China Steel plans to sell shares in Malaysian unit

China Steel Corp (中鋼), Taiwan's largest steelmaker, said it plans to list shares of a Malaysian unit in November to help finance expansion in the Southeast Asian nation.

China Steel and the China Development Industrial Bank (中華開發) plan to jointly sell 45 percent to 50 percent of Ornasteel Holdings Berhad before listing the unit in Malaysia, China Steel executive vice president Chen Yuan-cheng (陳源成) said.

"We're raising funds locally and will expand there," Chen said in a telephone interview. "We think it's a good time to list it because the environment is quite good."

China Steel owns 90 percent of Ornasteel Holdings, and China Development Industrial Bank, the nation's largest venture capital company, the remainder, according to Chen, who declined to give an estimate of how much the share sale will raise.

Oransteel Holdings, which controls Malaysia-based steelmakers Group Steel Enterprise Corp and Ornasteel Enterprise Corp, will be the first overseas subsidiary of China Steel to list, Chen said.

Kaohsiung-based China Steel has raised product prices every quarter since mid-2002 as strong demand from China drove up prices of the metal.

The company in June raised its profit forecast for the year by two-fifths from a December estimate to NT$46.4 billion (US$1.4 billion). It posted a profit of NT$37 billion last year.

China Steel saw sales rise 37.3 percent to NT$15.36 billion last month from a year earlier, according to a statement to the Taiwan Stock Exchange today.

China Steel shares ended 0.3 percent lower at NT$32.6 on the stock exchange, despite Merrill Lynch & Co raising its net profit forecast for the company this year by 3.2 percent to NT$48.97 billion (US$1.44 billion) on expectations demand for steel will continue to be strong.

The stock has gained 20 percent this year.