China approach may lift profits

Steelmaker and trader Rich Asia Steel targets revenue of more than Bt10 billion this year, markedly up from Bt4.64 billion last year.

Chief executive Angkakarn Tantiviroon yesterday said the company had already approached Chinese steelmakers to appoint it as their main supplier in Asean. This would give the company a chance to boost its revenue.

She said domestic and global steel prices had continued to rise and she forecast that steel demand in the next two years would reach 18 million tonnes per year, from the current 14.8 million tonnes.

The global price of products such as hot-rolled steel is about US$1,050 (Bt34,800) per tonne at present, a sharp increase from $480 last year. It is expected to reach $1,200 next year.

Early this year the company expanded its production capacity to 215,000 tonnes per year, up from 125,000 tonnes, to cater to the rising demand.

Managing director Somkiat Vongsarojana said he was confident of meeting the revenue target this year, of which between Bt4 billion and Bt5 billion would be from the trading business.

Recently the company secured loans from international financial institutions worth $64 million to expand its project to procure scrap metal for local giant steelmakers. The project is expected to generate Bt6 billion of revenue for the company per year and realise revenue of Bt3 billion from the project in the next quarter.

In the first quarter, Rich Asia Steel posted a net profit of Bt64.21 million versus losses of Bt175 million over the same period last year, due to the growth in revenue and foreign-exchange gains.

He added that this year the company would record a higher gross margin of 8 per cent, up from 4.06 per cent last year.

Angkakarn said the company's plan to issue warrants was expected to be approved by its shareholders on June 26.

The warrant value, which is estimated to be Bt2 billion, will be to repay short-term debt worth Bt1.5 billion with the rest for cash flow, which will reduce the debt-to-equity ratio from the present 0.84.