UPDATE 1-Shanghai Ind 2002 net falls on chip start-up loss


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HONG KONG, April 22 (Reuters) - Shanghai Industrial Holdings said on Tuesday its 2002 net profit fell 6.3 percent, disappointing analysts, due to a loss from the start up of a microchip affiliate and lower profits at its auto unit.

The blue-chip conglomerate controlled by the Shanghai government faces uncertainty this year over the compensation it will receive after the Chinese government announced in November the end of fixed-return projects in the country, analysts said.

The change in policy will affect two elevated roads that contributed about 65 percent of the company's estimated 2002 net profit, JPMorgan said in a research note ahead of the results.

It is holding talks with the Shanghai government over the change in policy and may reach an agreement by mid-year, said ABN Amro analyst Fan Cheuk Wan ahead of the results announcement.

Net profits fell to HK$1.13 billion (US$144.9 million) in 2002 from HK$1.20 billion in 2001. Analysts had been expecting profits to hold at the 2001 level, according to Multex Global Estimates.

Turnover rose 5.6 percent to HK$3.38 billion in 2002 and operating profit gained 6.4 percent to HK$1.16 billion.

Shanghai Industrial is to hold press and analysts' briefings starting at 4:00 p.m (0800 GMT) and no other financial details were immediately available.

The company, whose businesses range from infrastructure projects in China to consumer products and information technology, proposed a final dividend of 30 HK cents.

Shares of Shanghai Industrial closed the morning session 3.15 percent lower at HK$10.75. The stock sank nearly 29 percent in the past year through Thursday. Hong Kong markets were closed on Friday and Monday for Easter holidays.

Analysts had estimated contribution from its auto parts division to fall 30 percent, hurt by a continued price war in China's car industry.

Shanghai Industrial was also likely to book a loss of about HK$50 million from its 17 percent-owned chip start-up Semiconductor Manufacturing International Corp .

The firm had said it planned to book an exceptional gain of HK$220 million in the second half of 2002 from the listing of its associate company Shanghai Bright Dairy & Food Co Ltd .




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