Zibao Metals earnings slashed in very tough year

Hong Kong-based recyclable metal trader Zibao Metals Recycling Holdings announced its final results for the year to 31 March on Wednesday, with revenue rising to HKD 497.0m from HKD 403.8m.

The AIM-traded company reported profit before tax of HKD 0.6m - a serious slide from the 2015 figure of HKD 9.2m - with net profit after tax also at HKD 0.6m, down from HKD 7.7m.

Its cash position at period end was HKD 5.3m, up from HKD 1.1m a year ago.

Due to the difficult trading conditions, however, the board said it will not declare a final dividend, repeating their decision of 2015.

“Revenue for the period increased by 23%, million mainly due to an increase in sales through the Zhengbao stockyard acquired at the end of the previous year which in turn was offset by a material reduction in back to back trading,” said chairman Wenjie Zhou.

“This refocusing of the business was undertaken in response to difficult market conditions.

“Notwithstanding the change in emphasis of the business, gross margins fell significantly and profit after taxation decreased.”

Looking ahead, Zhou said the recent decline in the Chinese stock market and the depreciation of renminbi will make trading conditions more challenging, by increasing the local currency cost of imported scrap metals.

“The Chinese government is taking steps to address these issues by various methods including reducing interest rates and increasing investment spending,” he explained.

“In the longer term, these measures are expected to have a positive impact on business environment in which the company operates.”