China Shenhua Energy Co Ltd posted an 11.8 percent increase in
its net profit for 2006, lagging behind market expectations due to
a falling net profit margin.
Shenhua's profit reached 1.75 billion yuan in 2006, although
revenue increased 18.7 percent year-on-year to 64.2 billion
yuan.
The company was apparently struggling with a declining net
profit margin of 27.2 percent, compared with the previous year's
29.9 percent.
Shenhua said commercial coal production by volume climbed 13
percent last year to 136.6 million tons, compared with total
production of 2.32 billion tons on the mainland last year.
The mainland's largest coal producer would continue to complete
two to three acquisitions of its parent company's assets this year,
its chairman Chen Biting said yesterday.
"We have several deals in discussion at the moment, of which two
to three may become a reality by the end of the year. Progress does
not directly relate to the results of the listed company," said
Chen.
"But in consideration of shareholder interests, it is preferable
to inject mature assets into the listed company," he added.
He stressed that the main hurdle the company faced was the
restructure of assets rather than its lukewarm results.
The parent group currently owns five coal projects with a total
production capacity of 56 million tons. Chen did not rule out the
possibility of acquiring coal liquefaction projects from the parent
company.
The coal liquefaction projects are scheduled for completion by
the end of 2007. Annual capacity of the first production line would
amount to 1.08 million tons.
"Apart from the asset injection, we are seeking acquisition
opportunities overseas. For the domestic market, we aim to acquire
good quality players to consolidate our leading position."
To consolidate underlying assets and upgrade technology in coal
mining, Chen said Shenhua planned to invest 27.4 billion yuan as
capital expenditure for this fiscal year, up 11 percent.
The company aimed to realize commercial coal production
exceeding 200 million tons by 2010. Further, it expected railway
transport capacity and port shipment capacity to reach 200 million
and 140 million tons in 2008.
With tightening market supply, Chen expected the coal price
would remain high in the short term. "The unit cost of coal stayed
flat in the previous year, hovering at 131 yuan per ton. But it
still has room to fall in the light of the drop in transport
costs," said Chen.
Shenhua exported a total of 23 million tons of coal in 2006.
Chen said the company would continue to enlarge its export
capacity.
Shenhua's Hong Kong-traded shares closed at HK$19.96 yesterday,
falling HK$0.19 or 0.94 percent.
(China Daily March 27, 2007)