Double delight for Angang Steel

http://www.chinaccm.com 2007-4-30 10:57

Angang Steel Co, the biggest Hong Kong-listed Chinese steel maker by 
value, has reported that first-quarter profit more than doubled.

This followed price increases as demand rose and the government's 
efforts in reining in capacity expansion, Bloomberg News said.

Net income was 2.4 billion yuan (US$311 million), or 0.404 yuan a share
, in the three months ended on March 31, from a restated 1.13 billion 
yuan, or 0.229 yuan a share a year earlier, the Anshan, Liaoning 
Province-based company said in a statement to the Shenzhen Stock 
Exchange yesterday, based on domestic accounting standards.

Sales rose 32 percent to 16 billion yuan.

Steel prices in China, the world's top producer and consumer of the 
metal, recovered this year after the government tightened bank loans 
and land supply.

Prices gained 4.7 percent in the first three months of this year, 
according to the China Iron and Steel Association. Angang, China's 
third-biggest steel maker, raised prices for April shipments last 
month.

"We are optimistic on the outlook of Angang's performance this year on
 higher average steel prices," said Luo Wei, a Shanghai-based analyst 
with China International Capital Corp, China's biggest investment 
bank.

Angang shares have more than doubled in the past year, falling 0.4 
percent to close at HK$15.60 (US$1.99) in Hong Kong on Friday. Its 
yuan-denominated A shares have tripled in the past 12 months in 
Shenzhen, but fell 3.9 percent to 17.29 yuan on Friday.

China, supplier of one third of the world's steel, may boost 
production by 13 percent to 475 million tons this year, compared with
 an estimated 14 percent growth in demand, the CISA said February 9. 
Output grew 18 percent in 2006.

Angang plans to sell as many as 1.78 billion shares to existing holders
 in a three-for-10 rights offer to fund a 22.6-billion-yuan steel mill,
 the company said on April 11, without giving a price.

The share sale will result in an eight percent dilution in earnings per
 share, HSBC Holdings Plc's analysts Daniel Kang and Sara Mak said in 
a report released last week. HSBC initiated its coverage on Angang 
with an "underweight" rating.