KUALA LUMPUR: Malaysia Steel Works (KL) Bhd (Masteel) is still in talks with the Federal Government over its proposed commuter train network in Iskandar Malaysia.
UOB Kay Hian Malaysia Research said on Thursday Masteel had clarified it was still in discussions with the Federal Government over the network which would be undertaken on a joint venture with KUB Bhd.
“Masteel also clarified that there is no overlap with the ongoing proposed high speed rail project, and that the commuter train network can be complimentary to the mooted RTS network that links Johor Bahru to Singapore (by linking its commuter service from its proposed end terminal in Singapore at Woodland to the Thompson MRT line),” it said in a research note.
UOB Kay Hian Research said the JV was also negotiating with Railway Assets Corp to secure land to build its proposed commuter train depot.
“Should the government give the green light to the JV’s proposal, Masteel expects to inject RM100mil into the JV,” it said.
UOB Kay Hian Research said Masteel’s management shared its optimistic outlook for the steel industry at its first half 2013 results briefing on Wednesday, expecting prices of steel bars to be supported by buoyant demand.
The research house said local prices of steel bars have rebounded significantly, having risen RM130 a tonne to RM2,100 a tonne in the last two weeks, in tandem with the rebound in international steel prices after reaching a trough in July.
“Indicators point to further price hikes amid expectations of rising domestic demand and improving global economies. Masteel expects demand from the Klang Valley MRT project to raise local demand by 400,000 tonnes to 500,000 tonnes a year, from 2012’s base level of 2.5 million tonnes.
Masteel recorded a net profit of RM10.2mil in Q2, 2013 bringing 1H13 net profit to RM13.7mil (-2.8% on-year), amid a 1.7% on-year decline in revenue to RM672.2mil as lower average selling prices (ASP) offset higher volumes.
“In the immediate term, Q3, 2013 net profit could drop further due to the Hari Raya holidays which resulted in fewer working days, before a recovery in Q4,13 driven by strong demand and better ASPs,” it said.