CSTME exits Anzo to pave the way for a global fund to enter

CSTME Resource Sdn Bhd’s exit as Anzo Holdings Bhd’s substantial shareholder could pave the way for a major global fund to come in.
  A global fund from China or Hong Kong has been accumulating shares in Anzo since the beginning of June. We do have a name but let me do further checks before I disclose who.

We also hear that an investor from the United States is also looking at Anzo to expand its presence in Asia.

On June 23, Anzo was asked to clarify by Bursa on a news report stating that “a foreign investor was eyeing a stake in Anzo and it may also come in to inject a new business”.

Anzo responded saying that there are some foreign investors acquiring shares in the company but it did not say who was buying.

CSTME emerged as Anzo’s largest shareholder on June 23 with an indirect 11.62% stake, following share acquisitions by CSTME’s shareholders, Kevin Tan, Albert Tan and Chu Boon Lin. The shares closed 13 sen apiece on this day.

Two days after CSTME became a substantial shareholder, Anzo announced to Bursa Malaysia on June 25 that it had inked an agreement to supply up to 60,000 tonnes of copper scrap to a South Korean steel manufacturer for RM1.3 billion over a period of 40 months.

A few days later Anzo said it would be acquiring several assets such as lands, buildings, machinery, equipment and vehicles from Wintrade World Sdn Bhd for RM55 million, to manufacture its own medical and nitrile gloves to export to the United States and Europe, among other nations.

The shares of Anzo shot up to as high as 26 sen following the news on the copper deal and the glove manufacturing business.

 Surely when CSTME disposed of its stake in Anzo.The company would have considered these two businesses but it cashed out anyway and walked away with a hefty sum.

CSTME sold about 110 million shares at around 23 sen worth about RM25 million. If you do the math, CSTME made a lot from its three-week share holding in Anzo.

Big players can sell shares anytime so it isn’t a big deal that CSTME has ceased to be a substantial shareholder in Anzo.

The good thing is, despite CSTME’s exit in Anzo, the shares continued to trade actively and closed 20 sen on Friday (July 10).

It is also business as usual for both Anzo and CSTME.

CSTME, which has an AP licence for export purposes, is still supplying the copper scrap to South Korea for Anzo which holds the contract.

CSTME has been supplying copper to South Korea effective July 1 and we believe that by now (July 11) it may already have supplied about 600 tonnes worth an estimated RM13.8 million.

It was reported recently that copper prices are likely to stabilize in the coming quarters despite a recent surge in the red metal’s value and this augurs well for Anzo.

Three-month copper futures on the London Metal Exchange (LME) broke the $6,000-a-ton threshold by the end of June — a far cry from its low of around $4,626.50 at the height of Covid-19 fears in March.

On Monday, three-month copper on the LME gained 1.2% to trade at around $6,088 a ton, Reuters reported.

The copper rally over the past month from $5,700 a ton to over $6,000 a ton has occurred against a backdrop of flat to falling equity prices and bond yields, leaving copper looking overvalued by $220 to $420 per ton based on these historical relationships.

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