G Steel Plc (GSTEEL) and its subsidiary GJ Steel Plc (GJS) have both reported continuous financial losses since Nippon Steel — Japan’s No.1 steel producer and the fourth biggest producer globally — took over their management after acquiring a majority of shares in the companies 18 months ago.
The book value of G Steel fell by 59% to 0.09 per share and the company recorded a net loss of more than 2.5 billion baht, while the book value of GJ Steel fell by 23.8% to 0.48 per share and the company recorded a net loss of more than 3.6 billion baht.
These results disappointed many shareholders of the two firms, particularly G Steel shareholders as they are also concerned that there are no signs of a resumption of trading in the near future.
The arrival of Nippon Steel raised expectations among shareholders and investors regarding the value and performance of both G Steel and GJ Steel.
The shareholders of both companies are hopeful the performance of the stocks of G Steel and GJ Steel would improve and become stocks worth investing in once again. According to a statement by Takahiro Mori, executive vice-president of Nippon Steel Group: “We have an objective to invest in a steel plant in Thailand to support the demand for hot-rolled steel in the market even more.”
Despite the encouraging statement issued by Mr Mori, the value of sales made by both firms appears to have moved in the opposite direction. G Steel’s sales declined from 9.69 billion baht in the first half of 2022 to 5.5 billion baht in the first half of 2023 while the value of GJ Steel’s sales fell from 10.5 billion baht in the first half of 2022 to 6.34 billion baht in the first half of 2023.
Under the management of Nippon Steel over the past 18 months, the book value of G Steel decreased from 0.22 baht per share (end of Q1/2022) to only 0.09 baht per share — a 59% drop — as a result of the firm recording total net losses of 2.58 billion baht. A large part of the loss, tallying 1.49 billion baht, was attributed to machinery being idle. Crucially, shares of G Steel remain suspended.
The book value of GJ Steel fell from 0.63 baht per share (end of Q1/2022) to 0.48 baht per share — a fall of more than 23.8% — as a result of GJ Steel’s total net losses of 3.68 billion baht. A large part of the loss — tallying 3.61 billion baht — was attributed to machinery being idle.
Overall, the situation is disappointing because GJ Steel has very little debt, but is still not able to generate profits and pay dividends to shareholders.