RED-CHIP giant Shougang Group faced a difficult last year, with a loss in equity investment and China's austerity measures the two major reasons. The group, which announced a mixed annual result among its listed arms in Hong Kong, said its subsidiaries were more or less hit by the austerity measures in the last half of 1994. Its steel trading arm, Shougang Concord International Enterprises, nevertheless recorded a 222.6 per cent leap in attributable profits to $172.23 million, despite the difficult steel market in China. This included $50 million exceptional gains from disposal of properties. Turnover also rose by 142.7 per cent to $6.3 billion. The company said the increasing sales in China, expansion to Southeast Asia and a better inventory and management controls helped boost the sales of steel rebars. But its three joint ventures in Beijing, engaged in production and sales of steel wires and strip steel products, had their profit margins eroded under the difficult pricing situation, it said. It would also stop production of low-margin products and expand its production capacity for high-margin ones. However, Shougang's other subsidiaries did not do so well. Shougang Concord Grand, in which the group holds a big stake through Essential Assets, reported a loss of $199.58 million, down from a gain of $144.03 in 1993. The loss of the property investment arm was because of exchange loss on translating Swiss Franc convertible notes into Hong Kong currency and a loss in investments in the Hong Kong stock market. It said it had made a $27 million provision when its investment in the stock market has lost $51.6 million, 27.9 per cent of the portfolio. Shougang Concord also blamed the $139.5 million loss in its construction arm for dragging the company into the red. Hoi Sing came under scrutiny when Shougang Concord announced its intention to dispose of its stake in the company at a substantial discount and said it would strengthen its core business of property investment in China, especially on multi-storey residential buildings. The 147.5 per cent leap in attributable profit of ferrous and non-ferrous trading arm Shougang Concord Century was boosted by the $127.6 million gain from the sale of the 41st floor of the Convention Plaza and investment in Hon Lok Yuen in Tai Po. The company said the profit margin of its core business was seriously eroded by a downturn of the world's metal trading market. Shougang Concord Century said it would still be affected by the uncertain market conditions and liquidity problems of state-owned enterprises because of the austerity measures during the year. Electronic arm Shougang Concord Technology nevertheless leapt into the black by recording an attributable profit of $20.18 million, compared to the $106.47 million loss in 1993.