(Yicai Global) June 29 -- Shares in China First Heavy Industries surged by the exchange-imposed limit today after the metallurgical, heavy pressure and nuclear power machinery maker announced that it will purchase a 23 percent stake in a ferronickel producer in Indonesia to improve its profitability.

China First’s stock price [SHA:601106] jumped 10 percent to close at CNY3.08 (USD0.48).

China First will pay CNY2.4 billion (USD371.5 million) for a 38.74 percent stake in Zhongpin Shengde International Development, whose main asset is its 59.37 percent equity in Jiangsu Delong Nickel Industry Indonesia, the company said yesterday. It is buying the stake from its parent firm CFHI Group, which is controlled by the State-owned Assets Supervision and Administration Commission of the State Council.

Delong Nickel Indonesia processes and refines locally sourced laterite ores to produce ferronickel, which is then exported to China for use in the stainless steel, battery and electronics sectors. The purchase is expected to boost China First’s net profit by about 40 percent, or around CNY330 million (USD51 million), a year, it said.

Last year, Zhongpin Shengde logged profit of CNY843 million (USD130.5 million) on revenue of CNY7.92 billion (USD1.23 billion), while Qiqihar, northwestern Heilongjiang province-based China First raked in CNY830 million in profit on revenue of CNY37.29 billion.

Editor: Kim Taylor