Lower corporate tax has propped up Jingwei Textile Machinery Co's interim profit, which rose 3.1 per cent despite a 5 per cent fall in turnover. Jingwei, which listed its H shares in February, said net profit rose to 35.71 million yuan (about HK$33.21 million) while turnover fell to 330.37 million yuan in the six months to June. At the operating level, profit dropped 10 per cent to 42.07 million yuan, its margin squeezed - to 12.7 per cent from 13.5 per cent a year earlier - by rising costs. Jingwei this year pays corporate tax rate at 15 per cent, compared with the statutory 33 per cent last year, after it was incorporated in the Taiyuan High and New Technology Zone in Shanxi province before its listing in Hong Kong. Tax was 6.17 million yuan, compared with 12.15 million yuan in the previous corresponding period. An interim dividend of two fen a share will be given on earnings per share of 10 fen. Chairman Mei Zaisen blamed the dismal result on China's credit squeeze - which dampened demand for textile machineries - and cut-throat competition. 'Textile industry enterprises have tightened control on capital expenditure and textile manufacturers faced fierce competition in the market as a result,' Mr Mei said. The drop in turnover came from a 15 per cent decrease in sales of chemical-fibre textile machinery, which made up 22 per cent, or 72.22 million yuan, of total sales. Sales of another major product, natural-fibre textile machinery, were steady at 210.45 million yuan, or 64 per cent of turnover. General manager Liu Shitong said the easing in credit would stimulate demand for chemical-fibre textile machinery in the second half. The company plans to review its sales and after-sales service policy in the next few months. It will set up a sales and after-sales service centre to enhance co-ordination and management of sales activity. Jingwei yesterday did not mention its plan to acquire assets from its parent, China National Textile Machinery Corp, which has 19 subsidiaries up for sale. Mr Mei had said the acquisition would be funded by its A-share issue in Shanghai. The company said the mainland listing would be completed in the second half of the year.
