HG Metal Announces Major S\$20.8 Million Property Acquisition to Drive Capacity Expansion and Growth

Key Developments Set to Strengthen HG Metal’s Competitive Position and Support Singapore’s Construction Boom

Summary of Key Points

• Strategic Acquisition: HG Metal Manufacturing Limited (HG Metal), via wholly-owned subsidiary HG Construction Steel Pte Ltd, has exercised an Option-To-Purchase (OTP) for a leasehold industrial property at 47 Tuas View Circuit, Singapore, for S\$20.8 million.
• Funding Structure: The acquisition will be funded through a mix of internal resources, bank borrowings, and/or previously raised net proceeds from rights issue and share placement exercises.
• Property Details: The property has a remaining tenure of about 12 years (from a 30-year lease that started on 15 December 2007), and includes:
  • A 3-storey ancillary office building
  • Two 3-storey production buildings
  • A single-storey industrial development with two factories
  • Land area of approximately 24,163.8 square metres
  • Being sold with vacant possession, including existing plant and equipment
• Valuation: An independent valuation (as of 3 December 2025) assessed the property at S\$19 million, which is below the purchase price.
• Purpose & Rationale: The acquisition will:
  • Expand HG Metal’s production facilities and storage capacity
  • Enable the introduction of additional value-added services
  • Support the Group’s ability to scale up and meet rising demand from Singapore’s construction sector, which is projected to see annual demand of S\$39-46 billion over 2026-2029
  • Allow for improved optimisation of steel inventory and efficiencies within the Group
• Transaction Details:
  • 5% of the purchase price (minus the 1% OTP option money) is payable upon exercise of the OTP
  • Balance 95% payable upon legal completion, which is scheduled for two weeks after Jurong Town Corporation’s (JTC) confirmation of no-objection to the property transfer and any required regularisation
  • Completion is conditional on receipt of JTC’s in-principle consent for transfer and change of use, JTC final approval, and satisfactory legal requisitions
  • If required, the Vendor will bear the cost of environmental site assessment and decontamination
• Strategic Impact: HG Metal’s CEO, Ms Xiao Xia, emphasised that the new site will enhance operational footprint, provide scale and flexibility for more projects, and enable the Group to optimise inventory and deliver competitive solutions in Singapore and the region.
• Background: HG Metal is a leading steel distributor and processor with over 40 years of experience, serving more than 1,500 clients, and is listed on the SGX Mainboard.

Analysis of Shareholder-Relevant, Price-Sensitive Information

• Significant Capital Expenditure: The S\$20.8 million acquisition represents a major investment relative to the company’s scale, indicating management’s confidence in sustained growth for the Singapore construction market.
• Capacity Expansion: The new facility addresses existing near-full capacity constraints, positioning HG Metal to capture more business and potentially increase revenues and margins as construction demand rises.
• Valuation Vs. Purchase Price: The purchase price is above the independent valuation by S\$1.8 million, which could raise questions regarding negotiating power or strategic premium paid for specific location/facilities.
• Pace of Completion: The deal is subject to regulatory approvals (notably from JTC), with a long stop date of 6 months from OTP exercise, which introduces some execution risk and timing uncertainty.
• Balance Sheet Implications: The funding mix (internal resources, borrowings, equity proceeds) may impact the company’s gearing and liquidity, but could also be mitigated by future cash flows from enhanced operations.
• Potential Upside: Ability to undertake more/larger projects and introduce new value-added services could materially enhance future earnings, especially if construction demand projections hold.
• Operational Integration: The property comes with existing plant/equipment, which may lower setup costs and speed up operational ramp-up.

Conclusion

The announced property acquisition is a strategically significant move for HG Metal, aligning with anticipated strong construction demand in Singapore and the region. The expansion of production and storage capacity, together with the introduction of more value-added services, positions the Group for potential earnings growth. While the purchase price exceeds the independent valuation, and there are regulatory and execution risks, the deal underlines management’s growth ambitions and could be a key catalyst for the company’s shares, especially if operational integration is smooth and construction demand remains robust.

Disclaimer: The above article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own independent research and consult with professional advisers before making any investment decisions. The author and publisher accept no liability for any losses or damages arising from reliance on this information.

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