Under the agreement, MCS will initially spend Bt40 million to purchase a stake in China-based Huayin. The company would not say how much of a stake that would buy the company. The new partner is one of the top three light-steel manufacturing companies in China.

Naiyuan Chi, chief executive of MCS, said the alliance would help the company achieve an annual production capacity of 150,000 tonnes. The company is also negotiating with other potential partners to increase its capacity to 200,000 tonnes.

The larger production capacity will allow the company to take on bigger projects that can sometime use up to 100,000 tonnes of construction steel. It will also help it to export to markets such as China, Japan and other Asean countries.

Chi said the two companies would complement each other's strengths: MCS in high-rise building steel and Huayin in light-weight steel. As a result, MCS will have more opportunities to bid for high-rise building projects in China.

The agreement will also strengthen both sides' bargaining power with suppliers to buy large lots of raw material for less.

To facilitate the business alliance, the companies plan to jointly set up a centre to exchange information, employees and training programmes.

The centre is scheduled for completion at the end of this year.

Along with targeting general contractors in Japan, the two companies also plan to penetrate the steel market in Middle East.

The first joint effort will be a construction project in China that starts at the end of this year..

MCS expects revenue of Bt2.7 billion and a net profit of Bt310 million this year. It expects growth of 10 to 15 per cent a year due.

The company recorded a profit of Bt91 million in the first quarter of the year and orders of at least Bt700 million in the second quarter.

Chalida

Ekvitthayavechnukul

The Nation