Taiwan cement firms see bountiful returns in Mainland China

Taiwan cement firms see bountiful returns in Mainland China
Published: 18 October 2007

Thanks to the surge in cement prices, Taiwan’s leading cement producers, including Taiwan Cement Corp., Asia Cement Corp., Chia Hsin Cement Corp., Universal Cement Corp. and Goldsun Development & Construction Corp., have all been reaping considerable returns in mainland China since the beginning of this year.  
 
An institutional investor predicted Asia Cement will score more than 200 million renminbi in earnings in the mainland this year as the company meets little competitiveness in its investment location in central China region. Despite its latter investments in the mainland, Goldsun is expected to see earnings reach 50 million renminbi this year.  
 
Asia Cement’s investments in the mainland concentrate on central and western China regions. At present, the company’s cement plant in Jiangxi province is the largest of its kind in that area. Each of its Wuhan and Chendu plants is one of the top-two cement plants in respective region. The company predicted it will meet a goal of producing 20Mt of cement in the mainland in 2012, compared to present capacity of 8Mt.  
 
A market analyst said Asia Cement’s quarter earnings in the second half of this year will exceed that of the first half which came to over 70 million renminbi. It is expected the company will see earnings break the 200 million renminbi in the mainland this year.  
 
Taiwan Cement scored 60 million renminbi in the first half of this year as its Yingde plant in Guangdong province has turned to profits since the first quarter of this year. To ride the wave of cement price surge, the Yingde plant is now running in full capacity. It is expected Taiwan Cement will be able to see earnings reach 150 million renminbi in the mainland this year, smaller than earlier estimated because of its merge with Chia Hsin’s subsidiary in Hong Kong.  
 
Chia Hsin noted each of its Jingyang and Union cement plants in the mainland posted 20 million renminbi in earnings in the first half of this year. An institutional investor estimated the two plants will register 150 million renminbi in earnings this year if the cement price reaches between 260 and 280 renminbi per metric ton.  
 
Goldsun said it began making profits from investments in Fujian province in April this year. At present, the quoting price for cement in Xiamen of Fujian province has reached 360 renminbi per metric ton and another 5% rise is expected in the foreseeable future. Thanks to the price surge in cement, Goldsun will be able to score 50 million renminbi in earnings in the mainland this year.  
 
Universal’s Huizhou plant in Guangdong province will reach between 1.8Mt and 2Mt this year. The company earlier predicted it would be able to see breakeven for its Huizhou plant this year. Thanks to the surge in cement prices, the Huizhou plant has begun making profits since September and will be able to post five million renminbi in earnings this year.