China Starch net soars 278pc but stock ends flat on market debut

Shares of China Starch Holdings closed at their offer price on their trading debut yesterday, ahead of the company's announcement that first-half net profit jumped 278 per cent on corporate restructuring and tax exemption.

Net income for the mainland's third-largest cornstarch supplier reached 70 million yuan, or 26.68 fen per share, for the six months to June, up from 18.5 million yuan, or seven fen a share, a year earlier.

Sales rose 39.9 per cent to 603.17 million yuan.

The Shandong-based company was able to consolidate 100 per cent of its profit to its shareholders in the first half after corporate restructuring, according to a spokesman, compared with 45 per cent attributable to minority interests in the first half of last year.

Chairman Tian Qixiang said yesterday the company had also benefited from a two-year tax break after it had become a wholly foreign-owned enterprise. The company's effective tax rate in the first half of last year was 30.1 per cent.

Shares of China Starch, which raised HK$333 million in a Hong Kong initial public offering, traded between HK$2.63 and HK$2.21 before closing at the offer price of HK$2.22.

Fluctuations in the price of corn, China Starch's main raw material, would squeeze profit margins and add volatility to future earnings, analysts warned.