CSCSTEL make a lost this time

FY30/9/10
Financial Result
Current Quarter vs 3Q10 comparison

The Group achieved revenue and profit before tax for the current quarter of RM192.7 million and RM2.4 million respectively. This represents a significant decrease of RM68.8 million or 26% lower in revenue than that of its corresponding quarter. Profit before tax decrease significantly by RM51.2 million or 96% from RM53.6 million in the corresponding quarter. 
 
The drop in revenue is due to contraction in sales volume as a result of sluggish demand. The reduction of profit before tax was mainly the results of lower sales volume and high cost of raw materials which necessitated a write-down of inventories of about RM10 million to net realizable value.
Current Quarter vs Immediate preceding quarter comparison
The Group’s revenue has decreased significantly by 36%, from RM301.7 million in the preceding quarter to RM192.7 million in this quarter. The decrease in revenue is due to sales volume contraction and lower selling prices of our steel products

The decrease in revenue together with inventories write-down have resulted Group’s profit before tax to reduce significantly by 94% from RM42.1 million in the preceding quarter to RM2.4 million this quarter

Technical Outlook
Despite negative financial result,  CSCSTEL share price has been rising firmly. Until yesterday, before financial result announcement. It's now break under strong support of RM1.83. Its not looking good at the moment.

Stock Valuation
For the pass four quarter,  CSCSTEL make a net profit of RM97.72m, translate into EPS of RM0.26. Its trading at P/E 7x(12/11/10 closing RM1.82). With this multiple, i think its still cheap.


Overall
I think current quarter negative result come as a bit surprise. It might halt the uptrend for CSCSTEL for a while, until some good news kick in. However, CSCSTEL piggy bank has getting fatter. Company holding RM306.2m cash in hand, which is RM0.82/share of cash. 
Whenever steel sector resume to its glory, i think CSCSTEL will be the first to zoom. For long term investor, every price drop is an opportunities to accumulate.