Baosteel makes earning from Taigang Stainless Steel
Thursday, 07 May 2009
It is reported that Baosteel is expected to fulfill rate of return of over 20% in investing shares of Taigang Stainless Steel during Q4 2008 to Q1 2009.
Taigang Stainless Steel released its annual report and Q1 report on April 29th which showed, Baosteel had been the 9th in the Top 10 shareholders unlimited in selling by holding 19.57 million shares in Q4 2008, however absented itself from that list in Q1 2009. The move is a copy of what happened in Nanjing Steel before and the operator Baosteel is believed to reap a lot.
It's calculated that Baosteel bought in 19.57 million shares at average price of CNY 4.45 per tonne during last Q4, when shares of Taiyuan Stainless Steel bottomed at CNY 3.03 and touched the roof of CNY 8.14. Then, the share had flied up to CNY 6.48 in Q1. A steel analyst from Guangdong noted that "Baosteel is accustomed to purchase competitors shares in Secondary Market, I think it will heavily sell the shares in Q1."
Mr Xu Lejiang board chairman of Baosteel announced the company's investment in stock market is just financial behaviors which also involved in shares in energy industry. The investor 2008 report showed that it had owned 20.3 million shares of Xishan Coal Electricity, 0.3 million H-shares of CCB, 21.208 million shares of JDCMMC, 93.72 million shares of Neusoft, 20 million shares of Xinyu Steel, 37.64 million shares of China CSSC Holdings Ltd, 13.93 million shares of Nonfemet and 12.9 million shares of Pingdingshan Tianan Coal Mining.
According to stainless steel maker's reports that the company realized revenue of CNY 12.434 million in Q1 down by 20%MoM or 39.56%YoY and presented net profit loss of CNY 0.714 billion a harsh drop from profit of CNY 0.933 billion in the same period of last year. Despite this, the stainless steel business is said as a benefit killer for itself. According to Baosteel annual report, its stainless steel subsidiary's gross profit margin posted at 5.6% in 2008, unable to cover annual expenditure, resulting in losses. And the subsidiary only kept its capacity utilization ratio at 60%.
Mr Ping An Securities analyzed in its report that the oversupply would continue this year in China's stainless steel market. In Q1, price for nickel fell below USD 10,000 per tonne with average price down 50.1% from 2008, then dragging down stainless steel price by 38.8%.
