HONG KONG: China Shenhua Energy Co Ltd posted an 11.8 percent increase in its net profit for 2006, lagging behind market expectations due to a falling net profit margin.

Shenhua's profit reached 1.75 billion yuan in 2006, although revenue increased 18.7 percent year-on-year to 64.2 billion yuan.

Related readings:  Energy giant fires up profit  Shenhua develops plan to float A shares  Three companies sell coal 100m tons Generator signs JV deal to ship coal

The company was apparently struggling with a declining net profit margin of 27.2 percent, compared with the previous year's 29.9 percent.

Shenhua said commercial coal production by volume climbed 13 percent last year to 136.6 million tons, compared with total production of 2.32 billion tons on the mainland last year.

The mainland's largest coal producer would continue to complete two to three acquisitions of its parent company's assets this year, its chairman Chen Biting said yesterday.

"We have several deals in discussion at the moment, of which two to three may become a reality by the end of the year. Progress does not directly relate to the results of the listed company," said Chen.

"But in consideration of shareholder interests, it is preferable to inject mature assets into the listed company," he added.

He stressed that the main hurdle the company faced was the restructure of assets rather than its lukewarm results.

The parent group currently owns five coal projects with a total production capacity of 56 million tons. Chen did not rule out the possibility of acquiring coal liquefaction projects from the parent company.

1

2

(For more biz stories, please visit Industry Updates)