Xinyi Glass 2010 profit up 103.1% to HK$1.57bn

Te company proposes spin-off listing of solar glass business in Hong Kong to step up growth.

Leading integrated float glass, automobile glass, construction glass and solar glass manufacturer Xinyi Glass Holdings Limited (“Xinyi Glass”) announced on Monday its annual results for the year ended 31 December 2010.
The Group’s turnover increased by 60.8% year-on-year to approximately HK$6,364.3 million. Gross profit surged by 74.8% to approximately HK$2,555.0 million, while overall gross profit margin rose to 40.1% (2009: 36.9%), both achieved record high. Net profit attributable to equity holders of the Company recorded a surge of 103.1% to approximately HK$1,571.2 million. Earnings per share were 44.43 HK cents (2009: 22.06 HK cents).

The Board of Directors proposed payment of a final dividend of 13.0 HK cents per share (2009: 15.0 HK cents). Together with the interim dividend of 8.0 HK cents already distributed, the total dividend for the year amounted to 21.0 HK cents (2009: 10.6 HK cents). The dividend payout ratio was 47.1%.

Xinyi Glass disclosed that because of the strong domestic demand in China and modest economic recovery in overseas markets, the Group achieved outstanding performance during the year under review. Moreover, by using cheaper and cleaner natural gas as fuel for the new float glass and solar glass production lines, selling a more optimal combination of high value added products, and implementing improved production efficiency as well as stringent cost controls, its net profit also reached a historical high, according to a Xinyi Glass report.

The Group’s automobile glass business improved mainly due to the recovery of overseas markets, especially the strong rebound in North America, and the Group’s efforts in expanding its share of overseas markets.

The increase in sales of construction glass was mainly attributable to the fast growing market for building construction and higher demand for energy saving low-emission coating (“LOW-E”) glass in the PRC.

Spurred by the strong demand in automobile glass and construction glass in the PRC, the Group achieved very encouraging growth in its float glass business. The Group was well positioned to capture the business opportunities in the industry by commencing the operation of two new float glass production lines carrying a daily melting capacity of 700 and 900 tonnes respectively during the second quarter of 2010.

In view of the global trend to utilise green and renewable energy sources, the Group accelerated its expansion of the solar glass business during the year. This business was another major growth driver during the year, enjoying a significant increase in turnover.

Market Analysis
The Group’s different business segments recorded high growth, especially for the float glass and the solar glass markets in China. Therefore, turnover from Greater China climbed by 91.8% to approximately HK$4,230.1 million, accounting for 66.5% of total turnover. Sales to North America rose by 28.8% to approximately HK$747.5 million while the sales to Europe increased by 19.8% to approximately HK$451.8 million. Turnover from other overseas markets also increased by 17.6% to approximately HK$934.9 million due to continuous expansion in these markets.

Prospects
The Group’s new production complexes in the Yangtze River Delta, the Pearl River Delta and the Bohai region are to commence operation by the end of 2011. Another new production complex in Yingkou in northeastern China is also planned to commence operation by the end of 2012, to cater for the strong demand for high quality float glass and Low-E glass in the second and third-tier cities in the PRC.

To capture the ever-increasing demand for solar power systems, the Group is currently developing three new solar glass production lines in Wuhu and Tianjin. Moreover, the Board of Directors is proposing a spin-off listing of the solar business in Hong Kong to accelerate growth of this business.

To further enhance the overall production cost structure, the Group plans to use cheaper and clean fuel – natural gas for its float glass and solar glass production lines in the Dongguan production complex – by mid-2011. Also, the Group plans to install an environmentally-friendly low temperature recycling residual heat power cogeneration system in Dongguan and at the other new production complexes.

In addition, the Group will reinforce its research and development capabilities to enhance new product development and product quality. It will focus on the development of high quality float glass, new energy and environmentally-friendly and energy efficient glass products. In view of the escalating demand for high technology electronic products, the Group also plans to build an ultra-thin electronic glass production line in Wuhu, Anhui Province, in the PRC.

Mr Lee Yin Yee, M.H., Chairman of Xinyi Glass, concluded, “We are very optimistic about our future development and will uphold our business strategies that have proven to be highly successful. Striving to maintain our market-leading position, our efforts will enable us to extend the Group’s presence in both the Greater China and the global glass markets.”