CRC - MYCRON Steel Berhad

MYCRON STEEL BERHAD
A MELEWAR STEEL COMPANY
PRESENTATION CONTENTS
1. Corporate Information
2. Operations
3. Financials
4. Business Outlook
MAJOR SHAREHOLDERS
2 5 J u ly 2 0 0 6
N o .S h a re s
S h a re
S h a re h o ld e rs
(M i l l i o n )
h o ld in g
M e l e w a r I n d u str i a l G r o u p B h d
9 7 .5 0
5 4 .5 %
M e l e w a r E q u i ti e s (B V I ) L td
9 .3 4
5 .2 %
M a la y sia n A ssu ra n c e A llia n c e B h d
5 .5 0
3 .1 %
P e rm o d a la n N a sio n a l B h d
5 .4 5
3 .0 %
E m p lo y e e s P ro v id e n t F u n d B o a rd
5 .4 5
3 .0 %
1 2 3 .2 4
6 8 .8 %
5 5 .7 6
3 1 .2 %
1 7 9 .0 0
1 0 0 .0 %
T o ta l B u m i p u tr a & G o v e r n m e n t
F re e F lo a t
T o ta l P a i d U p C a p i ta l
BOARD OF DIRECTORS
Seated from left to right
Tunku Dato’ Ya’acob bin Tunku Abdullah
(Non-Independent Non-Executive Director)
Standing from left to right
Chan Sang Whye
(Executive Director / Chief Operating Officer)
Tunku Dato’ Seri Iskandar bin Tunku Abdullah Dato’ Zulkifly @ Sofi bin Haji Mustapha
(Non-Independent Non-Executive Director)
(Non-Independent Non-Executive Chairman)
Azlan bin Abdullah
(Executive Director / Chief Executive Officer)
Dato’ Abu Talib bin Mohamed
(Independent Non-Executive Director)
Lim Kim Chuan
(Non-Independent Non-Executive Director)
Dato’ Narendrakumar Jasani a/l Chunilai Rugnath
(Independent Non-Executive Director)
Paul Chan Wan Siew
(Independent Non-Executive Director)
MANAGEMENT STAFF
Azlan bin Abdullah
Chief Executive Officer
Education :
• BSc (Buss Admin) -Trinity Univ, USA
• MBA – Morehead State Univ, USA
Experience :
• 13 years in senior banking positions with
Citibank, UAB & BOC
• 7 years as MD of Precision equipment manufacturer
• 4 years in steel industry
Chan Sang Whye
Chief Operating Officer
Education :
• Fellow – ACCA, UK
• Fellow – ICSA, UK
Experience :
• 10 years Public & Internal Auditing
• 20 years Steel Industry Operations
Wong Yeap Min
Chief Financial Officer
Education :
• Fellow - CIMA, UK
• Fellow - ACCA,UK
Experience :
• 8 years KPMG, 10 years Financial Mgt
• 12 years Corporate Planning & General Mgt
OPERATIONS
COMPANY BACKGROUND
•
Mycron Steel Berhad was
listed on Bursa Malaysia in
June 2004.
•
Core activity is the production
of Cold Rolled Coil (CRC) steel
sheets (through 100% owned
Mycron Steel CRC Sdn Bhd).
•
Mycron Steel CRC Sdn Bhd
started production in June 1990.
•
First CRC manufacturer in
Malaysia.
•
Attained SIRIM ISO 9001 in
1996.
•
Manufacturer of highest quality
Malaysian CRC.
Cold Rolled Coil Factory, Shah Alam
Production Facilities
Location : Lot 717, Jalan Sungai Rasau,
Section 16, 40200 Shah Alam, Selangor
Continuous Pickling Line
Hitachi 6-High Cold Reduction
Mill
Electrolytic Cleaning Line
Batch Annealing Furnace
Recoiling Line
Land
: 781,423 sq.ft. (17.94 acres)
Built-up area
: 307,507 sq.ft.
Production Capacity : 15,000 mt per month
180,000 mt per annum
WHAT DOES MYCRON DO?
HOT ROLLED COILS
COLD ROLLED COILS
Thick Steel Sheet (1.7 to 3.5mm)
Thin Steel Sheet (0.3 to 2.5mm)
APPLICATIONS OF COLD ROLLED COIL SHEETS
Vehicle
bodies
Consumer
Goods
Electrical
Pipes/Tubes
components
Office
Furniture
Steel Drums
for Palm Oil
& Petroleum
Home
Furniture
COLD ROLLED COIL DIVISION - CUSTOMERS
S te e l S tr a p p i n g s
1 ,7 4 8 M T
6%
S te e l G a l v a n i si n g
4 7 M T 0 .0 2 %
F u r n i tu r e M a n u fa c tu r e r s
1 ,1 7 9 M T
4%
M YC R ON S TE E L
C a p a c i ty : 4 5 , 0 0 0 M T / Q 1 2 0 0 6
C u r r e n t P r o d u c ti o n :
2 9 ,5 0 2 M T / Q 1 2 0 0 6
C a p a c i ty U ti l i sa ti o n : 6 6 %
P i p e M a n u fa c tu r e r s
3 ,9 0 3 M T
13%
F u r n i tu r e & E l e c tr i c a l
M e l e w a r I n d u str i a l G r o u p B h d
5 ,3 9 3 M T
18%
S te e l C e n te r s
1 0 ,0 6 9 M T
34%
N.B. Unlike long-product
steel manufacturers, Mycron
has ZERO exposure to the
domestic construction
sector.
A u to & E l e c tr i c a l
D ru m
5 ,6 9 4 M T
19%
1 ,4 6 9
O th e r s
MT
5%
P a l m O i l , P e tr o l e u m
RAW MATERIAL SUPPLIERS
Manufacturing Cost Structure
Raw Materials - Hot Rolled Coil (HRC)
Manufacturing & Overheads Cost
Transportation Cost (Domestic)
Manufacturing & Delivery Cost
% Cost
87%
12%
1%
100%
• HRC constitutes 87% of total production cost.
• 40% HRC purchased from MegaSteel because of import
restrictions imposed by MITI. MegaSteel HRC is lower grade
quality (i.e. made from scrap steel).
• 60% HRC imported from JFE, Japan. Imported HRC is higher
quality (i.e. made directly from smelted iron ore).
• MegaSteel’s HRC prices (to CRC manufacturers) are now
generally in line with international prices. Used to cost
substantially more.
• Currently 100% of CRC output is sold in Malaysia.
CRC MANUFACTURING PROCESS
1. Steel sheet raw materials are delivered
in the form of Hot Rolled Coils (HRC).
2. Steel sheets are cleaned by
passing through a Continuous
Pickling Line (Acid Cleaning).
3. Steel HRC sheets are passed
through the Cold Roll Mill (CRM)
rollers that squeezes the steel into
thinner sheets (CRC) under high HRC
pressure.
This process is repeated until the
appropriate thickness is attained.
Cold Roll Mill
CRC
CRC MANUFACTURING PROCESS
4. The CRC are cleaned in an ECL (Electrolytic
Cleaning Line) depending on customer needs.
They are then stacked on top of one another in
the Batch Annealing Furnace, and for several
days, are heated to return the mechanical
properties back to the stressed steel.
Batch
Annealing
Furnace
Cold Roll Mill (Skin Pass Process)
5.The CRC is then passed
through the Cold Roll Mill
(CRM) again, to even out any
warps in the steel (Skinpass
Process).
6. The CRC are oiled, recoiled and
sealed for rust protection, for
delivery to customers.
Rough CRC
Smooth CRC
HOT ROLLED COILS (FROM SUPPLIERS)
CONTINUOUS PICKLING LINE - EXIT
CONTINUOUS PICKLING LINE - ENTRY
COLD REDUCTION MILL (Sheet compression)
ELECTROLYTIC CLEANING LINE
H2 ANNEALING FURNACES (Heating)
H2 ANNEALING FURNACES (Loading)
COLD REDUCTION MILL (Skinpass Process)
ELECTROSTATIC OIL COATER
PACKING
RECOILING LINE – Exit Tension Reel
CRC FINISHED GOODS STORE
FINANCIALS
STEEL PRICE CHART
Since mid-2005 prices
corrected substantially
(-US$ 170/MT) as China
became steel exporter.
800
CRC & HRC INTERNATIONAL PRICE
600
CRC
500
400
Asian
financial
crisis
Since 2002 prices increased
sharply due to demand surge
by China and weakening US$.
HRC
300
200
100
Spread
Over this 10 yr period, the HRC and CRC Spread, remained stable at ≈US$ 100 /MT.
Whilst HRC manufacturers’ margins are affected by market price fluctuations, CRC
manufacturers’ margins are very stable.
HRC price movements are always passed on to customers.
20
06
20
05
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
0
19
96
US$ / MT
700
FINANCIAL CHARTS
400
MYCRON SALES, PBT & PAT
RM mil
350
Sharp increase in sales
caused by sharp rise in price
of CRC.
300
250
200
Profits affected
by inventory
loss (FY 2006)
150
100
50
Profits are very stable (Avg PAT : RM 30mil)
Tax charge = Nil
up to FY 2001
0
-50
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Sales
203
192
204
160
197
182
160
201
270
357
325
PBT
15
12
15
4
37
30
19
34
33
36
-15.5
PAT
15
12
15
4
37
30
38
24
24
26
-12.2
y /e 3 1 J a n u a ry
IN C O M E
STATEM ENT
G ro ss R e v e n u e
2003
R M '0 0 0
♥
C o st o f S a le s
G r o s s P r o fi t
O th e r I n c o m e
2004
R M '0 0 0
2005
R M '0 0 0
2 0 1 ,0 8 5
2 6 9 ,5 7 7
3 5 7 ,2 8 4
(1 6 2 , 7 4 3 )
(2 3 1 , 9 7 8 )
(3 0 9 , 8 7 7 )
3 8 ,3 4 2
3 7 ,5 9 9
4 7 ,4 0 7
1 ,2 2 6
796
672
2006
R M '0 0 0
Q 12007
R M '0 0 0
3 2 5 ,4 6 1 Ω
(3 3 0 , 9 6 3 )
4 3 ,3 8 2
(3 8 , 7 6 0 )
(5 , 5 0 2 )
349
4 ,6 2 2
160
D i str i b u ti o n C o st
(2 , 6 8 2 )
(1 , 8 9 3 )
(1 ,7 7 7 )
(1 , 3 4 8 )
(2 6 7 )
A d m in C o st
(2 , 9 9 2 )
(1 , 9 5 0 )
(8 ,7 2 0 )
(5 , 9 1 7 )
(6 8 8 )
F in a n c e C o st
-
(1 , 8 9 5 )
(1 ,9 1 4 )
(3 , 1 4 1 )
(4 3 8 )
O th e r E x p e n s e s
-
-
-
-
(6 8 )
3 3 ,8 9 4
(9 , 9 4 9 )
3 2 ,6 5 7
(9 , 0 7 9 )
3 5 ,6 6 8
(9 , 5 4 4 )
(1 5 , 5 5 9 ) ♣
3 ,3 5 9
3 ,3 2 1
940
2 3 ,9 4 5
2 3 ,5 7 8
2 6 ,1 2 4
(1 2 , 2 0 0 )
2 ,3 8 1
P r o fi t B e fo r e T a x
Tax
P r o fi t A fte r T a x
♪
♥ Gross Revenue has grown strongly with the increase in HRC prices.
Mycron has passed on the price increase of raw materials to customers.
Ω Since mid-2005 (FY 2006), HRC & CRC prices have fallen.
♪ PBT has been strong for the past 3 years (avg. RM 34 mil /year).
♣ PBT loss of RM 15.6 mil was due to the write down in inventory values following
the fall in international HRC prices. Mycron has reduce HRC cost to US$ 445 /MT.
This loss is a one-time loss if HRC prices stabilise at this level.
31 January
BALANCE SHEET
Fixed Assets
Deferred Tax Asset
Deferred Tax Liabilities
Current Assets
2003
RM'000
2004
RM'000
2005
RM'000
2006
RM'000
128,304
126,879
127,491
185,334
7,874
0
0
4,700
0
108,261
(1,007)
90,247
(8,802)
(20,010)
152,191
139,814
(79,917)
(48,704)
(81,817)
Current Liabilities
(9,889)
Net Current Assets
98,372
10,330
103,487
57,997
NET ASSETS
234,550
136,202
222,176
228,021
Share capital
60,000
60,000
179,000
179,000
14,919
14,919
Share Premium Account
Revaluation Reserve
♥
♪
30,575
Retained Profits
174,550
76,202
28,257
3,527
SHAREHOLDER FUNDS
234,550
136,202
222,176
228,021
♥ Mycron has adopted international Financial Reporting Standards (FRS) for FY 2006,
and this has resulted in an fixed asset revaluation surplus of RM 30.6mil.
♪
Drop in Current Assets due to write-down in value of inventories.
OPERATING MARGINS
y/e 31 January
Avg.2002-05
RM mil
2002
RM mil
2003
RM mil
2004
RM mil
2005
RM mil
2006
RM mil
Sales
160.2
201.1
269.6
357.3
325.4
247.0
Operating Cost
131.2
158.0
226.0
308.2
311.7
205.8
EBITDA
29.0
43.1
43.6
49.2
13.7
41.2
TONNAGE ('000 MT)
121.4
142.2
154.1
154.5
118.2
Capacity Utilisation
67%
79%
86%
86%
66%
79%
Op.Cost (RM /MT)
1,081
1,111
1,466
1,994
2,637
1,413
EBITDA (RM /MT)
239
303
283
318
116
18.1%
21.4%
16.2%
13.8%
4.2%
EBITDA / Sales
♣
♣
♥
143.1
286
♦
17.4%
Drop in sales tonnage due to customers with-holding orders to reduce inventories,
in anticipation of further CRC price falls in 2005. Customers inventory levels are at
minimum levels, and orders have picked-up since Q1 2006.
♥ Lower margin per tonne (RM 116 /MT) due to Cost of Sales at historic price.
With write-down in values of inventories at year-end, FY 2007 margins will better
reflect operating profitability (should be similar to pre-2006 margins).
♦
If no major HRC price movements, profits for FY 2007 will return to pre-2006 levels.
Average EBITDA = 286 RM /MT.
DIVIDEND POLICY
(%) DIVIDEND PAID
Pre-IPO payout
180%
1.8
1.6
1.4
Dividend
Policy
Payout
Ratio =
25% PAT
1.2
1
0.8
0.6
0.4
20%
20%
20%
20%
0.2
7%
0
2000
2001
2002
2003
2004
2005
0%
2006
BUSINESS
OUTLOOK
STEEL CONSUMPTION (Long & Flat Products)
Per Capita Steel Consumption - kg/per annum
kg
965
974
1000
900
800
700
600
MALAYSIA
Indo Phil Viet Thai
Korea
70
KOREA
Taiwan
38
TAIWAN
Singapore
25
Malaysia
197
300
0
THAILAND
329
400
100
VIETNAM
SINGAPORE
500
200
PHILIPPINES
773
The Future for
Malaysian
Steel is Bright.
INDONESIA
Source : MISIF 2004
• Malaysia consumes 329 kg of steel per capita annually.
• As Malaysia’s development continues, demand for steel will grow.
• MISIF forecasts long-term demand growth of 6.0% per year.
DOMESTIC MARKET
♥Mycron supplies 1/3rd of
Malaysia’s domestic CRC
needs (OrnaSteel 2/3rd).
♫Although AP’s are
Mycron
OrnaSteel
MegaSteel
Market
Share
♥ 12%
27%
♠ 1%
40%
♫ 60%
100%
Estimated Tonnage
MT/year
MT/month
116,658
9,722
259,200
21,600
10,000
833
385,858
32,155
574,142
47,845
960,000
80,000
restricted, Malaysia imports
Imports
60% of its CRC needs
(mostly high-end quality
steel).
♠MegaSteel
Started production Q1 2006
Announced Capacity : 1,300,000 MT/year
Expected Max. Production : 480,000 MT/year
Output Quality : Low-end CRC. Focused on pipe / tube use.
Made from own HRC (scrap based steel)
MYCRON STRATEGY
Mycron already producer of high-end quality CRC (for drum, electrical, auto
component quality). Will move further up-market (i.e. auto bodies, roofing, etc)
using higher quality imported HRC, via upgraded facility (ready by end-2007).
MegaSteel (with support from OrnaSteel & Mycron) is lobbying MITI to protect
the domestic CRC market, by further restricting CRC imports.
HRC is a protected market in Malaysia. CRC will be protected too.
PLANT UPGRADE & EXPANSION
•
Embarking on plant upgrade and expansion. Capex: RM 120m.
•
Installation of new facilities –Tension Leveller, Skinpass Mill
and additional Annealing equipment. Completion: End 2007.
•
Upgrade will raise quality of high-end CRC (=better margins).
•
Capacity increases
from 180,000 MT/yr
to 260,000 MT/yr
(+ 80,000 MT /yr)
or +45%
UPGRADE P&L
2002
y/e 31 January
2003
2004
2005
TONNAGE ('000 MT)
121.4
142.2
154.1
154.5
118.2
EBITDA (RM mil)
29.0
43.1
43.6
49.2
13.7
EBITDA (RM /MT)
239
303
283
318
116
Average EBITDA 2002-2005 (RM /MT)
•
Profit After Tax
increase due to
the plant upgrade
& expansion is
estimated to be
RM 16.6 mil /yr
2006
Avg Op.Cost (RM /MT) 1,413
Savings 4.0%
EBITDA Plant Upgrade (RM /MT)
Plant Upgrade Additional Tonnage (MT /year)
286
57
342
Payback
(yrs)
80,000
EBITDA Plant Upgrade (RM mil /year)
27.4
4.4
PAT after Depn. Interest & Tax (RM mil /year)
16.6
7.2
INVESTMENT IN PMP GALVANIZERS SDN BHD
•
Mycron purchased 20% in PMP Galvanizers Sdn Bhd.
•
PMP is subsidiary of Multi Resources Holdings Sdn Bhd, (in
Kuching, Sarawak) which manufactures roofing products like
roofing truss, colour coating and roofing profiles, for export to
Australia, New Zealand, Middle East and South East Asia.
•
PMP is in the midst of installing a RM85 million CRC
galvanising plant (Capacity = 150,000 MT/year).
•
Expected to be commissioned by August 2006.
•
PMP has signed an off-take agreement to buy up to 75,000
MT/year of CRC upon completion of Mycron’s plant upgrade
and expansion (Expanded Plant capacity= 80,000 MT/yr).
•
Win-win for both :
PMP has a regular supply of high quality CRC.
Mycron is guaranteed an off-take for the added capacity.
TECHNICAL SERVICE AGREEMENT WITH
JFE JAPAN
•
Signed in April 2006.
•
JFE to provide technical assistance in producing
thin-gauge CRC (<0.3mm).
•
To enable Mycron to penetrate the roofing and auto
industries.
•
Involves secondment of JFE technical staff to
Mycron and training of Mycron’s technical staff in
Japan.
SHARE
VALUATION
•
Mycron share price has performed poorly compared to the CI.
•
Reason :
Fall in HRC prices.
Poor construction sector performance Æ negative out-look for steel sector.
Post IPO stock over-hang after MIG 1:4 distribution in-specie of Mycron shares.
VALUATION OF LISTED STEEL COMPANIES
C o m p a n ie s
(a s a t 2 5 / 0 7 / 0 6 )
S h a re
P r ic e
RM ps
PE
R a t io
A n n J o o R e s o u rc e s
1 .1 1
1 6 .9
A IS B
0 .6 0
1 4 .3
C h o o B e e M e ta l
1 .6 1
1 0 .1
F A C B In d
0 .4 9 5
3 .0
H ia p T e c k
0 .8 0
6 .9
M a la y a w a t a
1 .2 4
-
S o u t h e rn S t e e l
1 .0 5
-
M y c ro n S t e e l
AVERAGE
0 .7 2 5
1 0 .2
The PE ratio for listed steel
companies is relatively low at
12x compared to the Industrial
Sector PE of 14x or overall
market (EMAS) PE of 17x.
Valuations are slightly down
because of fall in HRC prices
(one-time effect).
But main share price
suppression caused by the
slow down in the domestic
construction sector.
Under 9th Malaysia Plan
construction industry will
eventually pick-up.
PE for steel sector should
eventually go above 12x.
yy //ee 33 11 JJ aa nn uu aa rryy
MM YY CC RR OO NN
E Ex xp pa an ns isoi on n
22 00 00 33
22 00 00 44
22 00 00 55
22 00 00 66
P Pr or ofifit t
RR MM mm iill RR MM mm iill RR MM mm iill RR MM mm iill
RRMM mmi l i l
Value of Mycron Shares
SS TT EE EE LL
PP RR OO FF IITT SS
Steel companies are affected by the
slow down in the domestic
construction sector & have low PE
ratios.
PP rroo fifitt AA ffte
t e rr TT aa xx
Mycron has a PE ratio lower than
the steel industry.
EE PP SS ((m
m aa iinn ttaa iinn aa bb llee ))
22 33 ..99
22 33 ..66
22 66 ..11
--11 22 ..22
1 16 6. 6. 6
+ + 2 24 4. 5. 5
AA vv ee rraa gg ee PP AA TT (m
(m aa iinn ta
ta iinn aa bb llee ))
PP aa iidd UU pp CC aa pp iittaa ll ((m
m iill sshh aa rree ss))
But Mycron has ZERO exposure to
the construction sector.
Apart from the one-time FY2006
loss, profits should remain stable
(as pre-2006) for the flat steel
sector.
Mycron supplies to the electronic,
auto, palm oil, petroleum &
furniture industries.
Mycron’s valuation should be
similar to that of these industries.
RR MM pp ss
MM aa rr kk ee tt pp rr icic ee 00 .7.7 11
NN TT AA vv aa lluu ee 11 .2
.2 77
IP
.4 00
IP OO pp rr icic ee 11 .4
SS ttee ee ll IInn dd uu ssttrr yy ((P
P EE 11 22 xx ))
IInn dd uu ssttrr iiaa ll SS ee cc tto
o rr ((P
P EE 11 44 xx ))
EE MM AA SS IInn dd ee xx VV aa lluu aa ttii oo nn ((P
P EE 11 77 xx ))
RM 3.18ps
Mycron is worth much more than current market price.
= = 4 41 1. 1. 1
1 17 79 9
0 0. 2. 23 30 0
PP EE RR
44 ..44
55 ..22
55 ..88
77 ..33
88 ..00
RR MM pp ss
00 ..66 00
00 ..77 11
00 ..88 00
11 ..00 00
11 ..11 00
RRMM p ps s
1 1. 0. 01 1
1 1. 1. 19 9
1 1. 3. 34 4
1 1. 6. 68 8
1 1. 8. 84 4
99 .3.3
11 .2.2 77
2 2. 1. 13 3
99 ..55
11 ..33 00
2 2. 1. 18 8
11 00 .2.2
11 .4.4 00
2 2. 3. 35 5
11 00 ..99
11 ..55 00
2 2. 5. 51 1
11 22 .0.0
11 .6.6 55
2 2. 7. 7 7
11 22 ..44
11 33 ..11
11 ..77 00
11 ..88 00
2 2. 8. 85 5
3 3. 0. 02 2
11 33 .9.9
11 .9.9 00
3 3.1.18 8
11 44 ..66
11 55 ..33
11 66 ..00
Mycron’s PE should be at least 14x.
Mycron’s fair value : RM 1.90 ps to
t i mm ee
22 44 ..55 OO nn ee --ti
iinn vv ee nn to
to rryy
11 77 99
lloo ssss
00 ..11 33 77
11 66 .8.8
11 77 ..55
22 ..00 00
22 ..11 00
22 ..22 00
22 .3.3 00
22 ..44 00
3 3. 3. 35 5
3 3. 5. 52 2
3 3. 6. 69 9
3 3. 8. 86 6
4 4. 0. 02 2
SUMMARY
SUMMARY
•
Mycron has been profitable since it started operations in 1990.
•
Mycron is manufacturer of highest grade CRC in Malaysia.
•
Malaysia imports 60% of its CRC needs.
•
International market price for HRC has been volatile. But spread
between CRC & HRC has always been stable (≈ US$ 100 /MT).
•
CRC manufacturers always pass through HRC price changes to
its customers. The profit margin for CRC manufacturers is stable.
•
In Malaysia, the spread between HRC and CRC is also very
healthy (> US$ 100 /MT).
•
Mycron enjoys good CRC:HRC spreads, because of:
•
Mycron’s 15 year client relations (1st M’sian manufacturer).
•
Mycron’s premium high-end CRC steel output.
•
Mycron’s strong reputation for quality.
SUMMARY
•
MegaSteel entering CRC market with low-end quality steel.
•
Mycron is focused on high-end CRC steel.
•
Mycron is upgrading facility to produce even higher-quality
CRC. Expansion completion : end-2007.
•
Upgraded facility will also increase capacity by 45%
(=80,000 MT /year).
•
PMP Galvanisers Sdn Bhd has signed off-take agreement
for 75,000 MT/year of the additional CRC.
•
The additional 80,000 MT/year capacity, will contribute
RM 27.4 mil EBITDA or RM 16.6 mil PAT.
•
This represents a Substantial Increase in Profit After Tax,
and should be a RE-RATING FACTOR for Mycron.
SUMMARY
•
Mycron’s share price (at RM 0.71 per share) is trading below its
book value (NTA=RM 1.27 per share).
•
Wrongly classified with long-product Steel counters ( PE = 12x )
which were affected by the slow down in the domestic construction
sector. Mycron has zero exposure to construction sector.
•
Mycron’s PE ratio should be the same as its clients (electronics,
auto, furniture, and drum for petroleum & palm oil industries) with
PE=14x
•
Mycron’s share price should be:
RM 1.90 ps (at PE=14x to match Mycron’s clients)
RM 3.18 ps (when new capacity is installed – End 2007)
Once reclassified, the up-side for Mycron’s STRONG
share price is tremendous…. + 340%
BUY
THANK YOU