HG Metal Manufacturing Limited: Key Developments and Shareholder Updates

Date: 16 January 2026
Source: Board of Directors, HG Metal Manufacturing Limited

1. Significant Expansion in Production Capacity

HG Metal Manufacturing Limited (“HG Metal”) is poised for substantial growth with the acquisition of a new industrial property at 47 Tuas View Circuit for S\$20.8 million. This strategic move comes as its current facility at 28 Jalan Buroh approaches full operational capacity. The new site is expected to deliver an incremental annual production capacity of up to 180,000 metric tonnes (MT) within the next 3–5 years upon full fit-out and automation.

• Estimated Capex: The group anticipates a phased investment of S\$15–20 million to fit out and automate the new site, aligned with cash flow, market conditions, and operational priorities.
• Revenue Impact: “Cut and bend” services remain the core revenue driver, accounting for S\$112.6 million or 86% of total group revenue.

Investor Note: The expansion signals HG Metal’s ambition to capture greater market share and diversify its customer base, which could be price sensitive and impact future earnings.

2. Strategic Diversification and Competitive Positioning

HG Metal is broadening its focus beyond traditional MRT and public infrastructure projects. The group is targeting growth in private residential developments, high-spec industrial buildings, and educational institutions.

• Competitive Advantages: Proven operational efficiency, track record in complex projects, and investment in new capabilities position HG Metal to deliver value beyond competitive pricing, focusing on quality and service differentiation.
• Growth Strategy: The company prioritizes value-added offerings to maintain sustainable margins and long-term client relationships, rather than engaging in price wars.

Investor Note: Entry into new market segments could diversify revenue streams and mitigate risks tied to public sector projects.

3. Investment in Eden Flame Sdn. Bhd.: Interested Person Transaction

HG Metal announced its subscription of RM18 million in Class B Preference Shares of Eden Flame Sdn. Bhd., convertible into a 4.4% equity stake. Eden Flame is a Malaysian steel manufacturer and a wholly owned subsidiary of Green Esteel Pte. Ltd. (Esteel), HG Metal’s majority shareholder.

• Plant Details: Located in Pasir Gudang, Johor Bahru, the plant uses electric arc furnace technology for greener steel production with a planned annual capacity of 500,000 MT of rebars (10mm–40mm), leveraging recycled steel scrap.
• Approval Process: The Board and Audit and Risk Committee, both comprising a majority of independent directors, reviewed and approved the transaction. Independent directors assessed commercial terms, risks, and strategic alignment—ensuring transparency and safeguarding minority shareholders’ interests.
• Commercial Safeguards: The investment terms were negotiated on an arm’s-length basis, matching those offered to all investors. The Board adopted a measured approach by subscribing to a minority stake, balancing risk and opportunity.
• Yield and Valuation: There is no fixed dividend rate on the preference shares; distributions are contingent on the project reaching operational maturity and generating cash flow. No formal valuation was conducted, but the Board reviewed technical feasibility, supplier credentials, and regulatory approvals.
• Strategic Rationale: The investment, less than 5% of HG Metal’s NTA, secures access to low-carbon steel—a growing demand in Singapore and Southeast Asia. Eden Flame can source scrap feedstock locally and regionally, with selling prices expected to reflect raw material price changes.

Investor Note: The investment in Eden Flame introduces exposure to green steel, a trend that may attract sustainability-focused investors and affect share price depending on project execution and market acceptance.

4. Interested Person Transactions (IPT) with BRC Asia Limited

HG Metal seeks shareholder approval for the renewal of its IPT mandate at the upcoming AGM (23 January 2026). BRC Asia Limited has been a major supplier since 2003.

• Correction of Typographical Error: Purchases from BRC Asia during FP2025 amounted to S\$47,436,000, not S\$47,436 as previously misstated. Sales to BRC Asia were S\$472,000.
• Supplier Relationships: Relationships with BRC Asia and other suppliers remain stable, with emphasis on reliability, service quality, pricing, and just-in-time delivery.
• IPT Oversight: The Audit and Risk Committee (ARC) reviews all IPTs, benchmarking against external and internal comparables, monitoring payment terms and service levels, and ensuring transactions are at arm’s length and in the best interests of minority shareholders. During FP2025, 59.8% of IPT contracts were pre-approved by the ARC, reflecting more cautious procurement due to falling steel prices.
• Governance: The ARC maintains strict oversight, with members abstaining from decisions where conflicts exist, and all IPTs are subject to annual internal and external audits.

Investor Note: The close scrutiny and governance of IPTs should reassure shareholders about transparency and fair dealing, but large volumes of transactions with related parties may remain a point of investor focus and scrutiny.

5. Governance and Risk Management Enhancements

HG Metal’s Board and ARC have strengthened procedures for approving and monitoring interested person transactions. Quarterly IPT Registers and annual audits ensure compliance and protect shareholder interests.

• Disclosure: All material transactions and corrections are promptly communicated to shareholders.
• Management Approach: The company has adopted a cautious procurement strategy, buying materials in smaller batches to mitigate exposure to steel price volatility.

Investor Note: Enhanced governance may bolster investor confidence and support share price stability, especially amid broader market uncertainties.

Conclusion: Price Sensitive and Strategic Implications

• Major expansion in operational capacity with the new Tuas facility may drive future revenue and earnings growth.
• Early-stage investment in Eden Flame offers exposure to green steel, with potential upside if the project succeeds, but also entails execution risks and no guaranteed yield.
• Correction of IPT figures and ongoing governance oversight highlight transparency, but continued high-value transactions with related parties may remain under investor watch.
• Strategic diversification and operational enhancements suggest a proactive approach to market changes, which could positively influence share price if successfully executed.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with professional advisors before making any investment decisions. The information herein is based on publicly disclosed documents and Board responses as at 16 January 2026.

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