KYM Holdings Bhd hopes to leverage on its relationship with Brazilian mining giant Vale International SA to secure jobs in Perak’s Teluk Rubiah enclave where Vale is setting up a RM9 billion iron ore business.
Its executive director Datuk Lim Kheng Yew said the company is confident of getting involved in the construction and downstream activities when Vale begins its operations there.
“We are in talks at the moment. We are confident that we could be involved in some of the activities generated from Vale’s investment in the area based on our relationship with the company,” Lim said after the company’s annual general meeting here yesterday.
KYM tied up with Vale when its 54%-owned subsidiary Harta Makmur Sdn Bhd sold 1,200 acres (485.6ha) of leasehold land in Teluk Rubiah to Vale for RM195.7 million last year.
Vale is planning to build a pelletising plant to process iron ore into pellets as feedstock for steel production. The iron ore would be shipped from South America to Teluk Rubiah.
The South American mining giant is also planning to set up a regional distribution centre in Teluk Rubiah to have better access to its Asian customers.
Vale is investing about US$900 million (RM2.9 billion) for its initial phase, and has set aside US$98 million for expenditure this year. Operations are expected to begin in Teluk Rubiah in the first half of 2013.
KYM managing director Raymond Chong Ting Choy said the company has secured some minor construction jobs from Vale.
Vale’s entry into Teluk Rubiah is a shot in the arm for KYM as it was debt-laden before it sold the land to Vale last year. “We were a debt-laden company a few years ago. However, the transaction with Vale has removed the millstone around our neck. This coupled with the big haircut from the bank, we can say that we would maintain our position in the black for this year,” said Chong.
As at end-April this year, KYM had long-term borrowings of RM10.76 million while its short-term debt obligations stood at RM110.41 million. KYM had cash and cash equivalents amounting to RM13.31 million.
Lim explained that KYM had settled some RM70 million in borrowings, and had about RM50 million of debt remaining.
For the first three months of FY11 ended April, KYM posted a net profit of RM454,000 on RM14.69 million of revenue. For the corresponding period a year ago, it suffered a net loss of RM2.24 million on the back of RM12.10 million in revenue.
KYM’s earnings per share for the three months under review stood at 5.5 sen, up from a loss per share of 2.76 sen in 1QFY10.
In March, it issued 40.57 million free warrants on the basis of one warrant for every two existing shares of 50 sen each, and reduced its entire share premium of RM81.13 million comprising 81.13 million shares of RM1 each via the cancellation of 50 sen of its par value.
“The free warrants and capital reduction exercise were in preparation for our transaction with Vale. With a clean balance sheet and improved gearing, we would be in position to undertake projects in the future, including potential ones with Vale,” said Lim.
Looking forward, Lim said that the company’s manufacturing arm which deals in corrugated fibre boards, boxes and paper bags, and its property wing would contribute more to its revenue stream.
KYM slipped one sen to close at RM1.39 yesterday, with one million shares changing hands.
This article appeared in The Edge Financial Daily, July 29, 2010.
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