VSC interim profit jumps 45pc

VSC interim profit jumps 45pc

Strong demand for steel boosts bottom line

Continuing demand for steel from the buoyant construction industry in Hong Kong as well as a management shakeup last year has helped boost interim profit at major steel trader Van Shung Chong Holdings (1001).

For the six months to 30 September 2013, profit attributable to equity holders of the company was HK$46.4 million, up 44.9 percent on the same period last year.

Operating profit jumped by 65.9 percent to HK$73 million despite revenue edging down 3.6 percent to HK$1.97 billion.

Its main business line of steel distribution accounted for most of the revenue at HK$1.48 billion.

The operating profit from steel distribution was HK$104 million, up 68.1 percent on the HK$61.9 million recorded in 2012.

“VSC Group’s gross profit margin was 9.7 percent in the current period versus 7.3 percent in the same period last year,” the company said in a stock exchange notice Tuesday.

It said sales volume at its Hong Kong Steel business jumped by 125.8 percent compared with the same period last year but did not provide the actual tonnage sold.

However a drop in steel prices, which the company attributed to excess production in mainland China, meant that revenue from the increases sales volume grew at a slower pace.

“According to tons sold and market growth, we maintained our market share in Hong Kong construction market,” the company said.

The company remained optimistic over prospects.

“The strength of the Hong Kong construction market should continue into the next three to five years and we will maintain our market share while exploring acquisitions that expand our product and process portfolio. We will also invest in downstream process to serve the evolving needs of the Hong Kong construction sector,” the company said.

Last year, the company overhauled its management structure and business lines and brought in a new chief executive officer and other new senior staff to take charge of the changes.

Its other business lines are building and design solutions, plastic resins and property investment.

In particular, its property business buys underperforming office buildings and renovates them into high end and high yield investments.

Last month, the company entered into a sale and purchase agreement for a 27-storey commercial building in Shanghai, the China CTS Tower, for 708 million yuan (HK$897 million) to provide stable rental income.

Danny Chung

 

 

 

 

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