HG says it'll announce major acquisition today

By NISHA RAMCHANDANI

HG Metal will buy the stake from BRC Asia's parent company, UK-based Acertec Holdings, which owns 69 per cent of BRC.

According to a Reuters report, HG Metal will buy the stake from BRC Asia's parent company, UK-based Acertec Holdings, which owns 69 per cent of BRC. The deal is said to be worth between $70 million and $100 million.

A spokesman for HG Metal said yesterday the company will make an announcement today on a major acquisition. He would not name the target company.

HG Metal and BRC Asia requested trading halts yesterday.

HG Metal said recently its Q3 net profit almost quadrupled year on year to $28.5 million, from $7.6 million in the year-ago period. Revenue jumped 90 per cent to almost $234 million on strong demand and higher steel prices. Earnings per share more than doubled to 6.72 cents, from 2.34 cents.

When it released the results, HG Metal said it was 'seriously considering merger and acquisition opportunities' and was 'in the midst of discussions with specific parties'.

BRC Asia, which designs and makes steel mesh, has operations in Singapore, Hong Kong and Shanghai.

Its Q2 net profit dropped to $1.75 million, from $2.1 million a year earlier, despite revenue surging 167 per cent to $68 million. This was due to a $3.4 million provision for 'onerous' contracts.

Despite the slowing economy and the government scaling back some projects, 'the construction market is expected to continue to be strong in the next 12 months', BRC said when it released its Q2 results in July.

The local construction industry is expected to be the main driver for the steel reinforcement industry this year.

2QFY08 RESULTS

13 May 2008

O

HG Metal Manufacturing      S$0.42      Target: S$0.72

Windfall from strong steel prices                   

Industrial goods & services - others