Eonmetall Group Bhd ... dated June 2008

Eonmetall Group Bhd, which has traditionally been focused on the manufacturing of secondary flat steel products steel storage system, is now ready to move upstream in steel processing.

The company was in the midst of finalising the necessary documentations and approvals for its expansion into upstream steel processing. More than RM75 million had been set aside for capital expenditure this year for its expansion plans.

They are poising themselves to capitalise on the rising steel prices, with China removing export rebates for Chinese suppliers, making Chinese production more expensive. Even in Malaysia itself, it is believed the market will be favourable to the Malaysian steel manufacturers.

Meanwhile, Eonmetall has embarked on a joint-venture project since May 2007 in the United Arab Emirates involved in the business of electromechanical equipment installation, building and designing centralised district cooling systems (DCS) and chilled water system cleaning and maintenance services.

Eonmetall expected the UAE venture to contribute towards 40% of the group’s revenue this year. With its 30% stake, the JV contributed RM1.1 million to the group’s turnover in 2007.

It has an order book of RM100 million in several cities in the UAE to build and design the district cooling systems.

The group was positioned positively to take advantage of the continuous spiralling of record oil prices through its investments in the DCS-related projects in the UAE and the successful development and handover of the country’s first palm fibre oil extraction plant (PFOE).

The intensive pace of development in the Middle East by oil rich countries will drive the DCS business while PFOE will be driven by the potential of oil recovery from the palm fibre. The group anticipates that these two areas will enable it to diversify and enhance future income.