Leon Fuat allots RM50m capex for new steel-pipe plant

BUKIT JALIL: Steel trading and processing company Leon Fuat Bhd, which is cautiously optimistic on the current financial year ending Dec 31, 2017, has allocated a capital expenditure (capex) of RM50 million for its new steel pipe manufacturing plant in Port Klang for the next two years.
Its executive director Calvin Ooi Shang How said the capex is for the first phase, which will be utilised for the factory’s construction and machinery.
It is targeting for the plant to be completed and to start production next year.
Leon Fuat is venturing into steel pipe manufacturing to diversify itself from merely doing steel trading and processing.
“We invest because we want to sustain the business for the future. In due time, when other opportunity comes, we may consider other options too. We want to strengthen the base of the company to ensure we’re able to withstand any difficulties,” he told reporters after its AGM yesterday.
Leon Fuat has two other factories in Port Klang Free Zone (warehouse and processing plant) and Bukit Raja (cutting facility) that are in operations now.
Meanwhile, its CFO Tan Kien Yap said it is not worried about its subsidiary Supreme Steelmakers Sdn Bhd that is affected by the compulsory acquisition to make way for the Mass Rapid Transit Project Sungai Buloh-Serdang-Putrajaya Line, as contribution of Supreme Steelmakers to the group’s revenue and profit after tax is less than 10%.
“We’re not worried because we have other subsidiaries that can help fill those (production) gaps,” said Tan.
Ooi added that its cutting facility in Bukit Raja can also help to cover the impact felt by Supreme Steelmakers.
The group is now searching for land and warehouse to relocate Supreme Steelmakers’ operations and has identified a few locations in the Klang Valley.
To recap, Leon Fuat received compensation of RM45.84 million from the Land Administrator of Wilayah Persekutuan Kuala Lumpur, which is compulsorily acquiring two plots of its land, owned by subsidiary Leon Fuat Hardware Sdn Bhd.