Published: Wednesday May 7, 2014 MYT 12:00:00 AM Updated: Wednesday May 7, 2014 MYT 6:36:12 AM
Bleeding Megasteel asks for protection
BY JAGDEV SINGH SIDHU
Interview with Tan Sri William Cheng. - SAMUEL ONG / THE STAR
KUALA LUMPUR: Loss-making Lion Corp Bhd’s main subsidiary, Megasteel Sdn Bhd, has petitioned the Government yet again for import duty protection and thinks it may need to wind down operations if it doesn’t get it.
Having asked the Government for a 30% import duty protection recently, Lion Group executive chairman Tan Sri William Cheng (pic) said Megasteel had been loss-making for much of the past decade, as it was unable to compete with cheap imports flooding the market.
“If imports were cut to 2.5 million tonnes a year, then we can turn around in three months,” he told the media at a luncheon yesterday.
“All we need is the Government to put a stop to dumping. If there is no protection, then I will no longer invest a single sen.”
Cheng said Megasteel had been running at about 25% capacity because much of the demand for steel products was being met by cheaper imports.
With demand estimated at between nine and 10 million tonnes, he claimed that 6.5 million tonnes of that was being satisfied via cheaper imported steel, with local steel players supplying only three million tonnes.
He felt imports should cater to about 2.5 million tonnes of the steel demand for the industry to operate at utilisation rates that will allow companies to make a profit.
“Most of us steel companies are now running at capacity utilisation rates of between 20% and 40%,” he said.
Cheng said the current situation could not go on for much longer, as nearly all the steel players were losing money.
As losses mount, he said their loans of RM12.8bil to banks in the country could be at risk. Megasteel owed banks about RM600mil, said Cheng.
He said other steel makers based on product types had also in recent times approached the International Trade and Industry Ministry for import duty protection.
“I know the ministry is sympathetic, but they must take action,” said Cheng.
Lion Corp, also classified as a PN17 company, is working towards its regularisation plan. In the past, it had offered shares to creditors as payment for loans and had even sold profitable companies in other businesses to support its steel-making business.
“We have been disappointed over the last few years, as we sold profitable companies to help our steel business,” he said.
If the Government does not agree to raise import tariffs, then Cheng will contemplate moving operations to Indonesia, where he claims Megasteel will get the equivalent of pioneer status and enjoy higher import duty protection.
Should the Government agree to Megasteel’s request, however, Cheng said he would then start investing in the steel mill.
He said he would invest RM4bil to upgrade the plant in two steps over two years.
I think the % of winning quite high due to the additional 4B investment n if wf gov protection steel ind will make turnard for sure:) "Jiang hai si Lao de la" ^^ welcome back to to Jiang hu Tan Sri:)
only him can be the represent in the country (Ex-chairman of Msia Chinese Chamber/Steel ind major player etc) n has the balls nego seriously wf gov for this time respect u Tan Sri give it final blow n bring back the glory of steel maker ind:)
erm i not really agree wf yr statement..at 1st u hv to see wat is his term if willing to give protection will invest further 4B which do u think other 'Bumi' will do so?beside it is really not fair if compare to other country (Indonesia/Thailand which they all protect their local players wf tax on outside) **Msia 0% tax to outsider which is so stupid cos got chances chop outsider but dunno how to chop..
just sample to u ar do u heard Boss of MMC mention anything when take over Bernas/KTM/Sugar biz??did he came out further investment amt?so situation is diff..there must be a give n take for Chinese deal wf Gov u think really like him ar..
Same tactic as airasia but still will try best focus in Msia still cos at the end Msia still his home n no body like to do so unless someone force to like Robert kuok..n I don't think Msia hv such bullet to bleed further by kicking out local companies due to country high debt lvl..u know now he able offer 4B investment not play play de o..where to find so immediate huge investment from other country at least hv to waste another few mnths or years to find n now he himself offer it so if I were gov am I so stupid till kick the immediate 4B out which can help reduce country debt lvl at least without wasting time look for other investor..anyway just my own view la:)
No matter wat kind of foregin company come to invest still they will ask for protection (0% tax, pinioor status etc) so that is the reason why local company suffer not bcos of cant compete is bcos of one word "FAIR":)
Hahahaha lolll but I got same feel to ytl as well cos quite some time nvr grap projects etc even latest power also lose tender bcos of "FAIR":) if Msia all big gun same time use same trick how do u think Msia look like??lollll~~
this stk seems like gamble game. if gov agree with william cheng, lioncor stk price will up fr 8cts to 30 cts, if gov reject & disagree, stk price will fall down to 4 cts or lower
lioncor paid up capital is around rm1.32 billion, if william cheng invest another rm4 billion, means is around 3 times of the paid up capital. if gov agree, lioncor share price will up back to 20-30 cts?
investor99 : tats the reason some time ppl dont und wat is the real reason n simply say things so dont so get so angry wf it cos they r not in the situation;) anyway for me i wont treat it as gambling but prediction yes (+ve prediction wf the report got improvement etc n the effort make to nego etc better than do nth)
ryan7642: thanks. Current situation is China steel product selling below cost & incluent current steel market. this is not a fair play situation in the competitive sector
Still within expactation which is red color result..anyway I don't think there will be significant impact on it's share price no matter report show red color or green cos is under ctrl by tan Sri..
yea i saw tat n i planing to grap some at 7-7.74 cts cos report is not the major news..the major news which will effect the price significant is from the gov side so have to be patient still..even US market also start protect their own country steel sector by giving high tax rate on outsider players so i think gov will follow the trend soon..
I will choose to hold it tight cos compare to others it is the cheapest n tan Sri is the chairman person to nego wf gov so if any good news it will be win on cheaper share price boosting + PN17 uplift so can consider is win win double booster:) anyway just my point of view only^^
if government giving green light, sure the price fry & fly, if vise versa, the price wil go down 4 cts & lower. & tan sri Will quit local steel industry & move to indo which provide better offer
from wat i know this wk they all fly to China for visiting so let see wat is the outcome after the visiting..for short play lion ind can play for repeat profit ard 0.6-0.65 range..from wat i notice it ad show 2-3 times this range d..
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Posted by nich0las > 2014-05-06 14:46 | Report Abuse
Buy call, Buy call