Nov 7, 2010

Watch Krakatau Steel 3Q net profit!

Investors are now in insane buying for PT Krakatau Steel (Persero) Tbk (KS) stocks in the primary market. They hope that Krakatau Steel stocks would jump in the first day trading scheduled on November 10 2010. Many investors estimated that Krakatau Steel stocks would soar in the first debut like what was experienced by PT Bank Jabar Tbk stocks.
They neglect that the third quarter result of Krakatau Steel suffered steep plunges both in net earning and revenue compared to the previous quarters.
In the first half of this year, Krakatau Steel posted Rp9 trillion revenue and Rp997 billion net profit. During the first 9 months ended September 30 2010, Krakatau Steel, the state-owned steel manufacturer booked Rp11.88 trillion revenue and Rp1.05 trillion net profit.
State-Owned Enterprises Minister Mustafa Abubakar on last Friday proudly announced that 9 months net profit of Krakatau Steel has surpassed the bottom line for the whole last year, which is true. But, Mustafa forgot to check carefully the third quarter result.
If you closely watch the third quarter result (July to September 2010), Krakatau Steel only booked Rp52 billion net profit and Rp2.88 trillion revenue.
During the first 6 months of this year, Krakatau Steel posted Rp9 trillion revenue and Rp997 billion. It means the company could make revenue of Rp4.5 trillion in 3 months and nearly Rp500 billion net profit in 3 months.
So, the question is why did Krakatau Steel net profit suffer a steep drop in the third quarter? Was the company in mismatch situation or unable to control costs?
 
Disclosure: No position at the stock mentioned above. 

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