Astino - good returns over the past 2 years

[i4value]

The Bursa steel sector is a tough sector to be in as illustrated by the chart below taken from my article A tough 12 years for Bursa Malaysia steel companies

You can see that over the past 14 years, the mean ROE was in negative territory for most of the time.



In my analysis, I found 4 companies with average ROA greater than 8% over the past 2 years. Astino was one of them. To be transparent, I invested in Astino years ago so I am wondering whether there is another opportunity to make money. But this of course required more in-depth analysis as my previous one is outdated.

[i4value]

When Warren Buffett first started, he focussed on finding “cheap” companies without paying too much attention on the quality of the business. He referred to this as cigar-butt investing. He likens this to finding a cigar butt that still has one or two puffs left.

I would put Bursa Malaysia Astino in the cigar-butt category. This steel roofing companies faced two headwinds over the past decade – soft property market and cyclical steel prices.

Nevertheless, it is a profitable business and is financially sound. Astino delivered single-digit revenue and earnings growth over the past 12 years

While it is in a mature sector, it is not a sunset industry. I do not see any digital or other disruption on the horizon.

Based on the past 12 years' performance, I estimated that there is more than 30% margin of safety from both the NTA and an Earnings Power Value perspective. It is not a value trap but a cigar-butt investing opportunity.