Sino Hua-An International Berhad ("SHA"): 1Q09 vs 1Q08 financial results
1Q09 Revenue registered +7% compared with 1Q08 mainly because of larger quantity of coke we produced as a result of our successful capacity expansion from 1.2 million tons of coke p.a. to 1.8 million tons of coke p.a. (since June 2008). In 1Q08 we produced approximately 324,000 tons of coke (average running at 108% capacity based on 1.2 million tons p.a.) but in 1Q09 we produced close to 396,000 tons (average running at 88% capacity based on 1.8 million tons p.a.) of coke. Comparing with the selling price of coke, 1Q09's average was RMB 1630 against 1Q08's was RMB 1903, which showed a drop of 14.3%. During the quarter under reviewed, our cost of sales ("COS") went up by 35.7%. 1Q09 average coking coal (our main raw material, which consists 90% of our COS) price shot up by 1.3% compared with 1Q08 on the back of relatively higher production output. 1Q09 average coking coal price was RMB 1066 and in 1Q08 its average was only RMB1052. Our 1Q09 results is further affected by the easing of the prices of our main by-products which are oil-related and they usually move highly co-related with global crude oil price, i.e. tar oil and crude benzene dropped by 35% and 58% respectively when compared 1Q09 vs 1Q08. These by-products contributed about 8% to our revenue. International crude oil price during 1Q08 was as high as USD 100 per barrel but in 1Q09 its price dropped to approximately USD 50 per barrel. As at 31 March 2009, our net cash position was RM 45.7 million (no bank borrowing since October 2007). According to China Iron & Steel Association ("CISA"), during 1Q09 the steel makers in China reported a combined loss of RMB 3.3 billion because of lower selling price of steel products and dropped in GP margin because of overcapacity. In 1Q09 China produced 127.4 million tons of crude steel and only exported 5.14 million tons of crude steel, a dropped of approximately 50% y-o-y.

Moving forward
The demand of steel in China has started to pick up as a result of the government's implementation of RMB 4.0 trillion stimulus package which targets on infrastructure projects, building of property houses & massive reconstruction of Sichuan earthquake site. As of May 2009, RMB 420 billion has been disbursed for the aforesaid projects. Long steel products' (i.e. steel bars & billets which are related to construction /infrastructure projects) inventory stockpile in China has dropped more than 30% in general during 1Q09 is seen as a good sign to the end of oversupply of steel there. In line to stimulate domestic demand, it was reported that the banks in China has extended a total of RMB 4.58 trillion of new loan in 1Q09. Retail Sales in China for the month of March 2009 showed +14.7% and in April 2009 showed +14.8%. Industrial output (which measures activities in the nation's millions of factories and workshops) registered growth of 8.3% in March 2009 and 7.3% in April 2009 respectively. Passenger car sales rose 10% & minivans demand increased 40% in March 2009. China's fixed asset investment in 1Q09 rose 28.8% to RMB 2.81 trillion is commendable. Last but not least, we are slightly more optimistic that 2H09 the steel industry in China would further improve in line with its domestic demand and at the same time we are hopeful that the recent rise of international crude oil price would subsequently boost the demand for long steel products in the Middle East.