Business for Xinyi Glass on the rise

“Considerable business improvement for second quarter is imminent despite unsatisfactory performance in the first quarter of 2009,” said Gerry Tung, CEO and managing director, Xinyi Glass, Markham, Ontario. “Production plant utilization rate has increased to 85 percent to 90 percent from previous levels of 75 percent to 80 percent. The price for float glass has risen to RMB 1,900/ton [$278.6/ton], compared with RMB 1,600 [$234.6]-1700 [$249.3]at end of 2008 and RMB 1,000/ton [$146.6/ton]in quarter one of 2009,” according to a June 4 release.

Incentives offered by the Chinese government to “Replace Old Cars with New Cars” combined with the “Green Energy Efficiency Drive” will significantly increase demand for energy efficient products. Thus, Tung expects that the worst times for the Chinese glass industry are over; in light of current demand exceeding supply, he has an optimistic outlook for the remainder of 2009.

“The company’s cash flow in April exceeded RMB 300 million [$43,999,237], with current debt ratio of 15 percent to 17 percent, down from 17.4 percentat the end of 2008,” said Jason Lau, CFO, in the release. “Loans are now at RMB 2 billion [$293,328,249] compared with RMB 1.3 billion [$190,663,362]at the end of 2008, to support Xinyi Group’s expansions in sustainable business development in the near future. Dividends will remain at a level of 45 percent to 50 percent.”

Tung adds that “Xinyi Glass will continue to focus on its three core business operations: production and sales of auto glass, architectural glass and float glass, with new production lines becoming operational in 2009.” In addition, Xinyi Glass will expand its production of low-iron photovoltaic glass. The PV products yield gross profit margins well over 50 percentand will undoubtedly enhance operational profits in the second half of 2009.

Xinyi Glass will shortly set up a high-tech research and development center in Hong Kong to develop energy-efficient glass products. Tung indicated that so far, Xinyi Group has no plans for any external acquisitions. However, the company is prepared for further investments when appropriate opportunities arise for vertical integration and restructuring in the glass industry, according to the release.