MALAYSIA Steel Works (KL) Bhd (Masteel) (5098) is confident of seeing profits again as steel prices have improved and export orders picked up.
"We posted RM8 million in losses last year because prices were lower and there was no margin. Even so, we continue to give out dividends to our shareholders because our cash position is still strong," chief executive officer and managing director Datuk Seri Tai Hean Leng said.
Among Masteel's institutional investors which benefit from the dividend payout are Lembaga Tabung Haji and Felda Group of Companies.
"This year, demand orders for steel bars has started to pick up. We expect to export 10 per cent more finished products to Australia and New Zealand," Tai told a press conference in Petaling Jaya, Selangor, yesterday.
OSK Research two weeks ago cut its Masteel call from a "Buy" to "Neutral" on rising iron ore prices and the impending price increase for natural gas. It said the mismatch between high material cost and lower average selling price looked set to crimp steel millers' margin in the second half of the year.
In response, Tai said the downgrade was not justified.
"The price spike in iron ore has no effect on our profit margin because we use steel scrap. Also, natural gas only constitutes 1 per cent of our direct costs. We only use natural gas in re-heating.
"The iron ore and steel scrap pricing work on different dynamics. We don't face margin squeeze," he said.
On another front, Masteel said it is close to completing its sale of more than half of its biotechnology unit to the Belgium-based IBA Molecular for RM5 million.
The fully-owned unit, Bio Molecular Industries Sdn Bhd (BMI), makes cancer markers, which are fluids detectable by scans used to monitor the treatment of cancer.
"The 55 per cent stake sale to IBA Molecular will help us reduce operational risks. They will take over the RM10 million loan guarantee on the FDG-producing equipment," Tai said.
"It is better to be a supporting player in a growing business," he added.
Three years ago, Bio Molecular and the Brussels stock exchange-listed IBA Molecular set up a RM40 million facility to produce fluorodeoxyglucose (FDG) in Sepang, Selangor. FDG is used as a cancer marker.
"We posted RM8 million in losses last year because prices were lower and there was no margin. Even so, we continue to give out dividends to our shareholders because our cash position is still strong," chief executive officer and managing director Datuk Seri Tai Hean Leng said.
Among Masteel's institutional investors which benefit from the dividend payout are Lembaga Tabung Haji and Felda Group of Companies.
"This year, demand orders for steel bars has started to pick up. We expect to export 10 per cent more finished products to Australia and New Zealand," Tai told a press conference in Petaling Jaya, Selangor, yesterday.
OSK Research two weeks ago cut its Masteel call from a "Buy" to "Neutral" on rising iron ore prices and the impending price increase for natural gas. It said the mismatch between high material cost and lower average selling price looked set to crimp steel millers' margin in the second half of the year.
In response, Tai said the downgrade was not justified.
"The price spike in iron ore has no effect on our profit margin because we use steel scrap. Also, natural gas only constitutes 1 per cent of our direct costs. We only use natural gas in re-heating.
"The iron ore and steel scrap pricing work on different dynamics. We don't face margin squeeze," he said.
On another front, Masteel said it is close to completing its sale of more than half of its biotechnology unit to the Belgium-based IBA Molecular for RM5 million.
The fully-owned unit, Bio Molecular Industries Sdn Bhd (BMI), makes cancer markers, which are fluids detectable by scans used to monitor the treatment of cancer.
"The 55 per cent stake sale to IBA Molecular will help us reduce operational risks. They will take over the RM10 million loan guarantee on the FDG-producing equipment," Tai said.
"It is better to be a supporting player in a growing business," he added.
Three years ago, Bio Molecular and the Brussels stock exchange-listed IBA Molecular set up a RM40 million facility to produce fluorodeoxyglucose (FDG) in Sepang, Selangor. FDG is used as a cancer marker.
