Mr Paul Cheung Kwok Wing, Chairman of the Company said: "Building upon our strengths and leveraging on our ever-expanding business network of more than 50 plants in China and overseas sales offices, the Group has set another period of strong business growth. Our broad-based growth and profitability were underpinned by healthy economic conditions in the region and the strategic investments we have made over the past years to improve our capabilities and competitiveness. Our excellent results very well reflect the inherent value of the Group’s balanced business portfolio in the three core business segments and our effort in sharpening the Group’s competitive edge so as to withstand business challenges."
According to the latest report of Japan Marketing Survey Co., Ltd, the laminate division continued to maintain its No.1 position to reach 11.5% of the global market share in 2006 up from 9.9% a year ago. The printed circuit board ("PCB") division attainted 19% revenue growth and continued to advance its market share. Riding on the strong growth momentum in the PRC market, the Group’s chemical division achieved a highest ever 208% growth in earnings contribution over the corresponding period of last financial year, after accounting for the share of associate profit of its Hainan joint venture with China BlueChemical Limited.
The Company was assigned investment grade ratings by Moody’s as well as Standard & Poor’s in May and July 2007 respectively. Mr Cheung added: "The ratings by major international rating agencies underscore the diversity of our businesses in high growth sectors complemented by satisfactory operating cashflows as well as the quality of our management team. We will continue to capitalize on the solid track records to pursuit long term business growth and further enhance our shareholders’ value."
Revenue (including inter-segment sales) for the laminate division recorded 26% growth to HK$4,672.2 million. Earnings before interest and tax ("EBIT") increased by 13% to HK$1,044.2 million over the same period last year. The Group’s overall business for laminates started with positive momentum in the second half of 2007. In order to capture additional market share in China and gain new customers in emerging markets, the Group is expanding its production capacities for glass epoxy laminate and upstream component materials as well as making headway to invest in high performance laminate products which can be used to manufacture more sophisticated electronic devices.
Revenue of PCB division for the six-month period under review increased by 19% to HK$3,449.6 million but EBIT declined by 25% to HK$244.8 million against same period last year. Although capacity utilization of Elec & Eltek was briefly affected by inventory adjustment of computer related customers at the beginning of 2007, the other PCB subsidiaries within the Group with little exposure to the computer applications enjoyed full capacity utilization throughout the first half and delivered satisfactory performance. Since end of second quarter of 2007, the PCB division experienced strong recovery in demand from the computer and peripherals sector including high-layered PCB for notebook and servers. Therefore, all PCB subsidiaries within the Group are currently operating at full capacities and the multi-layered PCB production capacity shall increase by around 13% by the end of 2007. The Group’s expansion plan for High Density Interconnect PCB capacity in Kaiping South remains on schedule and the new facility is set to commence operation by the first half of 2008.
The chemical division continued to deliver excellent performance with revenue and EBIT growth of 25% to HK$2,319 million and 88% to HK$264.3 million, respectively. This spectacular growth was due to strong product prices, increased economies of scale and competitive feedstock costs. The strong caustic soda demand in Southern China market had provided healthy return and margin expansion from the caustic soda plant in Hengyang, Hunan province. The coke/methanol plant in Hebei province had performed extremely well in the first half of 2007 and its EBIT tripled against corresponding period of last year as consolidation in domestic coke production continued. Despite volatility in methanol prices in the first half of 2007, the Group’s joint venture with China BlueChemical Limited in Hainan province generated remarkable return for its shareholders.
Mr Cheung concluded: "Expansion in the chemical division is expected to be the strongest growth driver for the Group, and the Group is pursuing its capacity expansion rigorously so as to further expand its market share. The Chongqing methanol project and the Huizhou phenol/acetone project are on track to commence operation by the end of 2007. Two joint ventures for methanol projects in Shanxi province, phase two expansion of the coke/methanol plant in Hebei province and phase three expansion of Hengyang caustic soda plant, all of which are expected to commence production in 2008, will further broaden our existing earnings base. Recently we entered into a vertically integrated venture covering coal mining and coke/methanol facilities at Lvliang, Shanxi province. This venture not only has a sustained competitive costs structure generating attractive investment returns, it will also have close to zero gas emissions. Our ongoing commitment to the development of environmental friendly and clean production facilities are greatly welcomed and supported by the provincial government authorities."
Financial Highlights| Six months ended June 30, | ||
| 2007 | 2006 | |
| HK$'million | HK$'million | |
| Turnover | 9,021.9 | 7,465.0 |
| Profit attributable to equity holders of the Company | 1,301.8 | 1,068.8 |
| Basic Earnings per share | HK$1.562 | HK$1.362 |
| Interim dividend per share | HK30.0 cents | HK20.0 cents |
About Kingboard Chemical
Kingboard Chemical Holdings Limited (HKEx: 148) is a global leader in laminate and printed circuit board as well as a major chemical supplier in China. The Group’s core manufacturing capability comprises an integrated network of more than 50 plants in China. The Kingboard Group of companies also includes Kingboard Laminates Holdings Limited (HKEx: 1888), Kingboard Copper Foil Holdings Limited and Elec & Eltek International Company Limited (both listed on the Singapore Stock Exchange).