West China Cement pretax profit up, debates listing location

West China Cement pretax profit up, debates listing location
Published: 04 September 2009

West China Cement Ltd said its first-half pretax profit more than doubled, mainly reflecting higher cement prices and margins, and that it was on track to produce around 7.5Mt of cement from next year.

The cement producer, which operates in Shaanxi Province in China, will actively seek opportunities for further growth by investment in new capacity or by acquisition, it said in a statement on Tuesday.

For the six months ended June 30, the company posted a pretax profit of CNY186.9m (US$27.4m), compared with CNY87.7m last year. Revenue grew 70 per cent to CNY574.7m.

The company said it expects to operate at full capacity of 5.3 Mt from the next quarter.

"This capacity is scheduled to increase by 2Mt next year, with commissioning of the Mianxian and Yangxian plants in the second and third quarters," it said.

West China Cement debates new listing location
The company, which listed on London’s Alternative Investment Market (AIM) in 2006, would now like to move to a bigger venue, but has yet to decide between the main boards of London and Hong Kong.

Po Ling Low, finance director at WCC, favors the Asian route, but can see the benefits of both options. She is currently in London, meeting with investors and the press to discuss WCC’s impressive interim results.

‘I would prefer Hong Kong. There are industrial investors there who understand the cement industry,’ says Low. ‘But in London we would be the only big cement company and would stand out, unlike in Hong Kong where there are many larger competitors.’

The move would enable WCC to continue its rapid expansion, which has seen profits double over the last 12 months. Low believes WCC needs a bigger pool of investors to tap if it is to continue growing at a similar pace. ‘If we see an opportunity to build in the future, we need a more liquid market to raise funds,’ she comments.

A listing in mainland China, on either the Shanghai or Shenzhen stock exchange, is not possible, as there is a long waiting list and priority is usually given to the larger state-owned enterprises. The decision on what to do next will be discussed by WCC’s board later in the year.