Friday, January 22, 2010

Southern Steel earnings expand on higher demand

PETALING JAYA: Southern Steel Bhd recorded a net profit of RM59.73mil on revenue of RM588.63mil for the quarter ended Dec 31 due to higher steel demand from a recovering economy.

This was a drastic turnaround from a year ago when it posted a loss of RM259.84mil and revenue of RM488.42mil due to poor market conditions and a diminution of inventory values.

For the year ended Dec 31, the company recorded a net profit of RM16.2mil on revenue of RM2.03bil.

“For the year as a whole, 2009 became progressively better as the steel industry recovered from the financial crisis,” it said.

OSK Research Sdn Bhd analysts Ng Sem Guan and Law Mei Chi said in a Jan 20 report that demand for steel was set to surge after the Chinese New Year celebration, driven by real demand and improved buying sentiment.

“We expect steel prices to go up another level by 10% to 15% at end-February on the return of private and public construction, coupled with stocking up activities in anticipation of a potential price increase,” they said.

AmResearch Sdn Bhd analyst Mak Hoy Ken has maintained an “overweight” call on the industry due to its anchor reflationary theme, as steel demand would accelerate on the imminent roll-out of regional infrastructure projects and a weak US dollar.

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