Melewar Industral Group Berhad (Melewar - 3778) had principal activities on manufacturing of CRC steel sheet and steel piping, engineering services as well as investment in Power Generation. Melewar is owned by late founder and chairman Tunku Tan Sri Abdullah ibni Almarhum Tunku Abdul Rahman from the Negeri Sembilan royalty.

Melewar had gone into severe financial condition after it's investment in the Mperial Power Ltd in Thailand had gone sour due to unable to see demand generated from their 160MW electric power plant. The group had went through several restructuring exercise which includes selling it's steel tube operation (Melewar Steel Tube Sdn Bhd) to subsidiary Mycron, settled by issuance of Mycron share at RM 0.44 / share to Melewar. Currently, Melewar hold 71.52% of Mycron.

The current state of steel industry had finally see some light when MITI had started to investigate on imported steel from China, Vietnam and South Korea. Currently, MITI had imposed anti dumping duties on pre-painted, painted, color coated steel coils that is imported from China and Vietnam. How will this play out for a Cold Roll Coil (CRC) player like Melewar ?

Positive on Anti Dumping Duties imposed on Cold Roll Coil 2nd Quarter 2016

The local market demand for CRC is still relatively strong and growing in an annual basis. However, the imported CRC actually play out to be approximately 51% of the supply in Malaysian market. Margin are tightly squeeze when China, Vietnam and South Korea decided to export their excessive CRC production to the nearby neighboring country like Malaysia at a very cheap prices.

Cscsteel Berhad had since filed a petition to MITI in order to start and investigation on the related matter. According to close sources that are familiar with this matter, Cscsteel are at a very favorable position at seeing anti dumping measurement being enforced to protect the local CRC player in the steel industry.

Fundamental Outlook 

Melewar had started to turn around it's operation for FYE 2016 with 2 consecutive quarter in the black. Industry player are positive on the imposition of anti dumping duties on CRC steel sheet, and thus, will see local player rushing in to fulfill the gap left from the CRC import from China, Vietnam and South Korea.

Should we factor in the finalization and implementation of anti dumping on CRC import, Melewar will easily be seeing a 50% increase from the projected annualized EPS of 5 cents, which will come out to 7.5 cents.

Given a PER x10, Melewar had a tendency to trade at RM 0.75.

Currently, Melewar NTA is RM 1.32 per share.

Conclusion
At the current outlook, Melewar is a very interesting counter to be monitored, due to the potential huge vacant supply left by CRC import. Beside that, Melewar power asset sale will also see the group in a better cash position.

Melewar short term target is RM 60, medium/long term at RM 0.80 to RM 1.00.