The 2004 profit of Chia Hsin Cement Greater China Holding Corp is expected to rise 30 percent over 2003 despite China’s measures to cool its economy, said the firm’s Taiwan parent on Thursday. The forecast was less optimistic than that of Kim Eng Securities, which estimated a 42 percent rise in net profit to HK$210.43 million (US$27 million) this year, versus US$19.02 million in 2003. Chia Hsin Cement’s Hong Kong-listed shares ended down 0.68 percent on Thursday, compared to a rise of 0.67 percent on the Hang Seng index .
Chief Executive Officer Jason Chang brushed off any concerns for his company and said the Chinese measures would benefit larger cement makers like Chia Hsin by paring the smaller inefficient firms that make up the bulk of the industry. "Although the cement industry will be the first to be affected by these measures, the main goal is to speed up the elimination of poor quality or small-sized companies," said Chang.
Chang said cement makers in China have to compete with 4000 smaller rivals. For example, the top 10 producers in China - including Chia Hsin - only hold a 11 percent market share, whereas globally the top 10 makers account for 45 percent, he said.
Chia Hsin operates it main cement plant in Jiangsu province in eastern China, which accounts for the bulk of production capacity of 2.8 million tonnes. Capacity is expected to double to around six million tonnes by the end of this year. The company is confident China demand will continue to grow due to large regional infrastructure projects like the Nanjing subway system and a second bridge over Hangzhou Bay in Zhejiang province, said Chang. He said energy efficient, high technology production processes including a dry rotary kiln that runs 24 hours a day have helped it keep prices for high grade cement stable while regional prices have fallen.