Friday 28 May 2021

Krono: Eyes On China

Krono is involved in Enterprise Data Management (EDM) business providing hardware & software solutions to enterprises for data storage & protection as well as EDM managed services.

Before this, Krono has a small presence in China through a 16.67%-owned Quantum China Ltd (QCL). Now it has proposed to acquire the remaining 83.33% of QCL for RM150mil.

Half of the amount will be paid by cash (RM75mil) and the other half will be paid by issuing 110.3mil new Krono shares at 68sen each.

This is the main reason Krono carried out private placement recently by issuing 104.67mil new shares at 66.23sen each to raise RM69.3mil.

So, a total of 215mil new Krono shares are to be issued to fund this acquisition. 

Should existing shareholders of Krono be happy or worry?

Saturday 15 May 2021

Commodity Super Bull Run: Part 2/2

Global commodity price has risen since the middle of 2020, and the rise is getting more pace in year 2021. Here in part 2, I'm making notes on recent commodity price surge on metals. You can refer to part 1 for commodity price on energy and agricultural products.


Reduction in supply and increase in demand especially from China have pushed steel and iron ore price to multiple year's high in 2021.

       Steel Rebar (CNY/T) 5-years chart

                     Iron ore (USD/T) 10-years chart

China's steel rebar price has reached CNY5500/T (~USD850/T) recently, up more than 60% in one year.

Listed upstream steel companies such as Ann Joo, Lion Ind, Southern Steel & Masteel should benefit from higher selling price of their end products.

Midstream & downstream steel players have to endure higher cost due to high steel price. However, they can increase the price of their products since steel price has gone up. 

For a period of time, they can enjoy super profit margin by utilizing raw material bought earlier at low price and sell at current high market price.

There are a lot of midstream & downstream steel companies listed in Bursa Malaysia, the long list includes Astino, Atta, AYS, Chinwell, Choobee, Chuan, CSCSteel, Dynacia, Emetall, Engtex, Hiaptek, KSSC, LeonFB, LSteel, Lysaght, Melewar, Mycron, Pantech, Prestar, SKBShut, Tashin, Tongher, WZSatu, YKGI, YLI etc.

Wednesday 12 May 2021

Commodity Super Bull Run: Part 1/2

Covid-19 pandemic not only sent the price of medical gloves to the sky, it has also resulted in the surge of almost all commodity price.

As we all know, price is the balance between supply and demand. 

In the early stage of the pandemic, demand was expected to drop drastically as there was worldwide lockdown in which movement was restricted and economy came to a halt.

There was fear of unknown at that time and commodities were sold down panically.

However, China as the world's economy powerhouse, managed to contain the pandemic swiftly. Its economy activities rebounded strongly from Q2 of 2020 which resulted in the recovery of demand.

Furthermore, the pandemic has increased the demand of electronic devices, home appliances and furniture etc as many people started to work and study from home.

Low interest rate and various government stimulus packages across the world also encouraged spending on groceries, cars and real properties.

After a shock in early stage, demand slowly crawled back.

As mining, agricultural and manufacturing activities slowed down due to lockdowns, the supply of commodities dropped.

When the demand is higher than pre-Covid level and the supply is significantly lower, the mismatch between supply-demand widens and commodity price shoots up.

Monday 3 May 2021

My Portfolio Apr21

Summary For April 2021

Stock Portfolio @ End of Apr21

Time flies and we are almost half way through the "recovery year" of 2021.

In the final quarter of year 2020, I was optimistic about recovery from the pandemic in 2021. I visualized that in the middle of 2021, we would lead an almost "normal" life.

However, the reality is far from that. Daily new Covid-19 cases soar pass 3000 now, from 1000+ cases in March.

Perhaps due to the start of vaccination program since February and significant drop in new cases in March, people are getting more slack in adhering to the SOP.

Anyway, the pandemic will be over one day. Year 2021 might be a transition year while 2022 will be a real recovery year in term of our daily activities.

Stock portfolio performance wise, it's a "not bad" month for me in April, as overall portfolio gains 4.56% in a month.