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[TheEdge] Masteel swings to profit in 2Q on higher sales volume, steel bar prices

Tuesday, September 28th, 2021

By Justin Lim

KUALA LUMPUR (Sept 28): Malaysia Steel Works (KL) Bhd (Masteel) has swung to a second-quarter profit on the back of higher sales volume and selling prices of steel bars.

It reported a net profit of RM9.39 million or earnings per share of 2.07 sen for the quarter ended June 30, 2021 (2QFY21), compared with a net loss of RM22.53 million or loss per share of 5.11 sen in the same period last year.

Quarterly revenue jumped 80.52% year-on-year to RM353.14 million from RM195.63 million.

For the six months to June, Masteel posted a net profit of RM17.78 million, compared with a net loss of RM26.7 million in the same period last year. Six-month revenue rose 33.65% to RM792.87 million from RM593.27 million.

“We could have reported an even stronger 2Q if not for the implementation of Full Movement Control Order (FMCO) in June. The improved performance was supported by the efficiency of our operations in adapting to the Covid-19 pandemic situation in Malaysia,” said Masteel managing director and chief executive officer Datuk Tai Hean Leng.

“Additionally, our strategic location in the Klang Valley near to key construction activities, along with our large capacity and reliable delivery, places us favourably in capturing the uptake in steel bar demand,” he added.

Tai said the group is heartened that lockdown restrictions have eased since this month under the National Recovery Plan, allowing the group to resume optimal production rate.

He said with the FMCO lifted, the group is now seeing steel bar orders from the construction sector resume.

“We expect steel bar demand to pose a gradual recovery to pre-FMCO levels from the second half of 2021 (2H21), supported by fulfilment of ongoing construction jobs, as well as major infrastructure projects to be rolled out.

“We will also continue to export our steel products to the regional markets where demand remains firm. Against this backdrop, we are confident of delivering resilient 2H21 performance,” he added.

Masteel’s share price closed 1.5 sen or 3.49% lower at 41.5 sen, for a market capitalisation of RM282 million.

Edited by S Kanagaraju

[The Edge] M&A Securities underwrites Masteel’s rights issue raising RM89.4 million

Thursday, September 2nd, 2021

By Sulhi Khalid

KUALA LUMPUR (Sept 2): Malaysia Steel Works (KL) Bhd (Masteel) has signed an underwriting agreement with M&A Securities Sdn Bhd for the former’s rights issue with warrants exercise to raise RM89.41 million.

In a statement today, the steel maker said the other co-underwriters are BIMB Securities Sdn Bhd, Malacca Securities Sdn Bhd and Inter-Pacific Securities Sdn Bhd.

On Feb 8, Masteel obtained its shareholders’ approval for the rights issue of up to 226 million new ordinary shares on the basis of one rights share for every two existing Masteel shares held. The cash is sweetened with free detachable warrants on the basis of one warrant for every one rights share subscribed.

The cash call is fixed at 39.5 sen, representing a 28% discount to the last traded price per share of 55 sen on Sept 1 and a 16% discount to the theoretical ex-all price per share of 47 sen.

“TYY Resources Sdn Bhd, which is the company’s largest shareholder, has undertaken to subscribe for its full entitlement to the rights issue with warrants. Coupled with commitment from the underwriters, this effectively means that the Rights Issue with Warrants is fully underwritten,” said the steel maker.

Of the funds raised, the group highlighted RM10 million will be used for the repayment of existing bank borrowings, RM76.81 million to fund the company’s working capital requirements, and the balance RM2.6 million to defray expenses of the rights issue.

Masteel Managing Director and CEO Datuk Sri Tai Hean Leng said the issuance of rights shares along with the free warrants would increase the number of Masteel shares in circulation, as well as enhance the liquidity and marketability of our shares.

This corporate exercise provides shareholders with the option to increase their participation within the company and benefit from its future growth, he said.

Shares in Masteel ended 1.5 sen or 2.73% lower at 54 sen, giving it a market capitalisation of RM240.01 million. It has a share issuance of 452.74 million.

Year to date, the stock has fallen by 12.3%.

Edited by Kathy Fong

[The Edge] Masteel revises rights issue price downwards to 39.5 sen apiece

Thursday, August 19th, 2021

By Adam Aziz

KUALA LUMPUR (Aug 19): Malaysia Steel Works (KL) Bhd (Masteel) has revised its rights issue price downwards by 19.1 sen or 32.59% to 39.5 sen per rights share, from 58.6 sen.

Similarly, Masteel revised downwards the exercise price of the accompanying free warrants to 39.5 sen, from 58.6 sen, its filing showed.

MasteeSl said the decision took into account, among others, the decline in its share price since the right issue’s price-fixing date of May 6, 2021, when Masteel’s counter closed at 86.5 sen.

The revised issue price of the rights shares and the revised exercise price of the warrants represent a discount of 24.3% to the 5-day volume-weighted average market price (VWAMP) of Masteel shares up to and including Aug 18, 2021 of 52.15 sen.

It also represents a discount of 13.8% to the theoretical ex-all price of Masteel shares of 45.83 sen, based on the 5-day VWAMP calculation respectively, it said.

“Premised on the above, the board is of the view that the revised issue price of the rights shares and the revised exercise price of the warrants are fair,” it added.

Masteel had proposed the one-for-two rights issue of up to 226.37 million rights shares in December 2020, together with one free warrant for every rights share subscribed.

The latest pricing now implies Masteel would raise up to RM89.42 million from the rights issue, of which around 85% would be used for working capital whereas another RM10 million will be used for debt repayment.

Shares of Masteel closed down 1.5 sen or 2.8% to 52 sen apiece, valuing the steelmaker at RM235.42 million.

Edited by Tan Choe Choe

[TheEdge] Masteel seeks to raise up to RM81.5m from rights issue

Monday, December 7th, 2020

By Shahirah Syed Jaafar

KUALA LUMPUR (Dec 7): Integrated steel manufacturer Malaysia Steel Works (KL) Bhd (Masteel) has proposed a rights issue with free detachable five-year warrants to raise up to RM81.5 million.

In a statement today, Masteel said the rights shares would be issued on the basis of one rights share for every two existing Masteel shares held, on an entitlement date to be determined later. Subsequently, one free detachable warrant would be issued for each rights share subscribed by shareholders.

From the RM81.5 million expected to be raised, up to RM69 million would be utilised for working capital requirements, while RM10 million would be used to repay bank borrowings, and the balance RM2.5 million to defray the estimated exercise expenses, the group said.

“We are witnessing an upcycle in steel demand within both the local and regional markets, as governments prioritise high-multiplier infrastructure developments and construction projects to stimulate economic growth. This is clearly advantageous for established steel manufacturers like us, who have both capacity and competitiveness to reap the benefits of this recovery.

“To this end, our recent capital expenditure investments in employing the latest steel melting technology will optimize our cost-efficiency,” Masteel managing director and CEO Datuk Sri Tai Hean Leng said in the statement.

Assuming all treasury shares are sold as at the date of the announcement, the rights issue with warrants will entail the issuance of up to 226.4 million rights shares, together with up to 226.4 million warrants,the group said.

The rights issue with warrants would expand Masteel’s share capital from RM239.9 million comprising 450.4 million shares, to RM402.9 million comprising 905.5 million shares.

Masteel said the exercise, which is expected to be completed in the second quarter of 2021, is not expected to have any material effect on the earnings of the group for the financial year ending Dec 31, 2020.

Shares of Masteel closed one sen or 2.13% higher at 48 sen today, for a market capitalisation of RM217.32 million.

Edited by S Kanagaraju

[The Star] Masteel records fall in Q3 profit

Saturday, November 21st, 2020

Regarding its prospects, Masteel said the group expects a steady improvement in its financial performance in the ensuing quarters, due to improved demand for its steel products and operating margins

PETALING JAYA: Malaysia Steel Works (KL) Bhd or Masteel posted a 95.7% year-on-year drop in net profit to RM3.8mil for its third quarter ended September 30,2020.

However, it should be noted the RM86.7mil net profit a year earlier was mainly due to a RM76.6mil land revaluation surplus recognised a year earlier.

Revenue for the quarter under review was 54.3% higher year-on-year to RM417.5mil mainly due to higher sales volume and selling price as a consequence in the recovery of global steel demand.

For the nine months under review, Masteel posted a net loss of RM22.9mil compared with a net profit of RM67.6 mil a year ago, while revenue grew 19.6% year-on-year to RM1.01bil.

It also pointed out that the expansionary 2021 Budget has highlighted the projected growth of the Malaysian construction sector of 13.9% in 2021 valued at RM61.34bil.

[TheEdge] Masteel returns to black in 3Q on better margin, demand rebound

Friday, November 20th, 2020

By Justin Lim

KUALA LUMPUR (Nov 20): Integrated steel maker Malaysia Steel Works (KL) Bhd (Masteel) returned to black with a net profit of RM3.77 million in its third quarter ended Sept 30, 2020 (3QFY20), from a net loss of RM22.53 million in the previous quarter, as it saw better margin and a rebound in demand for its steel products, amid a strong recovery in the international and local steel market.

Revenue more than doubled quarter-on-quarter to RM417.49 million from RM195.63 million, thanks to higher selling price and volume, its stock exchange filing today showed.

Year-on-year, however, its net profit was down 96% from RM86.73 million in 3QFY19, mainly because the previous year had recorded a land revaluation gain of RM76.65 million.

Profit before tax, meanwhile, tripled y-o-y to RM6 million from RM2.1 million, while revenue jumped 54% from RM270.6 million previously, in line with global recovery of demand for steel and lower operating expenses.

For the cumulative nine months period ended Sept 30, it recorded a net loss of RM22.94 million versus a net profit of RM67.66 million a year ago, though revenue rose 20% to RM1.01 billion from RM845.45 million.

On prospects, the company expects to see a steady improvement in its financial performance in the coming quarters, driven by improved demand for its steel products and operating margins.

The group believes it would be able to ride on the recovery wave in the construction sector, which it expects will be a catalyst to drive demand for steel products.

Masteel’s share price closed up half a sen or 1.56% to 32.5 sen today, giving it a market capitalisation of RM146.37 million.

Edited by Tan Choe Choe

[NST] Masteel’s Q3 net profit drops on deferred tax, revenue more than doubles

Friday, November 20th, 2020

By Azanis Shahila Aman

KUALA LUMPUR: Malaysia Steel Works (KL) Bhd’s net profit fell 62.4 per cent to RM3.8 million in third quarter (Q3) ended September 2020 from RM10.1 million last year due to larger deferred tax recognised in the previous year’s corresponding quarter.

Masteel, an integrated steel manufacturer, tripled its pre-tax profit to RM6.0 million in Q3 from RM2.1 million a year ago, buoyed by a 54.3 per cent jump in revenue to RM417.5 million from RM270.6 million previously.

“The vast improvement in financial performance was mainly attributed to higher sales volume and selling prices in line with the recovery of global demand for steel, as well as lower operating expenses,” it said. 

Masteel posted a convincing turnaround after incurring a net loss of RM22.5 million in the preceding quarter. 

The return to profitability was due to improved margins from the better utilisation of the new plant and equipment and lower operating expenses in Q3, as well as the preceding quarter’s operational disruptions caused by the implementation of the Movement Control Order (MCO).

Stronger demand for steel products on a quarter-on-quarter basis resulted in Q3 revenue more than doubling from RM195.6 million last year. 

For the cumulative nine-month period, Masteel posted 19.6 per cent higher revenue of RM1.0 billion versus RM845.5 million last year. 

Managing director and chief executive officer Datuk Sri Tai Hean Leng said the company’s commendable Q3 outperformance had underscored two primary points. 

Tai said firstly, the company was able to rapidly return its operations to normalcy after the disruptive period of the MCO. 

“More than just demonstrating the management’s extensive experience, it is also testament to the superior technology of our integrated plant that facilitated the quick rebound.

“Secondly, with our operations now running full speed ahead, Masteel is therefore well-poised to meet the anticipated demand for steel products in the construction sector, particularly as Malaysia gears up to carry out various infrastructure megaprojects as indicated in the expansionary 2021 Budget,” he said. 

Tai said Masteel’s two manufacturing facilities were ideally based in Petaling Jaya and Bukit Raja in Selangor, hence enabling the company to support the requirements of projects from Klang Valley to Johor and across the East Coast of Peninsular Malaysia in a timely manner.

“We look forward to reprising our role in supporting this key industry, and even more so as Malaysia’s development aspirations gather momentum in the years to come,” he added.

[Malay Mail] Masteel’s net loss widens in second quarter of 2020

Friday, August 28th, 2020

KUALA LUMPUR, Aug 28 ― Malaysia Steel Works (KL) Bhd’s (Masteel) net loss widened to RM22.53 million in the second quarter ended June 30, 2020 (2Q20), from RM10.39 million registered in the same quarter last year.

In a filing to Bursa Malaysia, the steel bars and steel billets manufacturer said its revenue fell to RM195.63 million during the reviewed quarter versus RM294.48 million

“The decrease in revenue in the current quarter was mainly attributed to lower sales volume and selling price due to the negative impact of economic disruptions resulting from the country’s implementation of the movement control order (MCO) in order to curb the spread of the Covid-19 pandemic,” it said.

Moving forward, Masteel said demand for the group’s steel products are expected to continue to improve from the lows of 2Q20.

The unit selling prices are expected to gradually increase to offset the surge of raw material prices resulting from the broad global recovery of demand for steel, it said.

“The company is focused on improving its costs of production, and barring any unforeseen circumstances expects to see improvement of its business results towards the later part of the year,” it added.

No dividend was declared by Masteel during 2Q20.

[The Edge] Masteel posts full-year net loss in FY19

Friday, February 21st, 2020

By Tan Xue Ying

KUALA LUMPUR (Feb 21): Malaysia Steel Works (KL) Bhd (Masteel) posted a net loss for its financial year ended Dec 31, 2019 (FY19), its first annual loss since 2015, impacted by lower margin resulting from the lower selling price and higher finance charges from increased borrowings during the year.

Masteel said this in an exchange filing today, which showed that the group made a net loss of RM8.3 million on lower revenue of RM1.2 billion versus a net profit of RM6.7 million on the back of RM1.5 billion revenue for FY18.

This was despite it registering a net profit in its fourth quarter (4QFY19), at RM688,000, compared with a net loss of RM24.87 million in 4QFY18, helped by a better margin during the quarter as a result of the company’s technology-driven cost-cutting measures.

Quarterly revenue increased marginally to RM349.86 million, from RM348.93 million in the corresponding quarter last year, on higher sales volume.

Masteel said it is confident that it will continue to experience steady demand for its steel products and margin improvements in the quarters ahead.

It noted that the recent rebounding of iron ore prices towards the US$90 per metric tonne level has caused the prices of steel bars in the region, as well as in Malaysia, to be well supported.

“The general domestic market continues to be well supplied with steel bars. In the Klang Valley, the demand has been adequate to enable the company’s plants to operate at a high utilisation rate.
“The present market situation that has been retarded by the recent major North Asia health crisis is not expected to have a lasting effect on the demand for the company’s steel products,” it added.

Shares in Masteel closed one sen lower today at 39.5 sen, valuing the steel bars and billets manufacturer at RM178.17 million.

[The Edge] Masteel 3Q net profit up 72% on higher tax credit

Friday, November 22nd, 2019

By Wong Ee Lin

KUALA LUMPUR (Nov 21): Malaysia Steel Works (KL) Bhd’s (Masteel) net profit jumped 71.63% to RM10.08 million or 2.37 sen per share for the third quarter ended Sept 30, 2019 from RM5.87 million or 1.38 sen per share a year earlier, thanks to higher tax credit.

This is Masteel’s first profitable quarter after three consecutive loss-making quarters.

In a filing with Bursa Malaysia today, the group said its tax credit quadrupled to RM7.98 million during the quarter from RM1.92 million previously.

This was despite a 30.35% decline in quarterly revenue at RM270.55 million from RM388.43 million previously, due to lower sales volume and selling price.

For the nine-month period, Masteel posted a net loss of RM8.99 million or 2.11 sen a share, versus a net profit of RM31.57 million or 7.44 sen a share a year ago, while revenue slipped 26.35% to RM845.45 million from RM1.15 billion.

On prospects, the group expects a gradual recovery towards the end of the year and this turnaround is expected to gather strength in 2020.

“The local demand for steel bars has rebounded from a trough in September 2019,” Masteel said.

Masteel added it is continuing to fine tune its new plant and machinery to ensure that the delivery of healthier performance is in line with the recovery of steel demand in the coming year.

Shares of Masteel closed half a sen or 1.43% lower at 34.5 sen today, valuing the company at RM147.79 million

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