KLSE-listed steel player ANNJOO Resources Berhad (ANNJOO) has reported a disappointing set of results for the first half of FY2025. Excluding extraordinary items of RM14.2 million, the company posted a core net loss of RM147.1 million, which has already surpassed both house and street estimates for its full-year loss of RM73.0 million.
This steeper-than-expected loss was primarily due to the sluggish recovery in average selling prices (ASP), which continues to weigh on ANNJOO’s margins despite management’s cost rationalisation efforts.
Global Headwinds Continue to Weigh on Steel Players
The broader operating environment for the steel industry remains challenging. The global economy is projected to moderate to 2.9% growth in 2025–2026, dragged by trade restrictions, tighter financial conditions, and ongoing policy uncertainty.
While inflation has eased and China managed to hit its 5% growth target, the steel market is still struggling with weak property sector demand. However, sentiment has improved slightly since July 2025, when Beijing introduced anti-involution measures to curb excess steel supply and pricing distortions. These measures have helped stabilise global steel prices and lifted steel bar prices in Malaysia.
Domestic Demand Supported by Infrastructure Spending
On the home front, Malaysia’s 13th Malaysia Plan, which allocates RM430 billion for infrastructure projects, is expected to underpin medium-term steel demand across key segments such as:
- Transportation and logistics
- Utilities and energy
- Housing developments
- Industrial upgrades
That said, the rollout timeline of these projects remains uncertain, creating limited visibility for near-term demand growth.
Carbon Tax 2026 – Risk or Opportunity?
One key regulatory development to watch is Malaysia’s planned carbon tax in 2026. For steelmakers like ANNJOO, this could mean higher compliance and operating costs. However, it also opens opportunities for early movers to invest in greener, energy-efficient steel solutions, aligning with global ESG standards.
Companies that successfully pivot towards sustainable steel production could not only offset cost pressures but also gain a competitive edge in export markets where green compliance is increasingly a requirement.
ANNJOO’s Outlook – Guarded but Supported by Pricing Momentum
Despite the weak 1HFY25 performance, ANNJOO’s management remains cautious but steady. The company is balancing:
- Firmer pricing momentum following China’s stabilisation policies
- Global volatility from slower growth and trade restrictions
- Upcoming regulatory challenges such as the 2026 carbon tax
Investors should note that while near-term earnings visibility remains clouded, medium-term prospects are supported by domestic infrastructure spending and gradual steel price stabilisation.
Key Takeaways for Investors
- Losses exceeded expectations in 1HFY25, highlighting weak margin recovery.
- Global steel demand remains soft, though China’s measures provide some price stability.
- Malaysia’s RM430bn infrastructure plan offers medium-term demand support.
- Carbon tax in 2026 poses both risks and opportunities for ANNJOO and peers.
- Cautious outlook: ANNJOO is maintaining a guarded stance, balancing domestic demand with global uncertainties.
For investors tracking KLSE steel stocks, ANNJOO remains a counter to watch closely, particularly as Malaysia’s infrastructure pipeline picks up pace and sustainability policies reshape the industry landscape.
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