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MASTEEL - The Steel Stock Primed for Data Center Growth (KingKKK)

Publish date: Sat, 15 Jun 2024, 07:16 PM

A. The importance of the steel industry to support data center construction.

Malaysia's data center sector is experiencing phenomenal growth, driven by factors like artificial intelligence (AI), cloud adoption, e-commerce, and the rise of digital services. The steel industry plays a vital role in this data center boom. It plays a crucial supporting role in several ways:

Construction Material: Steel offers a robust and versatile material for data center structures. Its strength allows for tall buildings to accommodate high server density, a key factor in maximizing data storage capacity. Additionally, pre-fabricated steel components can expedite construction timelines, crucial in this fast-paced sector.

Infrastructure: Steel underpins the physical infrastructure supporting data centers. From electrical transmission towers to telecommunication masts, a strong and reliable steel infrastructure ensures seamless data flow and connectivity.

Cooling Systems: Steel plays a part in constructing efficient cooling systems, vital for data center operations. Water chiller units and cooling towers often utilize steel components.

B. Data Center Boom Drives Steel Demand. 

The exponential growth in data generation is fueling a surge in data center construction. This translates to a strong and consistent demand for steel, making the steel industry a key beneficiary of this trend. For construction companies specializing in data centers, a strong understanding of the steel market and its fluctuations becomes crucial for project cost management and timely completion.

C. Masteel latest quarter earnings jumped 382% Y/Y and 351% Q/Q

The company made much more money this year (RM3.1 million) compared to last year (RM0.7 million). This is because they sold more steel (revenue up 40.9%) as construction in Malaysia boomed. In other words, the company did well because more buildings are being built in Malaysia.

The improvement against last quarter is due to revenue increase by RM136.54 million to RM662.51 million. This is mainly due to higher sales volume and selling prices. The Group recorded a higher profit before tax of RM5.69 million (vs. profit before tax of RM2.09 million last quarter) as margin improved.

D. Earnings Growth Among Steel Companies

Company/Earnings Growth in %

E. Masteel Background

Masteel Berhad (MASTEEL), a leading Malaysian steel producer listed on the Bursa Malaysia, is an attractive option for investors seeking exposure to the construction industry's growth. The data center boom in Asia is driving demand for high-quality steel, a material crucial for these facilities, and Masteel's focus on steel bars and billets aligns perfectly with this trend. Founded in 1971, Masteel boasts a long history and proven track record, with two strategically located manufacturing plants catering to both domestic and international markets. Their commitment to quality, adhering to international standards like SIRIM and ISO 9001, ensures their products meet the stringent requirements of data center construction. Furthermore, Masteel's presence in Southeast Asia and beyond offers potential for market share expansion, and their diversification into radiopharmaceuticals through a subsidiary provides a unique edge.

MASTEEL manufactures high-tensile deformed steel bars, mild steel round bars and steel billets. It has 68 domestic dealers and exports its steel products to Australia, New Zealand, Papua New Guinea, Indonesia, Singapore, Vietnam, Philippines and China.

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I agree, if we are talking about the actual building of the data centers. Likewise, other materials are also needed to build data center, including copper (for cable), aluminium and concrete (cement and sand), etc.

1 month ago


Do you think it is time for steel sector to run as beneficiary of data center theme? Which steel stock do you like (ANNJOO, MASTEEL, PRESTAR, Southern Steel or CSC Steel)?

1 month ago


Just monitor the steel bar price to time when you should buy steel stock.

1 month ago


Sifu Sslee, where to see steel bar price chart?

1 month ago


Nobody consider Hiaptek? They took have exposure to steel via eastern steel.

1 month ago

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