Operating profit and net profit surged 62 times and 24 times respectively
HONG KONG, Sept. 24 /PRNewswire-Asia/ --
Financial Highlights
For the six months ended 30 June
2009 2008 Change
HK$ '000 HK$ '000
Revenue 602,964 N/A N/A
Gross profit 220,844 N/A N/A
Operating profit 187,020 2,970 +6,197.0%
Profit attributable to owners of
the Company 37,854 1,495 +2,432.0%
Basic earnings per share (HK
cents) from continuing operations 7.10 0.41 +1,632.0%
Loudong General Nice Resources (China) Holdings Limited ("Loudong GN Resources" or the "Group"; stock code: 988) is pleased to announce today its interim results for the six months ended 30 June 2009 ("the Period").
During the period under review, the Group's revenue and gross profit amounted to approximately HK$603 million and HK$221 million respectively. Operating profit and profit attributable to owners of the Company surged 62 times and 24 times to approximately HK$187 million and HK$38 million respectively. Basic earnings per share for continuing operations for the six months ended 30 June 2009 surged significantly to 7.10 HK cents from 0.41 HK cents in the first half of 2008, posting a growth of 16 times. The significant improvement in the performance of the Group is mainly attributable to the incorporation of the results of the 50.1% equity interest in Shanxi Loudong General Nice Coking & Gas Company Limited, a company's interest in which the Group acquired in September 2008.
As at 30 June 2009, the net asset value per share also recorded a significant increase of 136% to HK$2.162. The Board of Directors did not recommend the payment of an interim dividend for the six months ended 30 June 2009.
Commenting on the interim results in 2009, Mr. Cai Sui Xin, Chairman of Loudong GN Resources, said, "During the first half of 2009, the global financial tsunami did pose a challenge to the Group's operations. Many steel manufacturers, including a number of our major customers, were hit by the financial crisis. Leveraging our competitive edges, coupled with the commencement of coke manufacturing business in September 2008, the Group gradually transformed to an enterprise focusing on coal processing and production of industrial coke and coal-related chemicals. The significant improvement in the financial results during the period under review demonstrated our successful transformation."
During the period, the PRC government introduced trade policies to discourage coke exports. The increased customs duty imposed on metallurgical coke exports has in turn heightened the Group's export prices of coke, relative to that of international competitors. As such, the Group's trading revenue for the six months ended 30 June 2009 were mainly domestic sales within China, comprising almost 100% of the sales, as compared with 84% for the corresponding period in 2008. During the period, the average selling price the best quality of metallurgical coke was RMB1,688 compared with RMB1,760 for the same period in 2008. The decline was across the board, mirroring the weakness in global commodity prices. During the period under review, approximately 289,780 metric tonnes of metallurgical coke were sold, a decrease of 46% compared with that of the corresponding period last year.
Nevertheless, the lingering effect of the financial tsunami may be an advantage to the Group. Firstly, many inefficient competitors in the coke manufacturing industry in the PRC have been eliminated. Secondly, the Group is able to take advantage of the low prices in the market to procure raw materials at a lower cost. Throughout the period, the Group dedicated its efforts to strengthen business relationships with major suppliers. The lower cost of sales made it possible for the gross profit margin to be maintained at a reasonable level of 35% in the first half of 2009, compared with 39% for the same period last year.
On 16 September 2009, the Group has entered into a memorandum of undertaking to acquire 49% of equity interests in Shanxi Linxian Taiye Coal Mining Company Limited ("Linxian Taiye"). Linxian Taiye owns a coking coal mine with a general mining area of approximately 6.5 square kilometers and estimated coal reserves of not less than 80,000,000 metric tones, subject to the assessments by valuers and technical advisers. The approved production capacity of the coal mine is 1,200,000 metric tonnes per year. The Group's proposed acquisition of Linxian Taiye offers a timely opportunity for its move into this highly promising sector as well as providing synergetic effect on its existing coking business. This will mark a significant step to groom the Group into a leading integrated coal and coke enterprise consisting of coal mining, coke manufacturing and related logistics operations. Shanxi is China's leading coal producing province with an annual production capacity of 900 million metric tonnes. The province is implementing a massive restructuring in the coal sector, a move that will consolidate the number of coal mines in the province from 2,600 to around 1,000.
In addition, the Group also announced its intention to acquire the remaining 49.9% equity interest of Shanxi Loudong on 7 August 2009. The Group expected that the proposed acquisition would further strengthen its business in the coal processing and production of coke and coal-related chemicals in the PRC upon completion.
Mr. Cai concluded, "Looking ahead, the Group will be benefited from the positive effects of the Chinese Government's RMB4 trillion stimulus package, coupled with the gradual recovery of the global economy. We look forward to sharpen our competitive edge and to increase our market share in the resources sector. In line with our ambition to groom the Group into a leading integrated coal and coke enterprise in China, the Group will continue to seek opportunities to move upstream into coal mining, and to eventually evolve into a first class, fully integrated resources operator."
About Loudong General Nice Resources (China) Holdings Limited
Loudong General Nice Resources (China) Holdings Limited is principally engaged in coal processing and production of industrial coke and coal-related chemicals. The Group's parent company, General Nice Group is one of the largest coking coal and coke trading groups in China which possesses a fully vertically integrated value chain of coke for steel-making to provide strong support to the Group. The Group owns 50.1% equity interest in Shanxi Loudong General Nice Coking and Gas Company Ltd., which has long term partnership with major coal mines. The Group is well positioned to become one of the largest integrated resources companies in China specialising in coal and coke.
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