Press Release - Steel Manufacturer HG Metal Full-Year Revenue Crosses $100 Million Mark
BackDec 30, 2003
(Singapore, 30 December 2003) - SESDAQ-listed HG Metal Manufacturing Limited, Singapore's only steel stockist with manufacturing capability, today announced FY2003 full year net profit of S$3.3 million, an increase of 16.9% from the previous year's $2.8 million on the back of a 20% rise in turnover from $90.3 million to $108.4 million.
| Overall Highlights |
FY2003 (ended 31 Oct 2003) $'000 |
FY2002 (ended 31 Oct 2003) $'000 |
% increase yoy |
| Turnover |
108,370 |
90,291 |
20.0 |
| Gross Profit |
12,618 |
12,317 |
2.4 |
| Profit before tax |
4,306 |
3,734 |
15.3 |
| Net Profit Attributable to Shareholders |
3,264 |
2,792 |
16.9 |
Turnover growth was driven by improvement in steel prices and pick-up in overall steel demand from sectors including shipbuilding and ship repairing. Gross profit margin was however lower than last year due to competitive market conditions in the beginning of the second half. But the later part of the second half saw a sharp increase in steel prices and demand, especially from China - one of the world's largest steel consumers - as a result of robust economic development and a large number of infrastructure projects for the 2008 Beijing Olympic Games.
On the outlook for the coming year, HG Metal CEO Mr Wee Piew commented, "We expect steel demand and prices to remain fairly strong, continuing its current upswing. The prospects for the first half of FY2004 are positive and we remain focused on diversifying our revenue base and keeping a close watch on our bottom line.
"In addition to growing organically, we will seek out possible acquisitions to strengthen the Group," he added.
Cash and cash equivalents notched up to $5.0 million from last year's $3.3 million, thanks in part to two share placements that raised $3.3 million. The greater number of shares reduced earnings per share from 4.31 cents to 4.0 cents but net asset value per ordinary share climbed from 24.85 cents to 27.41 cents per share.
In May 2003, the company issued 8 million new ordinary shares via a share placement at a price of $0.20 per share to Lingco Marine that has since purchased steel products from HG Metal for its shipbuilding business. This was followed by another successful placement of 6 million new shares in September 2003 at a price of $0.2905 per share. Besides providing funds for the company's growth plans, the placements serve to raise the profile of the Group and attract institutional investors and high net worth individuals.
The Group's Manufacturing Division - that accounted for 10% of Group turnover - reached a significant milestone in FY2003 when its new pipeline met its planned production capacity of between 800 and 1,000 metric tonnes per month. Built at a cost of $2 million, the new plant produces pipes and hollow sections. To gain greater market penetration and meet more diverse customers needs, the plant is now increasing its product mix by adding round and rectangular steel products to add to the current square design.
The Group has declared net dividend of 1 cent per share. To further reward existing shareholders, the company is proposing a bonus issue of 22,832,500 new ordinary shares of $0.20 each on the basis of one new ordinary share of $0.20 for every four existing ordinary share of $0.20 each, subject to approval from the Singapore Exchange.
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About HG Metal
HG Metal is a premier steel stockist and manufacturer of steel products. With more than 30 years in the steel business, HG Metal offers more than 2,000 different types of steel products of various dimensions for a wide variety of industrial and engineering applications. With their "one-stop supermarket" strategy, HG Metal is able to satisfy the needs of their customers with one visit to their extensive stockyard and manufacturing facility.
HG Metal has also differentiated itself from its peers in its strategic move to custom-manufacture steel products. HG Metal currently manufactures customized flat steel bars used in a wide variety of engineering processes and mild steel lip channels commonly used as roofing support in commercial and industrial buildings. The Directors believe that HG Metal is the only steel stockist in Singapore with such manufacturing capability. This give HG Metal a distinct competitive advantage against their competitors, as they can fulfill their customers' requirements more quickly and completely, especially for specifications that are not readily available in the market. HG Metal will expand its product mix to include the manufacturing of steel pipes soon. With its listed status and enlarged custom manufacturing capabilities, HG Metal will advance further up the steel value chain.
You may also visit the Company's website at www.hgmetal.com.
Issued for and on behalf of HG Metal Manufacturing Limited
Eruwin Sudirman/ Kathy Zhang
Financial PR Pte Ltd
Address: 30 Merchant Road, #04-20 Riverside Point, Singapore 058282
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