1H07 net profit soared 30%. Operating income: 9.646 billion yuan (+21.52% YoY); operating profit: 4.453 billion yuan (+33.03% YoY); net profit: 2.958 billion yuan (+29.99% YoY); EPS: 0.23 yuan.
1H07 total traffic touched 93.83 billion ton-kilometers (+22% YoY). For the first half year of 2007, coal traffic reached 156 million tons (+14.2% YoY), of which 145 million tons were from the Datang-Qinhuangdao line (+17.1% YoY). As transport distances lengthened, the growth of total traffic and revenue exceeded that of cargo volume carried in the same period. Given most of incremental supplies come from the districts such as Inner Mongolia which were far away from the Datong-Qinhuangdao line, we expect the average distance covered by coal to ascend steadily.
That profit growth outpaced revenue growth resulted from reduction of costs in two items. The raised capital was used to pay off the previous loans of line assets acquisition and capacity expansion. As a result, financial costs were cut down by 0.26 billion YoY in 1H07. Meanwhile, according to the new accounting standards, welfare balance offsets administrative expenses, and thus its administrative expenses decreased by 5%YoY within the reporting period. However, the offset in 1H07 was one-off and its administrative expenses are expected to rise with the expansion of business in future.
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