Quarz issues open letter to ‘undervalued” HG Metal; urges immediate action

SINGAPORE (May 31): Switzerland-based activist investor Quarz Capital Management today issued an open letter to the board of steel manufacturer HG Metal Manufacturing, urging the company to take “immediate steps to address the severe undervaluation” of its shares.

In the letter, a copy of which was seen by The Edge Singapore, the fund notes that HG Metal remains severely undervalued, despite a turnaround in profitability in 2016. The shares, which closed at 35 cents on May 30, trade at a 60% discount to its book value, and a discount of 20% and 35% relative to its peers, Quarz said in its letter.

Quarz is proposing that the company conduct a full strategic review on the potential divestment of HG Metal’s non-core 23% stake in steel mesh manufacturer BRC Asia. The fund estimates the stake to be valued in excess of $30 million. Quarz says it believes “multiple buyers are interested in building up substantial stakes in BRC Asia”, citing recent interest.

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