Demand for sheet glass produces glittering interim for Luoyang
CHINA'S growing demand for sheet glass has bolstered the interim performance of Luoyang Glass Company, which reported an almost 20 per cent increase in attributable profit to 127.1 million yuan (about HK$114.4 million) for the first six months of the year, based on last year's pro forma figures.
The first-half profit accounted for 52.5 per cent of the company's full-year forecast of 242 million yuan, made in the prospectus in June.
Luoyang Glass' turnover jumped 29.6 per cent to 452.38 million yuan, with weighted average earnings per share of 32 fen.
It received foreign exchange income from exports of US$2.32 million, representing an increase of 78.62 per cent.
Calculated at the pre-tax level, Luoyang Glass had an operating profit margin of 42.6 per cent in the first half, compared with 31.9 per cent in the last corresponding period.
The company did not propose any interim dividend, after the payment of special interim dividend in May, before its listing on the Hong Kong stock exchange in July.
Chairman Guo Xiaohuan said the mainland's austerity programme, unified exchange rate and the tax reform had not had a major impact on the company.
He said this was partly because continuous expansion of fixed asset investments in China has led to growing demand in the sheet glass market.
''Also, the company's foreign debt for the period remained relatively low, and foreign exchange earned from exports was sufficient to meet its foreign exchange needs.'' The company produced 184,100 tonnes of float glass in the first half, up 18.5 per cent, while production of vehicle safety-glass reached 222,400 square metres.
In the first half, Luoyang accelerated completion of its development projects.
Preparatory work for the expansion of the vehicle safety-glass production line was completed.
The ordering of equipment, construction of the main plant and other ancillary facilities are expected to be completed by year end, with operations to begin in 1995.
The Chenzhou float-glass production line, which will be completed in September, is scheduled to start operating the following month.
Meanwhile, preparatory work for the Qingdao plant and its associated Yinan mineral materials base have been completed, and construction of the main facility is expected to start within the year.
Mr Guo said Luoyang's development strategies for the second half of the year included a modification of its product structure to meet market conditions, expanding sales channels.
It will also enhance the existing four float-glass production lines to improve product yield by three per cent, compared with the first half of the year, and raise the first-grade quality rate by five to eight per cent.
He said the company was looking into possibilities of gaining ISO 9000 accreditation.
Luoyang Glass ended the day 15 cents higher at $3.52, but still below its issue price of $3.65.
The memory of the company's debut failure, with a 20 per cent plunge in the share price, is still vivid as investors continue to express concern about China's rampant inflation and its policy of tightening credit.
At that time, investors complained about Luoyang Glass' aggressive pricing when market sentiment was weak.
The company's shares were sold at 10.5 times prospective earnings.
Later, Shanghai Haixing, another Chinese candidate, aborted its share offering in Hong Kong because the mainland shipping company declined to accept a multiple of less than 10 times.