KUALA LUMPUR (July 1): Shares in Hiap Teck Venture Bhd (KL:HIAPTEK) rose in early trade on Monday, after the steel company reported better-than-expected third quarter results.
Hiap Teck rose as much as 4.71% or two sen to 44.5 sen — its largest gain in a single day since June 14 — on Monday morning. At 11.30am, the stock traded at 44 sen, still up by 1.5 sen or 3.53%, valuing the company at RM766.58 million on Bursa Malaysia. Trading volume totalled 32.83 million, more than four-fold the 200-day moving average.
Hiap Teck's core net profit of RM46.2 million for the third quarter ended April 30, 2024 (3QFY2024) accounted for 91.7% of consensus full-year estimate, due mainly to better-than-expected joint venture (JV) contribution.
Hong Leong Investment Bank (HLIB) Research, the sole research house tracking Hiap Teck, maintained its ‘buy’ rating with an unchanged target price of 52 sen on the counter, based on seven times FY2025 core earnings per share of 7.5 sen.
“We remain optimistic on Hiap Teck's earnings prospects, supported by the pending rollout of mega infrastructure projects and robust private sector job flows in Malaysia, rising capacity utilisation at ESSB’s (Eastern Steel Sdn Bhd) new blast furnace, which will boost its contribution to Hiap Teck's bottomline, and weak demand sentiment for steel products in China may have bottomed,” the research house said.
HLIB Research has maintained its earnings forecasts for Hiap Teck for now, with upside bias, pending updates from management. The counter saw its share price surge over 3.57% year-to-date.
Last Friday (June 28), Hiap Teck reported to Bursa Malaysia that its net profit for 3QFY2024 rose to RM46.82 million, from RM15.03 million a year earlier, driven by a higher share of profit from a JV company.
Earnings per share for 3QFY2024 improved to 2.69 sen, from 0.86 sen previously. Revenue increased by 7.14% to RM399.68 million from RM373.03 million on higher sales volumes, despite lower average selling prices.
No dividend was declared for 3QFY2024.
Hiap Teck said that going forward, it will focus on effective procurement strategies, efficient inventory management, and continuous operational improvement. To date, it has successfully utilised 90% of the new two-million-tonne blast furnace capacity and completed other auxiliary facilities.