SINGAPORE (Nov 3): Delong Holdings announced that 3Q17 earnings increased more than fourfold to RMB 973.9 million ($200.3 million) from RMB 229.3 million a year ago.
Sales for the third quarter ended September were 44.7% up at RMB 3.67 billion as compared to RMB 2.53 billion in 3Q16, attributed to a significant increase in average selling prices of hot rolled coil (HRC) coupled with an increase in HRC sales volume driven by infrastructure and construction activities in China.
However, the increase in sales volume was partially offset by the cessation of Aoyu Steel’s operations in August 2017.
In 3Q17, the group sold 1.06 million tonnes of HRC and 32 tonnes of steel billets as compared to 1.02 million tonnes of HRC and 80 tonnes of steel billets in 3Q16. Hence, overall sales quantity increased by 46,587 tonnes or 4.6%.
In line with the increase in revenue, cost of sales increased 29.4% to RMB 2.79 billion from RMB 2.15 billion the previous year, primarily due to higher raw material prices for steel production coupled with higher sales volume.
This brought gross profit to RMB 878.9 million, 131.1% more than RMB 380.2 million a year ago.
Administrative expenses increased by 39.7% to RMB 95.7 million from RMB 68.5 million in, primarily due to partial workers’ compensation payment following the cessation of Aoyu Steel’s operations in Aug 2017 as well as legal and professional fees incurred on the group’s on-going.
Finance expenses decreased by 33.9% to RMB 29.4 million from RMB 44.5 million last year, primarily due to the significant decrease in bank borrowings and notes payables, which in turn reduced interest expenses in 3Q17.
To diversify, the group will continue to selectively engage in opportunities to invest in quoted and/or unquoted securities, as well as the provision of seed and mezzanine capital to private companies with growth potential and undertaking business incubation.
The group’s management will also continue to explore and evaluate earnings-accretive acquisitions and investments in its core business for the long-term benefit of shareholders.
Shares in Delong closed 3 cents lower at $3.97 on Friday.
