Investors pump up China Steel

China Steel Corp (中鋼), Taiwan's largest steel maker, continued to lead the TAIEX by announcing its third-quarter net income reached as high as NT$5.02 billion, which almost triples the amount from the same period a year earlier.

China Steel surged NT$1.2 yesterday, or 6.7 percent, to close at NT$19 on the TAIEX.

"While foreign investors have been selling the shares for an adjustment since mid-October, local investors have continued to inject their confidence in China Steel and purchased 40,000 shares over the past few days," said Jones Wang (王源錦), an analyst from ABN Asset Management, adding that the company may report an earnings per share of NT$2 this year, and an EPS of NT$3 next year.

China Steel Corp yesterday reported its third-quarter net income rose to NT$5.02 billion from NT$1.8 billion a year ago while third-quarter sales also surged to NT$26.2 billion from NT$19.2 billion last year.

The company's net income for the first nine months of this year increased to NT$9.09 billion from NT$5.49 billion last year while the nine-month net sales were up to NT$72.44 billion from NT$63.91 billion.

Questionable report

A local Chinese-language newspaper report said that a US-based military veterans' investment fund may buy NT$20 billion worth of China Steel shares also helped fuel the surge in China Steel, Roger Lo (羅吉), an analyst from SinoPac Holdings Co (建華金控), said.

According to the report, a fund manager representing an unspecified US-based veterans' investment fund recently paid a visit to China Steel in Kaohsiung.

But China Steel yesterday denied the newspaper report. A China Steel official, who declined to be named, told the Taipei Times that, "The story is not correct. We have not met with any fund manager representing any foreign veterans' funds over the last few weeks."

China Steel, whose shares are 40 percent owned by the Ministry of Economic Affairs, reported a pretax profit of NT$8.5 billion last year from NT$18.6 billion the previous year.

After contending with Taiwan's worst economic slump in 50 years last year, which dramatically reduced steel demand from builders and auto manufacturers, the company is expected to double its pretax profit this year, as demand recovers.

China Steel may form a join venture with Teco Electric & Machinery Co (東元電機), Taiwan's largest maker of industrial motors, to build a US$20 million electric motor plant in China, along with Japan's Nippon Steel Corp, Marubeni-Itochu Steel Inc and Sumitomo Corp, local media reported Sunday, citing Theodore Huang (黃茂雄), chairman of Teco.

"The possible venture is believed to benefit the company's future development," Lo said.