TABLE OF
CONTENTS
01
CORPORATE PROFILE
02
OUR BUSINESS
04
MESSAGE TO SHAREHOLDERS
11
CORPORATE STRUCTURE
07
OPERATING & FINANCIAL REVIEW
12
BOARD OF DIRECTORS
09
FY2024 FINANCIAL HIGHLIGHTS
14
KEY MANAGEMENT PERSONNEL
10
FIVE-YEAR FINANCIAL SUMMARY
15
CORPORATE INFORMATION
16
SUSTAINABILITY REPORT
51
CORPORATE GOVERNANCE REPORT
95
FINANCIAL CONTENTS
CORPORATE PROFILE
At HG Metal Manufacturing Limited ("HG Metal"), we are sturdy like steel, yet flexible enough to understand and meet our clients' unique and changing needs. Change is constant and we believe in always gaining new perspectives to advance with evolving market trends.
With more than 40 years of experience in the industry, we have shaped a strong reputation as one of the largest steel distributors and processors around the region. We add value by bridging the gap between upstream steel producers and end users of steel. Through our three main business units - HG Distribution, HG Construction Steel, HG Coupler & Thread - we provide one-stop, end-to-end customised solutions for our strong clientele base of more than 1,500.
We pride ourselves as one of the most established steel distributors and services provider in the market. Armed with an extensive network of suppliers and solid sourcing capabilities, HG Metal offers customised solutions for our regional customer base along the entire supply chain.
HG Metal was listed on Singapore Exchange's SESDAQ on 21 March 2002 and was upgraded to the Mainboard in May 2004.
OUR BUSINESS
ONE-STOP CENTRE OFFERING INTEGRATED AND TAILORED SOLUTIONS
In today's ever changing and demanding business environment, we strive to provide quality steel products and one-stop customised solutions to meet our clients' steel needs. We offer end-to-end services ranging from distribution services to downstream value-added activities via our three business units.
HG DISTRIBUTION
Under our Distribution business, we provide a wide array of services including wholesale activities, retailing, trading, sourcing of products and distributing steel products to ASEAN countries. We have an extensive and competitively priced portfolio of quality steel products for a wide range of industries and applications, including BCA-compliant materials and higher grade niche products. We take pride in our strong and established sourcing capabilities from an extensive network of suppliers around the world. We also provide value-added services like steel finishing services, product customisation, logistics and local/export shipment.
HG CONSTRUCTION STEEL
To meet the rising demand for construction steel, we offer comprehensive packages that cater to just-in-time production for all forms of construction steel requirements. Our products range from cut and bend reinforcing bars to deformed bars, and straight rebars, while our services include customised steel finishing services like galvanising, coating, cutting and drilling, as well as rental of plates. Our state-of-the-art facilities in Singapore boast fully automated cut and bend production lines, with an annual production capacity of 180,000 tonnes.
HG COUPLER AND THREAD
With decades of experiences in the steel and construction businesses, we have partnered with China Academy of Building Research (CABR) to supply top quality rebars mechanical splice and anchor system for reinforced concrete construction. Our commitment is to deliver solutions that significantly enhance the strength and durability of reinforced concrete structures.
INTERNATIONAL NETWORK OF SUPPLIERS AND CLIENTS
Over the years, we have established a strong global network of suppliers and clients. Our extensive network of suppliers includes China, Japan, Korea, Turkey and other Eastern European countries. We also have a large and diversified customer base of more than 1,500 clients with our key markets being Singapore, Malaysia, and Indonesia.
LARGE-SCALE COMPREHENSIVE FACILITIES We have approximately 300,000 sq ft of warehousing and processing facilities located at Jalan Buroh. The facilities have a steel storage capacity of 100,000 tonnes and a yearly handling capacity (in and out) of 200,000 tonnes.
ENSURING QUALITY, ENHANCING VALUE
At HG Metal, everything we do is driven by our desire to ensure quality and enhance value for our clients. Our large-scale facilities and ability to order steel in bulk ensure that we achieve economies of scale, which enable us to offer competitive prices in the market. Together with our one-stop tailored solutions, extensive procurement network and established geographical reach, these key strengths have helped cement our 40-year position in the steel industry. Supported by highly experienced teams in management, operations and sales, we leverage on our decades of knowledge to deliver steel solutions more efficiently and effectively. From supply chain management, logistics and warehousing operation to quality assurance and dedicated customer service, we go the extra mile to provide greater value for our clients with products of the highest quality.
ADVANCING IN THE MARKET
To strengthen our foothold in the market, we adopt a multi-pronged growth strategy focused on:
• Diversifying our business model to include higher value-added services and direct sales to end-users
• Widening our geographical reach in South East Asia
• Strengthening customer relationships by directly engaging end-users of steel who require large and customised orders for specific projects
• Enhancing our processing capabilities by offering more downstream customisation services
• Providing one stop solutions for fabrication
DEAR SHAREHOLDERS,
On behalf of the Board of Directors ("Board"), we are delighted to present the Annual Report of HG Metal Manufacturing Limited ("HG Metal", the "Company" and together with its subsidiaries, the "Group") for the financial year ended 31 December 2024 ("FY2024").
OUR STRATEGIC TRANSFORMATION
Our strategic business transformation which started two years ago is making excellent progress. When I came onboard in June 2023, my first priority was to revamp HG Metal to become a leaner, more efficient, and forward-looking Company so as to enhance its long-term shareholder value.
In FY2024, we completed two share placements, in June and August 2024 respectively, which raised a total of approximately S$13.3 million ("Placements"). We also completed a rights issue in December 2024, for shareholders to participate in the Company's equity at the same share price as the Placements which raised approximately S$19.8 million. As the Company's controlling shareholder, Green Esteel Pte. Ltd. ("Esteel") undertook to subscribe for excess rights shares, Esteel's shareholding in the Company increased to approximately 52.59% in February 2025, after completing a mandatory general offer triggered by the rights issue. These fundraising exercises have allowed us to build up our financial resources to undertake our transformation, expand our core business, and make strategic investments via acquisitions, as and when these opportunities arise.
Last year, we fully divested from Myanmar to focus on our main market in Singapore, which I believe was the prudent and right decision. In addition, we are committed to strengthening the culture of work safety within the Group, with the aim of improving our health and safety track record and fostering a positive working environment for our employees. While we continue to make progress in this area, we are dedicated to further enhancing our efforts. The Board has been working closely with Ms Xiao Xia ("Ms Xiao"), who joined in April 2023 as the Group's Executive Director and Chief Executive Officer, to enhance the Group's operational efficiencies and expand our business. With over 20 years of experience in steel and commodity trading, Ms Xiao's contribution in every department - from corporate action to strategic planning to supply chain management - has made an invaluable impact to the Group's overall performance.
Together with the rest of our Board, which includes our two Independent Non-Executive Directors Ms Ong Lizhen, Daisy and Ms Ng Chuey Peng, and our key management personnel, we have a strong team in place which I am confident will bring the Company to greater heights.
OUTSTANDING FY2024 PERFORMANCE
The global macroeconomic environment remains uncertain, with high interest rates, lingering inflation, supply chain disruptions, and geopolitical tensions weighing on businesses. Ongoing conflicts, such as the war in Ukraine and the situation in the Middle East, have further contributed to global instability, disrupted trade flows and affected commodity prices, such as steel. These factors continue to drive volatility in energy, and raw material prices, adding additional pressure on businesses worldwide.
Despite these challenges, the Group posted a 5% increase in FY2024 revenue to approximately S$157.9 million, compared to approximately S$149.8 million in FY2023. Gross profit soared 73% to approximately S$22.1 million in FY2024 from approximately S$12.8 million in FY2023, while gross profit margin increased 5.5 percentage points to 14.0% in FY2024 from 8.5% in FY2023.
STRONG BUSINESS OUTLOOK
Overall, the Group's net profit jumped to approximately S$8.6 million in FY2024, marking a significant turnaround from a net loss of approximately S$1.8 million in FY2023. This huge improvement was driven by increased business volume, improved operational efficiency and better profit margins.
The Group's operating cash flow is also very healthy, with cash and cash equivalents at approximately S$55.4 million as at 31 December 2024, compared with an approximately S$16.4 million as at 31 December 2023. This large cash holding, generated from the Placements, rights issue, and higher FY2024 profits, affords us the financial resources to expand our business and undertake the right acquisitions if and when such opportunities present themselves.
Looking ahead, we are committed to advancing our corporate strategies in the development and application of steel products for the built environment in Singapore and overseas, either by acquisitions or organic growth. In Singapore, we also aim to increase our market share, sales, and profitability. We are actively looking at opportunities to expand our capacity within our current scope, which will enable us to enhance and broaden our existing product offerings while strengthening our competitive position in the market.
The Ministry of Trade and Industry ("MTI")1 reported that the Singapore economy grew by 4.4% in 2024, compared to 1.1% in 2023. Growth for 2025 is forecast to range between 1.0% and 3.0%, as the policies of the new US Trump administration create more uncertainty and contribute to a more cautious global macroeconomic outlook.
Meanwhile, the Building and Construction Authority ("BCA")2 expects Singapore's construction demand in the medium-term to remain strong due to several large-scale development projects. The preliminary construction demand for 2024 reached S$44.2 billion in nominal terms, which exceeded the initial estimates of S$35 billion to S$41 billion a year ago. Total construction demand is now forecast to range between S$47 billion and S$53 billion in nominal terms for 2025.
1https://www.mti.gov.sg/Newsroom/Press-Releases/2025/02/MTI-Maintains-2025-GDP-Growth-at-1-to-3-Per-Cent
2https://www1.bca.gov.sg/about-us/news-and-publications/media-releases/2025/01/23/construction-demand-to-remain-strong-for-2025
Our plan moving forward will be to continue to expand our production efficiency to grow sales. Our focus will be on improving raw material procurement and closely monitoring steel prices fluctuations to dynamically adjust our inventory management and pricing strategies.
We also aim to increase our production capacity to secure more projects, which may involve expanding our facilities as needed. At the same time, we have been actively working towards broadening our customer base in order to diversify. While our current projects are mainly focused on MRT, and infrastructure projects, the Group has recently secured new projects, including the Resorts World Sentosa. We will also be actively pursuing other significant developments, including the Changi Airport Terminal 5, private residential projects, high-specification industrial buildings, and educational facilities. These projects are expected to contribute to both our top and bottom lines once they materialise in the financial year ended 31 December 2025 ("FY2025").
Singapore's status as a global manufacturing and financial hub and its ambitions to be a technology powerhouse means continued opportunities for the high-quality development of infrastructure and buildings. As such, suppliers of building materials, including steel, will also have to evolve and constantly pursue better cost controls, operating efficiency, sustainability and safety to remain relevant in an increasingly competitive environment. This is something that Group is undergoing as part of its strategic transformation and long-term quest to become a leader in the steel market in Singapore and Southeast Asia. Barring unforeseen circumstances and taking into the account all the above, we remain cautiously optimistic in FY2025.
IN APPRECIATION
I would like to extend my heartfelt gratitude to our Board of Directors for their continued guidance and support, and to all our management and staff for their hard work and dedication in helping us to achieve an excellent set of results for FY2024 amidst a challenging business operating environment.
Next, I want to accord my appreciation to our valued customers, business associates and suppliers for their support over the years, and I look forward to many more fruitful years of partnership ahead.
Finally, a big thank you to our loyal shareholders for your unwavering trust and support in us. We are grateful to have you with us for this journey as HG Metal continues its growth strategies.
Mr Ong Hwee Li
Independent Non-Executive Chairman
FINANCIAL HIGHLIGHTS
For the year under review, the Group posted a revenue of S$157.9 million and a net profit after tax of S$8.6 million, signifying its unwavering effort to pursue business growth and ensuring a turnaround from the loss position of S$1.8 million recorded in FY2023. This strong financial performance underscores the Group's commitment to creating long-term value for its shareholders.
The Group also slightly reduced its borrowings in FY2024 while its cash and cash equivalents rose from S$16.4 million as of 31 December 2023 to S$55.4 million as of 31 December 2024. In FY2024, the Group successfully completed two tranches of share placements and a rights issue, raising net proceeds of approximately S$32.5
million. These fundraising exercises have enhanced the Group's balance sheet and positioned it for further growth opportunities.
The Group's business fundamentals will continue to be supported by the growth of the Singapore construction sector. Meanwhile, with effect from 3 February 2025, Green Esteel Pte Ltd ("Esteel") has become the majority shareholder of the Group following the successful completion of a mandatory general cash offer triggered by the rights issue. With Esteel's robust financial position, extensive business networks, and deep understanding of the regional business landscape, the Group is confident that this partnership will create valuable synergies, expand its capabilities and support its long-term growth strategy.
BUSINESS OUTLOOK
The Building and Construction Authority ("BCA") has projected Singapore's construction demand for 2025 to range between S$47 billion and S$53 billion, driven by major projects such as the Changi Airport Terminal 5, Marina Bay Sands expansion, public housing, healthcare and educational facilities, and infrastructure developments like MRT projects and Tuas Port. In real terms, demand is expected to be between S$35 billion and S$39 billion, slightly surpassing pre-COVID levels. Looking ahead, BCA anticipates an average annual construction demand of S$39 billion to S$46 billion from 2026 to 2029, underpinned by ongoing and upcoming infrastructure and development projects.1
Singapore's GDP grew by 4.4% in 2024, signaling a positive economic trajectory. This growth was driven by strong performances across key sectors, including wholesale trade, finance and insurance, and manufacturing. Additionally, the construction sector expanded by 4.5%, building on the 5.8% growth achieved in 2023. However, the Ministry of Trade and Industry ("MTI") has maintained its GDP growth forecast at a modest 1.0% to 3.0% for 2025, reflecting a more measured pace of growth. This cautious outlook is due to significant global economic uncertainties, including trade tensions and geopolitical conflicts, which could pose risks to Singapore's trade-dependent economy.2
Hence, while BCA's outlook for construction demand remains positive, the more subdued GDP forecast for 2025 could present challenges for the construction sector as the potential realization of global economic risks and geopolitical uncertainties may impact the sector's growth path.
CONTINUING OPERATIONS: REVENUE AND GROSS PROFIT
In FY2024, the Group achieved a revenue of S$157.9 million, which was an increase of 5% from S$149.8 million in FY2023. This slight revenue growth was driven primarily by a 19% year-on-year increase in sales volume, although gains were partially offset by a decline in average selling prices in view of the softening of global steel prices compared to FY2023. The lower global steel prices were attributed to a myriad of factors, including a weakened demand in the U.S. with its construction, manufacturing and industrial production recovering from post-COVID economic challenges and a weakness in major markets like Europe and Asia3. This is coupled with China's slower economic recovery and the ongoing downturn of its real estate sector4, while it increased its steel exports, further putting pressure on global steel prices.5
The Group's overall gross profit margin for FY2024 increased to 14.0%, up from 8.5% in FY2023, mainly
1https://www1.bca.gov.sg/about-us/news-and-publications/media-releases/2025/01/23/construction-demand-to-remain-strong-for-2025
2https://www.mti.gov.sg/Newsroom/Press-Releases/2025/02/MTI-Maintains-2025-GDP-Growth-at-1-to-3-Per-Cent
3https://www.fastmarkets.com/insights/how-trumps-2024-tariffs-are-reshaping-the-us-steel-market/
4https://worldsteel.org/media/press-releases/2024/worldsteel-short-range-outlook-october-2024/
5 https://gmk.center/en/news/steel-prices-may-fall-by-another-4-in-2025/
attributed to a lower weighted average cost of material on hand. As a result, the Group recorded a higher gross profit of S$22.1 million in FY2024, compared to S$12.8 million in FY2023.
OTHER OPERATING INCOME
Other operating income rose 77% to S$1.7 million in FY2024 from S$1.0 million in FY2023, mainly attributed to a fair value gain in forward currency contracts and a gain on from foreign currency exchange.
EXPENSES
Total selling and distribution costs increased by 71% in FY2024 to S$1.5 million from S$0.9 million in FY2023, driven by the higher delivery volumes, a higher use of outsourced logistics and a rise in transport charges.
Administrative expenses rose 8% to S$8.0 million in FY2024 (FY2023: S$7.4 million), mainly due to an increase in staff costs.
However, other operating expenses decreased 20% to S$3.4 million in FY2024 from S$4.2 million in FY2023, mainly due to lower depreciation expenses.
Total finance costs for FY2024 declined to S$0.6 million from S$1.0 million in FY2023, as the Group reduced its bank borrowings.
The Group also recorded a reversal of impairment loss on financial assets of S$0.04 million in FY2024 as compared to an impairment loss of S$0.08 million in FY2023 as its customers repaid the previously impaired amounts.
PROFITABILITY
The Group reported a net profit before tax from continuing operations of S$10.3 million in FY2024, up from a net profit before tax of S$0.1 million in FY2023 mainly driven by an increase in gross profit.
The income tax expense for FY2024 was S$1.5 million. In FY2023, the Group recognized a tax credit of S$0.3 million, resulting from a refund due to overpaid taxes.
As a result, the Group recorded a net profit after tax from continuing operations of S$8.8 million in FY2024, compared to a net profit after tax of S$0.5 million in FY2023.
In FY2024, the Group recorded a net loss after tax of S$264,000 for its discontinued operations which was divested on 13 February 2024.
All in all, the Group achieved a net profit after tax of S$8.6 million in FY2024 as compared to a net loss after tax of S$1.8 million in FY2023.
In FY2024, the net profit after tax attributable to shareholders was S$6.3 million, after factoring in a S$2.2 million waiver of intercompany debt by the parent company following the completion of the disposal of the discontinued operation. The net profit after tax attributable to non-controlling interests was S$2.3 million.
BALANCE SHEET
The Group's non-current assets, comprising mainly property, plant and equipment and right-of-use assets were S$24.5 million as at 31 December 2024, slightly lower than S$26.0 million as at 31 December 2023.
Inventory on hand decreased to S$11.9 million as at 31 December 2024 compared to S$24.2 million as at 31 December 2023, in line with the Group's strategy to optimise inventory holding.
Trade and other receivables increased to S$61.4 million as at 31 December 2024 as compared to S$50.4 million as at 31 December 2023, mainly due to higher trade receivables in line with the higher revenue generated in FY2024. Trade and other payables decreased to S$7.9 million as at 31 December 2024 from S$10.4 million as at 31 December 2023, mainly attributed to repayments made to suppliers.
Total bank borrowings decreased to S$6.7 million as at 31 December 2024, from S$8.7 million as at 31 December 2023, mainly due to loan repayments made to banks.
CASH POSITION
Net cash inflow from operating activities fell to S$11.4 million in FY2024 from S$22.3 million in FY2023, mainly due to the profits from operations that was offset by a net decrease in working capital, primarily due to an increase in trade and other receivables.
Net cash flows used in investing activities for FY2024 stood at S$2.2 million, comprising mainly S$3.6 million for fixed deposit pledged with banks, S$0.9 million for purchase of property, plant and equipment and intangible assets as well as S$1.4 million in net cash outflow for the disposal of a subsidiary. These outflows were partially offset by S$3.5 million in proceeds from maturity of investment securities and S$0.1 million in proceeds from a disposal of property, plant and equipment.
Net cash inflows from financing activities for FY2024 amounted to S$29.8 million. This included net proceeds of S$13.1 million from share placements and S$19.4 million from a rights issue, after accounting a S$2.1 million repayment of banks borrowings repayment and S$0.6 million in principal lease repayments.
The Group's cash and cash equivalents increased to S$55.4 million as at 31 December 2024 compared to S$16.4 million as at 31 December 2023.