Heavy rain, floods and cost increases failed to stop West China Cement increasing annual pre-tax profits 74 per cent to £10.7 million.

The Jersey–domiciled company, which produces and distributes cement in the western Chinese province of Shaanxi, lifted turnover 71 per cent to the equivalent of  £37.6 million last year. Production at AIM-quoted West China’s Pucheng plant slipped by 20,000 tonnes to 1.44 million tonnes as a result of repeated downpours and flooding in the August to October rainy season, but production of 980,000 tonnes from a new line at the company’s Lantian plant took the total to 2.42 million tonnes.

Chief executive Jimin Zhang says rising transport and coal prices put pressure on margins, though strong local demand brought price increases of between two and four per cent for the company’s various products. Inventories nearly doubled to £3.3 million and year-end cash fell from £13.56 million to £2.1 million.

West China is building a new 1.8 million-tonne plant at Ankang in the south-east of Shaanxi province, which should be up and running next year, taking total annual capacity to 5.3 million tonnes. Zhang cites demand from continuing urbanisation and a government-sponsored rationalisation of the cement industry as encouraging pointers to future prospects.

Floated at 105p at the end of 2006 and recommended by Growth Company Investor last May at 161p, West China shares hit 267p last October, before fears over the impact of the floods knocked the stuffing out of them. Now 121p, up 45p this morning, the shares value the company at £78 million and should regain lost ground if the company maintains its growth path and Chinese equities regain their appeal. 

         
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West China Cement	AIM	£39.43m	61.50p	0.00p
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