Chin Hin's 4Q profit falls following levy on imported steel wire rods

Posted on 28 February 2018
 

Source: The Edge

Chin Hin Group Bhd's fourth quarter net profit slumped 56% year-on-year (y-o-y) to RM8.54 million from RM19.55 million, mainly because the previous year's quarter had recognised a fair value adjustment amounting to RM10.57 million on investment properties.

Also impacting its bottomline in the quarter ended Dec 31, 2017 (4QFY17) were the considerable losses the group suffered in its steel mesh and metal roofing products segment after the imposition of definitive safeguard duties and steel tariff totalling 18.9% by the government on imported steel wire rods.

This caused local wire rod prices to rise significantly, Chin Hin said in a Bursa Malaysia filing today. The situation further worsened, it said, when some steel producers sold their mesh finished products at prices lower than their raw wire rod price.

Its quarterly revenue also retreated 3% y-o-y to RM255.84 million from RM264 million, on lower contribution from the segment where it distributes building material and ready-mixed concrete.

Notwithstanding the weaker quarterly results, Chin Hin declared a second interim dividend of 1.5 sen in respect of FY17, to be paid on April 16.

Meanwhile, the same reasons that weighed on its quarterly earnings also caused its annual net profit for FY17 to fall 28% to RM29.64 million from RM41.43 million. Annual revenue slipped 4% y-o-y to RM1.02 billion from RM1.06 billion.

While the steel mesh and metal roofing products segment's losses amounted to RM5.89 million in FY17, the lower year-to-date contribution from the distribution of building materials and ready-mixed concrete business also impacted profitability, it said.

This year, Chin Hin expects the construction materials market to remain extremely competitive and challenging. But its management remains confident of delivering better results in 2018 in view of new products and technology added to the group, i.e. ultra-high performance concrete (UHPC) product and pre-fabricated modular building system.

"Sales are expected to grow progressively in the second quarter of 2018, when more UHPC architectural solution projects kick off," it said.

Furthermore, it said it has implemented a turnaround plan for its steel mesh and metal roofing segment to respond to the volatile business environment and hope that the plan will bear fruit in the near future.

Chin Hin shares rose 1 sen or 0.99% to close at RM1.02 today, for a market capitalisation of RM556.39 million. 



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