Business

Published: Thursday July 5, 2012 MYT 8:38:00 AM

RHB Research indicative fair value for Melewar Industrial at 43 sen


KUALA LUMPUR: RHB Research Institute has an indicative fair value of 43 sen for Melewar Industrial based on 0.2 times book value of RM2.15, in line with its historical average during a down cycle.

It said on Thursday Maegma Steel, a sister company of Melewar, is proposing a new RM4.5bil fully-integrated HRC mill in Lumut, Perak.

RHB Research said the mill was slated to start in mid-2015 where phase 1A of the mill will have an annual production capacity of 1.5mil tonnes, doubling to 3.0 million tonnes by 2017 under phase 1B and will mainly cater the demand for high quality HRC. “Melewar's domestic steel pipe sales have remained weak as water-related projects have yet to get off the ground in a major way on the back of the continued stalemate in the restructuring of the water sector in the Klang Valley. Accordingly, utilisation rates at Melewar's steel pipe plant are sub-optimal at about 40%,” it said.

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