Epic : WCC

Last Results : http://www.investegate.co.uk/Article.aspx?id=200703270701277583T


The Company, which is headquartered in Xi'an the provincial capital of Shaanxi Province, operates three cement production plants in Pucheng, the first of which has been operational since 1977 and now have a combined production capacity of 1.5 million tonnes per annum. Two new lines are coming on line soon which will boost output by an additional 2 million tones. Some of this additional output will be seen in 2007 financial year, the rest in 2008 financial year.

The PRC Government is actively promoting the restructuring of the Chinese cement industry with a shift away from small-scale producers towards large, modern environmentally friendly production plants. This will benefit WCC are the smaller and more polluting plants are shut down and production at larger more efficient plans is ramped up, eg WCC.


Activities

The Group manufactures three types of cement, as well as clinker, a cement compound:

* Ordinary Portland Cement is a mixture of clinker, mineral admixtures (accounting for 6 to 15 per cent.) and gypsum, which is widely used in industrial and civil construction projects

* Flyash Portland Cement is a mixture of clinker, flyash and gypsum. The content of flyash by weight ranges from 20 per cent. to 40 per cent.depending on its intended use

* Composite Portland Cement is a mixture of clinker, at least two kinds of prescribed mineral admixtures and gypsum, which is widely used in industrial and civil construction projects

* Clinker is the base of the above mentioned products, the principal raw material of which is limestone. The Group does not intend to sell clinker as a separate product in the future

Nice moves up again today, still cheap imo.

Very well spotted, Papalpower...WCC has a great business...It is cash rich, cash generating, diversity (cement, electricity, gas waste) in a country that is strongly driven towards industrialization and urbanization. And also a robust balance sheet - that says it all.


West China Cement Limited
27 March 2007

West China Cement Limited
('WCC' or 'the Company')
Preliminary Results for the year to December 31, 2006

Post-tax profits double (99.6%) to RMB 88.6 million (approx 5.9 million)
Sales up 29% to RMB 307.3 million (approx 20.35 million).
Net profit margin rises to 28.8% (18.6%)
December admission to AIM following 22 million fundraising
New 2m tonnes p.a. production facility at Lantian
Strongly positioned to benefit from industry rationalisation

Chairman's Statement

Two thousand and six was a landmark year in positioning West China Cement as a
key participant in the growth of the construction industry in Shaanxi Province.
The Company raised 22 million in London and the Far East to complete the
financing of the construction of its two new production lines at Lantian. The
Company's growing production capacity means that it is well placed to benefit
from growth in demand for cement in the provincial capital of Xi'an, and the
area around Pucheng, where the Company's existing plants are located.
Furthermore WCC's developing market presence and strong cash generating capacity mean that we are in a good position to contemplate further expansion in the south in the province.

The Initial Public Offering was successfully carried out on the AIM market in
London, and it is highly satisfactory to see London at the forefront of financing the development of the needs of the fast growing Chinese economy. Following admission to AIM, WCC's shares have traded at a premium to the IPO price of 1.05, albeit in thin trading volumes. The finance raised amounted to 20.1 million net of expenses, and this completed the financing required for the RMB420 million (approx. 28 million) Lantian project. This project consists of
the construction of two kilns, with related facilities, which will increase the
Company's cement production capacity by 2 million tonnes to 3.5 million tonnes.
The first kiln is in the process of hot commissioning and the first sales of cement are expected in April. The second line is due to enter production in the fourth quarter of this year. This new capacity is highly efficient and environmentally sound, and will be further enhanced on both counts when the RMB60 million (approx. 4 million) waste-heat generation project is completed at the end of this year. Lantian is situated 35 kilometres to the South-East of Xi'an, significantly closer to the market than its competitors, and it is linked to the Xi'an ring road by a new highway.

While Lantian did not contribute to production during 2006, WCC's output
nonetheless increased by 29% over the previous year, to 1.47 million tonnes, as
a result of earlier capacity expansion. Net profit for the year doubled to RMB88.6 million (approx 5.9 Million) on an increase in turnover of 29.0%, reflecting the benefits of scale as output from the Pucheng plant reached capacity. Margins were also higher as the Company was able to increase cement prices whilst costs remained broadly stable. Being able to increase output in a firm cement market meant that Net Profit margins rose to 28.8% from 18.6% in 2005. Despite this satisfactory financial performance, the board is not recommending a dividend in respect of 2006, in view of the projects in progress. The board expects to consider the question of dividend policy afresh in regard to 2007.

China is now the world's largest cement producer with output above 1 billion tonnes per annum, and output from domestic producers grew more than 65% between 2002 and 2005, reflecting the country's continuing construction boom. While cement prices in mainland China fell during 2004 and 2005 following government measures to rein in national economic growth, the onset of rationalisation and consolidation within the industry, combined with continually increasing demand, has seen a strengthening of prices since the early part of 2006.

The outlook for well-positioned producers such as West China Cement is thus
improving, and it is anticipated that the industry will become dominated by a
few financially-strong regional companies using modern production methods. This
trend is driven in large part by Government planners who are acting to encourage
modernisation and rationalization in the cement industry through enforced
closure of small, inefficient plants and the introduction of modern, environmentally-friendly manufacturing. WCC's progress to date has positioned us
well to emerge as one of these so called 'regional champions' with the required
financial stability and modern production processes. We also aim to benefit from
Government concerns about the uneven pace of economic development in China. Over recent years, Shaanxi Province, close to the geographical centre of China, has recorded stronger GDP growth than the national average and there is little
competition from producers in other provinces due in large part to high transportation costs.

It is also notable that the growth in the market for cement in China is
accompanied by a demand on the part of government and customers that production and service be of the highest standard. The ethos of WCC is one of excellence, in terms of the quality of product and the manner in which it is produced. WCC is committed to the highest Safety, Health and Environmental standards. It is pleasing to note that there were no serious injuries to employees or contractors working on our sites during the year and that WCC won a number of environmental awards.

The success of WCC thus far and the buoyant prospects for its market place
encourage the board to consider further expansion. We are actively examining the
feasibility of a further new plant, of up to 2 million tonnes production capacity, in the south of the province, an area presently served by imports from other parts of China. We hope to be able to report further progress on this later in the year.

In summary, the Board is confident that having delivered strong financial growth
during 2006, WCC is now well placed to consolidate its regional position as
rationalisation of the cement industry in China continues. The Company has made
good operational progress, and we are looking forward to a maiden contribution
from our new Lantian production lines during the year.

Market Overview

Chinese Cement Market

Demand for cement products in China is expected to remain strong in the years
ahead as the country continues its drive for wider industrialisation and
urbanisation. The Government's 11th Five-Year Development Plan provides for the
rapid development of key infrastructure projects such as highways, railways,
airports and major energy supply projects, while construction in the private
sector is continuing apace. According to the Regulation on Industrial
Restructuring Promotion, domestic demand for cement is expected to reach 1.2
billion - 1.25 billion tonnes by 2010; and by 2020, 70% of the cement produced
in China must come from manufacturers using environmentally-friendly New Dry
Process Production (NDPP) technology. WCC is already using this technology, both
in its original production plant at Pucheng, near Xi'an, and in the two
production lines at its new Lantian plant further to the north.

Shaanxi Cement Market

Located close to the geographical centre of China, Shaanxi Province is still
lagging other parts of the country in terms of its economic development. As
development continues, demand for cement in the province - driven by
infrastructure spending growth of 13% per annum - is expected to reach 35
million tonnes by 2010, according Shaanxi's 11th Five Year Development Plan. The
same plan identifies requirements for the consolidation of the cement industry
in the province, including the closure of smaller, inefficient, producers, the
elimination of out-dated production technology used by shaft kiln manufacturers,
and the closure of plants causing serious pollution. All of these measures
should serve to enhance the competitive strength of companies such as West China
Cement that have achieved critical mass and adopted NDPP technology ahead of the
competition.

Customers and Sales

The Company continued with the successful expansion of its customer base during
2006, but remain focused heavily on Shaanxi Province, where it is well
positioned to use the existing transport infrastructure to supply clients. A
little over half of sales during the year went to customers in the Weinan area,
with most of the rest going to customers around Xi'an, Yan'an and the southern
part of Shaanxi. Small amounts went to Yuncheng and Fenglingdu in Shanxi
Province, and to Yu Ling in Henan Province.

Province Areas and Cities Sales %
Shaanxi Weinan area 50.65
Xi'an 34.38
Shangluo 10.61
Yan'an 2.54
Shanxi Yuncheng 1.71
Henan Yuling 0.11

Although the Company has maintained its position as a key supplier to large
infrastructure projects, winning involvement in seven either underway or due to
start during 2007, it is also positioned to meet strong demand from the private
sector, where construction work continues apace. Sales during 2006, totaled 1.47
million tonnes, with bulk sales of 0.46 million tonnes accounting for 31.1% of
the total, and bagged sales of 1.01 million tonnes accounting for the remaining
68.9%. Of the total, 37%, or 0.54 million tonnes, was provided for use on major
infrastructure projects, and 63%, or 0.93 tonnes for the private sector. Sales
for the year reached RMB 307.32 million, up from RMB 238.24 million during 2005,representing a year-on-year increase of 29.0%. Weighted average selling price per tonne rose from RMB218 per tonne (approx. 14.53 per tonne) in 2005 to RMB244 per tonne (approx. 16.27 per tonne) in 2006.

Credit Controls

WCC continues to operate tight credit controls to maintain solid cash flow and
margins, adopting different approaches for different kinds of customer. With
supplies to major projects, the Company delivers monthly only after having
received payment for deliveries in the previous month. Private sector customers
are required to provide settlement in advance.

Operating Overview

Pucheng Plant

Annual production increased by 0.33 million tonnes, or 29%, over the previous 12
months. Input costs remained stable through the year.

Lantian Plant

Investment in the new Lantian production facility reached RMB 310 million
(approx. 20.67 million) by the end of December 2006, accounting for nearly 74%
of the total planned project investment of RMB 420 million (approx 28million).
The Number One cement milling system on the first of the two Lantian production
lines began operating in March, 2007, using bought in clinker, and is now
running smoothly. The plant's 110kw electricity generating substation project
began operating in February, and the road between the plant and its limestone
quarry was also successfully completed. The Number Two cement milling system on the same line, and the final adjustments to the raw material and burning systems are expected to complete by April, at which time the Lantian 1 production line will be fully operational. Equipment ordering for the Lantian 2 line has now been completed, and this plant is on schedule for completion in the fourth quarter of the year.

Waste Heat Project.

WCC intends to invest more than RMB 60 million (approx. 4 million) to provide a
waste heat project using manufacturing exhaust gases to generate electricity.
Two generating sets of 4.5 MW each have been installed, potentially saving
19,590 tonnes of coal per annum, and cutting annual emissions of CO2 by 52,650
tonnes and of NOx gases by 395 tonnes. Annual cost savings as a result of this
project will be of the order of RMB 14.7 million (approx. 0.98 million) and
completion is scheduled by the year end.

Research and development

To improve the quality of its products and to strengthen its competitiveness in
the market, the Company set up an R&D centre in conjunction with Xi'an
University of Architecture and Technology. The facility is located on the
university's campus and is strategically focused towards the improvement of
existing manufacturing processes and further research into future NDPP
technology. WCC's objective is the continual improvement of its products and to
become more reactive to customer demands.

Summary

In summary, it is pleasing to be able to report that our continued operational
success during the year under review has translated into a strong market
presence in the Weinan area around our Pucheng plant, while the start-up of our
first production line at Lantian should bolster our presence around Xi'an and in
the east of Shaanxi Province. Looking ahead, we are evaluating opportunities in
the south of the province, where prices are high thanks to a relatively scarcity
of local supply and the high transport costs from distant manufacturing plants.
Having met our operational targets successfully during 2006, we remain confident
of moving forward with equal success through 2007.

Jimin Zhang
Chief Executive Officer

I bought in this morning when they were down , looks like a good growth story ,,good call papalPower.

I bought these ones when they first floated, I should have waited as they drifted down until the results came out.... but even then it seemed clear that WCC would make good growth.....

Yes, I got into WCC 6250 shares this morning...lucky opportunity.

good luck to you guys, but certainly not for me ...... i hear China and i am very wary; no web site; very little trade .... none of it sounds good to me ...... by the way, nms is only 2000 so see what happens if you try to sell 6250 in a weakening market!

nms is 5000 actually cynic ,,very little trade ??

not according to the official stock exchange page it isn't

Iv'e traded them today

that does not mean nms is 5000 .... would sooner trust info on stock exchange site re both nms and volumes over the last few months ..... believe Septic Peg if you so choose

wary?.what, with Rob Robertson as chairman..ex boss at Tarmac and Anglo American plus non-exec director at Avocet mining..you're losing the plot my son..its a cement business dude! what's a webiste! I could set one up tomorrow with 500!! means nowt.

Daily MAil described WCC as the best chinese company on AIM. If we'd listen to you cynic none of us would have made a penny in SOLA!

if some of you Wunderkinde listened to me occasionally, you might also find yourselves backing some quality stocks for considerable profit too .... as for SOLA, do you not believe sp is now looking sickly?

cynic doesn't know what he is talking about here.

fine .... i was asked to comment so i did ..... i write as i find; sometimes i'm even right

you crack me up you do cynic. you proffer worthless generalisations that are based on opinion not FACT! If we all invested on that basis none of us would make any money.

FACT,FACT AND FACT AGAIN. WE WANT FACTS NOT OPINIONS.

F18

FACT IS you get from me what you get and as i said, suprisingly often it is good advice even if it does not coincide with your opinion.

Cynic, you are generalising that all China shares are no good. I think that is clearly not a FACT.

i have said that any company linked with china i treat with great caution and that is from first hand experience of dealing there.

You are certainly very generalising, cynic

quite possibly, but we do a lot of biz in F/E in general and have learnt that some countries and their practices are more "acceptable" than others ...... even companies that are part govn't owned will not necessarily have the same "moral code" as a similar institution in the west ..... so not just blind prejudice.