Jiangxi Copper Profit More Than Doubles on Prices (Update6)
By Xiao Yu
bloomberg.com
April 19 (Bloomberg) -- Jiangxi Copper Co., China's second- biggest producer of the metal, said profit more than doubled to a record last year, as demand from the power and construction industries boosted prices.
Net income rose to 4.7 billion yuan ($609 million), or 1.597 yuan a share, from a revised 1.9 billion yuan, or 0.677 yuan a year earlier, the company said in a statement to the Shanghai Stock Exchange today. The profit compared with 4.76 billion yuan forecast by 16 analysts in a Bloomberg survey.
China's economy expanded at a faster than expected 11.1 percent in the three months ended March 31, as growth exceeded 10 percent for a fifth quarter. Strong demand from the world's biggest copper consumer, may boost usage of the metal 10 percent this year, independent research company CRU International Ltd, said April 16.
``Copper prices are very likely to reach a record this quarter or in the third quarter as investment funds increase purchases of the metal and Chinese demand enters a peak demand consumption period,'' said Peng Bo, analyst at Pingan Securities Co. by phone from Shenzhen today. Peng has a ``buy'' recommendation on Jiangxi Copper shares.
Shares in Jiangxi Copper, based in the eastern city of Guixi in Jiangxi province, fell as much as 7.8 percent in Hong Kong and closed down 6.5 percent at HK$11.32, after rising to a record yesterday. The Hang Seng index fell 2.3 percent as China's strong growth caused concerns that it may increase interest rates.
Profit Expectations
``The profit is basically in line with our expectations,'' said Chen Yue, analyst at Guotai Junan Securities Co. by phone from Shenzhen today. ``Shares fell because it rose too fast in the past few days, and Hong Kong stock market fall.''
Jiangxi Copper's shares have risen 18 percent in the previous three days. The stock's 14-day relative strength index, a ratio of changes in the past two weeks, rose to 72.57 yesterday, according to Bloomberg analytics. A score of over 70 indicates the stock is poised for a decline.
The stock was the fourth-biggest gainer this year in the Hang Seng China Enterprises Index, which tracks 41 mainland companies that have so-called H shares traded in Hong Kong. The company's shares more than doubled last year.
The company's shares in Shanghai fell 10 percent, a daily limit, to close at 25.88 yuan at 3:00 p.m. local time. The benchmark CSI 300 Index fell 4.7 percent, the biggest drop since Feb. 27.
Dividend Rises
Jiangxi Copper will pay a final dividend of 0.40 yuan a share for 2006, compared with 0.192 yuan a share a year ago. The year earlier profit was revised to conform with international accounting standards.
The company controls about a third of the copper reserves in China and supplies 17 percent of Chinese production of refined copper, used in wires, pipes and cables.
``A national revamp of power grids, railway construction and constructions of infrastructure in rural areas will boost copper demand this year,'' Jiangxi Copper said in the statement. ``Copper prices will hover at high levels in 2007.''
China's economy grew 11.1 percent from a year earlier in the first quarter, the statistics bureau said today, on booming exports and an accelerated spending on factories and real estate.
Rising copper demand may drive prices in London toward last May's record of $8,800 a metric ton, CRU International analyst Mary Chi said. Shanghai copper futures gained 22.7 percent in the past year.
Jiangxi Copper ranked second by 2006 output in China, producing 443,443 tons of refined copper last year, up 5.2 percent from 2005. State-owned Tongling Nonferrous Metals Co., based in eastern Anhui province, made 544,798 tons of the metal.
To contact the reporter for this story: Xiao Yu in Beijing at yxiao@bloomberg.net
Last Updated: April 19, 2007 05:04 EDT |
