Perwaja eyes Chinese firm's expertise to rejuvenate financials


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KUALA LUMPUR (Apr 4): Loss-making Perwaja Holdings Bhd may rope in China-based alloy manufacturer Zhiyuan Investment Group Co Ltd as a major shareholder, a move deemed crucial to rejuvenate the Malaysian steel product manufacturer's financials.

The Edge Malaysia business and investment weekly (Edge Weekly), in its latest April 6 - 12 issue,reported that Kinsteel Bhd, which is Perwaja's (fundamental: 0; valuation: 0.3) single-largest shareholder, was in talks on a proposed placement of Perwaja shares to Zhiyuan.

Edge Weekly quoted Kinsteel (fundamental: 0; valuation: 1.2) managing director Tan Sri Pheng Yin Huah as saying : “We need a professional partner who can bring operational changes to Perwaja. We are still in discussion on the share placement. If Zhiyuan emerges as the largest shareholder, it is actually good for Kinsteel.”

Pheng told Edge Weekly in an interview Zhiyuan was expected to upgrade Perwaja's Kemaman plant. 

Kinsteel owns 31.25% in Perwaja, which posted a net loss of RM114.15 million during the first half ended December 31, 2012. 

“One thing is for sure, we (Kinsteel) will stay on in Perwaja. But it doesn’t really matter who will eventually control Perwaja. For us, it is more important to bring in a new investor who can revive the Kemaman plant.

“Negotiations with Zhiyuan are progressing well. We are hopeful and confident that Perwaja will become a brand new company. This time, with the Chinese firm, I think we are on the right path,” Pheng said.

Yesterday, Kinsteel shares fell 0.5 sen or 4% to close at 12 sen for a market capitalisation of RM125.9 million. The stock had fallen 20% this year compared to the FBM KLCI's 4% gain. 

Perwaja shares ended unchanged at eight sen for a market value of RM44.8 million. The stock had advanced 60% this year. 

For a better understanding on Kinsteel's plan for Perwaja, kindly pick up and read the latest issue of Edge Weekly.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)