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Reports Malaysia

Malaysia stock market and companies daily report (June 03, 2014)

June 3, 2014, Tuesday, 06:23 GMT | 01:23 EST | 09:53 IST | 12:23 SGT
Contributed by Shares Investment

Kinsteel Net Losses Escalates

- Kinsteel reported a 90.6 percent increase in net losses from RM49.6 million in 4Q13 to RM94.6 million in the quarter ended 31 March. This widening of losses was attributed to zero production by its subsidiary Perwaja Holdings with the curtailment of gas and electricity supply and lower sales revenue.

- Stripping off the one time write-downs of inventory and assets of RM180 million, net losses would have been lower.

- Perwaja is still in the mist of restructuring and may face the challenge of getting all its creditors to agree to its restructuring scheme, and even if they did, Perwaja would still require a cash injection or equity capital to carry on its operations.

Significance: Kinsteel’s operations continue to face challenges as a result of lower demand coupled by weak steel prices. In addition, global overcapacity specifically in China is likely to impact steel product prices as production outpace demand.

Malaysia Smelting Corporation To Exit Indonesia

- Malaysia Smelting Corporation (MSC) has entered into agreements with two separate parties to divest all mining subsidiaries in Indonesia. The disposals include Bemban Corporation and PT MSC Indonesia.

- The consideration for the disposals is about US$1 million, which will be deployed towards the working capital of MSC. The rationale for the proposed disposals is to cease all mining operations in Indonesia and re-position MSC to be more geographically focused in its tin mining and smelting business activities.

- As the original investment cost in Bemban Corporation was RM61.1 million, MSC had made a full impairment charge in FY12.

Significance: According to industry observers, the crux of MSC’s problem started when MSC’s 75 percent-owned PT Koba’s application for another 10-year extention of contract of work, which expired on 31 March last year, was rejected by the Indonesian authorities.

Protasco Bags RM21m Deal

- Infrastructure development provider Protasco had been awarded by Jabatan Kerja Raya (Public Works Department) via its wholly-owned subsidiary, HCM Engineering a maintenance contract worth RM21 million.

- The job relates to the construction of overtaking lanes from Sibu to Bintulu and from Bintulu to Tatau, federal roads in Zone 2A, Sarawak, Malaysia.

- The works are expected to be completed within 12 months from the award.

Significance: The award is expected to contribute positively to Protasco’s results for the financial year ending 31 December 2014.