China Communications Services Corp, the nation's biggest builder of phone networks, posted an increase in first-half profit that trailed analysts' estimates after it spent more on workers and materials.

Net income rose 11 percent to 567 million yuan (US$83 million), compared with the 576-million yuan median of three analysts' profit estimates in a Bloomberg News survey. Sales climbed 38 percent to 13.6 billion yuan, the Beijing-based company, a unit of China Telecommunications Corp, said in a statement to Hong Kong's stock exchange.

China Communications' spending on salaries for workers and on materials rose by 50 percent from a year earlier after China's mainland instituted a new labor law and prices rose for metals, cement and other goods. The company's stock pared gains after the builder disclosed its financial results.

First-half earnings "might weigh on the share price," said DBS Vickers Ltd analyst Steven Liu, who rates the shares "hold."

China Communications rose 1.3 percent to HK$5.52 (US$7.08) yesterday in Hong Kong trading after climbing as much as 9.5 percent before earnings were announced. The shares have fallen 29 percent this year, compared with a 26-percent decline in the city's Hang Seng Index.

(Shanghai Daily September 9, 2008)