Sino Hua-An International Berhad : Unlikely to Turn Around in FY12/10 - 21/6/2010

Turnaround hope is becoming frail. We now believe that Sino Hua-An’s hope of returning to the black in FY12/10 is becoming frail, as:
1. The weakening steel consumption and prices, coupled with still-high inventory in China, indicate that steel producers in China may soon cut production, and this will result in weaker metallurgical coke consumption and prices. Not helping either, is the production cost pressure that is likely to remain given the strong pricing power of the metallurgical coal miners; and
2. Pieces of by-products (in particular, crude benzene and tar oil, which prices back the crude oil price movement) are likely to remain soft on the back of the still-lacklustre demand (both financial and fundamentals) for crude oil arising from heightened concerns on a sharper-than-expected slowdown in global economy in 2H10 that will result in soft crude oil price movement.

Sino Hua-An International Berhad : Unlikely to Turn Around in FY12/10 - 21/6/2010