Leader Steel Holdings Bhd, a leading producer of furniture pipes in the region, sees huge potential in the China market for its new iron ore trading business.
Group managing director Goh Cheng Huat told StarBiz in an interview that the group had recently obtained iron ore from local suppliers to sell in China.
Iron ore, which is much cheaper than scrap iron, is a key ingredient in producing high-grade steel. It is first mixed with coke in a blast furnace to produce pig iron, which is later refined to become cast iron for making steel products.
“In China, the recent demand for iron ore exceeds its supply, thus the selling price of iron ore is surging.
“The Chinese government is expected to make it mandatory to have an approved permit to import iron ore into the country soon. When this is implemented, we expect the selling price of iron ore to increase further,” Goh said.
He added that the group was now looking to source iron ore from other Asean countries to sell in China.
Goh said the group’s profit after tax for the fiscal year ended December 2004 was RM16.8mil on the back RM172.9mil in revenue, compared with RM12.3mil on RM100mil in revenue in 2003.
“Our strong performance for 2004 was due to the higher contribution from export sales, which generated 23% of the group’s revenue, compared with 10% in 2003.
“The increased sales of furniture pipes and tubes from our plant in Sarawak also contributed to the improved performance. This year, we want to push export sales to contribute over 30% of revenue,” he said.
Goh said the board of directors had approved a 2.5 sen per share dividend for its shareholders. “The dividend will be paid out in the next one or two months,” he said.
Leader Steel currently operates its furniture pipes manufacturing business at its facilities in Bukit Tengah, Penang and Kuching, Sarawak.
Its third RM20mil plant in Kapar, Klang, currently under construction, is expected to begin operations mid-2005.