or Lee Metal. Even those listed in China are valued higher. 

I think the stigma lies with Delong being a S-Chip. If Delong has more exposure and some coverage from analysts, I believe it is not a problem. Roman Abramovich: Russian Oligarch Putin Friend Owner of Evraz, owns 15% of Delong. Previously, Evraz wanted to buy 51% stake of Delong but failed due to regulatory disapproval. I suspect Delong enjoys good steel prices from Russian. 

Their plant is well utilised and capex is spent to upkeep the steel mills. Look at their cash conversation cycle as well. 

They have appointed Wu Geng as their independent director. Look at Wu Geng' s CV. Click on the link here. 

Mr Ding Liguo and Jack Ma are club members of China Entrepeneur Club. 

Some extra readings:

http://finance.sina.com.cn/meeting/2016-06-16/doc-ifxtfrrf0454139.shtml
http://www.52steel.com/news/2017-04-27/2456939.html
http://www.chinavalue.net/BookSerialise/BookShow.aspx?ArticleID=8441
 

 

More info on MOU
ENTRY INTO BINDING MEMORANDUM OF UNDERSTANDING
http://infopub.sgx.com/FileOpen/MOU%20.ashx?App=Announcement& FileID=452930

 

Lost Thai Business. Selling Aoyu capacity. Now buying chinese " state" own company that was building a steel plant but stopped due to fund since 2014. Whatever remained in the plant probably junk due to 3 years of rotting! RMB3 Billion paid up capital company which might not even has a web page.

 

Supet bull!seems still cheap. Can load more.

 

This counter goes through this type of ups and sudden down every 1 and half year to 2 year interval in thin volume. It has taken very small volume to reach $1 from 30 cents. Only last few days it it showing volume. This is changing right hand to left hand. Anyone going in will be caught off guard.

Just to go back, in 2008 Evraz might have spent nearly S$300mil to S$350mil to buy about 15% of the Delong. Each share costed about S$19.7 ( after 5 to 1 consolidation). It is most likely possible that fraction of Evraz money will be used to take the counter off the SGX in the near future giving some penny to retail shareholders. Another typical S-Chip behavior.


 

 

Today still up. This is crazy. February 22nd still below 30 cents. Today close at $1.42.

 

Results just out yesterday. Sales quantity drop but net profit up. Report provides a lot of work insight.

humayun      ( Date: 02-May-2017 00:26) Posted: This is the posting in relation to disinvestment. http://infopub.sgx.com/FileOpen/Production%20Capacity%20Transfer.ashx?App=Announcement& FileID=445942 " FINANCIAL EFFECTS OF THE PRODUCTION CAPACITY TRANSFER Since the Consideration will be used to offset the expenses to be incurred in relation to the cessation of Aoyu Steel&rsquo s operations as set out in paragraphs 5(a)(i) to (iii) above, the Company is of the view that, as at the date of this announcement, the Production Capacity Transfer is not expected to have any material impact on the net tangible asset value per share and earnings per share of the Company for the financial year ending 31 December 2017." Secret_Squirrel      ( Date: 01-May-2017 21:50) Posted: They are going to divest Aoyu for   a total consideration of RMB 400 million. http://www.theedgemarkets.com.sg/tags/aoyu-steel In 2012 theyaquire Aoyu for  a consideration of approximately RMB 264 million http://delong.listedcompany.com/newsroom/20120118_072644_B1N_E4707F4910100F124825798800802140.1.pdf So there is still a profit after they divest Aoyu.

 

This is the posting in relation to disinvestment.

http://infopub.sgx.com/FileOpen/Production%20Capacity%20Transfer.ashx?App=Announcement& FileID=445942

" FINANCIAL EFFECTS OF THE PRODUCTION CAPACITY TRANSFER

Since the Consideration will be used to offset the expenses to be incurred in relation to the cessation of Aoyu Steel&rsquo s operations as set out in paragraphs 5(a)(i) to (iii) above, the Company is of the view that, as at the date of this announcement, the Production Capacity Transfer is not expected to have any material impact on the net tangible asset value per share and earnings per share of the Company for the financial year ending 31 December 2017."

Secret_Squirrel      ( Date: 01-May-2017 21:50) Posted: They are going to divest Aoyu for   a total consideration of RMB 400 million. http://www.theedgemarkets.com.sg/tags/aoyu-steel In 2012 theyaquire Aoyu for  a consideration of approximately RMB 264 million http://delong.listedcompany.com/newsroom/20120118_072644_B1N_E4707F4910100F124825798800802140.1.pdf So there is still a profit after they divest Aoyu.   humayun      ( Date: 01-May-2017 16:08) Posted: Delong is going to disinvest " AOYU STEEL" . Anything else is coming into financial statement   except    impairment charge? Check out financial statement to see how much is CEO and exectives are getting. What investorssu got for this company is nothing. This is how all the s-chips are run.

 

They are going to divest Aoyu for   a total consideration of RMB 400 million.

http://www.theedgemarkets.com.sg/tags/aoyu-steel

In 2012 theyaquire Aoyu for  a consideration of approximately RMB 264 million

http://delong.listedcompany.com/newsroom/20120118_072644_B1N_E4707F4910100F124825798800802140.1.pdf

So there is still a profit after they divest Aoyu.

 

humayun      ( Date: 01-May-2017 16:08) Posted: Delong is going to disinvest " AOYU STEEL" . Anything else is coming into financial statement   except    impairment charge? Check out financial statement to see how much is CEO and exectives are getting. What investorssu got for this company is nothing. This is how all the s-chips are run.