Shanghai Electric Group Predicts Profit Margin Drop in 09

Shanghai Electric Group Co., Ltd. (SHSE: 601727; SEHK: 02727), a pillar power generation equipment manufacturer in China, estimates the gross profit margin will likely down 1 percentage point in 2009 from 16.9% in 2008.

Li Chongguang, secretary for the board of directors of SEG, reveals that the gross profit margin in 2008 was 0.7 percentage point higher than that in 2007, but that in 2009 may go downward as the new products of its power equipment sector have immature profit margins.

Mr. Li discloses that the gross profit margin of power equipment business in 2008 increased 1.8 percentage point from that in 2007, while that of electromechanical integration equipment kept around 18%. Given the fierce competition, the profit margin of electromechanical integration equipment is estimated to possibly drop 1 percentage point in 2009, while the market share SEG held will increase a little along with growing sales.

Xu Jianguo, CEO of SEG, stresses that the cooperation with strategic partners like Siemens AG is going on well and thus the total sales in 2009 would be no less than that in 2008.

Source: www.cpzl.com (April 29, 2009)

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