HG Metal Manufacturing

HG Metal Manufacturing (“HG Metal”) is a metal trading and construction metal fabrication company. It also owns a non-core but substantial stake of 22.6% in BRC Asia, one of the top 3 specialized construction metal fabrication firm in Singapore. The market value of the stake is more than 67% of HG Metal’s market capitalization. HG Metal has also achieved a turnaround in profitability post the substantial slump in steel price. Despite the above, the firm remain underappreciated and trades at a substantial discount of more than 60% to its liquidation NAV. 

In May 2017, BRC Asia announced that it has been the target of an unsolicited bid to takeover the company. We were of the opinion that firm could also be a potential target for market players interested in consolidating the local construction metal fabrication market to increase pricing power and efficiency. 

Engagement topics: 

  • Divest its stake in BRC Asia at a price of > S$0.8 and return most of the proceeds to shareholders – this can potentially yield a 40% return  
  • Scale down the trading division which has low barriers of entry and generate subpar return on capital 
  • Establish construction metal fabrication segment as the core business and expedite on investment plans to strengthen division’s capability 


  • HG Metal exited its stake in BRC Asia and returned a substantial portion of the sales proceeds as dividend to shareholders 
  • Quarz exited the position with a return on investment of 48%