KUALA LUMPUR: Pantech Group Holdings Bhd
has been downgraded to Market Perform by Kenanga Research following an anti-dumping tax imposed by the US on all carbon steel butt welded fittings from Malaysia.
The group announced that the US Department of Commerce (DOC) has made preliminary claims that Malaysian companies, including Pantech, import carbon butt weld fittings from China and subsequently export them to US, which circumvents around the existing US anti-dumping duties of 182.9% imposed on China.
Consequently, the US DOC has imposed anti-dumping duties of 182.9% on all carbon steel butt welded fittings from Malaysia.
“As Pantech manufactures its own carbon pipe fittings and by no means is circumventing around these duties, they are currently taking legal steps to reverse the duties imposed on them citing that their products are ‘Made in Malaysia’ and not China,” the research house noted in a report on Friday.
Pantech has suspended all shipments of carbon steel butt weld fittings to the US.
The research house is negative on this given that 70% of the group’s manufactured carbon butt weld fittings are exported to the US, and the move will hurt bottom line.
The research house said it decided to account for the worst by reducing FY19-20 manufacturing utilisation rates for carbon welded butt fittings to 40-60%, from 90% previously, to cater for nil US exports until mid-2020, leading to a 15-11% reduction to its estimates.
It also lowered its target price lower to RM0.61 from RM0.75 previously.
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