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07 Mar | Cement’s Taking Off

Early last week West China Cement caught my eye after finishing the day up 34 pence at 490 pence, a rise of a little over 7% on the day.

At that point after a little positive pondering, I postulated that if WCC could breach the 5 quid mark that week and remain there – remaining there’s a biggy – then it could be onward and upward for West China Cement in the coming weeks and months. 

Well, it not only breached the 5 quid mark it smashed that particular ceiling finishing the week at 585 pence, up a chunky 125 pence from the Friday before.

The reason? It doesn’t take Buffet to tell you that Friday’s Preliminary Results – whose highlights I’ve, well, highlighted below – were enough to stimulate more than a little interest. 

Take a look for yourself:

  • Revenue increased by 75% from RMB866 million in 2008 to RMB1,517 million in 2009.
  • Operating profit increased by 118% from RMB283 million in 2008 to RMB616 million in 2009.
  • Gross profit margins improved from 36% to 42% and operating profit margins improved from 33% to 41%, reflecting strong product prices, efficiency gains and economies of scale.
  • Redemption of the 7.8 million warrants in November 2009, giving rise to an exceptional charge of RMB168 million, removing liquidity risk and risk of substantial dilution to our shareholders.
  • Pre-tax profit increased by 111% to RMB544million before the exceptional item and 45% to RMB375 million after the exceptional item. Earnings per share amounted to RMB7.73 before this exceptional charge and RMB5.12 after the exceptional charge.
  • Return on Capital Employed (EBIT/Net Assets) of 47.6% (2008: 30.5%).
  • We are on schedule for listing on the Main Board of the Hong Kong Stock Exchange before 30 June, 2010.

Of particular interest (besides all those pretty numbers) is the last point. I for one will be holding on tight to my WCC holdings as I think concrete’s about to fly and grey is this year’s black. 

Remember, none of this should be construed as investment advice, I’m a mug investor who very occasionally gets it right. Please, please, please do your own homework from a ton of sources before parting with your hard earned. And when you’ve had a win, visit Kiva and share a little of your wealth with a third world entrepreneur. 

Paul
rsvp@investorsoiree.co.uk