Zhejiang Glass plans to invest up to CNY (2.42 billion HKD 2.28 billion) to increase its production capacity and product line in 2005.
Total investment by the firm, the second-largest Hong Kong-liste…
Zhejiang Glass plans to invest up to CNY (2.42 billion HKD 2.28 billion) to increase its production capacity and product line in 2005. Total investment by the firm, the second-largest Hong Kong-listed mainland glassmaker by market value, will depend on the outcome of its proposed CNY 1.5 billion share sale in China“s A-share market, as CNY 920 million from the sale is expected to go to capital expenditure in 2005. “Total bank borrowings and gearing ratio will definitely increase with the huge capital expenditure this year, though the earnings derived from new production facilities will cover the interest expense,” said chairman Feng Guangcheng. The company“s capital expenditure in 2004 was CNY1.2 billion, and its bank borrowings went up from CNY 689 million to CNY 1.65 billion, with a net gearing ratio of 67%, at the end of December 2004 From the end of June 2005 the firm“s soda ash production facilities in Qinghai will come on stream. Feng expects production from the new plant to be 250,000 tonnes in 2005, or about 28% of its soda ash annual production capacity. The company also aims to produce one million square meters of low-E glass for curtain walling in 2005. Feng said the gross profit margin of low-E glass is 3 to 5% higher than that of regular flat glass, a product that accounted for 93.4% of total turnover in 2004. The company“s gross profit margin was 35% in 2004. With the production of soda ash, low-E glass and other processed glass, Feng expects the share of flat glass to total turnover to fall to 70% in 2005. Gross profit margin for soda ash is expected to be more than 40%. “Soda ash and low-emissivity coated glass [low-E glass] are the earning drivers for this year,” Feng said. Zhejiang Glass said net profit rose CNY 12.6% to 205 million in 2004. A final dividend of CNY 0.0503 per share was declared. Including the interim dividend, the total dividend rose 12% to CNY 0.1063 a share, representing a 30% payout ratio.