CEO Morning Brief

Steel Counters Rise After Miti Announces Industry Moratorium

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Publish date: Thu, 16 Nov 2023, 08:44 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (Nov 15): Steel stocks continued their upward momentum from Wednesday morning, closing higher after the initiation of a two-year moratorium by the Ministry of Investment, Trade and Industry (Miti) effective from Aug 15, intended to address issues within the domestic iron and steel sector.

Mycron Steel Bhd was the top gainer among the steel counters, closing up 33.3% or 11 sen at 44 sen, with 45.28 million shares changing hands, valuing it at RM147.2 million. During morning trade, it was one of the top 10 most traded and highest gaining stocks.

Meanwhile, Melewar Industrial Group Bhd closed up 2.5 sen or 9.43% at 29 sen, Hiap Tech Venture Bhd gained 1.5 sen or 3.33% to 46.5 sen, Lion Industries Corp Bhd was up two sen or 6.06% at 35 sen, Malaysia Steel Works (KL) Bhd went up 1.5 sen or 4.62% to 34 sen, and Prestar Resources Bhd was up 2.5 sen or 6.17% at 43 sen. All made it to the top 35 actives in early trade.

A Kenanga industry analyst said the moratorium will allow the government to assess the overcapacity situation in the region, as well as to support the industry to achieve carbon neutrality objectives.

“Nevertheless, it appears that not all local steel players have been furnished with detailed information regarding the government's initiatives. In my view, all steel players will benefit from this move,” the analyst told The Edge.

The analyst’s top picks are United U-LI Corp Bhd, which gained three sen or 1.7% to RM1.81 before paring gains to close unchanged at RM1.78, and OM Holdings Ltd, which closed up five sen or 3.42% to RM1.51.

He noted that United U-LI Corp had seen a strong pickup in orders for its key product, namely cable support systems, and is bracing for even busier times ahead, driven by potential orders for MRT3, RTS, Singapore MRT expansion and new data centres.

“It is investing in two new plants that will boost its capacity by 40%,” said the analyst.

Meanwhile, OMH was preferred due to its structural cost advantage over international peers, and access to low-cost hydropower under a 20-year contract ending 2033, the analyst added.

“Its strong growth prospects are underpinned by plans to expand its capacity by 30%-36% to 610,000-640,000 metric tons per annum over the medium term, and its appeal to investor given its clean energy source,” said the analyst.

Deputy Investment, Trade and Industry Minister Liew Chin Tong on Tuesday said the temporary suspension covers all inquiries, assessments of current applications, new applications, licence transfers, expansion, regularisation and diversification of the manufacturing licence, as well as the issuance of certificates for exemption from the manufacturing licence (ICA 10) under the Industrial Co-ordination Act 1975 (Act 156) for manufacturing activities in the iron and steel industry, including non-ferrous recycling activities.

However, he said, if there are manufacturing licence applications that support the New Industrial Master Plan (NIMP) 2030 agenda, applications can be considered for exemption from the moratorium.

Liew said this includes projects for the production of complex iron and steel products with high added value and equipped with low-carbon/carbon reduction technologies such as carbon capture, utilisation and storage that support the missions and aspirations of the NIMP 2030.

Liew was winding up the committee-level debate on the Supply Bill 2024 for his ministry in the Dewan Rakyat on Tuesday.

Read also:
Miti implements two-year moratorium to update direction of iron, steel industry

Source: TheEdge - 16 Nov 2023

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