Xinyi to concentrate research on energy-saving glass

Auto and building glass maker Xinyi Glass Holdings will cut its investments for expanding production in 2006 and concentrate instead on research into energy-saving glass.
The cut followed the posting…

Auto and building glass maker Xinyi Glass Holdings will cut its investments for expanding production in 2006 and concentrate instead on research into energy-saving glass. The cut followed the posting by the Hong Kong-listed company of a 10.3% increase in net profit to HKD 260.1 million in 2005, significantly lower than the 27.2% increase in 2004 and 22.1% in 2003. The company attributed the slowdown in profit growth to the fact that its two new production lines in Dongguan, which started operations in the 2Q 2005, had not reached full capacity. It has budgeted HKD 180 million for capital expenditure in 2006, significantly lower than the HKD 744.3 million used in 2005 and HKD 537.6 million in 2004 when it expanded production facilities aggressively. The company will switch its capital expenditure in 2006 to research on energy-saving glass, which involves coating glass to reduce heat penetration, and enhancing existing vehicle glass production, according to Xinyi chief executive Gerry Tung Ching-sai. “We plan to build a research and development centre for energy-saving glass in our Dongguan factory in the 2Q this year,” he said. “Energy-saving glass is a focus in the mainland“s eleventh five-year plan. “The central government may also give concessions to the glass makers,” Mr Tung said. He said there was a 20% year-on-year increase in contracts in the 1Q in 2006, driven by mainland vehicle makers recently listed in Hong Kong, including Geely Automobile and Dongfeng Motor. Mr Tung expected vehicle glass export to remain the company“s main growth driver. Vehicle windshield glass production reached 7.5 million items in 2005, doubling capacity since 2004. Turnover in 2005 rose 34.3% to HKD 1.38 billion. Overall gross margin in 2005 was 34.7%, down from 36.3% in 2004. The company had HKD 140.9 million cash at the end of 2005, compared with HKD 248.3 million in the previous year. It proposed a final dividend of HKD 0.05 per share for 2005, unchanged from a year earlier.