By: Reuters 5th March 2012 HONG KONG – Cash-rich CITIC Resources Holdings, a Chinese oil and coal investor and producer, targets acquisitions in oil and coal assets but will carefully weigh the impact on its balance sheet, its CEO said on Monday after it reported that net profit doubled in 2011.
CITIC Resources had more than HK$10-billion ($1.29-billion) in cash by the end of 2011 and instead of paying dividends it wants to retain the cash to counter possible risks during financial market turmoil and for investment opportunities, Zeng Chen told a news conference.
"We can grow the company fast and that will bring better income to our shareholders," Zeng said.
The briefing came after it reported on Sunday evening that it doubled its net profit in 2011 to a record HK$2.2-billion ($283.55-million) on revenues of HK$38.5-billion, up 28%.
Controlled by state-owned CITIC Group, China's biggest and oldest financial conglomerate, CITIC Resources is focusing on investment opportunities in oil and coal, and also looking at metals and commodity trading assets.
Singapore state investor Temasek Holdings has an 11.47% stake in CITIC Resources.
"We would like to grow this company and that's our job," Zeng said. "Our priority will be in countries and areas we are familiar with, such as Kazakhstan, Australia, Indonesia and China."
However, CITIC Resources has just come out of high gearing -- a high level of borrowing relative to its share price -- with a rights issue and disposal of assets, and it wants to take a prudent approach, he said. "We will be very careful when we make the next investment."
Its earnings for last year were boosted by pre-tax profit of over HK$3.7-billion from the sale of a stake in Australian mining company Macarthur Coal Ltd and gains from partial disposal of interest in the Codrilla Deposit coal mine in Australia.
It also wrote down the value of its Australian aluminium assets by HK$956.5-million after Australia passed a law limiting carbon emissions.
Helped by a HK$2.5-billion rights issue in June, CITIC Resources reduced its net debt as a proportion of net capital to 9.7% by the end of last year from 49.7% in 2010.
The company earmarked about HK$2 billion capital spending to develop its oil fields in Kazakhstan, China and Indonesia this year.
CITIC Resources shares fell 5.6% on Monday after the results to HK$1.34 but have risen more than 25% this year, beating the broader market's 16% gain.
