Zhaojin Mining Industry Co. (HKG:1818) experienced a sharp 5.01% decline during intraday trading on Friday, despite reporting positive financial results for the fiscal year. The company's stock price drop raises questions about investor sentiment and the market's reaction to its recent announcements.
According to the released financial statements, Zhaojin Mining reported a profit attributable of RMB 1.45 billion for the fiscal year. The company's revenue reached RMB 11.55 billion, with a gross margin of 39.15%. Additionally, Zhaojin Mining declared a final dividend of RMB 0.05 per share. These results generally indicate a solid financial performance for the mining company.
However, the market's negative reaction might be linked to Zhaojin Mining's announcement of a significant investment plan. The company stated its intention to contribute RMB 482.35 million to Shandong Ruiyin Mining Industry, increasing the latter's registered capital from RMB 1,441.17 million to RMB 2,130.24 million. This substantial investment may have raised concerns among investors about capital allocation and potential risks associated with the expansion. The market's response suggests that shareholders might be cautious about the company's growth strategy or worried about the short-term impact on cash flow.
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