Starbiz, 17/4/13 issue: KUCHING: Yung Kong Galvanising Industries Bhd (YKGI) targets group revenue to hit the RM500mil mark this year on improving demand for its products as the local steel industry recovers from its doldrums.
Managing director and chief executive officer (CEO) Datuk Soh Thian Lai said sales of steel products had picked up as reflected by a 44% jump in YKGI group's turnover to RM139mil in the first quarter ended March 31, 2013 from RM96.5mil in the same period last year.
The company returned to the black with a group pre-tax profit of RM2.63mil for the first quarter from a loss of RM3.07mil in the same quarter last year.
“Our group has RM100mil worth of outstanding orders to be delivered. We expect a 25% increase in group production to 250,000 tonnes this year from about 200,000 tonnes last year,” Soh told StarBiz after YKGI's EGM here yesterday.
He said the group recorded about RM460mil in turnover last year, adding that the highest annual revenue it had registered so far was RM480mil before the industry's downturn.
YKGI, which has manufacturing facilities in Selangor and here, is Malaysia's top three flat steel producers among the seven players.
The group's main products are pickled and oiled coils, cold rolled coils, galvanised iron coils and pre-painted galvanised iron coils.
Soh said the steel industry in Peninsular Malaysia had benefited from better profit margins on increasing demand and that the company was confident the current demand could be sustained.
He said YKGI's average gross profit margin had risen to 10.2% from 7% a year ago. The company hopes to raise it by a further 5% by June.
He said the local steel industry experienced a turnaround after prices of steel products in China and Japan moved up early this year.
According to Soh, YKGI group sourced 100% of its imported raw material and hot rolled coils from Nippon Steel Corp, which has a 10% equity interest in YKGI.
He said as Nippon Steel was Japan's biggest and the world's second largest steel mill owner with an annual production of 55 mil tonnes, it was able to lower production cost.
“Besides the competitive price, Nippon Steel guarantees high quality and a constant supply of the raw materials to us,” he added.
At the EGM, shareholders approved a series of corporate proposals, including fund-raising.
YKGI is expected to raise net proceeds of RM42.95mil from a private placement and restricted issue of new 50 sen shares to substantial shareholder Marubeni-Itochu Steel Inc.
The private placement of more than 39.1 milllion shares representing 20% of the company's existing issued and paid-up capital will raise gross proceeds of RM19.55mil.
Soh has agreed to subscribe to a minimium of 10 mil placement shares and the remaining new shares would be placed out to third party investor.
The restricted issue of 48.8 mil shares to Marubeni-Itochu Steel Inc will raise gross proceeds of RM24.4mil. From the gross proceeds, RM1mil will be used to pay for the expenses of the corporate exercise.
Soh said the proceeds would be used as the company's working capital within 12 months.
Also approved was the proposed acquisition of the remaining 45.52% equity interest in Starshine Holdings Bhd for RM16.6mil to be satisfied via the issuance of 33.2 mil new 50 sen shares.
On completion of the acquisition, Starshine will become YKGI's wholly-owned subsdiary. Starshine group is principally involved in the manufacturing and trading of both long and flat steel products.
The EGM also gave its nod to a bonus issue of up to 38.2 mil new shares on the basis of one bonus share for every 10 existing shares held on an entitlement date to be determined later.
Shareholders will also get three free warrants for every 10 YKGI shares. The exercise will involve the issuance of up to 114.6 mil new warrants.
The bonus shares and free warrants will only be issued after the completion of the acquisition of Starshine, private placement and restricted issue.
“Marubeni-Itochu's stake in YKGI will be increased to over 26% from 18.4% upon completion of the restricted issue,” said Soh. Marubeni-Itochu has been YKGI's major foreign shareholder since 1983.
Nippon Steel's stake in YKGI will, however, be diluted to 7% after the corporate exercise
Soh said the combined stakes of Marubeni-Itochu and Nippon Steel would jump to one-third of YKGI's expanded capital of RM165mil upon completion of the entire corporate exercise expected by next month.
it will have to go up rather than down because of the bonus issue and moving forward looks very bright.I foresee it within 6 months to probably trade between 80cts-$1
even the warrants got more than 2 months b4 expiry.The shares maybe tightly held by the major shareholders so there is a possibility there will be those who may buy the warrants for conversion into shares,the ex price is only 50 cts plus current wrts price of 2 cts means only 52 cts which is a strong possibility
LET ME CREATE THE INTEREST AND THE DEMAND.buy the mother share and you will receive bonus shares and free warrants.in addition you will be a shareholder of a company owned by two giant Japanese steel companies.Future outlook and forecast earning looks very promising .Tp $1 in 6 months time
mother is bullish but still not much volume.the thing about this ctr is even if it touches 55 cts the volume will be small.so the leverage play is the warrants very attractive now
attention,government is gonna offer rm 60 billion contract to build new railway from singapore to kl....and with all construction stock fly,wil this steel company fly to....let see...buy in b4 too late
Post a Comment
People who like this
New Topic
You should check in on some of those fields below.
Title
Category
Comment
Confirmation
Click Confirm to delete this Forum Thread and all the associated comments.
Report Abuse
Please Sign In to report this post as abuse.
Market Buzz
No result.
Featured Posts
MQ Trader
Introducing MY's First IPO Fund for Sophisticated Investors!
MQ Chat
New Update. Discover investment communities that resonate with your ideas
MQ Trader
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
0:17
New IPO: Building management systems (BMS), solar thermal systems and energy-saving services provider, Solar District Cooling Bhd aims to list on the Ace Market!
MQ Trader 332 views | 2 d ago
0:17
New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
MQ Trader 11606 views | 10 d ago
0:17
New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
tonylim
4,796 posts
Posted by tonylim > 2012-12-31 11:12 | Report Abuse
.