Baoshan Iron and Steel Co Ltd, China's largest steelmaker, yesterday posted a 150-percent net profit jump in the first quarter of 2007 to around 2 billion yuan.
The jump is mainly due to the rising steel prices in China and Baosteel's continuous efforts to reduce operational costs and improve the product structure, the company said yesterday in a statement to the Shanghai Stock Exchange.
The details of the report will be released on April 26.
Baosteel shares surged 4.2 percent to close at 10.99 yuan yesterday, better than the stock market's performance on the day.
Analysts said rising steel prices and the relatively lower price-to-earnings ratio in the steel sector will push up steel stocks in the coming months.
"Steel companies' net profits in the first quarter will increase substantially, boosted by the international steel price rise," said Yang Baofeng, an analyst at Orient Securities.
The price of hot-rolled coil jumped 21 percent in the first quarter this year while cold-rolled coil climbed 8 percent, according to statistics from mysteel.com, a steel information provider.
"But steel prices in China are expected to remain stable this year," said Yang.
Baosteel's net profit increased 2.7 percent last year to 13 billion yuan while its earnings per share stood at 0.74 yuan.
The company aims to increase production capacity from 20 million tons to 50 million tons by 2012 and is seeking acquisition of small steel companies after buying out Bayi Iron and Steel Co Ltd at the beginning of this year, Baoshan President Ai Baojun said recently at stock.p5w.net.
Steel stocks will continue to surge as most of them are undervalued, say analysts.
(China Daily April 11, 2007)