Malaysia Steel Manufacturer   

Archive for the ‘Press Releases’ Category

[The Edge Markets] TNB, Deleum, BFood, BCorp, Iskandar Waterfront, Ge-Shen, EcoFirst, HCK Capital, Masteel, SMRT, Nylex

Tuesday, March 5th, 2024
Masteel 1.2

[New Straits Times] Masteel names JCorp president as new chairman

Monday, March 4th, 2024
Masteel 0.5

[The Star] Masteel appoints JCorp president as chairman

Monday, March 4th, 2024
Masteel 1.1

[The Edge Markets] 大马钢厂委任柔佛机构总裁Syed Mohamed为主席

Monday, March 4th, 2024
Masteel 1.0

[China Press] 马钢铁委任新主席 赛莫哈末3月起上任

Monday, March 4th, 2024
Masteel 0.9

[Sin Chew Daily] 赛益莫哈末任马钢厂主席

Monday, March 4th, 2024
Masteel 0.8

[The Edge Markets] Masteel appoints JCorp president Syed Mohamed as chairman

Monday, March 4th, 2024
Masteel 0.7

[Nayang] 大马钢厂委新主席 赛莫哈末走马上任

Monday, March 4th, 2024
Masteel 0.4

[The Star] Trading ideas: Siab, Tugu Setia, Masteel, MST Golf, Careplus, YNHP, Ranhill Utilities, Magna Prima, Cahya Mata and Eonmetall

Monday, January 15th, 2024
Masteel 0.3

[Berita Harian] Masteel got RM84 million in financing from AmBank

Friday, January 12th, 2024

KUALA LUMPUR: Ambank Group announced a financing facility of RM84 million channeled to Malaysia Steel Works (KL) Bhd (Masteel) to support technological transformation to emerge as a steel and billet producer with ultra-low greenhouse gas (GHG) emissions.

Masteel, a publicly listed company established in 1971, is the country’s first ultra-low carbon steel manufacturer listed in Bursa Malaysia’s FTSE4Good Index and given a full four-star rating for 2023.

In a statement today, AmBank Group Chief Executive Officer (CEO), Jamie Ling, said the banking group recognizes Masteel’s achievements and is excited to contribute to the company’s continued success in environmental, social and governance (ESG) aspects.

“In line with our ongoing efforts to navigate the rapidly changing economic landscape, this kind of collaboration only further proves AmBank’s commitment to ESG principles.

“This includes sustainable development which also emphasizes the importance of integrating sustainability in business strategy,” he said.

Meanwhile, the Managing Director and CEO of Masteel, Datuk Sri Tai Hean Leng, described the strong collaboration with AmBank as enabling the company to continue to strengthen its leading position in the management and sustainable production of the Malaysian steel sector as well as advance the decarbonisation agenda for the dynamic construction sector.

“It is a great honor for us when the main banking group, AmBank Group, provides a RM84 million financing facility to Masteel and supports the company’s journey as a leading green steel producer in Malaysia and the Southeast Asian region.

“In recognition of this commitment, especially taking into account the steel industry which is part of the sector that also consumes carbon, Masteel has stepped up from the status quo by emerging as the Gold Winner of the most significant performance category in a period of three years on 6 November 2023, through the ESG Edge Malaysia Awards 2023,” he said.

[The Star] AmBank grants RM84mil financing to Masteel

Friday, January 12th, 2024
Masteel 0.6

Siab, Tuju Setia, Masteel, MST Golf, Careplus, YNH Property, HE Group, Ranhill Utilities, Magna Prima, CMSB and Bintai Kinden

Friday, January 12th, 2024
Masteel 0.2

[The Edge] MARC affirms AAA-IS(bg) rating for Masteel’s RM130 mil sukuk programme

Tuesday, November 28th, 2023

By Anis Hazim

KUALA LUMPUR (Nov 28): MARC Ratings Bhd has affirmed the AAA-IS(bg) rating on Malaysia Steel Works (KL) Bhd’s (Masteel) RM130 million Sukuk Ijarah programme that is guaranteed by Bank Pembangunan Malaysia Bhd, with stable outlook.

The steel manufacturer’s credit profile incorporates its longstanding track record in the domestic production of steel billets and steel bars, MARC said in a statement on Tuesday (Nov 28).

The credit profile was also due improving operational efficiency from investment in production technology, the rating agency said, although margins contracted recently amid higher input costs.

In the first half of 2023 (1H2023), Masteel’s revenue grew by 4.5% year-on-year (y-o-y) to RM934.3 million on higher sales volume, despite the price volatility for both material and product prices, which could pressure margins.

“The group manufactures and markets high-tensile steel bars and prime steel billets, with the domestic market continuing to constitute the bulk of revenue at about 96% in 2022 (2021: 91%),” MARC said.

Operating profit margin, nevertheless, contracted in 1H2023 to 1.8% (2022: 2.6%) on lower steel bar prices — down by 5.3% y-o-y to RM3,690 per metric ton (mt) on average — and higher input costs.

“Despite some easing in recent months, raw material costs remained elevated compared to historical levels, which could continue to weigh on margins,” it noted.

Meanwhile, the company’s total debt was largely unchanged at RM482.2 million as at end-June 2023 as compared to RM471.4 million in 2022, mainly composed of bill payables for working capital. Its gross debt-to-equity (DE) ratio stood at 0.56 times as at end-1H2023, and net DE ratios stood at 0.44 times.

“Masteel had RM100.5 million of cash as at end-June 2023, more than sufficient to meet its its upcoming RM50 million notes maturity under the rated programme on Nov 30, 2023,” MARC said.

Shares in Masteel closed unchanged at 33 sen on Tuesday, valuing the company at RM224.11 million.

[The Star] Masteel raises industry benchmarks

Wednesday, February 1st, 2023

PETALING JAYA: Malaysia Steel Works (KL) Bhd (Masteel) has raised industry benchmarks as the first “ultra low carbon emission” integrated steel mill in Malaysia, with its inclusion in the FTSE4GOOD Bursa Malaysia Index in December 2022.

In a statement, the integrated steel manufacturer said it decreased its greenhouse gas or GHG emissions by 47% from 2017 to 2021, due to the reduction in Scope 1 emissions from the steel-making process as a result of the transition to new steel-making technologies starting in 2018.

The new facilities also reduce energy inputs required from natural gas and oxygen.

Masteel had completed the construction of a curtain wall of its reheating furnace which resulted in the further decrease usage of natural gas. These improvements also serve to reduce mill downtime.

Masteel earned three stars out of four in the environmental, social and governance ratings among public-listed companies (PLCs) on FBM EMAS, placing it within the top 26% to 50% of PLCs assessed by FTSE Russell.

Masteel managing director and CEO Datuk Seri Tai Hean Leng said the group aimed to reduce emissions by a further 10% by 2026, and 15% by 2031.

“At the same time, we will also expand our emissions monitoring systems from Scopes 1 and 2 currently to include Scope 3, to implement incremental step-ups in a systematic and sustainable manner.

“We have invested RM60.66mil across various carbon-reduction initiatives in our operations towards our goal of reducing total CO2 emissions by 7,300 tonnes,” he said.

Masteel was included in the FTSE4GOOD Bursa Malaysia Index as well as the FTSE4GOOD Bursa Malaysia Syariah Index.

The assessment by FTSE4GOOD was based on information contained within Masteel’s Sustainability Report 2021 as well as public domain as at October 2022.

Also, Masteel is focused on minimising other air pollutants.

The group had installed a continuous emissions monitoring system at the Bukit Raja plant in 2021, which can track particulate matter, NO2 and SO2 emissions in real-time.

[The Star] Masteel first steel mill listed on FTSE4GOOD Bursa

Tuesday, January 31st, 2023

KUALA LUMPUR: Malaysia Steel Works (KL) Bhd (Masteel) has become the first ‘ultra-low carbon emission’ integrated steel mill listed on the FTSE4GOOD Bursa Malaysia Index, having invested over RM60 million in various carbon dioxide (CO2) emission reduction initiatives in its operations.

Managing director and chief executive officer Datuk Seri Tai Hean Leng said Masteel’s pioneering achievement on FTSE4GOOD Bursa Malaysia Index was borne out of the unequivocal dedication, foresight and immense success in revolutionising the steel-making industry at its core manufacturing process.

He said the integrated steel manufacturer earned three stars out of four in the environmental, social and governance (ESG) ratings among public-listed companies (PLCs) in FBM EMAS, placing it within the top 26-50 per cent of PLCs assessed by FTSE Russell.

“We have invested approximately RM60.66 million across various CO2 reduction initiatives towards our goal of reducing total CO2 emissions by approximately 7,300 tonnes,” he said in a statement today.

He also said the group aims to reduce emissions by a further 10 per cent by 2026 and 15 per cent by 2031.

“At the same time, we will also expand our emissions monitoring systems from Scopes 1 and 2 currently to include Scope 3, to implement incremental step-ups in a systematic and sustainable manner,” he said.

He noted that Masteel has been focusing on minimising other air pollutants in addition to CO2 emissions mitigation measures, including the installation of a Continuous Emissions Monitoring System at the Bukit Raja, Klang plant in 2021, which is capable of tracking particulate matter, nitrogen dioxide and sulphur dioxide emissions in real-time. – Bernama

[The Edge] Masteel invests some RM60m in capex to become first ultra-low carbon emission integrated mill

Tuesday, January 31st, 2023

By Isabelle Francis

the FTSE4GOOD Bursa Malaysia Index last month.

In a statement on Tuesday (Jan 31) Masteel said it earned three out of four stars in the Environmental, Social and Governance (ESG) Ratings among public listed companies (PLCs) in FBM EMAS, placing it within the top 26%-50% of PLCs assessed by FTSE Russell.

The integrated steel manufacturer said it had decreased its overall greenhouse gas emissions by a significant 47% from the baseline year of 2017 to 2021, primarily attributable to the reduction in Scope 1 emissions from the steel making process due to the transition to new steel making technologies starting in 2018.

The new facilities also reduce energy inputs required from natural gas and oxygen.

Masteel had completed the construction of a curtain wall of its reheating furnace which resulted in further decrease in usage of natural gas.

“This has already yielded positive results, with estimated reduction in natural gas usage of more than 9 Sm3/mt and a reduction of oxygen of more than 7 Nm3/mt2. These improvements also serve to reduce mill downtime,” it added.

Masteel managing director and chief executive officer Datuk Seri Tai Hean Leng said the group aims to reduce emissions by a further 10% by 2026, and 15% by 2031.

“At the same time, we will also expand our emissions monitoring systems from Scopes 1 and 2 currently to include Scope 3, to implement incremental step ups in a systematic and sustainable manner.

“We have invested approximately RM60.66 million across various carbon-reduction initiatives in our operations towards our goal of reducing total CO2 (carbon dioxide) emissions by approximately 7,300 tonnes.”

[The Edge] Masteel set to resume its uptrend, says RHB Retail Research

Tuesday, December 20th, 2022

By Surin Murugiah

KUALA LUMPUR (Dec 20): RHB Retail Research said Malaysia Steel Works (KL) Bhd is set to resume its uptrend after it bounced off the 21-day average line, surpassing the 40 sen immediate resistance level on Monday on significant trading volume, moving past above the recent sideways consolidation phase.

In a trading stocks note on Tuesday (Dec 20), the research house said as the sideways direction has now turned bullish, the buying interest is likely to follow through to propel the stock higher towards the 45 sen recent high, followed by 50 sen.

“The momentum may be reversed if it drops below 37 sen, forming a ‘lower low’ bearish pattern, below the average line,” it said.

[The Edge] Sharp rise in Masteel’s share price sparks takeover speculation

Monday, December 12th, 2022

By Lie Jia Teng

STEEL bar manufacturer Malaysia Steel Works (KL) Bhd (Masteel), whose stock price has jumped 60% over the past month, is said to be a takeover target of a Bursa Malaysia-listed integrated builder conglomerate, according to market sources.

“A locally listed building materials distributor, which has been actively acquiring companies and businesses in recent years, is now eyeing Masteel as its next target,” a source tells The Edge.

“Just take a look at Masteel’s share price performance since mid-November. Something is definitely brewing in the company, possibly at the shareholder’s level,” another source observes.

[NST] MARC affirms AAAIS (fg) rating on Masteel’s sukuk

Monday, October 3rd, 2022

By Azanis  Shahila Aman

KUALA LUMPUR: MARC Ratings has affirmed its AAAIS(fg) rating on Malaysia Steel Works (KL) Bhd’s (Masteel) RM130.0 million Danajamin Nasional Bhd-guaranteed Sukuk Ijarah Programme with a stable outlook.

The rating agency said the rating and outlook are based on MARC Ratings’ assessment of the credit strength of Danajamin (AAA/Stable).

“This has provided unconditional and irrevocable financial guarantee insurance on the programme,” it said.

Upon completing the amalgamation exercise of Danajamin and Bank Pembangunan Malaysia Bhd (BPMB), BPMB will honour Danajamin’s obligations under the guarantees.

Accordingly, Masteel’s guaranteed sukuk will carry BPMB’s AAA/Stable rating.

Masteel’s credit profile incorporates its longstanding track record in the domestic production of steel billets and steel bars, its moderate domestic market position and the improving operational efficiency from continued investment in production technology.

The company is exposed to the volatility of steel prices and raw material costs.

The company’s financial performance improved, attributable to the higher steel bar price, for the first half of 2022 (1H22).

Meanwhile, its revenue grew by 12.8 per cent year on year (YoY) to RM894.5 million as the average selling price of domestic steel bars rose to RM3,020 per metric tonne (MT) from RM2,600 per MT in 1H21.

The normalisation of economic activities contributed to this after easing pandemic-induced restrictions.

According to MARC Rating, the outstanding under the Sukuk Ijarah Programme stood at RM90.0 million as of end-June 2022, with the subsequent repayment of RM40.0 million due on November 30, 2022.

“The company has a cash balance of RM62.1 million as of end-June 2022.

“The company’s borrowings rose to RM452.5 million as of end-June 2022 (end-2021: RM380.9 million), mainly to fund the working capital for steel production.

“The gross debt-to-equity ratio stood at 0.53 times,” it added.

[The Star] Masteel net profit surges 57% to RM13.2mil in 1Q

Friday, May 27th, 2022

KUALA LUMPUR: Malaysia Steel Works (KL) Bhd’s (Masteel) net profit jumped 57.4% to RM13.2mil in the first quarter ended March 31, against RM8.39mil a year prior, buoyed by higher selling prices of its steel products.

Revenue rose 4% to RM457.4mil versus RM439.7mil previously, due to the higher selling price of steel products in line with the rising of global steel prices and recovery of the Malaysian economy.

Managing director Datuk Seri Tai Hean Leng said its first quarter’s operations continued to benefit from the accelerated construction activities since the recommencement of projects in late last year after stop-work orders to curb Covid-19 were lifted.

“Coupled with the increased utilisation of our production facilities, the higher selling prices have also contributed to our improved profitability during the quarter, and bode well for the upcoming quarters as well.

“With the positive start, we are looking forward to a favourable year ahead as Malaysia transitions to an endemic phase alongside a normalised economic situation for the nation,” he said in a statement.

As the construction sector for the nation picks up and with the gradual normalisation of the international supply chain, demand for building materials is expected to be on an improving trend which would support the prices of steel in the near term.

“While optimistic of delivering a resilient FY2022 performance, we remain cautious of the trickling effects from high interest rate and inflationary pressure which could impact the global economic recovery,” Tai said.

[The Star] Masteel 1Q results soar on higher prices

Friday, May 27th, 2022

Revenue rose 4% to RM457.4mil versus RM439.7mil previously. Managing director Datuk Seri Tai Hean Leng said. (File pic shows Masteel factory)

PETALING JAYA: Malaysia Steel Works (KL) Bhd’s (Masteel) net profit jumped 57.4% to RM13.2mil in the first quarter ended March 31, against RM8.39mil a year prior, buoyed by higher selling prices of its steel products.

Revenue rose 4% to RM457.4mil versus RM439.7mil previously. Managing director Datuk Seri Tai Hean Leng said operations continued to benefit from the accelerated construction activities since the recommencement of projects last year after stop-work orders were lifted

[The Star] Lower margin risk amid another profitable year for steelmakers

Saturday, April 9th, 2022

By Ganeshwaran Kana

AFTER a strong 2021, thanks to higher selling prices, many steel producers could be looking at compressed margins and a normalisation in selling prices this year.

Amid the expected recovery in demand, steel players are already facing a rise in raw material prices such as iron ore, coupled with higher energy and freight costs.

Nevertheless, an analyst says steel producers could still expect to be profitable in 2022, leveraging on the pick up in construction and industrial activities following the reopening of the economy.

“Global supply chain disruption, stemming from China’s zero-Covid policy and the Russia-Ukraine war, could also keep steel selling prices elevated,” the analyst adds.

The lower margin and selling prices are expected to affect even the country’s largest listed steel maker, Ann Joo Resources Bhd.

In a sector report published on April 4, Kenanga Research said that Ann Joo’s peak profitability has passed, and earnings could turn weaker in the subsequent quarters.

This is premised on the expectation that weakening steel price would compress margins as raw material costs play catch-up.

Iron ore, which is the primary raw material in blast furnace steel production, has seen a rise in price of almost 40% year-to-date.

Price of metallurgical coal, which constitutes about 40% of the blast furnace cost of production, has also remained at a high level in 2022.

Amid the challenges, an analyst says that Asian steelmakers, including Malaysia, would benefit from China’s move to curb its domestic steel production as the country seeks to be more environment-friendly.

“China will have to import steel from elsewhere to meet local needs for steel, so producers in other countries such as Malaysia would benefit from this.

“Other countries that could no longer purchase the same volume of steel from China would also turn to Malaysia, for example.

“This is positive for the top line of local steel makers this year,” the analyst says.

The expectations of another positive year for steel players, despite the impact on margin and selling prices, have boosted local steel stocks in the past one month.

Ann Joo and Hiap Teck Venture Bhd are up by over 10% and 7% respectively, while Lion Industries Corp Bhd’s share price has increased by almost 13%.

A smallish steel player, Malaysia Steel Works (KL) Bhd (Masteel), is also up by 11.3% in the period.

Despite the increase, it is worth noting that these stocks remain well below the highs seen in 2021.

It seems that the market still awaits the steel players to deliver positive earnings in the recently concluded first quarter of 2022.

Masteel, which is involved in the manufacturing of high tensile steel bars, mild steel bars and prime steel billets, remains positive of the industry’s outlook.

In its results filing released on Feb 22, Masteel said the commencement of spring civil construction period in North Asia and the ending of restrictions of steel mill activities in China for the Beijing winter Olympics are causing steel prices to recover internationally and domestically.

The group, whose more than 91% of its revenue is contributed domestically, expects prices of local steel bars are expected to continue to trend higher.

This is due to rising international steel prices and the gradual recovery of the Malaysian economy from the Covid-19 pandemic.

The group also exports its steel products to China, Australia, New Zealand, Indonesia, Singapore and Vietnam, among others.

“The company continues to maximise its new steel making facilities and is expected to perform satisfactorily amid some short term volatilities due to the Omicron wave and shortage of labour issues in the country,” Masteel said.

Masteel staged a turnaround in the financial year ended Dec 31, 2021 (FY21), after two consecutive years of losses.

The rebound was possible on the back of higher selling prices, resulting from the recovery of the international and local steel prices, and enhanced production cost efficiency.

The steelmaker recorded a net profit of RM32.5mil in FY21 as compared to a net loss of RM14.73mil in the previous corresponding year.

Masteel’s revenue, on the other hand, improved by 14.18% year-on-year to RM1.58bil from RM1.38bil in the previous year.

This was achieved despite recording lower sales volume in FY21.

The group’s net profit margin in FY21 was recorded at 2.1%

While Masteel declined to respond to StarBizWeek’s queries, including on the plans to enlarge its capacity, the group has previously said that it has substantial capacity to meet the anticipated uplift in industry demand.

Masteel plans to capitalise on its upgraded steel manufacturing facilities to meet the increased demand.

In an earlier press statement, Masteel managing director and CEO Datuk Seri Tai Hean Leng remained upbeat on the group’s prospects.

This is considering that the stronger demand for steel from the accelerated pace of economic activities globally were expected to overshadow the impact of uptrending raw material prices.

Moreover, the ongoing conflict in Eastern Europe is not expected to have any impact on the group’s earnings, according to Tai.

“With our large capacity and reliable delivery network, we are confident of capturing this demand wave,” he said.

Masteel’s ability to further expand its production capacity may be restricted, considering that the group already has high debts on its books.

As of end-2021, the steelmaker had total borrowings of RM380.82mil against cash and cash equivalents of RM56.96mil.

In terms of valuations, Masteel has a price-to-earnings (PE) ratio of 7.1 times, compared to AnnJoo’s 4.32 times and Hiap Teck’s 3.44 times.

Choo Bee Metal Industries has a PE ratio of 2.46 times and Leon Fuat Bhd is valued at a PE ratio of 2.03 times.

[NST] Masteel turns around in 2021 with RM32.5mil net profit

Friday, February 25th, 2022

By Farah Adilla

Masteel managing director and chief executive officer Datuk Sri Tai Hean Leng remained upbeat on the company’s prospects, particularly as the stronger demand for steel from the accelerated pace of economic activities globally was expected to overshadow the impact of uptrending raw material prices. 

KUALA LUMPUR: Malaysia Steel Works (KL) Bhd (Masteel) saw a firm turnaround in the financial year ended December 31, 2021 (FY21), with a net profit of RM32.5 million from a net loss of RM14.73 million in FY20.

The integrated steel manufacturer said this was buoyed by the recovery in selling prices of steel products in local and international markets. 

Masteel said prices of iron ore, a primary raw material for blast furnace-based steel making which is a bellwether for steel demand, rose from a low of US$85 per tonne in November 2021 to more than US$150 per tonne on February 11, 2022, before settling at US$143 per tonne in the fourth week of February.

At the same time, price of metallurgical coal, which constitutes 40 per cent of blast furnace cost of production, remained high year to date.

Masteel’s revenue during the period increased 14.2 per cent to RM1.58 billion from RM1.38 billion.

Masteel said the growth in revenue was bolstered by the Malaysian market where sales rose 15.8 per cent to RM1.4 billion from RM1.3 billion previously on stronger demand from the construction sector. 

Export sales remained stable at RM136.1 million in FY21, versus RM137.3 million a year ago. 

Masteel managing director and chief executive officer Datuk Sri Tai Hean Leng remained upbeat on the company’s prospects, particularly as the stronger demand for steel from the accelerated pace of economic activities globally was expected to overshadow the impact of uptrending raw material prices. 

He said the ongoing conflict in Eastern Europe was not expected to have any impact on the company’s earnings.

“This strong turnaround, is made even more significant against the backdrop of the disruptive Movement Control Orders in FY21, and showcases our resilience. 

“We are also reaping the benefits of the timely upgrading of our steel making facilities. 

“Although prices of raw materials are increasing, the greater force of external demand is widely expected to eclipse the high-cost environment,” he said.

Tai added that North Asia’s commencement of the civil construction period in the spring, together with the lifting of restrictions of steel mill activities in China, was prompting a strong rebound in domestic and international steel prices. 

“With our large capacity and reliable delivery network, we are confident of capturing this demand wave,” he said.

For the fourth quarter, Masteel’s net profit improved 46.6 per cent to RM12.04 million from RM8.21 million, while revenue increased 24.4 per cent to RM463.87 million from RM372.76 million.

Tai said the company intended to maximise its new steel making facilities, which has substantial capacity to meet the anticipated uplift in industry demand. 

“Overall, despite short-term volatilities such as the Omicron wave and labour shortage, Masteel is expected to continue delivering satisfactory performance in FY22,” he added.

[The Edge] Masteel 4Q net profit climbs 47% y-o-y to RM12m, boosted by RM5m tax credit

Friday, February 25th, 2022

By Izzul Ikram

KUALA LUMPUR (Feb 25): Malaysia Steel Works (KL) Bhd (Masteel) reported a 47% rise in net profit for the fourth quarter ended Dec 31, 2021 (4QFY21) to RM12.04 million from RM8.21 million a year earlier, boosted by a tax credit amounting RM5.06 million.

However, in a filing on Friday (Feb 25), the group said its profit before tax (PBT) slipped 42% to RM6.97 million from RM12.07 million in 4QFY20, mainly due to higher operating expenses arising from a rights issue with warrants exercise, and a foreign exchange loss.

Its quarterly revenue rose 24% to RM463.87 million from RM372.76 million a year ago, due to higher steel bar selling prices, in line with the increase in global and domestic steel prices.

For FY21, Masteel swung to a full-year net profit of RM32.5 million compared to a net loss of RM14.73 million in FY20, mainly due to higher steel bar selling prices and enhanced production cost efficiency during the year under review.

Similarly, annual revenue rose 14% to RM1.58 billion from RM1.38 billion in FY20 on the back of higher steel bar selling prices, despite recording lower sales volume.

“This strong turnaround is made even more significant against the backdrop of the disruptive Movement Control Orders in FY2021, and showcases our resilience. We are also reaping the benefits of the timely upgrading of our steel making facilities,” said Masteel managing director and CEO Datuk Seri Tai Hean Leng in a statement.

In terms of prospects, Masteel said prices of local steel bars are expected to continue to trend higher due to rising international steel prices and the gradual recovery of the Malaysian economy from the pandemic.

“Although prices of raw materials are increasing, the greater force of external demand is widely expected to eclipse the high-cost environment.

“North Asia’s commencement of the civil construction period in the spring, together with the lifting of restrictions of steel mill activities in China, are already prompting a strong rebound in domestic and international steel prices,” Tai said, adding that the group is confident of capturing the expected increase in demand.

Masteel shares closed one sen or 3.23% higher at 32 sen, giving the group a market capitalisation of RM214.12 million.

Edited by Ahmad Naqib Idris

[The Star] More project rollouts likely

Wednesday, January 12th, 2022

KUALA LUMPUR: A gradual improvement in contract flows in the construction sector is likely this year as the country moves towards the endemic phase from the Covid-19 pandemic stage.

Hong Leong Investment Bank Research (HLIB) said a recovery in private sector opportunities and ongoing rollouts of existing projects like the East Coast Rail Link, Pan Borneo Highway Sabah and Sarawak, Johor Baru-Singapore Rapid Transit System and Central Spine Road project will support job flows in 2022.

Additionally, there is also the potential rollout of the Sarawak Metro which costs about RM6bil.

Note that domestic contracts to listed contractors amounted to RM6.3bil in the fourth quarter (Q4) of last year, boosted by RM1.6bil worth of awards from water and solar projects, notably the Rasau Water Scheme (RM896mil) and the fourth cycle of Large Scale Solar projects (RM571mil).

Notable contract wins in Q4 of 2021 included package two and three of Rasau to Taliworks Corp Bhdl, the Sabah Sarawak Link Road package to Kimlun Corp Bhd (RM780mil) and the aerotrain project in the Kuala Lumpur International Airport to Pestech International Bhd (RM743mil).

Meanwhile, there was only one foreign contract awarded during the quarter which involved the upgrading of various substations in the Philippines to Pestech International Bhd for a contract sum of RM157mil.

“The Home Ownership Campaign (HOC) and low interest rates which lifted property sales in 2021, could see a ramp up in private sector contract awards considering the repeated award delays in 2021,” HLIB pointed out.

However, the downside to this is the dampening of sentiment from the expiry of the HOC, interest rate hikes and rollout delays due to high materials price.

On a year-to-date basis, contracts awarded in 2021 were higher by 63% largely due to the low base effect as 2020 saw lockdowns imposed in the country.

In 2021, HLIB noted that stronger water, affordable housing, solar and road projects such as public sector funded jobs were seen while private sector contracts remained flattish due to the continued restrictions which dented rollout optimism.

The research house has maintained its “neutral” call on the construction sector given the fluidity of the looming general election, which could weigh on sector sentiment with investors adopting a wait-and-see approach.

“Sector valuations are on the lower end at 12.9 times price-to-earnings ratio on the next 12 months earnings per share (five-year average) and 0.65 times price-to-book value (minus one standard deviation five-year range).

“Recent reports on critical projects, including the Mass Rail Transit line three, are encouraging but we remain cautious on the timeline and overall sector earnings execution amid the ongoing virus spread,” it added.

[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

[KwongWah] 马钢铁工程 料向麦格理银行配股

Saturday, September 21st, 2019

马钢铁工程(隆)(MASTEEL,5098,工业产品组)计划向麦格理银行(Macquarie Bank Ltd)出售4250万股新股,以筹集现金并减低债务。

这家钢筋制造商致函大马交易所表示,新股售价38仙,并在未来12个月内分几批出售。

若以拟议中的发行价计算,它将可筹集1615万令吉的资金。

在筹集的资金中,1598万令吉将用于偿还其贸易贷款。

马钢铁工程说:“拟议中的私下配股将减少我们现有的贸易贷款,从而使我们能够节省融资成本。”

[The Edge] Masteel proposes private placement to repay borrowings

Friday, September 13th, 2019

By Ahmad Naqib Idris

KUALA LUMPUR (Sept 13): Malaysia Steel Works (KL) Bhd (Masteel) has proposed a private placement of up to 42.5 million shares to Macquarie Bank Ltd, as the group looks to raise cash to repay its bank borrowings.

In a filing with the bourse, Masteel said it had entered into a conditional share subscription agreement with Macquarie Bank, in relation to the issuance of up to 42.5 million placement shares, which represent about 10% of its total number of issued shares.

The group said the placement is expected to be implemented in multiple tranches within 12 months from the date on which the conditions precedent in the subscription agreement are fulfilled.

The agreement entails Macquarie Bank’s right to initially subscribe for up to 25.5 million placement shares for the first tranche and the conditional right to further subscribe for up to 17 million placement shares for the second tranche.

Masteel said the subscription price of each placement share will be equal to 91% of the volume weighted average price of its shares during the five consecutive trading days immediately preceding the subscription date.

Assuming an indicative issue price of 38 sen per share, the exercise would be able to raise RM16.15 million in proceeds, of which some RM15.92 million will be used to repay borrowings from Kuwait Finance House (Malaysia) Bhd, while the balance of the funds will be used to cover estimated expenses for the exercise.

“After considering various fund-raising options, the board has decided to pursue the proposed private placement as it will enable us to raise funds expeditiously and in a cost efficient manner.

“In addition, the proposed private placement will reduce our existing trade lines, thus allowing us to save on finance cost. The proposed private placement to be implemented via the subscription agreement will also serve to enhance trading liquidity of Masteel’s shares,” said the group.

Upon completion of the placement, Masteel’s share capital will grow to 468.06 million shares or RM244.92 million, from 427.24 million shares or RM230.09 million.

Masteel’s share price fell one sen or 2.35% to close at 41.5 sen, giving a market capitalisation of RM177.3 million.

[The Star] Masteel to place out new shares to Macquarie Bank

Friday, September 13th, 2019

KUALA LUMPUR:  (Masteel) plans to place out 42.5 million new shares to Macquarie Bank Ltd to raise cash and reduce its debts.

The new shares will be sold at 38 sen each, spread over in several tranches over the next 12 months, the steel bar maker said in a filing with Bursa Malaysia today.

As the proposed issue price, Masteel will raise RM16.15mil.

Of the amount, RM15.98mil will be utilise towards repayment of its trade lines.

“The proposed private placement will reduce our existing trade lines, thus allowing us to save on finance cost,” Masteel said.

[The Edge] Masteel posts net loss RM10.4m in 2Q on lower sales volume

Friday, August 30th, 2019

By Surin Murugiah

KUALA LUMPUR (Aug 30): Malaysia Steel Works (KL) Bhd (Masteel) slumped to a net loss of RM10.39 million for the second quarter ended June 30, 2019 from net profit of RM7.98 million a year earlier, due to lower sales volume and selling price resulting in a lower margin.

In a filing today, Masteel said revenue for the quarter fell to RM294.68 million from RM324.69 million previously. Loss per share was 2.44 sen compared to earnings per share of 1.89 sen in the year-ago quarter.

For the six months ended June 30, Masteel posted net loss of RM19.07 million versus net profit of RM25.7 million in the year-ago period. Revenue dropped to RM574.9 million from RM759.5 million a year earlier.

On its prospects, Masteel said the company’s initiatives, which commenced in 2017, were in anticipation of the increasing volatility in the domestic steel business environment.

“Presently, the company is beginning to realise its technology driven cost cutting measures and expects to see the improvement of its performance in the coming quarters,” it said.

At the midday break today, Masteel shares were unchanged at 42.5 sen, valuing it at RM181.58 million.

[The Edge] ‘Masteel vulnerable to steel price fluctuations’

Wednesday, August 7th, 2019

By Chester Tay

KUALA LUMPUR: Malaysia Steel Works (KL) Bhd’s (Masteel) stand-alone credit profile remains vulnerable to fluctuations in steel price, the cost of raw materials and increased competitive pressures in the Malaysian market, according to Malaysian Rating Corp Bhd (MARC).

In a statement yesterday, MARC said given Masteel’s relatively modest market position in the production of steel billets and bars, mainly for local consumption, these factors have weighed on its profitability margins.

Nonetheless, the rating agency affirmed its AAA IS(fg) rating on Masteel’s RM130 million Sukuk Ijarah programme, with a stable outlook, based on the unconditional and irrevocable financial guarantee insurance provided by Danajamin Nasional Bhd.

“Noteholders are insulated from downside risks in relation to Masteel’s credit profile by the guarantee provided by Danajamin. Any changes in the supported rating or rating outlook will be primarily driven by changes in Danajamin’s credit strength,” it said.

According to MARC, the domestic construction and property sectors’ challenging conditions have exerted pressure on steel suppliers. The situation is exacerbated by a major player entering the steel sector in October 2018, leading to a price war.

Consequently, domestic steel bar prices declined to RM2,225 per tonne by end-December 2018 (versus RM2,750 per tonne in January 2018), it said.

While Masteel increased its output and improved its product mix to include a higher proportion of steel bars, generating higher margins compared with that of steel billets, the company still recorded a weaker operating margin of 1.4% in 2018, mainly due to a decline in gross steel bar margins, coupled with impairments in inventory and higher administrative expenses.

Also, for the first quarter ended March 31, 2019 (1QFY19), Masteel still faced weakening profitability, recording operating losses of RM11.4 million.

MARC, therefore, viewed that it would be challenging for Masteel to turn around its performance over the near term.

Masteel’s liquidity position also remains weak, it noted, with RM35.7 million in cash and cash equivalents, against a short-term debt of RM297.6 million, comprising mostly bills payable as at 1QFY19.

Masteel’s working capital requirement has risen as well, alongside an increase in sales volume and a higher cost of raw materials.

Nonetheless, MARC said Masteel has improved its receivable days to below 40 over the last three years. “Masteel’s investments in the more efficient induction furnaces have also somewhat prevented the group from incurring larger operating losses.”

On Masteel’s gearing level, MARC said it remained moderate at end-2018, as reflected by its debt-to-equity ratio of 0.59 times.

[The Edge] Masteel’s standalone credit profile vulnerable on steel prices fluctuations, MARC says

Tuesday, August 6th, 2019

By Chester Tay

KUALA LUMPUR (Aug 6): Malaysia Steel Works (KL) Bhd’s (Masteel) standalone credit profile remains vulnerable to fluctuations in steel price, fluctuating cost of raw materials and increased competitive pressures in the Malaysian market, according to Malaysian Rating Corp Bhd (MARC).

In a statement today, MARC said given Masteel relatively modest market position in the production of steel billets and steel bars, which are mainly for local consumption, these factors have weighed on its profitability margins.

Nonetheless, the rating agency has affirmed its AAA IS(fg) rating on Masteel’s RM130 million Sukuk Ijarah programme with a stable outlook.

MARC said the affirmed rating and outlook are based on the unconditional and irrevocable financial guarantee insurance provided by Danajamin Nasional Bhd.

“Noteholders are insulated from downside risks in relation to Masteel’s credit profile by the guarantee provided by Danajamin. Any changes in the supported rating or rating outlook will be primarily driven by changes in Danajamin’s credit strength,” it said.

MARC noted that the challenging conditions in the domestic construction and property sectors have exerted pressure on steel suppliers.

“This was further exacerbated by the entrance of a major player in the steel sector in October 2018 which led to a price war resulting in domestic steel bar prices declining to RM2,225 per metric tonne (MT) by end-December 2018 (versus RM2,750 per MT in January 2018),” it said.

“Against this background, Masteel has increased its output and improved its product-mix to include a higher proportion of steel bars which generate higher margins compared to steel billets. For 2018, steel bar sales accounted for 87% of Masteel’s total revenue of RM1.5 billion,” it added.

During 2018, MARC said Masteel recorded a weaker operating margin of 1.4%, mainly attributable to a decline in gross steel bar margins, coupled with impairments in inventory and higher administrative expenses.

MARC pointed out that for the first quarter ended Mar 31, 2019 (1QFY19), Masteel continued to face weakening profitability, recording operating losses of RM11.4 million.

“MARC views that it would be challenging for Masteel to turnaround its performance over the near term,” it said.

The firm commented that Masteel’s liquidity position remains weak with RM35.7 million in cash and cash equivalents, against a short-term debt of RM297.6 million comprising mostly bills payable as at 1QFY19.

Masteel’s working capital requirement, said MARC, has risen alongside an increase in sales volume and higher cost of raw materials.

“Inventory days have increased to over 150 days, partly due to holding a higher amount of scrap steel to offset rising input costs through larger purchases,” it said.

Nonetheless, MARC said Masteel has improved its receivable days to below 40 days over the last three years.

“Masteel’s investments in the more efficient induction furnaces have also somewhat prevented the group from incurring larger operating losses,” it noted.

On Masteel’s gearing level, MARC said it remains moderate at end-2018, as reflected by its debt-to-equity (DE) ratio of 0.59 times.

“However, MARC expects Masteel’s DE to rise between 0.70 times and 0.80 times over the next two years. This is based on expectations that additional borrowings will be taken for the purchase of a second induction furnace and to bridge the funding gap due to margin compression,” it said.

At 3.24pm, Masteel was trading unchanged at 44.5 sen, giving it a market capitalisation of RM190.12 million.

[The Edge] Masteel posts RM24.8 mil loss in 4Q

Thursday, February 28th, 2019

By Tan Xue Ying

KUALA LUMPUR (Feb 28): Malaysia Steel Works (KL) Bhd (Masteel) posted a loss of RM24.87 million in the fourth quarter ended Dec 31, 2018 or a loss per share of 5.84 sen because of lower margins, impairment of inventories and higher administrative expenses.

In the year-ago quarter, it made a net profit of RM12.12 million or earnings per share of 4.02 sen.

Revenue contracted 17.4% to RM348.93 million from RM422.33 million in the same quarter a year ago, due to lower sales volume and selling price.

For the full year, Masteel’s net profit slipped to RM6.75 million, a significant decline compared with RM75.46 million recorded in FY17 despite higher revenue of RM1.5 billion, from RM1.46 billion in the previous year.

Masteel said its cost of production should be better in the Jan-March quarter as it expects to see convergence of its material costs between iron ore and scrap for steel-making.

However, the seasonal slowdown because of the Lunar New Year festivities, and a general slowdown in the construction and property sectors could further dampen demand for Masteel’s product and prices.

To counter this, Masteel said it is implementing extensive initiatives to streamline its manufacturing  processes and supply chain to improve margins.

Masteel fell three sen or 5.56% to 43 sen today, valuing the company at RM180.87 million.

[The Edge] Danajamin guarantees RM130m sukuk by Masteel

Friday, November 30th, 2018

By Amir Ridzwan Ismail

KUALA LUMPUR (Nov 30): Danajamin Nasional Bhd is guaranteeing a five-year RM130 million Sukuk Ijarah Programme issued by Malaysia Steel Works (KL) Bhd (Masteel).

The sukuk is rated AAAIS(fg) by Malaysian Rating Corp Bhd (MARC), following the backing of an irrevocable and unconditional Kafalah Guarantee provided by Danajamin.

“Masteel has almost 50 years of track record. They have endured several crises throughout their establishment and have since grown from strength to strength as one of the key players in the industry. Through our guarantee, we hope to instill investors’ confidence and assist Masteel to successfully deliver their business objective and continue to contribute meaningfully to the nation’s economy,” said Danajamin chief executive officer Mohamed Nazri Omar in a statement today.

Masteel managing director and chief executive officer Datuk Seri Tai Hean Leng said the funds available from this issuance will be used primarily for refinancing, working capital and for the acquisition of a new melting technology package.

“This technology will be a game changer for Masteel, putting us well ahead of the competition. The issuance will not only improve our liquidity position, but will enable Masteel to expand our operation, in line with the installation of the new facilities,” he added.

The principal adviser/lead arranger, lead manager, Shariah adviser and facility agent for this transaction is Kuwait Finance House (Malaysia) Bhd.

To date, Danajamin has guaranteed 37 issuers, with a total guarantee size of RM10.6 billion.

[Sinchew] 赚幅降低.外汇亏损.马钢厂第三季净利跌85%

Friday, November 30th, 2018

(吉隆坡29日讯)赚幅降低和外汇亏损升高,马来西亚钢厂(MASTEEL,5098,主板工业产品服务组)截至9月30日第三季净利下跌84.82%,至587万2000令吉,拖累首9月净利减少50.15%,至3157万5000令吉。

第三季营业额减少3.24%,至3亿8843万2000令吉;首9月营业额扬升10.28%,至11亿4792万8000令吉。

该公司在文告中表示,第三季营收微跌,因销售量减少和国内需求走软,盈利下滑则主要由于赚幅降低和外汇亏损升高。

展望未来,大马钢条市场面对新的进场者,本地钢条价格继续滑落,正冲击该公司产品的赚幅。尽管面对挑战,该公司正建造新的和更节省成本的生产设备以跟上大势,在新设备和设施于2019年启用后,预期赚幅可改善。

[The Edge] Masteel’s 3Q profit falls 85% on lower margins, forex loss

Thursday, November 29th, 2018

By Tan Xue Ying

KUALA LUMPUR (Nov 29): Malaysia Steel Works (KL) Bhd (Masteel) recorded a 85% drop in net profit to RM5.87 million for the third quarter ended Sept 30 from RM38.67 million a year ago, on lower margins and higher foreign exchange losses.

Earnings per share plunged to 1.38 sen, from 12.88 sen in the year-ago quarter.

Revenue contracted 3.2% to RM388.43 million from RM401.45 million a year ago, owing to lower sales volume on a softer domestic demand.

In an exchange filing today, the steel bars and billets maker attributed the weakened earnings to lower margins and higher foreign exchange loss.

Its financial statements showed operating expenses were 30% higher during the quarter against a year ago, and it also booked RM4 million of ‘other expenses’.

For the cumulative nine months, Masteel’s net profit halved to RM31.58 million, from RM63.34 million before, notwithstanding a 10.3% year-on-year growth in revenue to RM1.15 billion from RM1.04 billion.

Masteel cautioned that declining local steel bar prices and competition from new entrants of bars and billets supply would affect its margins.

However, the group expects margins to improve with its new equipment and facilities coming on stream next year.

Masteel slid two sen to close at 42 sen for a market capitalisation of RM178.86 million. The stock is currently trading at its lowest since Dec 9, 2016.

[The Edge] Immediate hurdle for Masteel at 52 sen, says AllianceDBS Research

Monday, November 12th, 2018

KUALA LUMPUR (Nov 12): AllianceDBS Research said Malaysia Steel Works (KL) Bhd (Masteel) had on Nov 9 traded lower to 48.5 sen before settling near the day’s low at 49 sen (down 1.5 sen or 2.97%).

In its evening edition last Friday, the research house said Masteel continued to trade below the 20-day (blue) and 50-day (red) moving average lines.

“Following the down close on Nov 9, the stock is likely to move lower with immediate support at 47.5 sen.

“A fall below 47.5 sen should see further price decline to the subsequent support at 44.5 sen.

“The hurdle is pegged at 52 sen. A rise above 52 sen would lift the stock to the next resistance at 56 sen,” it said.

AllianceDBS Research said stock volume traded on Nov 9 was 2.17 million shares compared to the 3-month average volume of 6.19 million shares.

[The Edge] Masteel to raise RM130m via sukuk

Friday, November 9th, 2018

By Arjuna Chandran Shankar

KUALA LUMPUR: Malaysia Steel Works (KL) Bhd (Masteel) plans to raise RM130 million via the issuance of sukuk for refinancing, capital expenditure and working capital requirements.

In a filing with Bursa Malaysia yesterday, Masteel said it has lodged with the Securities Commission Malaysia for the proposed establishment of the sukuk programme.

“The tenure of the sukuk is up to seven years from the date of first issuance. The first issuance of the sukuk is expected to be for a period of up to five years,” it added.

Masteel shares closed up 0.5 sen or 1% at 50.5 sen yesterday, with a market capitalisation of RM215.06 million.

[The Edge] Masteel 2Q net profit down 25% on forex loss

Wednesday, August 29th, 2018

By Justin Lim

KUALA LUMPUR (Aug 29): Malaysia Steel Works (KL) Bhd (Masteel) posted a 24.6% drop in net profit to RM7.98 million in the second quarter ended June 30, 2018 (2QFY18) from RM10.59 million a year ago, mainly due to a foreign exchange (forex) loss compared with a forex gain in 2QFY17.

This resulted in a lower earnings per share of 1.89 sen for 2QFY18 compared with 4.38 sen for 2QFY17.

Quarterly revenue, however, grew 11.7% to RM324.7 million, from RM290.76  million a year ago, on higher selling price from the strengthening of local steel price.

In the cumulative six months (1HFY18), Masteel’s net profit rose 4.2% to RM25.7 million from RM24.67 million a year ago, while revenue was up 18.8% to RM759.5 million from RM639.49 million in 1HFY17.

Going forward, the group expects to maintain its competitiveness and sustain its position as a competitive steel producer in Southeast Asia through the revamping of its facilities, despite the volatile market condition.

However, the group anticipates steel prices to remain subdued as domestic steel is well supplied.

“In the near term, the group will likely face headwinds from on-going global trade wars that may result in diversion into Malaysia, steel products from other countries that have been affected by the US import tariffs,” Masteel said.

“However, the group is not directly affected by the US tariffs as the group historically does not export its products to the US,” it added.

Masteel shares closed up two sen or 3.03% at 68 sen today, with 3.98 million shares done, bringing it a market capitalisation of RM290.52 million.

[The Edge] Masteel reports 26% lift in 1Q net profit on higher demand, prices

Friday, May 25th, 2018

By Tan Xue Ying

KUALA LUMPUR (May 25): Malaysia Steel Works (KL) Bhd (Masteel) saw a 25.8% increase in net profit for the first quarter ended March 31, 2018 to RM17.72 million, compared with RM14.08 million a year ago, as it sold more products at higher selling prices.

Revenue grew 24.7% to RM434.8 million, from RM348.72 million in the year-ago first quarter, according to the group’s filing with Bursa Malaysia.

The steel player attributed the increase in its revenue and profit to stronger domestic demand and the strengthening of local steel price, which helped boost its selling price and volume sold.

It also booked in a foreign exchange gain amounting to RM5.19 million in the quarter, lifting its bottom line further.

The group said it has seen softened demand for its products in the second quarter, due to the commencement of Ramadan festivities from mid-May, and the announcement of the zerorisation of goods and services tax effective June 1.

It expects demand to improve during the second half of the year.

Meanwhile, new technology packages are being installed at both its facilities at Petaling Jaya and Klang, which Masteel believes will “augur well with the bottom line of the company in the near future”.

Shares in Masteel closed up 1.5 sen or 1.96% at 78 sen today, bringing a market capitalisation of RM332.44 million. The stock has declined 38% year-to-date, from RM1.27 on Dec 29, 2017.

[The Edge] Masteel may trend higher, says RHB Retail Research

Wednesday, February 14th, 2018

KUALA LUMPUR (Feb 14): RHB Retail Research said Malaysia Steel Works (KL) Bhd (Masteel) may trend higher after it climbed above the 55-day SMA line yesterday.

In a trading stocks note today, the research house said this can be viewed as a continuation of the bulls extending the rebound from Feb 6’s “Hammer” pattern.

“A bullish bias may appear above the RM1.20 level, with an exit set below the RM1.08 threshold.

“Towards the upside, the near-term resistance level is at RM1.37. This is followed by the RM1.50 level,” it said.

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