Despite the recent price correction, ChinaResources Cement Holdings Ltd, a unit of ChinaResources (Holdings) Co, said it expects thatbuoyant demand for cement and concrete on themainland will remain for the rest of the year dueto economic growth and fixed asset investment(FAI).
The company also reported on Monday that itsnet profit for the first half to June 30 more than doubled to HK$2.05 billion.
Zhou Longshan, chief executive officer of China Resources Cement, said he expects cementprices to rise another 15 to 20 percent for the rest of the year, as the fourth quarter istraditionally the peak season for cement sales, and power shortage in provinces such asGuangxi will stoke prices due to a lack of supply.
Building materials, according to China Resources' Zhou, showed strong upward momentum inselling prices in the first half. Prices of cement, clinker and concrete rose 21.2 percent, 19.4percent and 16.5 percent to HK$371.7, HK$301.5 per metric ton and HK$348.0 per cubic meterrespectively for the first six months in 2011 over the same period a year earlier.
The company sold a total of 19.4 million tons of cement, 2.3 million tons of clinker and 6.2million cubic meters of concrete during the first half of 2011, representing year-on-year growthof 75.5 percent, 35.2 percent and 44.8 percent from last year.
Strong domestic demand and the climbing selling prices helped China Resources Cement topost a net profit of HK$2.05 billion or HK$0.31 per share for the six months ended June 30, 2011, up 236.8 percent from HK$607.2 million or HK$0.09 per share a year earlier, accordingto a statement to the Hong Kong Stock Exchange on Friday night.
The company also declared an interim dividend of five Hong Kong cents per share, whereas itdid not pay one during the same period in 2010.
Restrictions on the approval on the construction of new clinker production lines and tightenedentry conditions for the cement industry will further strengthen the consolidation of the cementindustry on the mainland, Zhou said, adding that it will also speed up the elimination oftechnologically-outdated competitors and benefit large market players such as ChinaResources Cement.
The relatively stable coal prices in the market, on the other hand, will also help the companyachieve an increased profit margin, said Zhou. For the first six months in 2011, its net marginhas improved 8.5 percentage points to stand at 21.2 percent, compared with the 12.7 percentnet margin over the same period last year.
Shares of China Resources Cement closed at HK$7.17 in Hong Kong trading on Monday, upHK$0.57 or 8.64 percent from its previous session.
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