Lysaght Galvanized Steel Berhad

We can see a number of cash rich companies announcing special dividends. This may, or may not, be due to the dividend tax coming into play next year. For example:

$KMLOONG / 5027 (KIM LOONG RESOURCES BERHAD) and $UTDPLT / 2089 (UNITED PLANTATIONS BERHAD) (have been declaring special dividends for many years already)
$LYSAGHT / 9199 (LYSAGHT GALVANIZED STEEL BERHAD) as discussed by @benghooi and @realalvinang before
$MSC / 5916 (MALAYSIA SMELTING CORPORATION BERHAD) with a substantial 17 sen special dividend for the first time in over a decade
$KOSSAN / 7153 (KOSSAN RUBBER INDUSTRIES BERHAD) also declares a special dividend
Pecca, Hexza, TMCLIFE, hupseng, far east and more.

What are some similarities of these few companies declaring these dividends? Some are record high, some are highest in a few years-- are these dividends coming from improved business operations, or appropriation of cash in the balance sheet that is expected not to be utilised in the near future?

Which other companies could potentially give a surprise bumper dividend before the year ends?
Many listed companies in Bursa are cash rich (or even cash hoarding, some might say); could there be any other which could be compelled to issue dividends soon?

Of course, as usual, due diligence is required and it's typically not a good idea to be fixated on just this singular facet (of special dividends due to the upcoming dividend tax). But it's something to think about. After all, if a major shareholder was to receive the money from the business they have been handling for years; now would be as good a time as any.

$LYSAGHT / 9199 (LYSAGHT GALVANIZED STEEL BERHAD): Strong Cash Position and Dividend Growth!

Here's a quick overview of $LYSAGHT / 9199 (LYSAGHT GALVANIZED STEEL BERHAD)'s Q2FY24 performance:

Revenue: RM23.83 million, reflecting a 21% YoY increase and a 6% QoQ increase. The revenue growth in both YoY and QoQ is primarily driven by higher sales in Malaysia and other ASEAN regions, while revenue from other areas declined.

Main Revenue Contributor: Malaysia remains the largest revenue contributor, accounting for 46.3% of total revenue this quarter, up from 44.7% in Q2FY23.

Profit Before Tax (PBT): RM3.47 million, a 34% increase YoY but a 26% decline QoQ. The YoY growth is mainly due to higher revenue, while the QoQ decrease is attributed to a 4% drop in the average selling price (ASP) of poles. However, this isn't a significant concern as Q2 typically records lower earnings for the company.

1HFY24 Performance: The company reported cumulative revenue of RM46.32 million, a 26% increase YoY, and a PBT of RM8.16 million, a 39% increase YoY.

Improved Cash Position: The company holds RM103.38 million in cash with no borrowings, placing it in a net cash position. This cash reserve represents approximately 86.7% of the company's market capitalization.

Positive Free Cash Flow (FCF): The company generated a positive FCF of RM7.35 million in this quarter.

Increased Dividend: LYSAGHT declared an interim dividend of 8 sen per share in this quarter, signaling a rise in dividend payouts. Last year, the company distributed 8 sen per share for the entire FY23. Given that final dividends are usually higher than interim ones, if another 8 sen per share is declared as the final dividend next year, the full-year dividend yield (DY) would be 5.6%.

Outlook: The company faces challenges from forex volatility, a slowing global economy, geopolitical tensions, inflationary pressures, and increased competition from lower-quality products. Additionally, fluctuations in commodity and crude oil prices may impact raw material costs for suppliers sourcing from overseas.

Change in Boardroom - MR EE BENG GUAN

General Meetings: Outcome of Meeting

$LYSAGHT / 9199 (LYSAGHT GALVANIZED STEEL BERHAD): Profit and Cash achieving New High

Background:

For those unfamiliar with LYSAGHT, it is a leading manufacturer of galvanized steel poles and masts in Malaysia. Their products serve a wide range of applications, including lighting columns for streets and highways, infrastructure for transport terminals and traffic interchanges, illumination solutions for airports, ports, sports complexes, and stadiums, supporting structures for golf courses and other recreational facilities, and antenna masts for 5G technology. Additionally, they offer tubular steel structures designed for supporting overhead power transmission lines, power substation structures, and mounting high-voltage equipment.

Q1FY24 Updates:

📌 Revenue: Achieved RM22.48 million, marking a 32.34% increase YoY but a 3.51% decrease QoQ. The YoY increase is primarily due to higher sales of galvanized steel products and installation income. Sales of galvanized steel products contribute 99.7% of total revenue.
📌 Sales Breakdown: Poles and masts sales amounted to RM17.56 million and RM3.80 million, respectively.
📌 Geographical Revenue: Revenue from other ASEAN countries (excluding Malaysia) constitutes about 48% of total revenue, followed by Malaysia at 42%.
📌 PBT: Increased by 43.37% YoY and 14.55% QoQ to RM4.69 million. The YoY increase is due to higher revenue, while the QoQ increase is due to a roughly 3% decrease in steel prices this quarter.
📌 PAT: Recorded at RM3.59 million for the quarter.
📌 Balance Sheet: Remains strong with a cash position of RM98.38 million and zero borrowings. This equates to RM2.37 per share in cash, meaning 87% of the current share price of RM2.71 is actually cash.
📌 Free Cash Flow: Remains positive for the quarter.
📌 Management Outlook: The management remains cautious about upcoming quarters due to concerns over foreign exchange volatility, a slowing global economy, geopolitical tensions, inflationary cost pressures, and increased competition from lower-quality products.
📌 Additional Factors: Volatility in commodities and crude oil prices, which affect supplier pricing for raw materials sourced from overseas, and fluctuations in steel prices, which impact the company's profit margins.

Change in Audit Committee - MR CHONG CHIN LOOK

Change in Risk Committee - MR CHEAM LOW SOO

Change in Remuneration Committee - MR CHONG CHIN LOOK

Change in Remuneration Committee - MR CHONG SAI SIN

Quarterly rpt on consolidated results for the financial period ended 31/03/2024

Change in Audit Committee - MR CHEAM LOW SOO

Change in Risk Committee - MR YEOH SHEONG LEE

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RECURRENT RELATED PARTY TRANSACTIONSLYSAGHT GALVANIZED STEEL BERHAD ("LYSAGHT OR "THE COMPANY")
- RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

Mohnish Pabrai's PE of 1

If you sift through companies with a PE of 40, you'll find plenty, but the pool diminishes as the PE drops. However, Mohnish Pabrai advocates seeking out companies with a PE of 1. While it may sound absurd, it's a strategy that actually works.

Pabrai argues that PEs of 10, 20, 30, etc., are all non-hidden PEs, whereas a PE of 1 is a hidden gem, and that's what he urges investors to uncover.

There are two methods to uncover these hidden PEs of 1. The first involves predicting future earnings. Pabrai cites Fiat Chrysler as an example. In 2012, it traded at $5/share, and he foresaw that its EPS could reach $5 in the future. By 2018, this prediction came true, resulting in a 7 to 8x return for Pabrai.

The second method involves excluding a company's cash reserves. Pabrai illustrates this with IPSCO. He invested in IPSCO when it had a PE of 3, but since a third of its market cap was in cash, adjusting for this yielded a PE of 2. He anticipated this stock would yield returns in just 2 years, but within that time, the company was acquired, providing him with a 4x return.

How about in the KLSE? I'd venture to say that it's not particularly difficult to identify companies with a PE of 1 by disregarding their cash reserves. Take $LYSAGHT / 9199 (LYSAGHT GALVANIZED STEEL BERHAD) for instance. Presently, the company boasts a market capitalization of approximately RM108.5 million, yet it holds net cash totaling RM94.94 million. This implies that 87.5% of the company's market capitalization consists of cash. By excluding this cash, the PE ratio dwindles to just 1.2.

https://cutt.ly/ueq00Vh5

Annual Report & CG Report - 2023

CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PROPOSED NEW SHAREHOLDERS' MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

LYSAGHT - Notice of Book Closure

General Meetings: Notice of Meeting

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RECURRENT RELATED PARTY TRANSACTIONSLYSAGHT GALVANIZED STEEL BERHAD ("LYSAGHT" OR THE "COMPANY")

PROPOSED NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRNSACTIONS OF A REVENUE OR TRADING NATURE ("PROPOSED NEW SHAREHOLDERS MANDATE")

Change in Boardroom - MR CHONG CHIN LOOK

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RECURRENT RELATED PARTY TRANSACTIONSLYSAGHT GALVANIZED STEEL BERHAD ("LYSAGHT OR "THE COMPANY")
- RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

$LYSAGHT / 9199 (LYSAGHT GALVANIZED STEEL BERHAD): An Undervalued Stock?

On February 22nd, a company released its quarterly report that may not be well-known due to its low market capitalization and profile. This company is $LYSAGHT / 9199 (LYSAGHT GALVANIZED STEEL BERHAD), a manufacturer of galvanized steel poles and masts in Malaysia. As of the closing price on February 23rd, the company's market capitalization stood at RM102.3 million. The latest Q4FY23 report shows the company achieving a new high record in net profit over 8 quarters, also marking the highest revenue and profit in the past 5 years.

1. Financial Performance
- Revenue reached RM23.3 million, a 46.22% increase year-over-year (YoY).
- Gross profit stood at RM6.61 million, showing a 50.03% YoY increase.
- Profit Before Tax (PBT) amounted to RM4.1 million, a 53.72% YoY increase.
- Profit After Tax (PAT) reached RM3.23 million, marking a 72.47% YoY increase due to higher Average Selling Price (ASP) of standard poles.
- Net Profit Margin stood at 13.85%, higher than the 11.74% in Q4FY22.

2. Balance Sheet Strength
- The company boasts total assets of RM186.21 million and total liabilities of only RM6.67 million, indicating a very healthy position.
- Notably, the company's cash position is strong, with RM94.94 million in cash and no borrowings. This cash represents about 92.8% of its market capitalization, translating to a cash per share of approximately RM2.28.

3. Cash Flow
- A positive free cash flow of RM15.77 million was reported.

4. Conclusion
- Upon considering the cash per share and EPS, the basic calculation suggests that the current share price may adequately reflect the company's value. The company achieved an EPS of 27.05 sen in FY23 and when adding with the cash per share, totaling RM2.55, which is a 3.66% discount of current share price. However, further research and calculations are necessary to determine the intrinsic value of the company.
- Despite these positive aspects, there are a few drawbacks to consider. The low trading volume and market cap are notable, along with a low dividend yield of 1.22% for FY23. Although the dividend payout remained the same as FY22 at RM0.03 but there is decreased in payout ratio. Additionally, volatility in commodities and crude oil prices could impact the company's margins.

Quarterly rpt on consolidated results for the financial period ended 31/12/2023

OTHERSLYSAGHT GALVANIZED STEEL BERHAD ("LYSAGHT" OR "THE COMPANY")
- PROPOSED FINAL SINGLE TIER DIVIDEND FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2023

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RECURRENT RELATED PARTY TRANSACTIONSLYSAGHT GALVANIZED STEEL BERHAD ("LYSAGHT OR "THE COMPANY")
- RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

Change in Boardroom - MR CHUA TIA BON

Change in Principal Officer - MR CHUA TIA BON

Quarterly rpt on consolidated results for the financial period ended 30/09/2023

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RECURRENT RELATED PARTY TRANSACTIONSLYSAGHT GALVANIZED STEEL BERHAD ("LYSAGHT OR "THE COMPANY")
- RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE

Revitalizing the Steel Sector: Exploring Market Resilience and Financial Dynamics Amid Regulatory Changes

Steel stocks experienced a surge as early market leaders on November 15, following the commencement of a two-year moratorium by the Ministry of Investment, Trade, and Industry (Miti) effective from August 15. This initiative aims to address issues within the domestic iron and steel sector. The table provided below exhibits the gainers among steel stocks, listed in descending order based on their stock price increases. Additionally, various financial metrics of each stock are detailed to aid investors or traders in identifying stocks supported by strong fundamentals. Here, the focus is narrowed down to 5 out of the 18 stocks, considered worthy of attention.

$LYSAGHT / 9199 (LYSAGHT GALVANIZED STEEL BERHAD)
In the 2QFY23 ending on June 30, 2023, the company reported total revenue of RM19.77 million, marking a 7% increase from 2QFY22 due to heightened sales. Concurrently, the company's Profit Before Tax (PBT) rose from RM2.23 million to RM2.59 million, aligning with the revenue increase.

$ASTINO / 7162 (ASTINO BERHAD)
In the 4QFY23 ending on July 31, 2023, the company achieved total revenue of RM151.4 million, a decrease from RM158.1 million recorded in the previous year's corresponding quarter. This decline was attributed to weaker overseas sales, resulting in a 40.7% lower PBT than the corresponding quarter of the preceding year. The lower PBT was mainly due to subdued overseas market demand and higher inventory write-down.

$AYS / 5021 (AYS VENTURES BERHAD)
In the 1QFY24 ending on June 30, 2023, the company's revenue decreased by 15.61%, reaching RM297.211 million compared to RM352.171 million in the corresponding quarter of the previous year. This decline was primarily driven by lower revenue in both the Trading & Services and Manufacturing divisions. The company's operating profit and PBT also decreased due to lower sales volume, reduced average selling price, and higher interest expenses.

$LEONFB / 5232 (LEON FUAT BERHAD)
In the 2QFY23 ending on June 30, 2023, the company's revenue decreased by 13.4% to RM217.42 million compared to 2QFY22. This decline was predominantly due to reduced revenue from trading and processing of steel products, attributed to lower sales volume and decreased average selling prices.

$LSTEEL / 9881 (LEADER STEEL HOLDINGS BERHAD)
In the 2QFY23 ending on June 30, 2023, the company's revenue decreased by 1.3% to RM44.08 million compared to 2QFY22, primarily due to lower revenue generated in the steel segment. The drop in the steel segment's revenue was driven by reduced unit selling prices despite improved quantities sold, affecting the company's PBT, which faced a 45.3% decrease due to lower gross profit margins and one-off expenses related to ESOS.