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Nico Steel says able to meet S$40m market cap to exit watch list in 'reasonable time'

MAINBOARD-LISTED metals supplier Nico Steel Holdings said it will be able to meet the S$40 million market capitalisation requirement to exit the Singapore Exchange (SGX) watch list, given “reasonable time”.

In a quarterly update on Tuesday morning, the company also said it is optimistic that it will remain profitable in the current financial year.

The board believes Nico Steel is at the forefront of the metallurgical and materials solutions for the 5G revolution, which will help the group achieve better financial performance and in turn improve its valuation, despite the global economic slowdown and geopolitical uncertainties.

As at July 22, Nico Steel had a market cap of about S$24.81 million, based on SGX data. The counter closed flat at 0.5 Singapore cent on Monday.

Nico Steel was placed on the watch list on Sept 5, 2016 under the financial entry criteria, for posting three straight years of pre-tax losses, and for failing to maintain a market cap of at least S$40 million.

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It has until Sept 4, 2020 to exit the financial watch list, after the SGX gave it a one-year extension to do so.

In addition, it was also placed on the watch list under the minimum trading price (MTP) criteria on June 5, 2017, for failing to maintain a six-month volume-weighted average trading price of 20 Singapore cents, and a S$40 million market cap. It has until June 4, 2020 to cure that status, or it could be forced to delist.

The Business Times reported last week that SGX plans to seek public feedback on a proposal to scrap the MTP requirement. If this share price hurdle is removed, it could avert the prospect of the bourse operator having to delist up to 54 companies in June 2020 because they could not raise their share prices in time.

Nico Steel said on Tuesday that its board will continue to monitor and explore options to comply with the financial exit criteria and the MTP exit criteria.

The company has received shareholder approval for its share buyback mandate.

Barring unforeseen circumstances, the board and management are also “reasonably optimistic” that the group will remain profitable in FY2020.

Nico Steel said it will continue to improve the functionality and performance of its customers’ electronic mobile devices for 5G, through its customised metallurgical and materials solutions, and the proprietary Nico brand of metal alloys.

“The group believes that its financial performance will be improved through its value-creation for its customers,” it noted.

Nico Steel posted a net profit of US$243,000 for FY2019 ended Feb 28, slightly more than seven times its net profit of US$34,000 a year ago. This came on the back of a 14.2 per cent increase in revenue to US$15.1 million, supported by demand for its proprietary metal alloy brand.

On Tuesday, the company also said it will announce its unaudited interim financial statements for the six months ending Aug 31, 2019 in October this year, when it will also give its next quarterly update under listing rules. The firm is not required to announce quarterly financial results.

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