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Thursday, May 15, 2008

Southern Steel surges to decade high

SOUTHERN Steel rose to the highest in more than 10 years amid speculation higher steel prices and the Malaysian government’s plan to remove price controls will boost earnings.

Southern Steel yesterday surged 56 sen, or 18 per cent, to close at RM3.76, the highest since November 1997. Its rivals also climbed. Ann Joo Resources rose 18 sen, or 4.6 per cent, to RM4.06.

Malaysia’s government on Monday scrapped the ceiling price of steel bars and billets and eased import and export restrictions to help curb a supply shortage.

Southern Steel also said last week first-quarter profit jumped sevenfold to RM96.4 million (US$30 million) on higher prices.

“That has spurred interest in the stock,” said Azida Nor-Azizi, an analyst at DBS Vickers in Kuala Lumpur with a “buy” rating on the shares. “It’s backed by the good set of results.”

Southern shares also rose amid speculation steel demand may surge because of reconstruction work after China was hit by its strongest earthquake in 58 years. The magnitude-7.9 earthquake struck Sichuan province Monday, killing more than 10,000 people after 500,000 buildings collapsed.

By Bloomberg

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