Bloomberg reported that Angang Steel Co China second largest mill by market value posted a Q3 profit as a government stimulus program boosted demand from builders and manufacturers.
According to a statement to the Shenzhen stock exchange net income was CNY 1.89 billion or CNY 0.262 share for the three months ended September 30th. That compared with a loss of CNY 1.57 billion in the Q2 and was down by 17% from the CNY 2.27 billion profit a year ago.
Wuhan Iron & Steel Group said monthly steel output in China reached records in the four months since May as a CNY 4 trillion spending program by the government increased demand. Mills which have overproduced because of the stimulus may cut output in the fourth quarter as prices dropped.
CLSA analysts including Mr Scott Laprise said “We have yet to see demand strong enough for the steel mills to make sustainable profit. Overall for the year, we expect Angang to show a loss for three out of four quarters.”
Angang Steel fell 0.7% to close at HKD 16.16 in Hong Kong. The stock has jumped 86% this year outpacing a 54% gain in the benchmark Hang Seng index. The announcement was released after the market closed.
Anshan Liaoning province-based company said sales declined 16% to CNY 19.2 billion in the Q3 from a year ago. Profit in the first nine months plunged 96% to CNY 330 million. Earnings given in the statement were prepared under Chinese accounting standards.
Mr Zhang Xiaogang Chairman said the company expects to have a profit for the year as demand recovers and a new plant contributes to earnings. Profit may be as much as CNY 1.5 billion.
The company had said the company CNY 22.6 billion new mill in Bayuquan port in Yingkou, Liaoning will contribute up to one third of 2009 profit.
