(extracted from Annual Report 2024)
DEAR SHAREHOLDERS,
On behalf of the Board of Directors ("Board"), we are delighted to present the Annual Report of HG Metal Manufacturing Limited ("HG Metal", the "Company" and together with its subsidiaries, the "Group") for the financial year ended 31 December 2024 ("FY2024").
OUR STRATEGIC TRANSFORMATION
Our strategic business transformation which started two years ago is making excellent progress. When I came onboard in June 2023, my first priority was to revamp HG Metal to become a leaner, more efficient, and forward-looking Company so as to enhance its long-term shareholder value.
In FY2024, we completed two share placements, in June and August 2024 respectively, which raised a total of approximately S$13.3 million ("Placements"). We also completed a rights issue in December 2024, for shareholders to participate in the Company’s equity at the same share price as the Placements which raised approximately S$19.8 million. As the Company’s controlling shareholder, Green Esteel Pte. Ltd. ("Esteel") undertook to subscribe for excess rights shares, Esteel’s shareholding in the Company increased to approximately 52.59% in February 2025, after completing a mandatory general offer triggered by the rights issue. These fundraising exercises have allowed us to build up our financial resources to undertake our transformation, expand our core business, and make strategic investments via acquisitions, as and when these opportunities arise.
Last year, we fully divested from Myanmar to focus on our main market in Singapore, which I believe was the prudent and right decision. In addition, we are committed to strengthening the culture of work safety within the Group, with the aim of improving our health and safety track record and fostering a positive working environment for our employees. While we continue to make progress in this area, we are dedicated to further enhancing our efforts. The Board has been working closely with Ms Xiao Xia ("Ms Xiao"), who joined in April 2023 as the Group’s Executive Director and Chief Executive Officer, to enhance the Group’s operational efficiencies and expand our business. With over 20 years of experience in steel and commodity trading, Ms Xiao’s contribution in every department – from corporate action to strategic planning to supply chain management – has made an invaluable impact to the Group’s overall performance.
Together with the rest of our Board, which includes our two Independent Non-Executive Directors Ms Ong Lizhen, Daisy and Ms Ng Chuey Peng, and our key management personnel, we have a strong team in place which I am confident will bring the Company to greater heights.
OUTSTANDING FY2024 PERFORMANCE
The global macroeconomic environment remains uncertain, with high interest rates, lingering inflation, supply chain disruptions, and geopolitical tensions weighing on businesses. Ongoing conflicts, such as the war in Ukraine and the situation in the Middle East, have further contributed to global instability, disrupted trade flows and affected commodity prices, such as steel. These factors continue to drive volatility in energy, and raw material prices, adding additional pressure on businesses worldwide.
Despite these challenges, the Group posted a 5% increase in FY2024 revenue to approximately S$157.9 million, compared to approximately S$149.8 million in FY2023. Gross profit soared 73% to approximately S$22.1 million in FY2024 from approximately S$12.8 million in FY2023, while gross profit margin increased 5.5 percentage points to 14.0% in FY2024 from 8.5% in FY2023.
Overall, the Group’s net profit jumped to approximately S$8.6 million in FY2024, marking a significant turnaround from a net loss of approximately S$1.8 million in FY2023. This huge improvement was driven by increased business volume, improved operational efficiency and better profit margins.
The Group’s operating cash flow is also very healthy, with cash and cash equivalents at approximately S$55.4 million as at 31 December 2024, compared with an approximately S$16.4 million as at 31 December 2023. This large cash holding, generated from the Placements, rights issue, and higher FY2024 profits, affords us the financial resources to expand our business and undertake the right acquisitions if and when such opportunities present themselves.
STRONG BUSINESS OUTLOOK
Looking ahead, we are committed to advancing our corporate strategies in the development and application of steel products for the built environment in Singapore and overseas, either by acquisitions or organic growth. In Singapore, we also aim to increase our market share, sales, and profitability. We are actively looking at opportunities to expand our capacity within our current scope, which will enable us to enhance and broaden our existing product offerings while strengthening our competitive position in the market.
The Ministry of Trade and Industry ("MTI")1 reported that the Singapore economy grew by 4.4% in 2024, compared to 1.1% in 2023. Growth for 2025 is forecast to range between 1.0% and 3.0%, as the policies of the new US Trump administration create more uncertainty and contribute to a more cautious global macroeconomic outlook.
Meanwhile, the Building and Construction Authority ("BCA")2 expects Singapore’s construction demand in the medium-term to remain strong due to several large-scale development projects. The preliminary construction demand for 2024 reached S$44.2 billion in nominal terms, which exceeded the initial estimates of S$35 billion to S$41 billion a year ago. Total construction demand is now forecast to range between S$47 billion and S$53 billion in nominal terms for 2025.
Our plan moving forward will be to continue to expand our production efficiency to grow sales. Our focus will be on improving raw material procurement and closely monitoring steel prices fluctuations to dynamically adjust our inventory management and pricing strategies.
We also aim to increase our production capacity to secure more projects, which may involve expanding our facilities as needed. At the same time, we have been actively working towards broadening our customer base in order to diversify. While our current projects are mainly focused on MRT, and infrastructure projects, the Group has recently secured new projects, including the Resorts World Sentosa. We will also be actively pursuing other significant developments, including the Changi Airport Terminal 5, private residential projects, high-specification industrial buildings, and educational facilities. These projects are expected to contribute to both our top and bottom lines once they materialise in the financial year ended 31 December 2025 ("FY2025").
Singapore’s status as a global manufacturing and financial hub and its ambitions to be a technology powerhouse means continued opportunities for the high-quality development of infrastructure and buildings. As such, suppliers of building materials, including steel, will also have to evolve and constantly pursue better cost controls, operating efficiency, sustainability and safety to remain relevant in an increasingly competitive environment. This is something that Group is undergoing as part of its strategic transformation and long-term quest to become a leader in the steel market in Singapore and Southeast Asia. Barring unforeseen circumstances and taking into the account all the above, we remain cautiously optimistic in FY2025.
IN APPRECIATION
I would like to extend my heartfelt gratitude to our Board of Directors for their continued guidance and support, and to all our management and staff for their hard work and dedication in helping us to achieve an excellent set of results for FY2024 amidst a challenging business operating environment.
Next, I want to accord my appreciation to our valued customers, business associates and suppliers for their support over the years, and I look forward to many more fruitful years of partnership ahead.
Finally, a big thank you to our loyal shareholders for your unwavering trust and support in us. We are grateful to have you with us for this journey as HG Metal continues its growth strategies.
Mr Ong Hwee Li
Independent Non-Executive Chairman