HG Metal

HG Metal: 2Q14 net loss came in at $12.9m versus a net profit of $0.7m taking 1H14 net loss of $12.4m. Revenue for the quarter fell 34% to $44.5m, as sales volume declined by 24% compared to 2Q13 due to lower demand for steel products. Gross margins decreased to 5% from 6.8% Other operating income declined 8% to $1.2m mainly due to the absence of fair value gain from forward currency contracts in 2Q14, while bottom-line was weighed largely by a 419% drop in other operating expenses to $14.8m, due largely to a one-time provision for inventories, doubtful debts and assets. Going forward, the group has highlighted the following factors that may significantly affect their performance over the next 12 months: 1) The demand for steel products based on the health of the Singapore economy 2) The intensity of the competition in the industry 3) The fluctuation of the USD against SGD HG Metal will continue to rationalise its operations and optimise its expenditure. The group’s net gearing is relatively low at 10.1%, and at the current price the group trades at just 0.67x P/B.