Sinoma in talks on overseas acquisitions

Sinoma in talks on overseas acquisitions
Published: 31 August 2011

China National Materials Co Ltd (Sinoma) said it is in talks in Europe and the United States for acquisitions at CNY1-10bn (US$153,800-$1.5bn) each in the cement equipment and high-tech materials sectors, Reuters reported.

Like other Chinese cement makers, Sinoma has been enjoying booming sales, resulting in hefty cash inflows that are helping it build up a war chest for overseas acquisitions. A firming yuan will also contribute to its purchasing power overseas.

"This is a good time for overseas acquisitions because of the appreciation of the yuan," President Li Xinhua told a news conference on Wednesday. "We are in talks on a number of projects."

The acquisitions, if concluded, would be the first major overseas push for the company and a key part of its global strategy. "We can help them (overseas companies) to cut costs and they can lift our technology," he said.

Cement equipment and engineering services accounted for more than half of the company’s sales in the first half of 2011, contributing about a third of the company’s profit.

Cement production and sales remains its mainstay business, accounting for nearly 60 per cent of profit, thanks to strong cement demand and prices in China as economic growth prompted a building boom across the country.

Asset acquisitions in China had become expensive because of high cement prices, but the company would continue to look at possible acquisition targets in western China and build new production lines, Chairman Tan Zhongming said.

Sinoma’s controlled production capacity reached 76Mt at the end of June. It has 14 production lines with a combined capacity of 23.2Mt under construction.

Sinoma’s first-half net profit rose 71 per cent to CNY766m, and cash and cash equivalents at end June were above CNY12bn.