Ho Wah Genting shareholders gives thumbs up for rights issue

KUALA LUMPUR: Ho Wah Genting Bhd shareholders yesterday approved of a rights issue to raise between RM7 million and RM68 million to fund its wire and cable business in Indonesia.

"Additional working capital to finance the purchase of raw and packaging materials for our manufacturing division will contribute positively to our earnings," said managing director William Teo.

As at March 2011, the bulk of Ho Wah's income is derived from its wire and cable business.

Most of the group's power supply cord sets and cable assemblies for electrical and electronic devices are exported to the US.

In mitigating against the US economic slump, Ho Wah is looking to broaden its client base in southeast Asia.

"We're evaluating prospective distributors in this region. We want to increase our presence in Vietnam, Cambodia and Thailand," he told reporters after the company's shareholders meeting here yesterday.

Recently, Ho Wah's 51 per cent unit HWG Tin Mining Sdn Bhd has been awarded a 10-year mining lease to mine tin until 2020 at a 202.4ha site in Pengkalan Hulu, Grik, Perak.

"From mid-February until now, we've extracted around 30 tonnes of tin ore. Output is low because open-pit mining requires clearance and removal of overburden or top soil before reaching the tin ore body where the bulk of the valuable mineral is deposited," he said.

The tin industry, which contributed about RM2 billion to the country’s gross domestic product annually, is bullish, mainly driven by the consistent consumption globally.

"Back in January 2008, tin was trading at US$16,500 per tonne and as of last month, it has climbed to US$25,500 per tonne. The buoyant pricing is mainly due to global demand outpacing supply. The weakening US dollar had also contributed to the price hike," he explained.

Teo expects tin prices to go on trading at between US$25,000 and US$30,000 per tonne as it is not that easy for tin supply to catch up with rising demand from the electrical and electronics sector.

He also expects Ho Wah's tin mining business to be a major earnings driver as the operations move into commercial production, a year from now.

"At current pricing of US$28,000 per tonne, tin mining is expected to give us good returns in the coming quarters. We target to produce about 150 tonnes or 1,800 tonnes of tin next year," he said.

It was reported that the Perak royal family directly owns a 35 per cent stake in HWG Tin Ming via Jiwa Seribu Sdn Bhd, which is a wholly-owned subsidiary of Ras Sdn Bhd.

The Perak state government, which awarded the mining concession, also benefits from Ho Wah's mining gains because it collects a 5 per cent royalty from the tin ore extracted.

Ho Wah also owns a 35 per cent stake in Hong Kong-listed magnesium producer CVM Ltd, which has dolomite reserves of some 20 million tonnes in Perak.

Dolomite is used to make magnesium ingots

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