Sinoma in talks to expand abroad

PUBLISHED : Thursday, 01 September, 2011, 12:00am
UPDATED : Thursday, 01 September, 2011, 12:00am


China National Materials (Sinoma) is in discussions on a number of possible acquisitions in Europe and the US worth one billion yuan (HK$1.22 billion) to 10 billion yuan each, its president Li Xinhua said yesterday.

The news helped Sinoma's Hong Kong share price surge 11.3 per cent to HK$4.71 yesterday. The state-owned firm is one of China's biggest cement producers and the world's largest maker of cement equipment.

Sinoma's previous international acquisitions were smaller than the potential deals it is now discussing.

'We want to be an international company, so we must have a global strategy,' Li said.

A range of industries are being considered for investment including new materials and cement equipment, Li added.

By contrast, Sinoma will be cautious about acquiring mainland cement producers this year because of their high valuations, Li said.

In its cement equipment business, Sinoma expects new orders for the whole of this year to exceed 30 billion yuan, said Sinoma chairman Tan Zhongming. During the first half, Sinoma's new orders in cement equipment totalled 23.3 billion yuan, of which 10.8 billion were domestic and 12.5 billion were overseas, mostly from Africa. The total value of Sinoma's new orders for cement equipment in the first half was 42.9 per cent higher than the same period last year.

Sinoma's capital expenditure will be 10 billion yuan this year, of which 3 billion yuan had been spent in the first half and 7 billion yuan will be spent in the second half, said Sinoma chief financial officer Yu Kaijun. The money will be mainly used to expand production capacity, said Yu.

For the whole of this year, Sinoma's sales of cement and clinker is expected to exceed 60 million tonnes, said Tan. Sales of cement and clinker grew 36 per cent year-on-year to 25 million tonnes in the first half.

The company will add 20 million tonnes of new annual cement production capacity this year and another 10 million tonnes next year, said Sinoma vice-president Gu Chao. By 2015, Sinoma aims to have 100 million tonnes of annual production capacity for the Xinjiang Uygur Autonomous Region alone, as it hopes to capture 50 per cent of the region's demand for cement, said Gu.

Sinoma's annual cement production capacity rose to 76 million tonnes by the middle of this year from 70.5 million tonnes at the end of last year. Net profit rose 70.8 per cent to 765.95 million yuan in the first half, and turnover 22 per cent to 22.32 billion yuan.