Steel Synergies Strengthened: BRC Asia to Acquire 55% Stake in Southern Steel Mesh

Strategic Acquisition to Cement MarketDominance

BRC Asia’s move to acquire 12.9 million ordinary shares, constituting55% of the issued share capital,of Southern Steel Mesh Sdn Bhdrepresents a strategic step to consolidate its footprint in the wire meshand steel reinforcement industry. With the acquisition valued at RM61.1million, BRC Asia aims to expand its operational scale and capacity inMalaysia, furthering its influence beyond Singapore.

The proposed acquisition was announced via BursaMalaysia filings on April 22, 2025, and marks a follow-up to BRC’sFebruary disclosure regarding its intentions to acquire a controlling stake.

Southern Steel Mesh: Financial Metrics &Valuation

As of June 30, 2024, SSM recorded:

• Book     Value: RM108.9 million
• Net     Tangible Assets (NTA): RM106.5 million (as of September 30,     2024)
• FY2024     Net Profit (After Tax): RM4.72 million
• 1QFY2024     Net Profit: RM649,617

Despite the acquisition price of RM61.1 million,which is below the company’s reported book value, the deal reflects BRC Asia’scareful valuation strategy based on a “willing-buyer, willing-seller”principle. The price was influenced by profitability trends, future earningspotential, and strategic benefits rather than purely asset-based valuation.

Deal Structure & Regulatory Conditions

The completion of the acquisition is contingent uponseveral key approvals:

1.  ShareholderApproval at Southern Steel’s EGM: An ordinary resolution mustbe passed endorsing the proposed transaction.

2.  SGXRegulatory Assessment: BRC Asia must secure confirmation from SGXRegCo (Singapore Exchange Regulation Company) on the application of Rule908(2) of the Listing Manual. This relates to potential disaggregation oftransactions involving Southern Steel, its subsidiaries, and Green Esteel,ensuring compliance with related party transaction rules.

These conditions indicate that both Singaporean andMalaysian regulatory environments are being navigated with diligence tomaintain corporate governance integrity.

Corporate Strategy & Synergistic Value

BRC Asia is a leading provider of prefabricated steelreinforcement products, often used in high-rise construction, civilengineering, and industrial infrastructure. By acquiring SSM, a specialist in wiremesh manufacturing, often used in slabs, walls, and pre-cast components, BRCAsia is poised to:

• Achieve     vertical integration within the steel value chain.
• Boost     manufacturing efficiency and output across Southeast Asian     markets.
• Leverage     SSM’s local Malaysian distribution network     and production facilities.
• Mitigate     supply chain volatility amid global steel price     fluctuations.

This acquisition aligns with BRC’s broader strategic goalof becoming ASEAN’s dominant steel reinforcement ecosystem player,serving mega infrastructure projects from Singapore to Kuala Lumpur.

Geopolitical & Economic Context

The deal also arrives amid heightened demand forconstruction-grade steel in Malaysia, driven by:

• Revival     of mega infrastructure projects (e.g., MRT3, ECRL, and high-speed     rail).
• Industrialization     in Johor, fueled by cross-border real estate     development with Singapore.
• A     renewed focus on domestic manufacturing resilience and steel     localization strategies post-COVID-19.

Given these tailwinds, SSM's acquisition provides BRC Asiawith strategic optionality to capitalize on post-pandemic recovery.

Key Takeaways:

• BRC     Asia will acquire 55% of Southern Steel Mesh for RM61.1 million (~USD 18.2     million).
• Southern     Steel Mesh holds a book value of RM108.9 million & FY2024 net profit     of RM4.72 million.
• The     deal supports vertical integration & ASEAN market expansion.
• Completion     is subject to shareholder approval & SGX regulatory clearance.
• BRC     aims to strengthen its regional dominance in wire mesh & steel     reinforcement.

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