PETALING JAYA: Ann Joo Resources Bhd
is expected to sharpen its focus on downstream value-added steel activities and reposition itself for a return to profitability as it advances plans to monetise its loss-making upstream business by the second half of financial year 2026 (2H26).
The group is also seen leveraging its downstream trading and services platform while expanding into steel-adjacent ventures, including automotive precision steel components, electrification works and operations in Singapore.
The proposed disposal, alongside diversification initiatives, is viewed as a critical step towards improving earnings resilience amid prolonged weakness in the regional steel market.
“The group’s strategy to monetise its loss-making upstream unit at attractive valuations positively, with completion targeted by 2H26,” said CIMB Research.
“The divestment should enable Ann Joo to sharpen its focus on downstream value-added steel activities, providing a clear pathway back to profitability.”
Ann Joo is expected to progressively reallocate capital towards new growth areas, namely precision automotive steel components for local marques, electrification works via its wholly owned IAC Infrastructure unit, and operational expansion in Singapore.
While maintaining its earnings forecasts pending completion of the proposed disposal, CIMB Research kept its “hold” call on Ann Joo and raised its target price to 55 sen from 53 sen after incorporating adjustments following the release of the group’s 2025 annual report.
TA Research said management expected steel sector conditions to remain challenging in the near term amid persistent China overcapacity and weak property demand, which continue to pressure regional steel prices and limit average selling price recovery.
“Domestic demand was expected to improve gradually on the back of infrastructure and government-led projects.
“Pricing competition and margin pressure are likely to remain elevated, particularly within upstream steel segments.
“The group had undertaken several strategic initiatives aimed at unlocking value, strengthening its balance sheet and enhancing long-term growth prospects, including the disposal of its upstream division, expansion into steel-adjacent businesses and selective monetisation of its land bank.”
These initiatives were “expected to diversify earnings streams, improve operational resilience and better position the group for sustainable growth amid ongoing industry and macroeconomic challenges”.
TA Research maintained its “hold” recommendation on the stock but lowered its target price to 60 sen from 72 sen previously.
