Nexbis spared after 'challenging' results; Posco rise short-lived

via CAAI

Monday, 06 September 2010 15:01 Catherine James

THE share price of Australian telecommunications security supplier Nexbis Ltd was surprisingly spared from further depletion despite the company’s reporting a net loss for the 2010 financial year, ended June 30, of A$49.6 million (US$45.5 million).

The company reported the loss, down from a net profit of $45.9 million in 2009, as well as a 96 percent fall in revenue to $2.4 million from $65.7 million on Tuesday.

“The last financial year was without doubt one of the most challenging in our history for both the company and our shareholders,” chief executive Johann Young said in preliminary final results.

Its share price, which plummeted in May after it failed to immediately disclose negotiations with the Cambodian government over a US$700 million deal to improve national security systems in the Kingdom, opened lower on Wednesday at A$0.059.

But share value then climbed more than 33 percent over the following three days to close on Friday at $0.08.

However, the rebound is small relief for the company which has seen its share price plunge 84.6 percent from $0.52 since its listing on the Australian Stock Exchange on August 21, 2009.

Vimpelcom, the owner of Cambodian mobile-phone operator Beeline, released financial results Thursday, announcing a US$334.7 million net profit for the 2010 second quarter that ended June, a 52 percent fall compared to the same period last year. The Russian-Norwegian company, with interests in nine countries, said total sales increased 23 percent over the period to $2.64 billion.

Shares were little moved on the Nasdaq, closing only $0.06 higher at $14.94 from Thursday’s opening of $14.88, and dropped back to $14.91 by the end of the week.

Korea’s Posco agreed on Monday to buy control of fellow Korean resources firm Daewoo International Corporation for 3.37 trillion won (US$2.8 billion).

Posco operates an engineering and construction company in the Kingdom, Posco E&C, and has reportedly postponed its Star River development in Phnom Penh because of Cambodia’s slow real estate market.

It will acquire 68.15 percent of the steel and crude oil trader Daewoo as part of its $30 billion capacity expansion plan.

An analyst with Korean securities firm Meritz Securities, Shin Yoon Shik, explained the advantage for the world’s largest steelmaker: “Posco will benefit from Daewoo’s overseas sales networks as the steelmaker has to secure clients for its increasing output.”

Posco rose 2.6 percent from 489,500 won (US$417.39) to close at 497,000 won ($423.79) in Seoul trading on Monday, according to the company.Daewoo gained 0.9 percent to 32,300 won. But Posco’s gains were pared back by Friday with the price falling 4.3 percent to 475,500 won.

ADDITIONAL REPORTING FROM BLOOMBERG