Sino Construction issues profit warning on FY11 results

As revenue from its newly acquired thermal plant operator RELI fell short of expectations.

According to the company statement:

We completed the acquisition of DAQING SUNSHINE RELI THERMAL CO., LTD on 28 September 2011. Based on a preliminary review of the unaudited financial results of RELI, the revenue fell short of management’s projections due to lower take up rates of existing property developments in that area as well as a deferral in new builds due to measures taken by the central government to cool the property market in the PRC. Accordingly, the intangible assets comprising the licence to operate the heating plant and network arising from the acquisition might be impaired.

Consequently, the expected profits from the operations of RELI will not be sufficient to offset the operational loss incurred by our existing core business of construction and sale of concrete and bricks given the onset of winter in the northern hemisphere. As such, we expect the Group to extend the losses already recorded and announced in the first nine months of the year ended 30 September 2011.