Anzo Holdings Bhd (Anzo) has attracted an Indian-based steel maker who is understood to have placed and order to buy copper scrap from the timber-turned-copper supplier worth in the region of RM500 million.
It is understood the RM500 million order came in last week and Anzo will start supplying to India as soon as possible.
We think Anzo will supply the copper via CSTME Resources Sdn Bhd, which has an AP license for export purposes. CTSME, which has about 12 per cent stake in Anzo is also supplying copper for Anzo to South Korea.
Anzo last month won a RM1.3 billion contract to supply millberry/candy copper scrap over 40 months to South Korea effective from July 1.
It would supply up to 60,000 tonnes of copper scrap to CSTME Resources Sdn Bhd at RM23,000 per tonne over 40 months.
As at July 7, we think Anzo has supplied around 14,000 to 15,000 tonnes of copper to the South Korean group, worth in the region of about RM18 million.
Anzo is really on the roll now. First it announced the RM1.3 billion copper deal with the South Korean group. Then last week it said that it is buying a glove company in Manjung, Perak for RM55 million that can produce up to 1.2 billion pieces of medical gloves a year.
Then news came out that a global fund from Hong Kong or China has emerged as a substantial shareholder in Anzo and now retail and institutional funds are also looking at the company. Can we expect more from Anzo? Analysts whom I speak to think yes.
At the rate the company is going now, this is going to be one high-flyer. We are expecting the stock to hit limit-up this week.
The shares of Anzo rose to a new high of 26 sen in three years and will be high-flying similar to other stocks trading in the glove sector.
Anzo’s earnings are also expected to improve significantly because of its new copper and glove business, not forgeting that its existing timber and construction businesses are on-going. Anzo will definitely no longer be a penny stock but a darling stock in the local stock exchange.
Copper prices are likely to stabilize in the coming quarters despite a recent surge in the red metal’s value and this augurs will for Anzo.
Three-month copper futures on the London Metal Exchange (LME) broke the $6,000-a-ton threshold by the end of June — a far cry from its low of around $4,626.50 at the height of Covid-19 fears in March.
On Monday, three-month copper on the LME gained 1.2% to trade at around $6,088 a ton, Reuters reported.
The copper rally over the past month from $5,700 a ton to over $6,000 a ton has occurred against a backdrop of flat to falling equity prices and bond yields, leaving copper looking overvalued by $220 to $420 per ton based on these historical relationships.
So if you look at this price trend, Anzo is going to perform superbly coupled with the earnings potential from its glove business.