West China Cement eyes Hong Kong

West China Cement eyes Hong Kong
23 October 2009

Chinese cement producer West China Cement proposes to list its shares in Hong Kong and will review its AIM listing.

Based in China’s Shaanxi province, West China believes it will be ‘better positioned and understood’ in Hong Kong than on AIM, says chairman Robbe Robertson. Observers suggest the Jersey-domiciled company might hope for more active trading and a higher rating on the Far Eastern exchange, which has lately been considered by several China plays from London.

West China, which doubled its interim pre-tax profits to UK£16.5m on turnover up 70 per cent to UK£51m, has been addressing the finance needed to boost production to a targeted 7.5Mta Ahead of its Hong Kong listing, the company is to redeem $30.2 million (£19 million) of warrants between now and January, using part of a $50 million (£31 million) bridging loan from the Industrial and Commercial Bank of China (ICBC).

The bank has secured this loan by a charge over some of the shares in West China Cement held by chief executive officer and majority shareholder Jimin Zhang. The charge covers 29.9 per cent of the company’s shares, little more than half Zhang’s holding.

Floated on AIM at 105p in 2006 and recommended by Growth Company Investor the next year at 161p, West China’s shares reached 250p before crumbling to 48p on flooding problems and recessionary fears. With China now reflating and profits buoyant, they have surged to 479p, valuing the company at UK£311m.

Partial profit taking might be prudent, though the Hong Kong move could give the price a further lift.
Published under Cement News