HG Metal hopes to hit annual sales of at least $500 million in three years, riding on strong market demand and a widening of its product range.

The steel stockist said this yesterday as it announced a full-year net profit of $13.7 million - almost triple the previous year's $5 million - as revenue rose 6.4 per cent to $362.8 million. The surge in earnings for the 12 months to Sept 30, 2006 was attributed to strong demand from key customers, a better product mix and gains from the disposal of listed securities. Basic earnings per share rose to 7.77 cents from 3.15 cents.

Its trading segment contributed 93.5 per cent of revenue and manufacturing accounted for the rest. HG Metal attributed the trading revenue to the strong steel demand from the buoyant shipbuilding and construction sectors.

Due to stabilised steel prices and the better product mix, gross profit also grew 16.2 per cent to $32.7 million. A near fourfold jump in other operating income from $2.2 million to $8.2 million together with lower operating expenses contributed to a more than doubling in pre-tax profit to $16.3 million from $7.3 million.

HG Metal said it is looking to widen its range of steel products and services. The company recently acquired Niho Singapore Pte Ltd, a stainless steel specialist, and also set up a sand blasting facility at its subsidiary, Oriental Metals.

It added that prospects in the marine engineering and construction sectors remain bright and it expects continued strong demand for steel products in those industries. It also believes that the recovery in steel prices would be sustainable in the short term.

Its directors recommended a final dividend of four cents per share.

HG Metal also proposed a renounceable rights issue of up to 99.2 million shares. The issue, on the basis of two rights shares for every five existing shares, is priced at 20 cents per rights share. The company plans to use the net proceeds from the issue for general working capital purposes and to finance expansion of its business through acquisitions.