Feb. 1 (Bloomberg) -- Nanjing Pharmaceutical Co., a Chinese distributor and producer of medicines, fell to a two-week low in Shanghai trading after the company said it expected to report a loss for 2011.
The stock fell as much as 6.8 percent to 3.70 yuan and traded at 3.89 yuan as of the 11:30 a.m. mid-day trading break. China’s benchmark Shanghai Composite Index fell 0.4 percent
Nanjing Pharmaceutical said it would post a 2011 net loss because of higher interest rates on loans and after the results of some of its business adjustments failed to meet expectations. The company, the biggest drug distributor in the provinces of Jiangsu, Anhui and Fujian, is an “ideal acquisition target”, Capital Securities Corp. said in a report last month.
China’s central bank raised interest rates three times last year to rein in inflation that peaked at a three-year high in July. As a result, the People’s Bank of China’s benchmark one-year lending rate increased by 75 basis points in 2011.
At the end of the third quarter, Nanjing Pharmaceutical had 2.44 billion yuan ($387 million) of outstanding loans. Its financing costs for the first nine months of last year increased 48 percent from a year earlier to 143 million yuan, according to the company’s quarterly earnings report.
Profit for the first nine months fell 113 percent. For the third quarter, Nanjing Pharmaceutical reported a net loss of 704,612 yuan. The company, based in the city of Nanjing, report 9.37 million yuan of profit for 2010.
To contact Bloomberg News staff for this story: Feifei Shen in Beijing at Fshen11@bloomberg.net
To contact the editor responsible for this story: John Liu at firstname.lastname@example.org