(1 April 2009 – Hong Kong) Haitian International Holdings Limited (“Haitian International” or “the Company”, together with its subsidiaries and associates collectively known as “the Group”; stock code: 1882), one of the world’s largest plastic injection moulding machine (“PIMM”) manufacturers, is pleased to announce its annual results for the year ended 31 December 2008.
For the year ended 31 December 2008, the Group’s sales amounted to approximately RMB3, 694,370,000, representing a slight decrease of 3.4% compared to the same period a year ago. Gross profit decreased 12.1% to approximately RMB985, 764,000. Profit attributable to equity holders was RMB405, 247,000, equivalent to earnings per share of around RMB25 cents. The Board of Directors declared a final dividend of HKD3 cents per share.
Commenting on the Group’s results for 2008, Mr. Zhang Jianming,Executive Director and CEO of Haitian International said, “The year 2008 saw challenges in the global economy and financial market on several fronts hitting the Group’s business. However, the Group stays focused to uphold prudent yet pertinent strategies to promote business growth.”
The financial turmoil sparked by the US sub-prime mortgage crisis had slid the global economy into recession, sapping the consumer demand and denting the investment sentiment. Coupled with the unprecedented fluctuation in raw material prices and the value-added tax (“VAT”) reform in China that led to the postponement of purchase orders, the headwinds facing the company were stronger than ever. Yet in the midst of the market downturn, the Group still managed to record a slight decrease in sales, thanks to the successful implementation of strategies to counter the downturn comprising product diversification, stringent cost control measures as well as enhancement of production and management efficiency.
During the year, the Group proactively responded to the unfavourable market condition and confronted the challenges. The Group had seen a drop in the demand for small PIMMs and hence swiftly shifted the focus to medium to large PIMMs which were more often used in less impacted industries like logistics and electrical home appliances. Sales from medium to large PIMMs increased by 13.9% to RMB1,377 million, offsetting the decline in small PIMMs demand. Alongside, the tax reform in China that allows VAT being deducted for any fixed assets purchased after 1 January 2009 had resulted in temporary delays of orders across the nation. Against this backdrop, the Group concentrated on the international market which grew steadily at the pace of 7.4% last year.
Meanwhile, the Group also strived for cost minimizations in order to maintain profitability. In the face of the mounting cost pressures stemmed from surging raw material prices like steel and iron in the first half of the year, the Group took decisive actions to alleviate the pressure including improving the product mix with the focus on higher margin products like Mars (J5) series, optimizing production process to lower production and logistic costs as well as raising product selling price by 6%. The average selling price of the products ramped up approximately 20% to RMB236,000 which was attributable by an increase of proportion of higher margin products (energy saving PIMMs and large tonnage PIMMs) in the sales mix and increase of the selling price. During the year, the gross profit margin decreased to 26.7% from 29.3% a year earlier.
Haitian International believes that research and development (“R&D”) constitutes the core competitiveness of the Group in meeting the dynamic needs of customers and sustaining the leadership in the future. In January 2008, the Group has started a post-PhD R&D programme under which Haitian International would fund a team of PhD graduate working with Beijing University of Chemical Technology to conduct researches in new plastic processing technology and the development of new PlMM models for commercialization in the future. The Group’s commitment and sustaining efforts in R&D were well recognized and was awarded during the year as one of the “innovative enterprises” amongst other 90 companies in China by the Ministry of Science and Technology, the State-owned Assets Supervision and Administration Commission of the State Council and the All-China Federation of Trade Unions.
The Group’s financial position remained solid and as of 31 December 2008, net cash level was approximately RMB925 million.
Looking forward, Mr. Zhang opined, “In 2009, the challenging environment caused by the financial meltdown will persist until the global consumer confidence restores. However, the Group remains optimistic about the prospect of the PIMM industry in the medium and long term, thanks to strong fundamentals of the Group. Despite the impact of financial turmoil impinging on the sales performance in 2009, we had been aware that the tsunami had been transforming our operating environment in positive directions. Several unfavorable factors such as rising plastic and steel prices, continuous appreciation of RMB and tightened Chinese austerity measures, had been dramatically swept away.”
The Group said the RMB4 trillion stimulus package embarked by the Chinese Government would help encourage corporate investment in equipment in the long run and drive the growth of the domestic demand for PIMMs in the future. Haitian International believes that the macro economy of mainland China can recover from the financial crisis at a pace faster than other countries. “With approximately 60% of sales in domestic market, we will be in a prime position to benefit from it.” Mr. Zhang concluded.
About Haitian International Holdings Limited
Haitian International is a leading PIMM manufacturer in the PRC, primarily designs, develops, manufactures, sells and supports plastic injection moulding machines (“PIMMs”) and related parts which are used by its end-user customers across a wide range of industries, such as automotive, construction materials, healthcare, logistics, packaging, information technology, electrical appliances, electronic and other consumer products etc., to produce plastic products and parts.