QUOTE AND NEWS
Benzinga  May 22  Comment 
China Precision Steel (NASDAQ: CPSL) dipped 25.37% to $1.22 after the company announced delisting from the NASDAQ. Westell Technologies (NASDAQ: WSTL) dipped 14.75% to $2.60 after the company reported a Q4 loss of $0.02 per share. Weibo...
TheStreet.com  Mar 6  Comment 
NEW YORK (TheStreet) -- China Precision Steel  exploded to a one-year high of $3.75 on Thursday on higher-than-average volume. The stock had amassed a volume of more than 1.5 million as of 2:40 p.m., more than 100 times its average of 14,925....
StreetInsider.com  Mar 6  Comment 
China Precision Steel, Inc. (Nasdaq: CPSL) 100.0% HIGHER; ripping through the $2 and $3 levels today with volume. Digital Power Corp. (AMEX: DPW) 69.5% HIGHER; this Fremont, Cali.-based company might be in cahoots with Tesla Motors on its...
StreetInsider.com  Feb 20  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/China+Precision+Steel%2C+Inc.+%28CPSL%29+Widens+Q2+Loss+to+%242.80Share+on+Sales+Slump/8114127.html for the full story.
StreetInsider.com  Nov 19  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/China+Precision+Steel%2C+Inc.+%28CPSL%29+Widens+Q1+Loss+to+%241.09Share/7888719.html for the full story.
StreetInsider.com  Oct 16  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/China+Precision+Steel%2C+Inc.+%28CPSL%29+Widens+Q4+Loss+to+%242.32Share/7794342.html for the full story.
StreetInsider.com  Aug 16  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Management+Changes/China+Precision+Steel+%28CPSL%29+Board+Member+Lui+Resigns/7668536.html for the full story.
StreetInsider.com  May 16  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/China+Precision+Steel%2C+Inc.+%28CPSL%29+Widens+Q3+Loss/7444887.html for the full story.
Benzinga  Mar 19  Comment 
China Precision Steel, Inc. (NASDAQ: CPSL) announced today that it received a letter from the listing qualifications department staff of The NASDAQ Stock Market LLC, granting China Precision Steel an additional 180 days, or until September 10,...
StreetInsider.com  Sep 29  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/China+Precision+Steel+%28CPSL%29+Q4+Net+Income+Drops+as+Revs+Strengthen/6819027.html for the full story.




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China Precision Steel Inc. (NASDAQ:CPSL) makes specialty steel products for use in other industries. CPSL essentially takes pre-made blocks of steel and turns this "raw" steel into precisely measured steel pieces that serve as components in automobiles, microelectronics, and other manufactured goods. CPSL's products are also used in plane friction discs, appliances, food packaging materials, saw blades, and textile needles. The company earned $76 million in revenue and incurred a net loss of $408K in 2009.[1]

Though it has no direct domestic competitors, CPSL does compete with larger foreign exporters to China, which account for 85-90% of the premium steel industry in China. However, due to technological and geographical advantages, CPSL offers its products at a 10% discount to international prices, and with shorter delivery times. CPSL is also actively searching for new business in foreign countries. Although most of CPSL’s sales are made in China, it exports its cold-rolled steel products to Nigeria, Thailand, Indonesia and the Philippines. The company plans to continue its international expansion and establish itself in the global thin sheet metal manufacturing industry.

Company Overview

Product Categories[2]

China Precision produces a variety of specialty steel products. The main categories are low-carbon and high-carbon steel which are further delineated into the cold rolled and hot rolled categories.

Low carbon steel refers to approximately 0.05–0.15% carbon content while high refers to approximately 0.6–0.99% carbon content. [3] Low carbon steel is used in automobile body panels, tin plate, and wire products. [4] High carbon steel has greater hardness and can be used in high strength wires or springs. [5]

Hot and cold rolled refers to the temperature at which the steel is formed into shape. Hot rolled steel is formed while the steel is above the "scaling" temperature, or roughly 1700 degrees fahrenheit. Cold rolled refers to the opposite condition. [6] One major difference is that the final size of hot rolled steel has to be estimated, while cold rolled steel can be formed with greater precision. The size of the steel product changes as it cools. [7]

Sales Breakdown By Region[8]

  • Domestic China: 91% of net sales
  • Philippines: 5.4% of net sales
  • Thailand: 3.6% of net sales
  • China Precision also exports to Nigeria, though to a lesser extent

Business Growth

FY 2009 (ended June 30, 2009)[1]

  • Net revenue decreased 13% to $76 million.
  • The company reported a net loss of $408K compared to a gain of $18.5 million in the previous year.

Trends and Forces

CPSL Faces Higher Commodity Prices

Iron ore costs have increased 65%, coking coal costs up 300%, and scrap prices has also jumped.[9] Because raw materials were approximately 90% of CPSL's cost of goods sold (COGS), increases in commodity prices will decrease the company's profitability. If China Precision cannot continue to pass on higher production costs to its customers, its profits will suffer.

Competition and Market Share

CPSL competes primarily with importers, including Ton Yi Industrial Corp. in Taiwan; Shinwha Special Steel Co., Limited in Korea, and CEW, a German steelmaker. CPSL does not have any direct manufacturing competitors based in China in the cold-rolled steel industry. However, the company warns that there are potential competitors who are currently constructing mills to produce precision and specialty steel products in China. CPSL has 50-70% of the China domestic production market share and about 10% of total production of specialty premium steel.

References

  1. 1.0 1.1 CPSL 2009 10-K "Selected Financial Data" pg. 35
  2. CPSL 2009 10-K "Products" pg. 6-7
  3. Wikipedia--Carbon Steel
  4. Key to Steel: Steel Database--Classification of Carbon and Low-Alloy Steels
  5. Wikipedia--Carbon Steel
  6. Hot Rolled vs. Cold Rolled Steel, What’s all the Fuss About? 4/08/2005
  7. Hot Rolled vs. Cold Rolled Steel, What’s all the Fuss About? 4/08/2005
  8. CPSL 2009 10-K "Sales Breakdown By Major Customer" pg. 45
  9. Supply Excellence: What’s Really Behind the Steel Price Surge?
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