ANN JOO’s 2Q net profit soars, declares 6 sen dividend

Steel company Ann Joo Resources Bhd’s net profit soared over 30 times to RM70.9 million in its second quarter ended June 30, 2010 (2QFY10) from RM2.2 million a year earlier due to a continuous improvement in productivity coupled with higher export tonnage.

Revenue climbed 40% to RM595.4 million  from RM424.30 million, while basic earnings per share (EPS) rose to 14.11 sen from 0.44 sen. It declared the first interim dividend of six sen per share less tax to be paid on Sept 9.

Quarter-on-quarter, pre-tax profit jumped 67% to RM77.5 million from RM46.4 million in the immediate preceding three months, while revenue increased 26% from RM473.95 million, due to the delivery of export tonnages which were committed at higher selling prices despite a sharper-than-expected market correction.

For the six months ended June 30, 2010 (1HFY10), Ann Joo registered a net profit of RM112.40 million versus a net loss of RM36.7 million a year earlier, while revenue rose 66% to RM1.07 billion from RM644.43 million. 1HFY10 EPS stood at 22.37 sen.

In its announcement to Bursa Malaysia Securities yesterday, Ann Joo said the increase in revenue was mainly attributable to higher selling price and sales tonnage boosted by a recovery in steel consumption in both the international and domestic markets.

“Steel demand is expected to return by fourth quarter this year primarily driven by robust economic growth in emerging markets and post summer re-stocking rally.

“The urbanisation and industrialisation of emerging markets and developing countries, particularly BRIC countries, Asean region and Indian sub-continent are expected to relentlessly drive the apparent steel consumption of the countries,” Ann Joo said.

“Domestically, steel demand is expected to recover with the resurgence of construction activities and infrastructure development coupled with the commencement of 10th Malaysia Plan which places significant emphasis on public transport spending, such as the Second Penang Bridge, LRT extension works and new LCCT complex,” it said.

RHB Research recently upgraded Ann Joo and another local steel player CSC Steel Holdings Bhd on prospects of a rebound in steel product prices in the fourth quarter. Ann Joo was raised to market perform from underperform with a target price of RM2.74.


This article appeared in The Edge Financial Daily, August 4, 2010.