XINYI GLASS On Move After Strong Half

AUTO & CONSTRUCTION glassmaker Xinyi Glass Holdings Ltd (00868) played down any effect from a spinoff following a strong interim performance.

The Hong Kong-listed integrated vehicular glass, energy-saving construction glass and high quality float glass maker announced on Tuesday that January-June revenue rose 4.9% year-on-year to 5.28 billion hkd.

Interim gross profit and net profit rose 5.5% and 24.1%, respectively, to 1.41 billion hkd and 944.9 million hkd.

The half year gross profit margin remained stable at 26.7% (1H 2014: 26.6%), while the net profit margin increased to 17.9% (1H 2014: 15.1%).

Basic earnings per share stood at 24.10 HK cents (1H 2014: 19.43 HK cents), with the board recommending an interim dividend of 9.5 HK cents per share (1H 2014: 9.0 HK cents), representing a dividend payout ratio of 46.4%.

The company also proposed to spin off its Hong Kong automobile glass retail business for a separate listing on the Growth Enterprise Market (GEM Board) in Hong Kong.

Xinyi Glass CEO Mr. Tung Ching Sai told investors in Hong Kong on Tuesday that the proposed spin off would have "no material impact on the company as it only accounts for a minor proportion of overall operations."

Another top executive was very bullish on the firm's prospects.

"Supported by our established reputation as a leading glass manufacturer and our high value-added diversified product mix, Xinyi Glass achieved a satisfactory financial performance in the first half of 2015.

"Despite the ongoing relatively challenging market environment, we witnessed growth in all business segments attributable to our economies of scale and nationwide market coverage and our strategic production complexes and expansion in production capacity have helped the us achieve a favorable competitive edge in the market competition, further strengthening our leading position in the global glass industry," Xinyi Glass Chairman Mr. Lee Yin Yee told investors in Hong Kong on Tuesday.

Management said that the strong momentum of aftermarket automobile glass sales in North America offset the drop in the weaker European market, thus turnover the firm's automobile glass business grew 6.5% to 1.897 billion hkd in 1H 2015

Gross profit of the firm's construction glass declined slightly by 4.0% to 382.9 million hkd while float glass "remains resilient amidst a challenging market environment due to slow growth in the PRC's construction industry."

Greater China remains as the Hong Kong listco's largest market with a 3.1% turnover increase to 3.59 billion hkd, occupying 67.9 % of total turnover.

"We remain optimistic about the prospects of increasing our market share in aftermarket automobile glass.

"In addition, our directors have also resolved to commence preparation work for the proposed spin-off and the separate listing of our Hong Kong automobile glass retail business Hong Kong's GEM Board," management added.

Furthermore, Xinyi Glass is exploring overseas opportunities which offer a more attractive market environment, lower production and energy costs, better tax structure and incentive programs, and the group's first overseas project is to take place in Malaysia.

Xinyi Glass will also build its first wind farm project in China's Anhui Province in order to capture the growth opportunity presented by the PRC policy on encouraging clean and new energy.

Established in Hong Kong and listed on the Main Board of the Hong Kong Stock Exchange in February 2005, Xinyi Glass Holdings Ltd is one of the largest integrated manufacturers of high quality float glass and glass products for the automobile and construction sectors in China and overseas. Its automobile glass brand was named "China Top Brand" in 2007. With a sales network that spans more than 130 countries and territories worldwide, Xinyi Glass has a solid customer base comprising renowned companies. Its product range includes high-quality float glass, windshields, side and rear windows, plastic and rubber components for automobile glass, environmentally friendly and energy saving low-emission coated construction glass for buildings and other glass products that employ new technologies and used in new energy products. Xinyi Glass' production complexes are located in Shenzhen, Dongguan and Jiangmen (in Guangdong Province), Wuhu (in Anhui Province), Tianjin, Yingkou (in Liaoning Province) and Deyang (in Sichuan Province) in China. The Group is a constituent of the Hang Seng Global Composite Index, Hang Seng Composite Index, Hang Seng Composite MidCap Index, Hang Seng Composite Industry Index - Industrial Goods, Hang Seng Mainland 100 Index, as well as MSCI Hong Kong Small Cap Index. Xinyi Glass is also included in the 2014 Fortune China 500. Xinyi Glass is the single largest shareholder of Xinyi Solar Holdings Limited (stock code: 00968), holding 27.22% of the number of Xinyi Solar Shares in issue. 

(Note: This story is contributed by Andrew Vanburen. Mr. Vanburen has served as a
government official focused on international trade at the American Institute of Taiwan in
Taipei, and worked in financial journalism for nearly a decade in both Beijing and
Shenzhen. He holds a Master's Degree from New York University. He is currently Director at
Hong Kong-based Asia Fund Space. For more information, please visit:
www.asiafundspace.com)