Hiap Teck’s management aims to raise utilisation to around 90% by the end of financial year 2026.
PETALING JAYA: Hiap Teck Venture Bhd
’s management remains optimistic that the group’s solid performance in the first quarter of financial year 2026 (1Q26) can be sustained in the near term, according to Hong Leong Investment Bank (HLIB) Research.
The outlook is supported by stabilised steel prices, steady domestic construction activity and China’s new steel industry action plan.
The measures adopted by the world’s second-biggest economy include a strict ban on additional capacity and measures to accelerate the phasing out of outdated equipment to address persistent oversupply.
HLIB Research added that the stricter enforcement of lorry load limits was likely to be a temporary measure and that it should have a manageable impact, as higher transportation costs arising from the enforcement are expected to be passed on to customers.
In its report, the research house said: “We understand that the capacity utilisation rate at Eastern Steel Sdn Bhd’s (ESSB) hot‑rolled coil plant has risen to about 80% currently, from 60% in 1Q26.”
Hiap Teck’s management aims to raise utilisation to around 90% by the end of financial year 2026, which should further reduce unit conversion costs, it noted.
While the eventual implementation of a carbon tax will have cost implications for industry players, HLIB Research said management believes ESSB will be able to pass on at least part of the additional costs to customers, supported by the firm’s position as the sole domestic hot‑rolled coil producer.
On the environmental, social and governance front, ESSB has set targets to reduce its carbon emission intensity by 20% by 2035 and to achieve carbon neutrality by 2050, using 2024 as the baseline year.
To meet these goals, the group has outlined a phased low‑carbon transformation pathway focused on systematic emissions reduction across its operations and value chain.
HLIB Research maintained its “buy” call on the stock with an unchanged target price of 36 sen, and continues to favour Hiap Teck for its healthy balance sheet and attractive valuations.
