Hot Stock CSC Steel shares climb to 2½-yr high after posting a jump in 4Q profit

by **Cals** Wed 24 Feb 2016, 03:16

Hot Stock

[size=28]CSC Steel shares climb to 2½-yr high after posting a jump in 4Q profit

By Gho Chee Yuan / theedgemarkets.com | February 23, 2016 : 12:21 PM MYT

KUALA LUMPUR (Feb 23): Write-back of doubtful debts and lower input costs have given a big boost to CSC Steel Holdings Bhd's quarterly earnings, marking the fourth consecutive quarter it registered a net profit.

Likewise, its share price climbed to RM1.32 at noon — the highest level since mid-2013 — up four sen or 3.13%.

However, the steel product maker warns of a soft export market ahead.

CSC Steel announced yesterday it posted a net profit of RM28.53 million or 7.47 sen per share in the fourth quarter ended Dec 31, 2015 (4QFY15) due to lower cost of production as a result of lower hot rolled steel prices.

In contrast, the steel product maker posted a net loss of RM9.01 million or 2.43 sen per share in 4QFY14.

CSC Steel declared a final dividend of 8 sen per share for the financial year ended Dec 31, 2015, payable on July 13.

The write-back of the doubtful debt provision of RM16.9 million, out of which RM12.9 million of the doubtful debt provision was originally provided in the corresponding quarter, also helped to lift the company's earnings.

However, revenue for the quarter come in 7.64% lower at RM242.54 million from RM261.51 million due to the decline in selling prices of all steel products and lower sales volume of certain steel products.

For the full year (FY15), it registered a net profit of RM54.6 million or 14.75 sen per share as compared to a net loss of RM21.27 million or 5.72 sen loss per share in FY14.

Annual revenue for FY15 fell 3% to RM1.02 billion from RM1.05 billion.

Going forward, CSC Steel said the continued slowdown in China's economy remained as a major challenge for the group.

"Although China has implemented several measures to reduce steel output, particularly from its older mills, total China steel over production may still remain.

"If China's domestic demand remains sluggish, the export market will continue to be soft," it added.

On the domestic front, CSC Steel said the anti-dumping measures implemented by the Malaysian government have stemmed the decline in steel prices.

"Together with the continued support from our parent company, we are cautiously optimistic, barring unforeseen circumstances, that the domestic market should yield positive returns for the group," the group said.
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