appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

appConfig

filter

json

liveArticle

Paper hygiene products company Hengan International Group is investing heavily in its two mainland tissue paper factories after selling all they could produce last year.

The group will focus on the production of high-end products such as wet tissue paper while  phasing out low-end products because of fierce mainland competition.

The group is to invest $800 million  in two new production lines at its Shandong and Fujian factories, which will start operation  in August and in the middle of next year respectively. Each factory will have an annual production capacity of 60,000 tonnes of tissue paper.

Having paid about $150 million of the $800 million investment last year, the group  will fork out $450 million this year and the rest next year. In July last year, the company borrowed $550 million from 20 international and local banks. Because of the loan, the company's gross gearing ratio was 37.2 per cent, compared with  19 per cent in 2003.

Last year, the group made a net profit of $297.93 million, up 16.8 per cent from  254.98 million in 2003. Turnover reached 2.33 billion, an increase  of 38.2 per cent from $1.68 billion  in the previous year.

Net margin fell to 12.8 per cent from 15.1 per cent.

Earnings per share were 28 cents, against 24.9 previously.

The company will pay a final dividend of 12 cents per share, unchanged from a year earlier.  The total payout for the year was also flat at 22 cents per share.

Cash on hand was $544 million, compared with  $644 million in the previous year.

Group chairman Sze Man-bok said tissue paper  became its major revenue earner last year: 'The increase in turnover is mainly attributable to remarkable growth in the 'Hearttex' tissue paper business.'

Tissue paper contributed to 41.8 per cent of the group's turnover last year, compared with  24.3 per cent in 2003. Revenue from sanitary napkins dropped to 34.8 per cent from 47.5 per cent.

Vincent Loo Hong-shing, an executive director and chief financial officer of the firm, said the group's high-end tissue paper had a net margin of 50 per cent,  while the low-end  variety had 20 per cent.

Mr Loo said  the company  would promote its high-end products by  using more sales teams  with improved training.

He said annual mainland consumption of tissue paper was 2.4kg per capita,    with the world average  at 3.2kg and  American usage at 32kg.

Hengan shares yesterday fell 1.01 per cent to end at $4.875.



Hengan focuses on high-end  products