HONG KONG, Aug. 22 /PR Newswire Asia/ -- Zhengye International Holdings Company Limited ('Zhengye International' or the 'Company' and, together with its subsidiaries, the 'Group', stock code: 3363), the largest supplier of paper-based packaging products for household air conditioners in the PRC, today announced its interim results for the six months ended 30 June 2011 (the 'period under review').
During the period under review, the Group recorded an overall business growth, with revenue amounting to approximately RMB595.6 million, representing an increase of 23.3% compared to the corresponding period last year. Gross profit increased 33.2% year-on-year to approximately RMB116.2 million. Profit for the period (less listing expenses and gain on disposals of property, plant and equipment) increased 12.7% to approximately RMB43.3 million. Gross profit margin and basic earnings per share were 19.5% and RMB0.08 respectively. The Board of Directors of the Company did not recommend an interim dividend payout for the period under review.
Mr. Hu Zheng, Chairman and Executive Director of Zhengye International, expressed his satisfaction with the first results after the listing of the Group, 'With China's rapid economic growth, continued increase in disposable income per capita and the growing demand for and consumption of household appliances, the Group's products benefited greatly from favourable economic conditions. In the first half of 2011, the country saw an increased demand for air conditioners as well as other household appliances, and the average selling price rose 15% as a response to the increase in cost, thus generating satisfactory revenue and profit of the Group during the period under review.'
During the period under review, the Group's revenue from paper-based packaging products amounted to approximately RMB354.0 million, representing an increase of 28.3% compared to the corresponding period last year. Honeycomb paper-based products, which have a higher gross profit margin, began to contribute to the Group’s profit. Revenue from corrugated medium paper increased 16.7% year-on-year to RMB241.6 million, with the utilization rate of production line of 95%.
Currently, Zhengye International has a total of nine production lines, with an aggregate annual production capacity of approximately 316.2 million sq.m. of corrugated cartons and other ancillary products such as honeycomb paper-based products. Six of the production lines are for corrugated cartons and two for honeycomb paper-based products. A new production line for corrugated medium paper is expected to start operations at the end of 2011, which will further enhance the Group's production capacity.
The Group maintained its industry-leading position during the period under review, and built up a solid customer base with major customers across industries, including household appliances, information technology products and food condiments. In the business of paper-based packaging products, major customers of the Group include electrical appliances manufacturers such as Gree, Midea, Galanz, TCL and Panasonic, and customers from the food condiment industry include Lee Kum Kee and Haitian. The Group became the supplier of Gree in 2003 and the strategic supplier of Midea and Galanz in 2009. Benefiting from the Rural Appliance Rebate Program and the Change of the Old for New Program, the overall sales of household appliances are expected to continue its uptrend, which will thus drive up the demand for paper-based packaging products.
Looking ahead, Zhengye International will strive to expand its business nationwide, and set up new plants in central China as planned, including the production base in Zhengzhou, which is expected to commence operations at the end of 2011 with an annual production capacity of 106.9 million sq.m. of corrugated cartons and 7,700,000 sq.m. of honeycomb paper-based products and other ancillary products. The production base in Hefei is expected to commence operations in the first quarter of 2012, with an annual production capacity of 148.5 million sq.m. of corrugated cartons and 7,700,000 sq.m. of honeycomb paper-based products and related products. In addition, the Group has formulated plans for the next three years to further expand its production base in northern and western China, with the aim of enhancing production capacity and expanding customer base.
Mr. Hu concluded, 'Zhengye International will continue to provide comprehensive paper-based packaging solutions to its customers, increase its market share and R & D capability, diversify its product portfolio and improve efficiency, thereby optimizing performance and profitability and maximizing returns for shareholders. '
About Zhengye International Holdings Company Limited
Zhengye International is a manufacturer of paper-based packaging products in the PRC capable of offering paper-based packaging services coupled with its own corrugated medium paper manufacturing capability. The Group is a production enterprise integrating the processes of recycling of waste paper, manufacturing of corrugated medium paper, and production of paper-based packaging products, which are used to substitute traditional packaging materials such as foam and plastic materials that are generally considered to cause unfavourable effects on the environment. Its principal products are: (i) paper-based packaging products, which mainly include corrugated cartons and other ancillary products such as honeycomb paper-based products; and (ii) high-strength corrugated medium paper. According to the China Packaging Federation, the Group was the largest supplier of paper-based packaging products for household air-conditioners in the PRC in terms of production volumes for the year ended 31 December 2009. Zhengye International was listed in the Main Board of the Stock Exchange of Hong Kong Limited on 3 June 2011.