Its integrated steel mill in Kemaman, Terengganu, is currently undergoing a trial-run which should start producing before year end (2014).
Revenue and profit contribution from the plant will kick-in 2015.
The integrated steel mill is a joint-venture project between Hiap Teck and China Shougang International Trade and Engineering Corp. Shougang is also substantial shareholder of Hiap Teck, with an equity stake of 9.09%.
Hiaptek’s main earnings contributor will be its manufacturing arm.
The plant will likely have 700000 slab production capacity. Expects the plant to incur start up losses in the first and second quarters in FY2015 possibly break even in 3Q and report profit by 4Q.
Expect the initial losses to be around rm15 million.
It has taken step toward iron ore mining by subscribing to a 55% stake in Vista Mining Sdn Bhd.
Management expects the operation in Bukit Besi to start in early 2015. It would help the company to sustain the war material supply to its blast furnace plant and enable cost savings to improve the plant’s profit margin.
Going forward, industry observers believe domestic demand will remain buoyant on the back of existing and upcoming construction and infra projects. This is despite expectations that international prices of steel will remain under pressure on the back of a moderating global economic growth.
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