Posted on 21 Aug 2008
Steel player Perwaja Holdings Bhd fared poorly on its debut
on the Bursa Malaysia main board yesterday, ending 42 sen down from its initial
public offering (IPO) price of RM2.90 per share.
The stock, which closed at RM2.48, performed way below
analysts’ expectations. It was the day’s biggest loser.
The market had expected the stock to trade at a premium over
its IPO price. Instead, it opened at RM2.80 and nosedived to the day’s low of
RM2.34.
At yesterday’s closing price of RM2.48, the stock is valued
at about 3.6 times its projected earnings of 69 sen per share for the current
year ending Dec 31, based on the average estimate of six local brokerages.
Perwaja chairman Tan Sri Abu Sahid Mohamed said: ”In today’s
market, shares go up and down. We know that our company has good fundamentals.”
Speaking at the company’s listing ceremony, he said Perwaja
expected demand for steel to remain strong for at least the next six months if the
Government continued to spend on infrastructure projects.
“The Government is at present spending a lot on
infrastructure projects. So I don’t foresee any drop in steel prices locally,”
he said, adding that the price was currently between RM2,200 and RM3,600 per
tonne.
Perwaja is involved in the upstream manufacture and trading
of steel products. Its steel products include direct reduced iron (DRI) and
semi-finished long products such as steel billets, beam blanks and blooms.
It exports about 40% of its production. Internationally,
prices have softened and steel is currently trading at a shade below US$1,000 a
tonne.
Abu Sahid said steel prices in the international market had
been rising previously and a certain level of adjustment was acceptable.
Chief executive officer Henry Pheng said demand was still
stronger than supply in the international market with
He said the company sold its products “at about the same
price” locally and overseas.
On earnings, Pheng said he expected Perwaja to post “better
results” in the next two quarters compared with the previous two, thanks to
stronger margins as a result of lower raw material costs.
For the six months ended June 30, Perwaja made a net profit
of RM222.6mil or 44.52 sen per share.
An Aseambankers analyst contacted by StarBiz said the
company’s poor share performance yesterday was due to “the weak sentiment in
the broader market.”
Minority shareholders of associate company Kinsteel Bhd may
also have dumped their shares as they had bought them earlier at RM2.23 per
share, he said.
Going forward, steel prices could continue their earlier
uptrend post-Olympics when factory and construction activities are expected to
resume in
