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4 years ago
China Shanshui bonds slide after profit warning
July 17, 2013 / 12:11 PM / 4 years ago

China Shanshui bonds slide after profit warning

HONG KONG, July 17 (Reuters) - China Shanshui warned it expects a hefty fall in net profit for the first half of the year due to low sales prices of its cement, particularly in the northeast region of Shandong.

The announcement, which was released after the stock market close, said net profit would fall by at least 40 percent on the year.

Its bonds due 2016 fell to 100.5/102 and bonds due 2017 to 105.75/106.75, both off by 2 points.

The statement said the likely fall is mainly due to sustained low sales prices particularly in Shandong, one of its biggest markets, which was grappling with excess production.

China Shanshui said poor weather in the region dampened demand for cement.

In the first two quarters of 2013 average prices in China Shanshui's main sales regions dropped 9.2 percent and 9.4 percent, respectively, compared with the same period a year earlier, according to brokerage Jefferies.

The warning follows an upgrade in the company's credit rating in March when it was raised to BB from BB- by Fitch Ratings on the back of improved national cement sales in the second half of 2012.

The warning comes after a string of positive earnings reports from three Hong Kong-listed rivals - CR Cement , TCC International and Asia Cement.

China Shanshui shares ended up 1.16 percent at HK$3.46 before the release. (Reporting by Umesh Desai)

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