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AGV takes on convertible loan at 15% interest, raising stake in Johor plant

Chan Chao Peh
Chan Chao Peh10/16/2017 08:00 AM GMT+08  • 8 min read
AGV takes on convertible loan at 15% interest, raising stake in Johor plant
(Oct 16): AGV Group is preparing to buy back a major stake in an upcoming galvanising plant in Pasir Gudang, which could soon benefit from a wave of capital expenditure by Malaysia’s Petroliam Nasional (Petronas). But it is unclear when AGV will return
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(Oct 16): AGV Group is preparing to buy back a major stake in an upcoming galvanising plant in Pasir Gudang, which could soon benefit from a wave of capital expenditure by Malaysia’s Petroliam Nasional (Petronas). But it is unclear when AGV will return solidly to the black. And, in the meantime, its shares are trading at a stiff premium to its book value.

AGV went public in August last year, following a placement of 26.92 million shares at 22 cents each. The company owns a galvanising plant in Singapore with a processing capacity of 5,000 tonnes a month. The plant is running at a utilisation rate of about 70%, and is contributing the bulk of AGV’s revenue. AGV also owns a 36% stake in an entity called AGV Holdings, which owns 51% of the Pasir Gudang plant. This plant began operations only in April 2016. It, too, has a capacity of 5,000 tonnes a year, and is running at a utilisation rate of around 50%.

Albert Ang, CEO of AGV, says this plant could soon benefit from stronger demand for galvanised steel from major construction and infrastructure projects in the area. These include a Petronas project in Johor — the Refinery and Petrochemical Integrated Development. Other projects that could benefit the plant are the KL-Singapore high-speed rail and the new port in Melaka. “There are a lot of developments in Malaysia that you can look into,” says Ang in a recent interview with The Edge Singapore.

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