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Delivered satisfactory results for FY2012 against market headwinds
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KINGBOARD CHEMICAL HOLDINGS LIMITED
Delivered satisfactory results for FY2012 against market headwinds

Financial Highlights

 

FY2012

FY2011

Change

 

HK$’million

HK$’million

 

 

Revenue

37,290.3

36,559.1

+2%

EBITDA

5,506.9

6,240.3

-12%

Profit before tax

2,927.0

3,719.6

-21%

Net profit attributable to owners of the Company

2,097.0

2,594.2

-19%

Basic earnings per share

HK$2.454

HK$3.039

-19%

Full-year dividend per share

HK52.0 cents

HK65.0 cents

-20%

- Interim dividend per share

HK10.0 cents

HK40.0 cents

-75%

- Final dividend per share

HK42.0 cents

HK25.0 cents

+68%

Dividend payout ratio

21%

21%

 

 

Net asset value per share

HK$35.9

HK$32.8

+9%

Net gearing

38%

40%

 

Hong Kong, March 8, 2013 – Kingboard Chemical Holdings Limited (the “Company’) (HKEx: 148) and its subsidiaries (the “Group”) today announced satisfactory results for the financial year ended 31 December 2012 against strong market headwinds. Group revenue increased by 2% to HK$37,290.3 million while net profit declined by 19% to HK$2,097 million; basic earnings per share were HK$2.454. The Group maintained a robust financial position. The directors of the Company proposed a final dividend of HK42 cents per share, which together with the interim dividend of HK10 cents per share, constitutes a total dividend per share of HK52 cents, representing a payout ratio of 21%. The board has recommended to make a bonus issue of two new shares credited as fully paid for every ten shares held by shareholders of the Company. The proposed bonus issue is subject to approval by the shareholders of the Company in the forthcoming annual general meeting.

Mr. Paul Cheung Kwok Wing, Chairman of the Group said: “On the back of our solid financial strength and proven management team, the Group has built up an excellent business model with a balanced portfolio yielding diverse income streams. All core business divisions continued to deliver profitable results.”

Global demand for electronic products remained soft in 2012. As a result, the business performance of the laminate and printed circuit board (“PCB”) divisions was dampened by market sentiment. Meanwhile, chemical prices were dragged down by slower domestic demand in China. However, the new phenol/acetone plant, at Yangzhou, Jiangsu province delivered profitable earnings upon commencement of production which fueled growth for the chemical division in the second half of 2012. With regards to the property division, sales revenue from the Group’s first residential development project - Shanghai Kingboard Yu Garden - was recognized by the Group in 2012. Investment properties continued to bring in rental income increase for the Group. Hence, property division’s contribution achieved remarkable growth in 2012.

Although shipment volume and capacity utilization of laminates improved marginally for the laminates division against last year, the average selling price of laminates products showed a downtrend due to softer copper prices. The laminates division successfully expanded in the China domestic market, with sales denominated in Renminbi (“RMB”) accounting for 50% of the division’s total revenue. Turnover (including inter-segment sales) for the laminates division decreased 6% against the previous year to HK$12,941.3 million. Sales volume increased 1% from last year and average monthly shipment reached 8.57 million square metres. Earnings before interest, tax, depreciation and amortisation (“EBITDA”) decreased 16% to HK$2,104.5 million.

Customer order intake showed signs of positive momentum at the onset of 2013. Demand for electronic products, especially smart-phones and high-end consumer products, is expected to maintain robust growth. This would definitely be a positive driver for laminates demand. The Group will continue to invest in product mix enhancement and business development in the domestic China market in order to advance our market share. Plans are underway to expand laminates production capacity in both eastern and southern China this year to capture business opportunities for thin and high-performance laminates.

Similar to the laminates division, the performance of the PCB division was also affected by weaker demand for electronic products. Turnover for the PCB division declined by 11% to HK$7,253.3 million and EBITDA decreased 8% to HK$971.9 million. The Group has allocated additional resources to expand its high density interconnect (“HDI”) PCB production capacity, and gain market share in this market segment by ongoing technology and capability enhancement. HDI PCB sales accounted for 21% (2011: 17%) of PCB division sales and generated good earnings contribution to the division.

The Group will continue to ramp up the production capacity of the new PCB production sites at Yi Zheng Industrial Park, Yangzhou, Jiangsu province in the current year. Furthermore, the two dedicated HDI PCB plants in Kunshan, Jiangsu province and Kaiping, Guangdong province, also plan to expand production capacity in 2013 to meet customer demand.

Despite lower chemical products prices during the year, the new phenol/acetone plant in Yangzhou, Jiangsu province, with an annual capacity of 300,000 tonnes, generated considerable profit for the Group in the second half of 2012, and the Huizhou phenol/acetone plant in Guangdong province continued to deliver excellent performance. The Group’s other chemical projects including the Xingtai coke/methanol plant in Hebei province as well as the Hengyang caustic soda plant in Hunan province also delivered stable earnings for the Group. Turnover (including inter-segment sales) for the chemical division increased 3% to HK$17,557.8 million while EBITDA decreased 28% to HK$1,519.7 million. Share of associates’ results (the bulk of which was contributed by the natural gas-based methanol joint venture with China BlueChemical Limited) decreased by 17% to HK$215.5 million as a result of lower methanol selling prices against last year.

The Hebei coke/methanol plant has shown outstanding performance for the first two months of this year. Meanwhile, capacity enhancement plan for the Huizhou phenol/acetone plant in Guangdong province is currently scheduled for the end of 2013. The Hengyeng caustic soda plant in Hunan province is also ramping up output volume in the current year

The property division started to deliver attractive returns. The key investment properties in eastern and southern China continued to bring in steady rental income growth. Total rental income for the Group jumped 69% to HK$401.1 million in 2012. Together with recognition of sales income of HK$1,434.2 million from the Shanghai Yu Garden project, division revenue reached HK$1,835.3 million. The Group acquired Delta House, a commercial building located at Shatin, Hong Kong in May 2012. In addition, the acquisition of a commercial property, 90 Fenchurch Street with a gross floor area (“GFA”) of approximately 8,000 square metres located in central London, England, was completed in October 2012. These two investments are expected to bring in additional annual rental income of HK$100 million for the Group. As at 31 December 2012, the Group owned an investment properties portfolio with a GFA of about 210,000 square meters comprising properties across mainland China, Hong Kong and London. Moreover, the Group has built up a land bank measuring a GFA of around 5 million square meters, with the sites at prime locations mainly in Shanghai, Kunshan and Guangzhou. The property business is expected to generate steady and attractive returns to the Group in future.

Renovation work for Guangzhou Kingboard Plaza at Zhujiang Xincheng, Guangzhou is in progress with target completion date scheduled for mid-2013. Pre-sale for Qiandeng Kingboard Yu Garden Phase I in Kunshan, Jiangsu province has made good progress. Construction work of the residential portion of this project is expected to be completed within 2013

“The operating landscape for the Group this year remains challenging. Nevertheless, our experienced management team will respond promptly to changes in the market and to any business opportunities with decisive action. We are confident that the Group will continue to deliver attractive returns to our shareholders in future,” concluded Mr. Cheung.

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 60 plants in China. The Kingboard Group of companies includes Kingboard Laminates Holdings Limited (HKEx: 1888), Elec & Eltek International Company Limited (HKEx:1151 & SGX: E16), and Kingboard Copper Foil Holdings Limited (SGX: K14).

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