Steel Maker Unhappy With Low Share Price

By Nuntawun Polkuamdee, Bangkok Post, Thailand

Mar. 21–G Steel Plc, a hot-rolled steel maker, aims to improve investor understanding of the steel industry in order to raise its share price to a more realistic level.

President Ryuzo Ogino said the company had met with local and foreign analysts, and held international roadshows to provide information to foreign investors.

A Hong Kong roadshow would be held at the end of this month, after which the company’s executives would travel to meet with US investors, he said.

“The management will have to meet with the press more often to explain the outlook of the steel business and G Steel in the near future. We hope that clearer information will make investors better understand and perhaps attract interest in steel stocks,” he said.

G Steel was listed on the Stock Exchange of Thailand on Jan 25 but its prices have disappointed investors as they have never reached the initial public offering price of 1.60 baht. Since Jan 25, G Steel prices have peaked at 1.59 baht, and dropped to a low of 1.19 baht on March 10. The shares closed yesterday at 1.25 baht, down one satang, in trade worth 28.8 million baht.

G Steel has paid-up capital of 9.7 billion baht with a par value of one baht. It raised 2.4 billion baht from the IPO, with the float of 1.5 billion shares. Asia Plus Securities acted as the financial adviser.

Mr Ogino said demand for hot-rolled steel had grown by 10 percent since January, although the sector had limited production capacity. Last year, Thailand produced 1.1 billion tonnes of hot-rolled steel, with capacity to rise to 1.3 billion by 2008.

Sahaviriya Steel Industry is the largest producer with 31 percent of total output, followed by G Steel with 22 percent and NSM at 10 percent. Imported steel totalling about 2.6 million tonnes also serves local demand.

“Domestic hot-rolled steel demand grew 16 percent during the first three quarters of 2005. The annual growth is forecast to stay at around 6-7 percent during the next five years. Steel prices have reached the lowest point already and now US steel prices are moving up,” Mr Ogino said.

G Steel plans to expand its annual capacity from 1.8 million tonnes to 3.4 million tonnes by 2007, about 80-90 percent of which would be for domestic sales.

Plant construction and machine installation will be completed by the third quarter of 2007 and revenues from the additional steel capacity will be booked in the last quarter of the year.

The company has a low debt-to-equity ratio of 0.32 times and a book value at around 2.5 times.

“We have a bright future and the global steel demand and prices are picking up, but our share prices at the moment don’t reflect the fundamentals. This makes us very confused and we have to be more concerned about the feelings of individual investors,” Mr Ogino said.

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