Records Stable Revenue with Net Profit Reaching HK$2,124.8 million
Dividend Payout Ratio Remains High
Interim DividendAmounts to25.0 HK Cents Per Share
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Continues to ImplementPlanned Production Capacity Expansion in an Orderly Manner
Actively Optimises Globalisation Strategy
(Hong Kong, 8 August 2019) – Xinyi Glass Holdings Limited (“Xinyi Glass” or the “Group”) (stock code: 00868), a leading integrated automobile glass, energy-saving architectural glass and high-quality float glass manufacturer has today announced its unaudited interim results for the six months ended 30 June 2019.
During the period under review, the escalating Sino-US trade dispute has brought uncertainties that have impacted economic development and affected the global business environment. Despite the aforementioned, Xinyi Glass was still able to maintain its leadership in the glass industry. Revenue decreased by 3.8% to HK$7,449.9 million (1H2018: HK$7,747.8 million). Gross profit amounted to HK$2,688.9 million (1H2018: HK$2,917.9 million) and gross profit margin was 36.1% (1H2018: 37.7%). Net profit increased by 5.8% to HK$2,124.8 million and net profit margin was 28.5% (1H2018: 25.9%). Basic earnings per share were 53.1 HK cents (1H2018: 50.0 HK cents).
The Group has adopted a high dividend payout policy to reward shareholders for their support. Correspondingly, the Board of Directors have declared an interim dividend of 25.0 HK cents per share (1H2018: 25.0 HK cents), representing a dividend payout ratio of 47.1%.
Dr LEE Yin Yee, B.B.S., Chairman of Xinyi Glass, said, “Despite the changing economic environment, the Group continued to lead the float glass, automobile glass and energy-saving low-emission (“Low-E”) architectural glass markets during the first half of 2019. On behalf of the Group, I would like to thank the management for their leadership and our entire workforce for their unstinting efforts. During the review period, we adhered to our production capacity expansion plan in order to build a solid foundation for future development and enable ourselves to seize market opportunities.”
Business Review
Float Glass –Price of float glass has been risingsince May leading tocautious optimism aboutthesecond half year
The price of float glass hoveredat a weaker range duringthe first half year, affecting the performance of the float glassbusiness. Revenuedropped toHK$3,528.4 million. Gross profit totalledHK$986.8million and gross profit margin was 28.0%. The price of float glass in the PRC began to rise from its trough in May. The Group is therefore cautiously optimistic about the second half year. In addition, the Group is actively expanding its business into markets of various regions. With production capacity expansion, diversified product portfolio, effective cost control measures, and the leading advantage of Xinyi Glass, the Group is certain of its ability to capture opportunities oncethe industryrecovery begins.
Automobile Glass –Actively seized new market opportunities and maintained stable sales growth and high gross profit margin
The Group has implemented flexible and dynamicmarketing strategies for its automobile glass business to bolsterits product portfolio as well as to attractnew overseas customersso asto maintain the sales volume of its automobile glass products. In the first half of 2019, the Group upheldits position as the largest exporter of automobile glass in the aftermarket, and revenue of its automobile glass business grew steadily by 4.2% to HK$2,204.3 million. Gross profit increased by 6.5% to HK$1012.4million and gross profit margin alsorose, risingfrom 44.9% in the first half of the previousyear to 45.9%. The Groupis actively expanding its business to overseas markets outside of North America, which could help alleviate the impact of fluctuating tariffson certainexport operationsand drive the long-term healthy growth of the Group’s business.
Architectural Glass–Economies of scale and appropriate business strategiessupported profit growth of architectural glass
Benefitting fromeconomies of scaleachieved andsupported byits nationwide coverageandstrategies to expand the energy-saving low-emission (“Low-E”) architectural glass business to complement environmental protection developmentsin the PRC, the Group’s architectural glass business recordedrevenuegrowth of 15.0% to HK$1,717.2 million in the first halfyear. Gross profit was up by 18.5% to HK$689.7million and gross profit margin increased to 40.2%. The Group believes the Low-E architectural glass industrywill realise stable growth supported by higher utilisation rateof double-and triple-layer energy-saving glass.
Geographic Market Analysis
The Greater China region remained asthe Group’s largest geographical market, recording revenue of HK$4,897.5 millionand accountingfor 65.7% of total revenue. Revenuefrom overseas markets rose by 17.2% to HK$2,552.4 million,among which turnover from Europe and North America increased by 13.2% and 9.2% to HK$289.6million and HK$888.0 million respectively, making up15.8% of the Group’stotalrevenue.
Prospects
Backed by sound and visionary operating strategies, the Group hasmaintained afirm footingin the market despite external economic uncertainties and intense competitionwithin the industry. Looking ahead, the Group will continue to pursue a development strategy aimed at creating a more diversified and differentiated product portfolio, as well as an expanded high value-added product portfolio that includes specialty glass. Differentiated products accounted for more than 35% of float glass product sales in the first half of 2019. The Group will continue to implement related strategies in the future to improve overall gross profit margin of its products.
When it comes to capacity expansion, construction of the Group’s new production lines is progressing well, with a quality float glass production lineboastingdaily melting capacity of 1,100tonnes in Beihai, Guangxi, setto commence operation in the fourth quarter of 2019, withthe remaining three production lines projected to gradually commence operation in 2020. Onceall of theseproduction lines are inoperation, daily melting capacity will reach 3,200 tonnes.Furthermore, the addition ofproduction lines in Zhangjiagang, Jiangsu,with total daily melting capacity of 1,500 tonnes,are plannedto commenceservice in the first half of 2020. In addition, the Group will build a production line in Beihai, Guangxi in phases, which will have an annual production capacity of 4 million heat-reflective automobile glass. Also, the Group is currently expanding and optimising its production capacity. The four energy-saving Low-E architectural glass production lines that it acquired are expected to increase the production capacity of architectural glass by over 30% by the end of 2020.
Dr Lee concluded, “We believe the gradual introduction and operation of new production lines will improve our production efficiency and enlarge our market share; driving overall profit growth. What is more, the management is optimistic about the Group’s development prospects owing to its industry-leading position; well-located production bases, which possess strategic geographical advantages; economies of scale, which delivers economic benefits; vertically integrated model; and globalisation strategy. Looking ahead, we will work diligently to maximise investment value, maintain our high dividend yield, and since listing, achieve high dividend payout ratio, as well as bring satisfactory returns to our shareholders.”
