Steel pipe maker AISB to diversify into property development

KUALA LUMPUR (Jan 16): Steel pipe manufacturer Amalgamated Industrial Steel Bhd (AISB) announced today that it will enter into property development business to diversify its revenue stream.

According to an announcement to Bursa Malaysia, AISB (fundamental: 0.35; valuation: 1.2) said it has plans to undertake the development and construction of industrial buildings on its own land in Shah Alam, funded by internally-generated funds and external bank borrowings.

The gross development cost and the value of the project are said to be approximately RM146 million and RM161 million respectively.

“The proposed diversification would provide another source of revenue and income to AISB Group, and reduce its sole dependency on the existing core business of manufacture and sale of mild steel pipes and trading of construction related materials.”

“The expansion of the group’s business into property development is part of the AISB group’s long term strategy of diversifying into other industries with strong growth prospects,” the company said.

AISB added its diversification plan will be implemented in 2015, subject to approval of its shareholders in an extraordinary general meeting.

AISB’s shares rose 5.36% or 1.5 sen to 29.5 sen, with a market capitalisation of RM34.12 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)