Xinyi Glass profit up 1.85 times to $641.8mln

Group to strengthen operational management efficiency to tackle any challenges during prolonged global economic recovery.

Integrated float glass, automobile glass, construction glass and photovoltaic glass manufacturer Xinyi Glass Holdings Limited (“Xinyi Glass” or the “Group”) announced on Monday its interim results for the six months ended 30 June 2010.

With the recovery of the global economy, the Group’s turnover was approximately HK$2,648.7 million, up by approximately 62.7% as compared to the same period last year. The overall gross profit margin also increased to 39.0% from 33.9% in the last corresponding period. Profit attributable to equity holders surged 1.85 times to HK$641.8 million. Earnings per share were 18.1 HK cents (2009: 6.5 cents*). The Board of Directors proposed payment of an interim dividend of 8.0 HK cents per share (2009: 3.0 HK cents*), a dividend payout ratio of 44.1%.

Mr. LEE Yin Yee, Chairman of Xinyi Glass, said, “I am very pleased that all business segments of Xinyi Glass reported good performance during the review period. Moreover, both of overseas sales and sales in the PRC markets recorded a satisfactory increase. The Group also managed to achieve higher margins by boosting its economies of scale, improving production techniques and procedures, implementing more stringent cost controls on raw materials and inventory and providing a diversified and better product mix of high value-added glass products, such as ultra-clear photovoltaic glass. The Group has also adopted a flexible management strategy to take advantage of different supportive government policies in the PRC.”

The significant rise in turnover for the six months ended 30 June 2010 was mainly due to clients in the overseas automobile glass markets increasing their purchases. This increase was because of the gradual recovery of overseas economies and clients’ restocking due to low inventory levels generally maintained during 2009.

The strong PRC economy and wealth accumulation of its rapidly expanding middle class provided a confident environment for the PRC’s expanding market. With the Central Government’s energy saving policy boosting the demand of Low Emission (“Low-E”) glass, the increase in PRC’s building project volume and the new capacity at the Wuhu production complex coming on stream, the construction glass and float glass businesses enjoyed significant growth for the first half of 2010.

The sales of ultra-clear photovoltaic glass also enjoyed a record high in the first half of 2010 because of the strong demand of solar modules in global market and the increase of new ultra-clear photovoltaic glass capacity at the Wuhu production complex.

Market Analysis
For the period under review, as the North American markets have gradually recovered, sales to North America increased by 16.4% to approximately HK$330.5 million. Riding on the strong economic rebound in the Greater China market, the Group’s sales here also rose significantly 114.3% to approximately HK$1,720.5 million. As the European economies are still more seriously affected by the economic turmoil, sales to Europe rose slightly by 7.3% to about HK$150.9 million. In light of the Group’s effort to actively explore other overseas markets, such as Australia, Middle East and Africa, sales in these markets increased by 11.4% to approximately HK$446.8 million.

Prospects
With the supporting factors of the PRC Government’s adjustment to its economic stimulus plan, and its continuation of policies to support the automobile industry and to encourage the building materials industry in rural areas in China, and its issuing new energy-saving standards for building construction and initiating measures to promote use of solar energy systems, Xinyi Glass plans to continue to strengthen its research and development capability to enhance new product development and improve product quality.

Xinyi Glass also intends to focus on the development of new environmentally-friendly and energy efficient glass products to meet the increasing demand for high quality float glass, LOW-E glass, double glazing insulated glass and photovoltaic glass products. The Group expects the second and third tier PRC cities to also have a strong need for high quality float glass and Low-E glass in the future.

In addition, the Group plans to build three new ultra clear photovoltaic glass production lines in Wuhu and Tianjin to fulfill the demand for solar power systems, which is expected to continuously increase in Europe, the US, China, Japan and Asia.

Chairman LEE concluded, “Our new production lines in the Yangtze River Delta, the Pearl River Delta and the Bohai region will commence operation before the end of 2011, supporting our growth in different product fronts. During the year, the Group will also continue to strengthen its operational management efficiency in order to tackle any potential challenges during the prolonged global economic recovery. We are optimistic about the development of our business in the future and are committed to delivering fruitful returns to our shareholders.”