Prosperity Minerals
Prosperity is an iron ore trader serving customers in the People's Republic of China (the 'PRC') and holds investments in entities involved in the manufacture and sale of cement and clinker in the same market.
Prosperity also has a real estate division and has recently entered into a number of conditional agreements designed to build up a portfolio of PRC property and development assets.
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Prosperity Minerals revenues hit US$849 million in FY09
In its financial results, Prosperity Minerals (LON:PMHL)
reported a 31% increase in revenue to US$849m (FY09: $647.7m) and a
140% rise in pre-tax profit to US$18.5m (FY09: US$7.7m).
The newly
re-focused iron-ore trading business had a particularly significant
year, in which it re-positioned itself following the disposal of the
majority of its Chinese cement business.
For the twelve months to
31 March 2010, the company reported a 2% decline in total earnings
(EBITDA) to US$43.5m (FY09: US$44.3m), however on a ‘per share’ basis,
basic earnings were up at 8.4 cents (FY09: 3.7 cents). Prosperity has
also proposed a significant increase to the final dividend, to 9 cents
per share (FY09: 1.7 cents)
"We were rewarded this year with the
very successful sale of our cement business to TCC International Limited
(TCCI) for HK$3.8 billion (approximately US$500 million) in cash ...
Over four years, we created one of the leading cement players in the PRC
through a number of timely investments and acquisitions, which
galvanized its value, a fact recognised by TCCI,” Prosperity chairman
and chief executive David Wong commented.
"In my view, the cement industry is only one of many incidental
beneficiaries of the development of the economy in the PRC,” Wong added.
Subsequently, Prosperity has been increasingly focused on its
iron-ore business, which is reflected by the 80% year-on-year increase
in the total tonnage shipped to 7.9m tonnes (FY09: 4.4m tonnes).
However, the company acknowledged that whilst trading volumes have grown
substantially, profit per tonne was lower than the previous financial
year, “due to continued volatility in the market and a substantial drop
in iron ore prices in the first half of the year. Prosperity noted that
it had shipped most of the iron ore during this period.
In the
current financial year, following the completion of the cement business
sale on 30 April 2010, the company has made rapid progress in terms of
its new ventures.
In May, Prosperity bought back into Liaoning
Changqing - a formerly-controlled subsidiary of the disposed cement
business - through a deal with a former joint venture partner. With a
£10m investment, Prosperity will take its former partner's place in a
joint venture with TCC.
Liaoning Changqing began trial production
of a new 2 million tonnes per annum clinker production line in April
2010 and full production is expected to commence in September 2010. In
May, the company said that it expects to have an opportunity to sell the
stake in Liaoning Changqing, at a higher valuation once normal
production is established at the Liaoning plant.
In June, the
company announced its plan to move into the Chinese real-estate market.
“[Real-estate] is a market with which the Prosperity team is already
very familiar ... in addition to our iron ore trading operations we
intend to act as a specialty real estate developer in China, focusing
only on prospectively profitable projects in prime or promising
locations with good cash flow.”
“It is not the company's aim to
become the biggest property company in the PRC but to be one of the most
profitable; and I believe we have the capability to achieve this.”
On
the 1 June 2010, Prosperity told investors that it had established a
property development and investment division. The new business has
already entered into agreement in relation to two separate property
investments - in the Fujian Province in south-east China and in
Guangzhou City.
According to Prosperity, the PRC’s long term
urbanisation plan brings increased demand for high-quality housing in
China’s cities.
Alongside the announcement, on 1 June, Prosperity
revealed the terms of a significant new iron ore master off-take
agreement with Grace Wise Pte Ltd, to purchase ore from Malaysia. The
three-year off-take deal sees maximum trading volumes capped at 1.5m
metric tonnes in FY11, 2.5m metric tonnes in FY12 and 4m metric tonnes
in FY13.
In terms of his outlook, Prosperity CEO Wong concluded:
"I believe Prosperity is strongly positioned and able to grow the
business and to continue to increase value for shareholders."
Other Prosperity Minerals news
- Prosperity Minerals sees more domestic demand coming from China’s new 5 year plan
2010-11-30 - Prosperity Minerals performing in line with expectations
2010-10-08 - Prosperity Minerals completes acquisition of 25% stake in Liaoning Changqing Cement
2010-09-01 - Prosperity Minerals receives final payment from disposal of cement business
2010-08-21 - Prosperity Minerals to pay £70.1m for Guangzhou properties
2010-07-30
