Improved Performance, HK Metals Ready For Rights Issue Collaborating With Strategic Partners

Directors and Commissioners of HK Metals Utama. (Photo: Doc. HK Metals)

JAKARTA - A manufacturing company engaged in the iron, steel and aluminum industry, PT HK Metals Utama Tbk (HKMU) plans to hold a corporate action to issue new shares with Pre-emptive Rights (HMETD) or rights issue in order to cooperate with strategic partners.

The Company will issue a maximum of 5,150,000,000 new shares with a nominal value of Rp. 100 per share. However, the price for this Limited Public Offering (PUT) has not been determined.

HKMU's President Director Muhamad Kuncoro said the period for the implementation of the PUT or rights issue will be carried out after the company has obtained an Effective Statement from the Financial Services Authority (OJK).

"Referring to the provisions of Article 8 paragraph 3 POJK 14, the period between the date of approval of the EGMS to the effective date of the registration statement is no more than 12 months. The rights issue is expected to be held and completed in the first quarter of 2022," he said in a press conference after the General Meeting of Shareholders. Extraordinary Shares (EGMS), in Jakarta, Thursday 7 October.

The rights issue proceeds, after deducting all commissions, fees, fees and other expenses, will be used for working capital, partial debt repayment, and the remainder for subsidiaries.

"We estimate that in the event that the funds obtained from the Preemptive Rights proceeds are used in accordance with the planned use of funds, then we will have a number of funds that can be used as working capital for the implementation of the retail business strategy and payment of some debts," he explained.

On the same occasion, Jodi Pujiyono, Director and Corporate Secretary of HKMU, added that this rights issue is also one of the strategies in cooperating with new partners in the midst of improving business performance.

Based on the information disclosed by the company, currently HKMU's shareholder is PT Hyamn Sukses Abadi with 46.87 percent or 1,509,963,750 shares, while public investors (under 5 percent) are 53.13 percent or 1,711,786,250 shares.

Assuming all shareholders absorb their rights, then after the rights issue, the initial scenario before the new partner, namely Hyamn Sukses, will still own 46.87 percent with the share portion increasing to 3,923,656,095 and the public at 53.13 percent with the number of shares increasing to 4,448. .093.905 shares.

In an effort to improve corporate governance, shareholders have also appointed a new commissioner, namely actor Ricky Harun. The son of actress Donna Harun was appointed as the Independent Commissioner of HKMU through the AGMS and EGMS last August 16. Ricky was appointed as one of the commissioners because he is a public figure who is expected to increase public awareness about HKMU products.

First semester performance improved

The company recorded a performance that began to recover in the first semester of 2021 in the midst of the COVID-19 pandemic. HKMU achieved revenue of Rp.236.78 billion, down from the same period last year of Rp.444.05 billion. The biggest contribution was from aluminum, which was Rp. 119.85 billion, from Rp. 122.58 billion, and sales of light steel were Rp. 48.76 billion from the previous Rp. 80.31 billion.

Interestingly, sales of stainless steel products rose 38.32 percent to Rp26.82 billion, from Rp19.39 billion, and PVC pipes rose 54.28 percent to Rp19.47 billion from Rp12.62 billion. Sales of toilet products and sanitary wares even jumped 251 percent to Rp19.29 billion from the same period last year of Rp5.49 billion.

Thus, HKMU's net loss was reduced by 61 percent to Rp 9.09 billion from a net loss in the June 2020 period of Rp 23.16 billion. Jodi Pujiyono said the future strategy is to cut low-margin businesses such as distribution, trading with single-digit margin contributions, and will focus on manufacturing.

"This is based on, among other things, the weakening market conditions during the pandemic, making the principal sell direct to consumers, so that the position as a distributor is increasingly unprofitable. We also have a manufacturing business that should be able to be even more optimal in terms of gross margins and efficiency for the sake of generate profitability," he said.

The pandemic still has an impact, but the aluminum industry is strong enough to survive the COVID-19 era because the WFH (work form home) trend has increased demand for home renovations.

"Aluminum is a substitute product for frame components that were previously made of wood, where the market is also starting to be educated, which is expected to provide demand resistance to always grow," he said.

The company will boost its performance in the second half of the year due to cyclical growth in the second half.

"Therefore we focus on two things, namely demand which is expected to recover and efficiency so that profitability can be more clearly seen. We do not allocate a dominant capex (capital expenditure), only IDR 5 billion and prioritized for maintenance and engine rejuvenation so that economies of scale and production efficiency can be achieved ," he explained.

In addition, exports will also continue to be optimized to increase the proportion, while utilization will also be pushed to 80 percent. This year, several units have also reached record highs and will continue to be increased.

"With standardization to enter architectural aluminum products in the export market, the R&D and operational teams will also continue to strive to achieve this standard so that the products produced can meet these demands," he concluded.