|
Report Date : |
15.12..2012 |
IDENTIFICATION DETAILS
|
Name : |
MEGASTEEL SDN. BHD. |
|
|
|
|
Registered Office : |
C/o LION CORPORATION BERHAD Level 14, Office Tower No.1
Jalan Nagasari (Off Jalan Raja Chulan), Kuala Lumpur, Wilayah Persekutuan, 50200 |
|
|
|
|
Country : |
Malaysia |
|
|
|
|
Financials (as on) : |
30.06.2011 |
|
|
|
|
Date of Incorporation : |
18.04.1989 |
|
|
|
|
Com. Reg. No.: |
181104-T |
|
|
|
|
Legal Form : |
Private Company Limited By
Shares |
|
|
|
|
Line of Business : |
Engaged in manufacturing &
sales of hot rolled coils and cold rolled coils |
|
|
|
|
No. of Employees : |
1,800 employees |
RATING & COMMENTS
|
MIRA’s Rating : |
Ba |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
Status : |
Satisfactory |
|
Payment Behaviour : |
No complaints |
|
Litigation : |
Clear |
NOTES :
Any query related to this report can be made
on e-mail: infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – September 30, 2011
|
Country Name |
Previous Rating (30.06.2011) |
Current Rating (30.09.2011) |
|
Malaysia |
A2 |
A2 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
malaysia - ECONOMIC OVERVIEW
Malaysia, a middle-income country, has transformed itself since the
1970s from a producer of raw materials into an emerging multi-sector economy.
Under current Prime Minister NAJIB, Malaysia is attempting to achieve
high-income status by 2020 and to move farther up the value-added production
chain by attracting investments in Islamic finance, high technology industries,
biotechnology, and services. The NAJIB administration also is continuing
efforts to boost domestic demand and reduce the economy's dependence on
exports. Nevertheless, exports - particularly of electronics, oil and gas, palm
oil and rubber - remain a significant driver of the economy. As an oil and gas
exporter, Malaysia has profited from higher world energy prices, although the
rising cost of domestic gasoline and diesel fuel, combined with strained
government finances, has forced Kuala Lumpur to begin to reduce government
subsidies. The government is also trying to lessen its dependence on state oil
producer Petronas. The oil and gas sector supplies more than 40% of government
revenue. The central bank maintains healthy foreign exchange reserves, and a
well-developed regulatory regime has limited Malaysia''s exposure to riskier
financial instruments and the global financial crisis. Nevertheless, Malaysia
could be vulnerable to a fall in commodity prices or a general slowdown in
global economic activity because exports are a major component of GDP. In order
to attract increased investment, NAJIB has raised possible revisions to the
special economic and social preferences accorded to ethnic Malays under the New
Economic Policy of 1970, but he has encountered significant opposition,
especially from Malay nationalists and other vested interests.
|
Source : CIA |
Verified Address
Subject
name : MEGASTEEL SDN. BHD.
Business
address : Wisma Lion, Lot 2319
Kawasan Perindustrian Olak Lempit
Mukim Tanjung 12
Town : Banting
Province : Selangor Darul Ehsan
Zip/postal
code : 42700
Country : Malaysia
Tel : +60 3
31822000
Fax : +60 3 31822211
Website : www.lion.com.my
Registered
address : C/o LION CORPORATION BERHAD Level 14, Office Tower
No.1 Jalan Nagasari (Off Jalan Raja
Chulan)
Town : Kuala Lumpur
Province : Wilayah Persekutuan
Zip/postal
code : 50200
Country : Malaysia
Executive Summary
Date
founded or registered : 18/04/1989
Legal
form : Private Company Limited By Shares
Chief
executive : Tan Sri Cheng Heng Jem
Issued
& paid up capital : MYR 601,866,701
Sales
turnover : MYR 3,532,868,000 (Consolidated 12
months, 30/06/2010)
Net
income : MYR 98,042,000 (Consolidated 12 months,
30/06/2010)
Total
fixed assets : MYR 4,515,298,000 (Consolidated 12
months, 30/06/2010)
Line
of business : Manufacturing of hot rolled coils and
cold rolled coils.
Staff employed : 1,800 employees (Subject)
Company Analysis
Country
risk : Country risk is minimal
Operation
trend : Operational trend is steady
Management
experience : Management is adequately experienced
Financial
performance : Financial performance is recovering
Organization
structure : Organizational structure is stable
Detrimental : No
detrimental found
Payment
history : No payment delays noted
Registry Data
Registration
date : 18/04/1989
Legal
form : Private Company Limited By Shares
Registration
no 181104-T
Registered
authority : Companies Commission of Malaysia
Registry
status : Live/Active
Previous
name : The Subject was established under the
name MEGASTEEL INDUSTRIES SDN.
BHD.
and changed to the current style on 19-09-1994.
Change of legal form : None
reported.
Key Management
Name : Tan Sri Cheng Heng Jem
Designation : Managing
Director
Name : Lee Weng Lan
Designation : General
Manager - Production
Name : Lai Chin Yang
Designation : General
Manager - Marketing
Appointments
Name : Wang Chung-Yu
Designation : Director
Identification
no : 200570446
Appointment
date : 14/08/03
Address : #16, Lane 79, Alley 179, Sec. 2
Nei-Hu Road
Taipei
Taiwan
Biography : Nationality: Taiwanese
Name : Tan Sri Cheng Heng Jem
Designation : Director
Identification
no : 430319-71-5033
Appointment
date : 10/01/90
Address : A-16-1, Block A, Satu Residensi (One Residency) No. 1, Jalan Nagasari (Off Jalan Raja Chulan)
50200 Kuala Lumpur Wilayah Persekutuan Malaysia
Biography : Tan
Sri William Cheng has more than 35 years of experience in the business
operations of The Lion Group encompassing steel, retail, property development,
tyre, computer, motor and plantation. He oversees the operation of the Company
and is responsible for formulating and monitoring the overall corporate
strategic plans and business development of the Company. Tan Sri William Cheng
is the President of The Associated Chinese Chambers of Commerce and Industry of
Malaysia and The Chinese Chamber of Commerce and Industry of Kuala Lumpur and
Selangor.
Name : Tan Sri Rafidah Aziz
Designation : Director
Identification
no : 431104-08-5438
Appointment
date : 03/08/11
Address : 15, Jalan Setiamurni 2
Bukit Damansara
50490 Kuala Lumpur Wilayah Persekutuan
Malaysia
Biography : Tan
Sri Rafidah binti Jubur Aziz (born 4 November 1943) is a Malaysian politician
and the current Member of Parliament for the Kuala Kangsar constituency since
1986.
Born
in Kuala Kangsar, Perak, Rafidah was the former Minister of
International
Trade and Industry from 1987 to 2008.
Name : Tan Sri Cheng Yong Kim
Designation : Director
Identification
no : 500202-66-5029
Appointment
date : 16/07/99
Address : 1103, Apartment Desa Kudalari
Lorong Kuda, Jalan Tun Razak
50450 Kuala Lumpur Wilayah
Persekutuan Malaysia
Name : Lee Chaing Huat
Designation : Director
Identification no : 531011-07-5597
Appointment
date : 09/01/08
Address : No. 4, Jalan TR 6/1
Tropicana Golf & Country Resort
47410 Petaling Jaya Selangor Darul
Ehsan Malaysia
Name : Chan Poh Lan
Designation : Company Secretary
Identification no : 560707-08-6078
Appointment
date : 18/04/89
Address : 23, Jalan Cempaka 2
Taman Cempaka
68000 Ampang Selangor Darul Ehsan
Malaysia
Name : Wong Phooi Lin
Designation : Company Secretary
Identification no : 651003-10-6046
Appointment
date : 26/02/04
Address : 68,
Jalan Sri Petaling 1
Bandar Baru Sri Petaling
57000 Kuala Lumpur Wilayah
Persekutuan Malaysia
Staff
employed : 1,800 employees (Subject)
Key Advisors
Auditors : ERNST & YOUNG
Level 23A, Menara Milenium
Jalan Damanlela
Pusat Bandar Damansara
Kuala Lumpur 50490
Malaysia
Composition
Authorized
Capital : MYR 1,000,000,000
No
of shares : 998,133,300 Ordinary Shares /
49,000,000 Preference D Shares / 11,000,000
Preference E Shares / 26,670,000
Preference F Shares / 100,000,000 Preference
G Shares
Share par value :
MYR 1 for Ordinary Share / MYR 0.01 for
Preference D Share / Preference E Share / Preference F Share / Preference G
Share
Issued
capital : MYR 601,866,701
Paid
up capital : MYR 601,866,701
Changed
in capital : The Subject increased its share capital
from MYR 300,000,000 to MYR
1,000,000,000 on 05-12-1996.
How
listed : Full List
Composition
Shareholder
name : LIMPAHJAYA SDN.BHD.
Address : Level 14, Office Tower
No. 1 Jalan Nagasari (Off Jalan
Raja Chulan)
50200 Kuala Lumpur Wilayah
Persekutuan Malaysia
No.
of shares : 473,333,334 Ordinary Shares /
49,000,000 Preference D Shares / 26,670,000
Preference F Shares
Shareholder
name : LION DIVERSIFIED HOLDINGS BERHAD
Address : Level 14, Office Tower
No. 1 Jalan Nagasari (Off Jalan
Raja Chulan)
50200 Kuala Lumpur Wilayah
Persekutuan Malaysia
No.
of shares : 126,666,667 Ordinary Shares /
11,000,000 Preference E Shares / 100,000,000
Preference G Shares
Structure
Name : LION
DIVERSIFIED HOLDINGS BERHAD
Affiliation
type :
Ultimate Holding Company
Address :
Level 14, Office Tower
No. 1 Jalan Nagasari (Off Jalan
Raja Chulan)
50200 Kuala Lumpur Wilayah
Persekutuan Malaysia
Comments : Lion
Diversified Holdings Berhad (LDHB) was incorporated in Malaysia under the
Companies Act, 1965 on 24 March 1970 as a private limited liability company
under the name of Chocolate Products (Malaysia) Sdn Bhd. It was converted to a
public limited liability company under the name of Chocolate Products
(Malaysia) Berhad on 22 December 1981 and assumed its current name on 10
February
2003. LDHB was listed on the Main
Market of Bursa Securities on 11 February
1982.
The company’s new Direct Reduced
Iron (DRI) plant in Banting under Lion DRI Sdn Bhd commenced production of DRI
for making high grade steel in June 2008. The supply of DRI helps to reduce the
dependence on scrap as raw material for steel making by steel mills and enables
the production of high quality steel.
Its computer business undertaken
by the Likom Group of Companies is involved in the provision of integrated
one-stop original equipment manufacturing ("OEM") services for the
production of personal computer casings and enclosures, and assembly of
computer peripherals and electronic components for other segments such as audio
visual equipment, telecommunication, security-alarm and electrical switching
products. The production facilities are located in Melaka in Malaysia
and Mexico, with a sales
representative office in USA to provide customer support services.
LDHB is also involved in property
development via a 35% joint venture high-end condominium development known as
Twins, located in the prestigious residential enclave of Damansara Heights,
Kuala Lumpur, comprising two iconic tower blocks with about 300 residential
units.
Name : LION CORPORATION BERHAD
Affiliation
type :
Intermediate Holding Company
Address :
Level 14, Office Tower
No.
1 Jalan Nagasari (Off Jalan Raja Chulan)
50200
Kuala Lumpur Wilayah Persekutuan Malaysia
Comments : Lion Corporation
Berhad, an investment holding company, engages in the manufacture and sale of
steel products primarily in Malaysia. It offers hot rolled coils, cold rolled
coils, bands, plates, sheets, and iron products. The company is also involved
in the manufacture, distribution, and trading of office equipment, security
equipment, and steel related products; property development activities;
construction and civil engineering works; and general merchant activities. In
addition, it sells commercial vehicles; provides share registration and
secretarial services; and manufactures and markets industrial gases. The
company is based in Kuala Lumpur, Malaysia.
The company is indirectly
majority owned by LION DIVERSIFIED HOLDINGS BERHAD.
Name : LIMPAHJAYA SDN.BHD.
Affiliation
type :
Parent Company
Address :
Level 14, Office Tower
No.
1 Jalan Nagasari (Off Jalan Raja Chulan)
50200
Kuala Lumpur Wilayah Persekutuan Malaysia
Comments :
Investment holding.
Name : MEGASTEEL HARTA (L) LIMITED
Affiliation
type :
Wholly-owned Subsidiary
Address :
Labuan, Sabah
Malaysia
Comments :
To issue and manage bonds pursuant to
its parent company’s debt financing exercise.
Name : SECOMEX MANUFACTURING (M) SDN BHD
Affiliation
type :
Wholly-owned Subsidiary
Address :
Wisma Lion
Kawasan
Perindustrian Olak Lempit
Mukim
Tanjung 12
42700
Banting Selangor Darul Ehsan Malaysia
Comments :
Manufacturing and marketing of
industrial gases.
Name : BRIGHT STEEL SERVICE CENTRE SDN BHD
Affiliation
type :
Sister Company
Address :
Lot 177, Jalan Utas
40000
Shah Alam Selangor Darul Ehsan Malaysia
Comments :
Processing and selling of steel coils
and sheets.
Name : LION TRADING & MARKETING SDN BHD
Affiliation
type :
Sister Company
Address :
Lot 4, Solok Waja Tiga
Kawasan
Perindustrian Bukit Raja
41050
Klang
Selangor
Darul Ehsan
Malaysia
Comments :
Trading and marketing of security
equipment, office equipment and steel related products.
Name : LION STEELWORKS SDN BHD
Affiliation type : Sister Company
Address :
Lot 4, Solok Waja Tiga
Kawasan
Perindustrian Bukit Raja
41050
Klang
Selangor
Darul Ehsan
Malaysia
Comments :
Manufacture and distribution of office
equipment, security equipment and steel related products.
Name : BRIGHT STEEL SDN BHD
Affiliation
type :
Sister Company
Address :
Wisma Lion
Kawasan
Perindustrian Olak Lempit
Mukim
Tanjung 12
42700
Banting Selangor Darul Ehsan Malaysia
Comments :
Manufacturing, sale and distribution of
steel and iron products.
Name : LION PLATE MILLS SDN BHD
Affiliation
type :
Sister Company
Address :
Lot 3916 Kawasan Perindustrian Teluk
Kalong
24007
Kemaman Terengganu Darul Iman Malaysia
Comments :
Manufacturing and marketing of hot
rolled steel plates.
Related
companies and corporate affiliations comments
Other
companies of the Lion Group should be considered affiliates of the Subject
Bank Details
Name
of bank : Malayan Banking Berhad (Maybank)
Address :
Malaysia
Account
details :
Current Account
Name
of bank : Ambank (M) Berhad
Address :
Malaysia
Account
details :
Current Account
Comments :
It is generally not the policy of local
banks to provide credit status information to non related parties, however interested
parties would be advised to consult first with the Subject if banker's
references are required.
Mortgages : Total of Charge: 700,000,000.00
Date
of Creation: 03-01-1997
Name
of Chargee: AMMB INTERNATIONAL L LIMITED Charge Status: PARTLY RELEASED
Total
of Charge: 700,000,000.00
Date
of Creation: 10-03-1997
Name
of Chargee: AMMB INTERNATIONAL L LIMITED Charge Status: UNSATISFIED
Total
of Charge: FOREIGN CURRENCY Date of Creation: 21-07-1999
Name
of Chargee: AMBANK (M) BERHAD Charge Status: UNSATISFIED
Total
of Charge: OPEN CHARGE Date of Creation: 22-01-2003
Name
of Chargee: AMINTERNATIONAL L LTD Charge Status: UNSATISFIED
Total
of Charge: 280,000,000.00
Date
of Creation: 22-01-2003
Name
of Chargee: AMINTERNATIONAL L LTD Charge Status: UNSATISFIED
Total
of Charge: FOREIGN CURRENCY Date of Creation: 27-01-2003
Name
of Chargee: AMINTERNATIONAL L LTD Charge Status: UNSATISFIED
Total
of Charge: 140,000,000.00
Date
of Creation: 23-03-2004
Name
of Chargee: BANK PEMBANGUNAN DAN INFRASTRUKTUR MALAYSIA BERHAD
Charge Status: UNSATISFIED
Total
of Charge: 140,000,000.00
Date
of Creation: 23-03-2004
Name
of Chargee: BANK PEMBANGUNAN DAN INFRASTRUKTUR MALAYSIA BERHAD
Charge
Status: UNSATISFIED
Total
of Charge: OPEN CHARGE Date of Creation: 24-06-2008
Name
of Chargee: AMINTERNATIONAL (L) LTD Charge Status: UNSATISFIED
Total
of Charge: OPEN CHARGE Date of Creation: 30-09-2009
Name
of Chargee: AMINTERNATIONAL (L) LTD Charge Status: FULLY SATISFIED
Total
of Charge: FOREIGN CURRENCY Date of Creation: 30-12-2010
Name
of Chargee: AMINTERNATIONAL (L) LTD Charge Status: UNSATISFIED
Legal Fillings
Bankruptcy
fillings : None reported.
Court
judgements : None reported.
Tax
liens : None reported.
Others : None reported.
Description
Source
of financial statement : Commercial Registry Filings
Financial
statement date : 30/06/10
Type
of accounts : Full audited
Currency : Malaysia, Ringgit (MYR)
Exchange
rate : 1 USD = MYR 3.04 as of 15-02-2012
Summarized Financial Information
|
Consolidation type : |
Consolidated |
Consolidated |
Group Consolidated |
|
Currency : |
Malaysia, Ringgit (MYR) |
Malaysia, Ringgit (MYR) |
Malaysia, Ringgit (MYR) |
|
Denomination : |
(x1) One |
(x1) One |
(x1) One |
|
Date of financial year end : |
30/06/10 |
30/06/09 |
30/06/11 |
|
Length of accounts : |
12 months |
12 months |
12 months |
|
Sale turnover / Income : |
3,532,868,000 |
2,867,662,000 |
3,118,550,000 |
|
Operating profit : |
294,527,000 |
-767,561,000 |
-95,992,000 |
Comments :
The consolidated financial information
above relates to the Subject and its two subsidiaries.
The
group’s consolidated financial information above relates to the Subject’s
Intermediate Holding Company Lion Corporation Berhad and all its subsidiaries
which include the Subject.
Main
activities : The Subject is engaged in manufacturing
& sales of hot rolled coils and cold rolled coils.
The
Subject is the sole manufacturer of hot rolled coils and cold rolled coils in
Malaysia.
The
Subject operates an integrated flat steel mill producing hot rolled and cold
rolled coils located on a 500-acre site in Banting, Selangor with a
built-up
area of 1.3 million square feet. The facility is fully automated using
state-of-the-art Direct Current Electric Arc Furnace - Compact Strip Production
(EAF-CSP) process which incorporates Thin Slab Casting technology developed by
SMS, Germany. It is the only steel mill in the country to use this advanced CSP
technology which enables it to produce high quality steel with significantly
higher production yield and energy savings.
The
Subject is able to produce flat steel products with a capacity of 3.2 million
tonnes of hot rolled coils and 1.45 million tonnes of cold rolled coils per
annum.
The
Subject is part of Lion Corporation Berhad (LCB) which was incorporated in
Malaysia on 27 September 1972 under the Companies Act,
1965
as a private limited liability company under the name of Lion (Teck Chiang) Sdn
Bhd. It subsequently changed its name to Lion Corporation Berhad on 18 May
1981. It was converted to a public company and adopted its current name on 30
May 1981.
LCB
is an investment holding company whose subsidiaries are involved in the
manufacturing and marketing of steel products such as hot rolled coils, cold
rolled coils, bands, plates and sheets; manufacturing, distribution and trading
of office equipment and steel related products; and share registration and
secretarial services.
Product
& services : Cold Rolled Coils
Hot Rolled Coils
Purchases
Local : Yes
International : Asian countries
Sales
Local : Yes
International : Asian countries
Key
events : 3 November 2011
KUALA
LUMPUR: Megasteel Sdn Bhd is believed to be lobbying for a 15%
levy
on steel imports across the board from non-Asean countries, according to
industry sources.
“If
this proposal goes through, it will irreparably damage the (downstream) steel
industry in Malaysia. Why would anyone want to do business in Malaysia?” said
an industry source.
Industry
sources are not happy with Megasteel’s new proposal, which they claim will tax
imports of all steel products, even those not produced by Megasteel.
A
unit of the Lion group’s flagship Lion Corp Bhd, Megasteel is the country’s
sole manufacturer of flat steel products, producing hot rolled and cold rolled
coils.
Bursa
Malaysia-listed Lion Corp owns 79% of Megasteel while another Lion group listed
entity, Lion Diversified Bhd, holds the remaining 21% stake.
To
recap, Megasteel had in May filed a safeguard petition to seek an additional
35% import duty on hot rolled coils (HRC), which would bring the total duty
payable on HRC up to 60%.
The
new proposal of a 15% import duty is not in the nation’s interest, the source
said.
“Almost
every industry uses steel. It is used in the automotive industry, in manufacturing
and construction. Everyone will lose out if this goes through.”
A
player from the steel industry who supports the liberalisation of the steel
industry told The Edge Financial Daily, “Protectionism is very unhealthy. We
must look at the whole value chain, the growth of the whole industry and
protect everyone’s interests. Not just the well-being of one company.”
The
Edge Financial Daily was unable to reach the International Trade and Industry
Ministry for comment on the progress of the discussion on the proposed levy.
Global
conditions of late have been unfavourable to Megasteel, noted an analyst.
“While
iron ore prices have fallen, steel prices have fallen even further. Megasteel’s
costs may have fallen giving them some reprieve but overall, their net margins
would have fallen,” said the bank-backed analyst.
“The
fall in prices has been due to softening demand. China, for example, has been
slowing down its property market, which has in turn reduced appetite for steel
used for construction. Manufacturing has also been slowing down in tandem with
poor global economic conditions.”
He
pointed out that Megasteel continued to make losses despite the lack of
competition due to safeguards by the government and Megasteel’s monopoly.
“Megasteel
has not been profitable even though there has been a 25% levy on HRC, its
primary product. Also, Megasteel is essentially the sole HRC producer in
Malaysia. This could be indicative of its uncompetitive cost structure.
“Furthermore,
Megasteel uses the the electric-arc furnace, which produces lower grade steel
products.
“If
the proposed import tariffs on steel do not go through, Megasteel may not be
able to compete with imports,” noted the analyst.
The
situation is further exacerbated by the fact that Megasteel’s products are
mostly sold in the local market.
An
industry player said: “Nobody wants Megasteel to suffer. We want Malaysia to
have its own steel makers. We just want the industry to be fair. A 15% levy on
all steel imports will cripple the industry. A solution will need to be
discussed across the value chain that can benefit everyone.”
“Unfortunately,
it doesn’t seem like Megasteel is ready to talk,” the industry source added.
Megasteel
is undertaking a RM3.2 billion blast furnace project that will be able to
produce about 2.07 million tonnes of liquid hot metal a year, of which 1.57
million tonnes could be converted into slab for sale on the open market.
“They
are trying to rope in foreign partners and secure a loan from Chinese bankers,
but the economic climate is not conducive,” said an analyst.
If
global economic conditions worsen, Megasteel could be affected by a collapse in
demand for steel, which will drive steel prices down.
“Given
the present situation, unfavourable global economic conditions will have an
adverse impact on Megasteel,” the analyst added.
He
also noted that Megasteel has a high level of debt.
A
summary of Megasteel’s financial information for the year ended June
30,
2010 revealed it had liabilities of RM4.06 billion and RM146.6 million in
accumulated losses.
Meanwhile,
Lion Corp reported a net loss of RM45.1 million for 4QFY11 ended June 30
compared with a net profit of RM60.4 million a year ago.
That
brought full-year net loss to RM234.4 million, more than double
FY10’s
loss of RM112.8 million.
14
September 2011
Govt
mulls assistance for Megasteel
KUALA
LUMPUR: After turning down the Lion Group’s request for safeguards, the
government is now considering proposals to provide alternative assistance to
the group’s steel manufacturing unit, Megasteel Sdn Bhd, as a bolster against
competition from imported hot- rolled coils (HRC).
“We
may help Megasteel in another form. That is still being discussed and is not
yet finalised,” International Trade and Industry Minister Datuk Seri Mustapa
Mohamed was yesterday quoted by Bernama as saying.
However,
Mustapa did not disclose details as to what form of assistance the government
is considering, only saying that the government would look into Megasteel’s
requests and how best to help the group.
The
minister explained that the government was unable to grant
Megasteel’s
request for an additional 35% import tariff on HRCs as it
would
have big implications on upstream and downstream activities as well as
steel-consuming industries like construction.
Mustapa’s
remarks yesterday came a day after Lion group boss Tan Sri William Cheng said
he is considering moving his steel manufacturing operations to Indonesia, which
imposes a 48% duty on HRC imports to safeguard its local industry.
Speaking
at a press conference on Monday, Cheng reiterated his dissatisfaction over what
he maintains is unfair competition from imported HRCs from the region that jeopardised
Megasteel Sdn Bhd’s steel operations.
Cheng
reportedly said he is agreeable to a ceiling price for locally manufactured HRC
if the government is concerned that the Lion group is “making too much profit”
or behaving like a monopoly.
The
tycoon’s remark about moving his steel manufacturing business out of Malaysia
was met with scepticism by industry observers, who point out that the move
would be a mammoth and expensive endeavour to undertake.
Currently,
Cheng is undertaking a RM3.2 billion blast furnace project that will be able to
produce about 2.07 million tonnes of liquid hot metal a year, of which 1.57
million tonnes can be converted to slab for sale on the open market.
Megasteel,
a unit of the Lion group’s flagship Lion Corp Bhd, is the country’s sole
manufacturer of flat steel products producing hot rolled and cold rolled coils.
Bursa-listed
Lion Corp owns 79% equity interest in Megasteel and another Lion group listed
entity, Lion Diversified Bhd, holds the remaining 21% stake. Former international trade and industry minister Tan Sri Rafidah Aziz is the chairman
of Megasteel.
To
recap, in May Megasteel filed a safeguard petition to seek an additional
35%
import duty on HRC which would bring the total duty payable on HRC
up
to 60%.
Megasteel
claimed that rising HRC imports in recent years had harmed the local steel
industry and it pointed out that imports of HRC had been
growing
at faster pace.
According to data from the
Companies Commission of Malaysia, Megasteel
posted
a net profit of RM98 million on revenue of RM3.53 billion for FY10 ended June
30. Its balance sheet shows a deficit of RM146.5 million on its reserves which
could be due to accumulated losses.
In
late August however, the ministry of international trade and industry announced
it had terminated its investigation on imports of HRC, thus bringing an end to
Megasteel’s petition.
Megasteel’s
request for safeguards proved to be controversial and divided the steel
industry. Foreign HRC exporters and local downstream steel players, including
several with Japanese investors, were against the petition.
Market
observers opined that any move to impose additional import duty on HRCs could
cast a shadow on the wellbeing and competitiveness of the entire iron and steel
industry.
Some
observers pointed out that granting the safeguards to Megasteel would
effectively afford “protection” to foreign parties via their equity interest in
the Lion group’s assets.
The
Lion group recently confirmed reports that it is in preliminary talks for a
prospective strategic partnership, but no concrete decision has been made.
The
Lion group’s steel assets, including Megasteel and Amsteel Mills Sdn
Bhd,
have attracted the interest of foreign suitors.
Some
of the names that have cropped up include Taiwan’s largest steel producer China
Steel Corp and China’s second largest steelmaker Baosteel Group Corp.
Property &
Assets
Premises :
The Subject operates from premises
located at the verified heading
address
consisting of production facilities, warehouse, administrative office.
Branches :
None reported.
Other
property : Total Group NBV of property, plant and
equipment as of 30-06-2010 was
MYR 2,566,451,000.
Gross Domestic
Products (GDP) & Economic Overview
Central
bank : Central Bank of Malaysia
Reserve
of foreign exchange & gold : US$ 133.7 billion as of 13 January 2012
Gross
domestic product - GDP : US$ 247.781 billion
GPP
(Purchasing power parity) : US$ 442.01 billion of International
dollars
GDP
per capita - current prices : US$ 8,624
GDP
- composition by sector : agriculture: 9.4%
industry: 40.9%
services: 49.7%
Inflation: 2008:
5.4%
2009: 0.6%
2010: 1.7%
Unemployment
rate: 2008:
3.3%
2009: 3.6%
Public
debt
(General
Government gross debt as a % GDP) : 2008: 42.8%
2009: 55.4%
2010: 54.2%
Government
bond ratings: Standard & Poor's:
A-/Stable/A-2
Moody's rating: A3
Market
value of publicly traded shares : US$420 billion
Largest
companies in the country : CIMB Group Holdings (Banking), Sime
Darby (Conglomerates), Public Bank Berhad (Banking), Maybank (Banking), Tenaga
Nasional Berhad(Utilities), Petronas Chemicals, Maxis Berhad
Trade & Competitiveness Overview
Total
exports : US$210.3 billion
Exports
commodities : electronic equipment, petroleum and
liquefied natural gas, wood and wood products, palm oil, rubber, textiles,
chemicals
Total
imports : US$156.2 billion
Imports
commodities : electronics, machinery, petroleum
products, plastics, vehicles, iron and steel products, chemicals
Export
- major partners : US 15.6%, Singapore 14.6%, Japan 9.1%,
China 8.8%, Thailand 5%, Hong
Kong
4.6%
Import
- major partners : Japan 13%, China 12.9%, Singapore 11.5%,
US 10.8%, Taiwan 5.7%, Thailand 5.3%, South Korea 4.9%, Germany 4.6%, Indonesia
4.2%
FDI
Inflows: 2007: US$8,538 million
2008:
US$7,318 million
2009: US$1,381 million
FDI
Outflows: 2007: US$11,280 million
2008:
US$14,988 million
2009:
US$8,038 million
Best
countries for doing business : 21 out of 183 countries
Global
competitiveness ranking : 26 (ranking by country on a basis of
133, the first is the best)
Country and
Population Overview
Total
population : 28.23 million
Total
area :
329,847 km2
Capital : Kuala Lumpur
Currency : Malaysia Ringgits (MYR)
Internet
users as % of total population : 57.61%
Purchase Term
Local : Prepayment, Bank transfer, Credit up to
120 days
International : L/C,
Prepayment, Cash against document, Credit up to 120 days
Sales Term
Local : Prepayment, Bank transfer, Credit up to
120 days
International : L/C,
Prepayment, Cash against document, Credit up to 120 days
Trade Reference/
Payment
Behaviour
Comments :
As local and international trade
references were not supplied, the Subject's payment track record history cannot
be appropriately determined but based on our research, payments are believed to
be met without delay.
Investigation Note
Sources :
Interviews and material provided by the
Subject
:
Other official and local business
sources
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.54.39 |
|
|
1 |
Rs.87.78 |
|
Euro |
1 |
Rs.71.29 |
INFORMATION DETAILS
|
Report
Prepared by : |
SDA |
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
-- |
NB |
New Business |
-- |
This score serves as a reference to assess
SC’s credit risk and to set the amount of credit to be extended. It is calculated
from a composite of weighted scores obtained from each of the major sections of
this report. The assessed factors and their relative weights (as indicated
through %) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment record
(10%)
Credit history
(10%) Market trend (10%) Operational size
(10%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.