Hiap Teck Venture Berhad

PETALING JAYA: Steel manufacturer Hiap Teck Venture Bhd is expected to weather near-term challenges and have an improved business outlook over the longer-term.

Major overhang removed for Malaysian #Steel industry? Contrast with most building material prices that has risen substantially over the recent years.

Just on-top of my head, $MASTEEL / 5098 (MALAYSIA STEEL WORKS (KL) BHD), $HIAPTEK / 5072 (HIAP TECK VENTURE BERHAD), $SSTEEL / 5665 (SOUTHERN STEEL BERHAD) and $LEONFB / 5232 (LEON FUAT BERHAD) has growth and/or special-situation factors in play.

PETALING JAYA: Weak steel prices, albeit starting to show signs of recovery, will continue to pose a challenge to Hiap Teck Venture Bhd’s near-term profitability, says Hong Leong Investment Bank (HLIB) Research.

Hiap Teck Venture Bhd has cautioned against a challenging global steel market, particularly in China due to weak domestic demand that is driving increased exports.

KUALA LUMPUR: Faced with a prolonged downtrend in steep prices, Hiap Teck Venture Bhd has turned its focus to streamlining operations and optimising costs.

$HIAPTEK / 5072 (HIAP TECK VENTURE BERHAD)
Research by HLIB
Buy – TP RM0.55

“Longer term prospects remain intact"

While near term earnings will likely weaken (both QoQ and YoY, on the back of weaker steel prices), we remain optimistic on HTVB’s longer term earnings prospects, supported by (i) pending rollout of mega infrastructure projects and robust private sector job flows in Malaysia, (ii) ESSB’s continued efforts in improving its cost competitiveness and utilisation rate at new blast furnace, and (iii) weak demand sentiment for steel products in China may have bottomed. We raise our FY24-26 core net profit forecasts by 18.0%/4.2%/2.2%, mainly to account for (i) higher production volume assumption for ESSB in FY24, and (ii) slightly lower fixed cost assumptions at ESSB in FY25-26 (following recent completion of additional ancillary facilities). Post earnings revision, we maintain our BUY rating on HTVB with a slightly higher TP of RM0.55 based on 7x revised FY25 core EPS of 7.8 sen.

Analyst:
Chye Wen Fei
wfchye@hlib.hongleong.com.my

Titan Trading Notes For Wednesday [3/7/2024]:

$KLSE-KLCI had a brief retracement which led it to close red around the 1597 points region with an overall mixed market sentiment as we saw over 450 counters closing red along with it for the day. Daily trading volume settled around the 5.3 billion mark, which is still a decent sign though.

Main stocks that showed strong buying momentum would be the likes of UUE, VELESTO, HIAPTEK, PWRWELL, EKOVEST, CLOUDPT, WCT, SIMEPROP, MCLEAN, CMSB, IFCAMSC, IJM, SUNWAY, EVERGRN, and SALCON. All of which were able to sustain their rallies throughout the day on the top volumes list.

$HIAPTEK / 5072 (HIAP TECK VENTURE BERHAD) had a huge breakout from its RM 0.46 major resistance and rallied all the way towards the RM 0.49 regions with huge volume and buying momentum here after retesting its RM 0.41+ major support levels just last week.

Looking quite strong here and as long as able to hold above its RM 0.46+ immediate support levels on the daily chart, could continue on towards and beyond the RM 0.49 - RM 0.50+ major resistance levels soon in the coming weeks.

Rising demand for steel due to construction of data centers will most likely be the main catalyst for steel stocks like HIAPTEK. Will be monitoring it closely.

$MCLEAN / 0167 (MCLEAN TECHNOLOGIES BERHAD) since breaking out towards the RM 0.475 regions earlier last week, had been retracing back towards its RM 0.365+ major support levels and formed a good support there.

Today, was able to breakout from its RM 0.40+ major resistance levels and rallied all the way towards the RM 0.45 regions with huge volume and buying momentum here, suggesting a potential uptrend continuation pattern soon.

Will be monitoring MCLEAN closely here.

$FAJAR / 7047 (FAJARBARU BUILDER GROUP BHD) after retracing and consolidating over the past few weeks around its RM 0.47+ major support levels, seems to have formed its higher low region here already and today, was able to breakout towards the RM 0.50+ regions with good volume and buying momentum.

Although wasn't able to close on its intraday high, its closing price of RM 0.49 was still a pretty good sign here. For now as long as able to sustain above its RM 0.47+ main support levels, could continue on to trend up towards and beyond the RM 0.54+ major resistance levels soon.

Will be monitoring FAJAR closely

More Good News on Steel Industry

1. Data centre boom, chip industry expansion expected to boost local steel demand
- Steel consumption is expected to see positive growth this year, reaching 8.3 million tonnes, primarily driven by the construction of data centres. If infrastructure projects like the Penang light rail transit commence, steel demand could approach nine million tonnes.

2. Miti working with construction industry, Works Ministry to ensure more local steel used in govt projects
- The government is exploring ways to enforce greater use of local steel products in government projects. Additionally, a two-year moratorium on approvals for expansion and diversification in the iron and steel industry was implemented in August 2023. This moratorium applies to all inquiries, assessments of current applications, new applications, licence transfers, expansions, regularisations, and diversifications for manufacturing licences in the iron and steel industry.

Companies poised to be benefited: $HIAPTEK / 5072 (HIAP TECK VENTURE BERHAD), $ANNJOO / 6556 (ANN JOO RESOURCES BERHAD), $KKB / 9466 (KKB ENGINEERING BERHAD), $CSCSTEL / 5094 (CSC STEEL HOLDINGS BERHAD), $SENDAI / 5205 (EVERSENDAI CORPORATION BERHAD), CHINWEL, TONGHER, SSTEEL, ASTINO, MASTEEL, TSA, LEFORM, LIONIND, BWYS, LEONFB, TASHIN, YLI, etc.

PETALING JAYA: Hiap Teck Venture Bhd is poised to benefit from the impending rollout of mega infrastructure projects and robust private sector job flows in Malaysia.

$HIAPTEK / 5072 (HIAP TECK VENTURE BERHAD)
Research by HLIB
Buy – TP of MYR 0.52

“Strong earnings recovery”

HTVB’s 3QFY24 core net profit of RM46.2m (3.4x QoQ; 2.3x YoY) took 9MFY24’s total sum to RM78.6m (vs. core net loss of -RM4.0m SPLY). The results surpassed our expectation, accounting for 91.7% of our full-year estimate, due mainly to better-than-expected JV contribution (ESSB). Maintain earnings forecasts for now (with upside bias), pending updates from management, as well as BUY rating with an unchanged TP of RM0.52 based on 7x FY25 core EPS of 7.5 sen. We remain optimistic on HTVB’s earnings prospects, supported by (i) the pending rollout of mega infrastructure projects and robust private sector job flows in Malaysia, (ii) rising capacity utilisation at ESSB’s new blast furnace, which will boost its contribution to HTVB’s bottomline, and (iii) weak demand sentiment for steel products in China may have bottomed.

Analyst(s):
Chye Wen Fei
wfchye@hlib.hongleong.com.my

KUALA LUMPUR: Shares in Hiap Teck Venture Bhd were lifted 2.35% in active trading on Monday following a positive quarterly result.

Things are looking good for steel company Hiap Teck Venture Bhd (HTVB) as various factors are in play to boost its earnings ahead.

$HIAPTEK / 5072 (HIAP TECK VENTURE BERHAD)
Research by HLIB
Buy – TP of MYR 0.52

“Brighter earnings prospects ahead”

We remain optimistic on HTVB’s earnings prospects, supported by (i) the pending rollout of mega infrastructure projects and robust private sector job flows in Malaysia, (ii) rising capacity utilisation at ESSB’s new blast furnace, which will boost its contribution to HTVB’s bottomline, and (iii) weak demand sentiment for steel products in China may have bottomed. We trim our FY24 core net profit forecast by 9.1%, mainly to account for lower downstream EBIT margin and higher finance cost assumptions. FY25 core net profit forecast, on the other hand, is raised by 28.7%, mainly to reflect contribution from ESSB’s expanded capacity. Post earnings revision and roll-forward of valuation base year (from FY24 to FY25), we maintain our BUY rating on HTVB, with a higher TP of RM0.52 based on 7x revised FY25 core EPS of 7.5 sen.

Analyst(s):
Chye Wen Fei
wfchye@hlib.hongleong.com.my

KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB) remains optimistic on Hiap Teck Venture Bhd's earnings prospects, supported by the pending rollout of mega infrastructure projects and robust private sector job flows in Malaysia. 

© New Straits Times Press (M) Bhd

PROVISION OF FINANCIAL ASSISTANCE

@weiwenn928 sir, can you help to check the Shanghai container index again please? I understand it has been climbing up again and now back to almost 2200 after the recent rally and retrace. So far, it seems to be stabilizing at a very high price...

by the way, brilliant read on $HIAPTEK / 5072 (HIAP TECK VENTURE BERHAD)

Quarterly rpt on consolidated results for the financial period ended 31/01/2024

$HIAPTEK / 5072 (HIAP TECK VENTURE BERHAD) - Eastern Steel completes significant expansion milestones, but hit by FOREX losses; Results are NOT AS BAD as the bottomline numbers suggest.

Someone asked me to take a look at Hiaptek recently, saying that the company had just completed a major expansion and is in progress for ramp up, which aligns with what I usually share about when looking for potential investment opportunities.

I've been extra busy lately so I hadn't had much time to dig in details, but let's just go through the recent quarter results and see what's interesting about it.


1. Share of results of JV (from Eastern Steel) hits bottomline at RM 16.6mil loss, but this is mainly just unrealized FOREX losses.
2. In reality, Eastern Steel recorded a positive operating profit of around RM 60mil. Excluding the FOREX losses, it would have been a RM 16mil profit share of JV instead.
3. Eastern Steel had just ignited its 2,000,000 MT blast furnace in August and started production in October, raising its capacity from 700k MT to 2700kMT, a near fourfold increase.
4. Management expects this to contribute substantially to the revenue, together with notable cost savings from greater economies of scale.
5. They also expect significant future contribution and positive outcomes from the JV to the group.

6. High priced inventory in FY22 had been mostly digested, with current inventory level at near RM 500mil.

7. Their core divisions of trading and manufacturing are reasonably profitable. Demand is there but prices are not great. Main manufactured products are steel pipes, hollows, and scaffolding.

8. I like that their products are sold not just domestically but overseas as well.

9. I don't like that they only hold a minority stake in Eastern Steel. (In general, I don't like listed companies owning minority stakes, especially when it's substantial to the business).

At a glance, it seems like things are going well for them-- with all segments having core operating profits. Steel prices have stabilized compared to 1-2 years ago, and this could help them with maintaining profitability. The expansion is completed at a right timing, I think, because I estimate that the next leg of commodities to be here soon.
That being said, I'm not an expert of commoditized steels per se, so I'm not sure how the whole industry is like. My understanding is that the global supply of steel far outmatches the demand. but I could be wrong. It's worth noting that Eastern Steel is majority owned by China-based companies.

The recent share price weakness could be due to the wrong "perception" that their Q1 performance was a drastic RM 9mil LAT (from a RM 40+mil profit QoQ), which in reality was mainly unrealized forex losses in a share of JV.

The COO had just bought 2 mil units from the open market recently, at 39.5sen a share.

It could be worth exploring deeper into the company, but I haven't done any further due diligence. Maybe you could take it further.

DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : Dealings Outside Closed Period

@portoftheyear 2024

$RGB / 0037 (RGB INTERNATIONAL BHD) 50%
$SYSCORP / 5173 (SHIN YANG SHIPPING CORPORATION BERHAD) 35%
$HIAPTEK / 5072 (HIAP TECK VENTURE BERHAD) 25%
$MINDA / 5166 (MINDA GLOBAL BERHAD) 50%
$CATCHA / 0173 (CATCHA DIGITAL BERHAD) 50%

OTHERSHIAP TECK VENTURE BERHAD ("HTVB" OR THE "COMPANY")

Share Subscription Agreement ("SSA") entered into between Shanxi Jianlong Industry Company Limited, Jianlong Holdings Sdn. Bhd., HTVB, Chinaco Investment Pte. Ltd., (Jointly known as "Subscribers") and Eastern Steel Sdn. Bhd. ("ESSB").

$HIAPTEK / 5072 (HIAP TECK VENTURE BERHAD)

The price trending upward and currently trade at discount area showing good sign of entry. This counter have outperformed QoQ result. Reducing significant loss from -49mil to only -9mil. The momentum indicator showing sign of reversal as seen from MACD and Stochastic.

Change in Audit Committee - DATO OOI LAY SEE

Change in Risk Committee - DATO OOI LAY SEE

Change in Nomination and Remuneration Committee - DATO OOI LAY SEE

Change in Risk Committee - MR CHEN THIEN YIN

OTHERSHiap Teck Venture Berhad ("HTVB" or "the Company")
The Combination of Nomination Committee and Remuneration Committee into one committee to be known as Nomination and Remuneration Committee.

Change in Boardroom - MR LEE CHING KION

Change in Nomination and Remuneration Committee - MR LEE CHING KION

Change in Audit Committee - MR LEE CHING KION