China Communications gains from port growth

PUBLISHED : Wednesday, 11 April, 2007, 12:00am
UPDATED : Wednesday, 11 April, 2007, 12:00am

China Communications Construction, the mainland's largest port machinery maker, reported a higher than expected 45.7 per cent annual profit growth, thanks to government spending on infrastructure and port expansion.

Net profit rose to 3.2 billion yuan from 2.2 billion yuan in 2005, while sales jumped 38 per cent to 114.88 billion yuan.

The earnings results, the company's first since listing in December last year, beat the 2.8 billion yuan forecast in the listing prospectus, and were 4 per cent higher than BOC International's estimate.

'Buoyant government expenditure on infrastructure projects in the latest five-year plan will continue to help fuel the company's sales,' said Jimmy Lam, a transport analyst at BOCI.

Mr Lam said cost controls also helped the company's earnings, and boosted its overall profit margin to 5.6 per cent from 4.6 per cent.

Operating profit of the company's major port machinery business jumped 48 per cent to 2.3 billion yuan, accounting for 35 per cent of the total.

Subsidiary Shanghai Zhenhua Port Machinery produced 261 units of quayside container cranes and 500 gantry container cranes last year, representing 70 per cent of global market share.

The firm's entrance in the railway market, and increased demand for building of ports, roads and bridges, pushed operating profit at the infrastructure construction division to 1.9 billion yuan, up from 941 million yuan a year earlier. The dredging business saw a 144 per cent operating profit growth to 1.3 billion yuan.

Shares in China Communications edged up 0.63 per cent to HK$9.52 yesterday. The stock has more than doubled its initial public offering price of HK$4.60.