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Asia Cement subsidiary to seek mergers in China

Asia Cement subsidiary to seek mergers in China

Taipei, March 15 (CNA) Taipei-based Asia Cement Corp. said Saturday that its China subsidiary is seeking merger and acquisition (M&A) opportunities to raise its production capacity in a market primed for growth. The company said that subsidiary Asia Cement (China) Holdings Corp. will target cement producers in China, including small and medium-sized companies in different regions, for M&As or strategic alliances to boost its competitive edge. In early January, Asia Cement and its China subsidiary signed a strategic partnership agreement with Anhui Conch Cement Group and China Conch Venture Holdings Ltd. Under the deal, the companies agreed to upgrade to environmentally friendly production methods and lower production costs while working together to penetrate cement markets in Taiwan, China and other countries. In addition to M&As, Asia Cement (China) is gearing up for organic growth by expanding its production capacity and improving efficiency, the parent company said. With all 13 production lines in China becoming operational this year, the production capacity of the Chinese unit is expected to rise from this year's forecast of 32 million metric tons to 40 million metric tons in 2015 before hitting 50 million metric tons in 2016, the company said. Urbanization in rural areas of China mean it is likely that investment in infrastructure and the property market will continue growing, boosting the demand for cement, the company said, citing market estimates of 6-7 percent growth in demand this year from 2013 levels, which saw 11 percent growth year-on-year. In 2013, Asia Cement (China) posted 823 million Chinese yuan (US$135.3 million) in net profit, up 108 percent from a year earlier with its earnings per share (EPS) at 0.529 yuan from last year's 0.254 yuan. The growth was attributed to an increase in shipments and efforts in cost reductions. The Chinese unit also saw its gross margin rise five percentage points from a year earlier to 22 percent last year. Market analysts said Asia Cement (China) is expected to contribute about NT$0.87 in EPS to its parent company for last year, up from the NT$0.4 recorded in 2012. In the first nine months of 2013, the Asia Cement recorded NT$1.54 in EPS, compared with NT$1.28 registered over the same period of the previous year. (By Wei Shu and Frances Huang)