Friday 29 Mar 2024
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KUALA LUMPUR (March 16): Sino Hua-An International Bhd — which produces metallurgical coke and its by-products — announced that the temporary closure of its subsidiary Linyi Yehua Coking Co Ltd in China is expected to have a material impact on its financial health for the year ending Dec 31, 2015 (FY15), should the situation be extended over a period of time.

In response to a query by Bursa Malaysia this evening, Sino Hua-An said based on the latest audited financial statements, Linyi Yehua contributed almost 100% to the group’s financial results.

“In this respect, given the temporary shutting down of production in the above-mentioned subsidiary, the financial and operational impact, as well as the expected loss to the Sino Hua-An Group, is envisaged to be material in FY15, should the adverse situation be prolonged over a protracted period of time,” the group said in a statement.

However, Sino Hua-An did not provide an estimate on the expected losses.

Sino Hua-An said it is still awaiting the results of an assessment by China’s Ministry of Environmental Protection (MOEP), adding that it is not able to “ascertained with certainty” on the duration of the temporary closure.

To recap, Sino Hua-An had on March 11 (last Wednesday), announced it is temporarily shutting down its metallurgical coke plant in Linyi, China, as the MOEP is embarking on a tough stance to address persistently heavy pollution in the city.

Sino Hua-An (fundamental: 1.85; valuation: 1.2) said all steel mills and coke producers, regardless of their standards of compliance, have been instructed to temporarily stop production, until the MOEP concludes its assessment.

Sino Hua-An is controlled by its executive chairman Tunku Naquiyuddin Tuanku Ja’afar, the son of the late Negri Sembilan ruler. He owns a 28.21% stake in Sino Hua-An, held via Syarikat Pesaka Antah Sdn Bhd and other various vehicles.

Sino Hua-An’s second largest shareholder is its managing director Liu Guo Dong — a Chinese national who holds a 15.86% stake via UOB Kay Hian Nominees (Asing) Sdn Bhd.

The group produces and sells metallurgical coke and its by-products, such as coal gas, tar, ammonia sulfate, crude benzene, coal slime and middlings.

Currently, Sino Hua-An produces 1.8 million tonnes of metallurgical coke annually.

The stock closed 7.69% lower at 12 sen today, giving it a market capitalisation of RM134.68 million.

(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)

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