Maruichi Steel Tube Invests for Vietnamese Tube Maker

Maruichi Steel Tube will tie up with Sun Steel Corporation, a steel tube maker of Taiwanese Group located in Vietnam, in equity capital, which will underwrite allocation of new shares to a third party at US$ 26.3 million of US$ 32.5 million, which will hold 35.3% of shares. Sun Steel Corporation becomes the equity method affiliate of Maruichi Steel Tube.Sun Steel Corporation (SUNSCO) was established by Taiwanese capital in 1996, which started production of steel tube and has expanded production items for hot dip zinc coated steel sheet, colored steel sheet and processing steel sheet, while stopped production of reinforcing steel bar. SUNSCO constructed a continuous galvanizing line in February 2005 and will complete construction of cold rolling line in February 2007. Toyota Tsusho Corporation holds some shares of SUNSCO.SUNSCO is suffered from fund shortage since 2005 due to capital expenditure, market price decline and delay of new plant operation. The firm posted US$ 103 million of net sales and US$ 6.4 million of recurring profit in 2004. The sales decreased to US$ 83 million and the profit turned to US$ 9.5 million of loss in 2005. Maruichi Steel Tube judged SUNSCO could improve and expand its business with capital reinforcement and engineering assistant.SUNSCO currently produces a few thousand tonnes per month at CGL and 30,000 tonnes per yearat colored steel sheet line. The firm will increase the production at CGL to 15,000 tonnes per month, which plans to expand total production to 200,000 tonnes per year in 2007 putting coated steel sheet as the main product. The firm expects US$ 160 million of sales and US$ 3 million of recurring profit in 2007.