Hong Kong, August 28, 2006 - Kingboard Chemical Holdings Limited (HKEx: 148) continued to achieve excellent profitability across all of its core businesses including different segments of Elec & Eltek Group during the six months ended 30 June 2006 ("the reporting period"). The Group recorded 25% increase in turnover to HK$7,465 million and net profit also grew by 55% to HK$1,069 million. The Board recommended an interim dividend of HK20.0 cents per share (2005: HK12.0 cents).
Mr Paul Cheung Kwok Wing, the Chairman of Kingboard Chemical Holdings Ltd., said: "There has been a perfect integration of Elec & Eltek Group into the Group following our acquisition of a controlling interest some 20 months ago. As a growing global entity, the Group continues to keep a tight rein on costs and implement essential measures to ensure we remain competitive in the international market. One thing came through clearly in the reporting period - our reputation and franchise continued to gain more recognition as our operational performance once again was ahead of competition in most areas."
In the last six months, the Group continued to gain market share in both paper and glass epoxy laminate businesses. Revenue for the laminate division grew by 42% to HK$3,716 million, while earnings before interest & tax ("EBIT") rose even higher by 62% to HK$925 million compared to the same period last year, which reflected a 3.1% hike in EBIT margin to 24.9%. Volume sales were up by around 23% with the average monthly shipment reaching 7 million sq. meters. As demand for most consumer related products such as consumer electronics and automotive continued to accelerate, our paper laminate and glass epoxy laminate businesses have experienced respectable growth in the reporting period. The tight supply of raw material for glass epoxy laminate has lifted laminate's selling prices and also allowed the Group to enjoy a satisfactory return. For paper laminate we continued to possess a formidable market position in the global market and with the advantage of economy of scale to achieve steady profitability.
To capitalize on the laminate industry upcycle, the Group will continue to add new manufacturing facilities in China. Our new glass epoxy laminate production line in Fogang, Guangdong province and paper laminate production line in Kunshan, Jiangsu province are expected to commence operation in the second half of 2006. The construction of a new glass epoxy laminate factory in Jiangyin, Jiangsu province is currently underway. All of these new investments will be translated into around 20% growth of production capacity by mid-2007.
Tapping on on-going outsourcing trends from the US, Europe and Japan, all of our PCB plants in China, Hong Kong and Thailand have been operating near full capacity utilization throughout the reporting period. As one of the world's ten largest PCB makers our total monthly production capacity for double-side and multi-layer have exceeded 7.3 million square feet. Our PCB sales achieved an 18 % increase in the financial period and EBIT margin improved to 11.3 %. The Group would undertake continued review of its operating landscape and essential rationalization in order to lay a solid foundation for sustainable future growth. The cooperation and alliance of different PCB shops of the Group, among others, will continue to be our primary focus. The Group strives to tap on the PCB market growth opportunities with new investments in the production of more quality PCB at competitive prices. Based on the current progress an additional monthly production capacity of 1.7 million square feet will become operational by mid-2007.
The chemical division of the Group has become one of the key players in certain chemical segments in China. Revenue for the chemical division rose by 34% to a record HK$1,853 million in the six-month period compared to the same period last year with EBIT, despite higher feedstock costs, up by 54% to reach HK$141 million. Both caustic soda plant in Hengyang of Hunan province and coke-methanol plant in Hebei province became profit contributors after the initial gestation period. This reflects our strategic moves entrenching over the past few years have paved the growth for the chemical division.
The construction of the methanol plant by our joint venture with CNOOC's chemical division in Hainan province is on schedule and trial production has commenced. Another new epoxy resin plant in Jiangyin, Jiangsu province will be set up by the end of 2006, while the methanol plant in Chongqing and the phenol and acetone plant in Huizhou, Guangdong province shall commence operation in year 2007. In addition with our experience in the coke-based methanol production in Hebei province, we have recently commenced a couple of joint venture projects of converting coke gas into methanol in Shanxi province. With all these new manufacturing facilities coming on stream, the Group is well poised to seize growth opportunities in the chemical division that will achieve greater value to the Group.
Mr Cheung added: "The growth prospects across our various business segments continue to be good, underpinned by a strong global demand from electronics segment. Medium term outlook remains very favourable as our chemical projects being completed over the next couple of years are bounded to provide extra impetus for growth."
Financial Highlights| Six months ended 30 June, | ||
| 2006 | 2005 | |
| HK$'000 | HK$'000 | |
| Revenue | 7,464,958 | 5,954,028 |
| Profit attributable to equity holders of the parent | 1,068,807 | 688,299 |
| Basic Earnings per share | HK136.2 cents | HK95.6 cents |
| Interim dividend per share | HK20.0 cents | HK12.0 cents |
About Kingboard Chemical
Kingboard Chemical Holdings Limited (HKEx: 148) is one of the world's largest manufacturers of laminates and printed circuit boards. Since the establishment of its first laminates plant in 1988, the Group has been growing in scale and expanding through vertical integration to become a widely recognized industry leader in laminates and printed circuit boards, with upstream capabilities in copper foil, bleached kraft paper, glass yarn, glass fabric, formalin, methanol, hydrogen peroxide, epoxy resin and TBBA. The Group's core manufacturing capability comprises an integrated network of more than 40 plants in China. The Group has been added to the MSCI Hong Kong Index as a constituent since May 2004, and named for six consecutive years by Forbes Magazine as one of "The Best 200 Under a Billion Companies".