KUALA LUMPUR (May 25): Ann Joo Resources Bhd (KL:ANNJOO) shares fell to a one-month low on Monday after Southern Steel Bhd (KL:SSTEEL) withdrew from what was its second attempt to sell the capital-intensive Ann Joo Steel Bhd (AJSB).

The company has instead entered into a new deal with a vehicle linked to Southern Steel’s largest shareholder, Singapore-based Green Esteel Pte Ltd.

Green Esteel holds a 50.01% stake in Southern Steel. This would make it the company’s third attempt to exit its loss-making upstream business.

Last November, a sale-and-leaseback arrangement involving AJSB and Axis Real Estate Investment Trust (KL:AXREIT) was mutually terminated in March 2026. A day later, the company signed a deal with Southern Steel.

The counter fell 10 sen or 13.8% to close at 56 sen on Monday, after about 1.66 million shares changing hands. At the last price, the company had a market capitalisation of RM402.6 million. Year to date, the stock is up 2.6%.

On Friday, the company said it had mutually agreed to terminate its deal with Southern Steel, only to follow up with a similarly structured deal with Green Esteel, excluding selected land and property assets, at an estimated value of RM348.7 million based on RM1.005 billion in non-current assets, plus current assets and liabilities.

TA Securities in its note on Monday said at an implied disposal value of RM348.7 million, Ann Joo is monetising its persistently loss-making upstream business at an attractive 1.89 times price to book value versus peers’ 0.35 times–0.67 times while strengthening its balance sheet and improving earnings quality.

It said the disposal is expected to generate an illustrative RM157.1 million disposal gain, strengthen group net assets to RM923.6 million and reduce gearing materially to 0.68 times from 1.73 times (at group level) on a pro forma basis.

The upstream unit has posted large losses in recent years and carries high debt, so the disposal will help reduce debt, improve earnings quality, and strengthen the company’s balance sheet.

After the deal, Ann Joo is expected to be more financially stable and better positioned to focus on its core profitable business, it said.

Green Steel is linked to steel magnate You Zhenhua, who directly owns a 39.12% stake in Ann Joo and also has a 56.65% indirect interest in Green Esteel through Advance Venture Investments Ltd and Deep Source Holdings Ltd.

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