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Resilient FY2011 results with record high revenue

04/06/2012 | 03:28am US/Eastern
KINGBOARD CHEMICAL HOLDINGS LIMITED Financial Highlights

FY2011

FY2010

Change

HK$'million

HK$'million

Revenue

36,559.1

33,891.5

+8%

EBITDA*

6,123.8

7,373.1

-17%

Underlying profit before tax*

3,627.3

5,010.0

-28%

Net profit attributable to owners of the Company

- Underlying net profit*

2,583.5

3,509.0

-26%

- Reported net profit

2,594.2

3,620.8

-28%

Basic earnings per share

- Based on underlying net profit*

HK$3.026

HK$4.146

-27%

- Based on reported net profit

HK$3.039

HK$4.278

-29%

Full-year dividend per share

HK65.0 cents

HK110.0cents

-41%

- Interim dividend per share

HK40.0 cents

HK50.0cents

-20%

- Final dividend per share

HK25.0 cents

HK60.0cents

-58%

Dividend payout ratio

21%

26%

Net asset value per share

HK$32.8

HK$30.3

+8%

Net gearing

40%

23%

* Excluding:

2011:        (1)     impairment loss on available for sale investments of HK$83.2 million (net of portion shared by minority shareholders)

(2)     gain on fair value changes of investment properties of HK$306.8 million (net of deferred tax)

(3)     share-based payments of HK$212.9 million (net of the portion shared by minority shareholders)

2010:        (1) gain on disposal of available-for-sale investments of HK$111.8 million (net of the portion shared by minority shareholders)

Hong Kong, March 30, 2012-Kingboard Chemical Holdings Limited (the "Company') (HKEx: 148)and its subsidiaries (the "Group")today announced a set of resilient results for the financial year ended 31 December 2011. The Group's revenue increased by 8% to HK$36,559.1 million amidst an extremely volatile and difficult operating landscape. The underlying net profit (excluding non-recurring item) declined by 26% to HK$2,583.5 million; basic earnings per share were HK$3.026. The directors of the Company proposed a final dividend of HK25 cents per share.

Mr. Paul Cheung Kwok Wing, Chairman of the Group said: "Despite strong headwinds in the second half of 2011, our experienced management team managed to lead our employees to deliver profitable results from all core business segments. Driven by buoyant domestic demand for chemical products in China, our chemical division also delivered impressive growth in both turnover and profit. Our property developments division generated stable rental income growth from our investment properties during the year."

Turnover (including inter-segment sales) for the laminates division was similar to the previous year at HK$13,839.6 million despite the weak demand due to the negative impact of the Japan earthquake and the European sovereign debt crisis. Volume sales decreased around 9% against 2010 and average monthly shipment reached 8.5 million square metres. However, domestic sales denominated in Renminbi ("RMB") continued to be robust and increased 13% compared to last year. Despite a net increase in the average selling price ("ASP") of laminates against the previous year, continuous raw material price and other operating costs increases in 2011 in addition to lower capacity utilization in FY2011 Q4 impacted the Group's margin. Consequently earnings before interest, tax, depreciation and amortisation ("EBITDA") decreased 26% to HK$2,517.6 million.

After the Chinese Lunar New Year holidays in 2012, customer orders showed signs of improvement. Laminate prices also showed an uptrend as commodity prices recovered as compared against the end of last year. Hence, shipment volume and laminates production utilization improved in February 2012. Plans are underway to expand the laminates production capacity of both Jiangyin plant, Jiangsu province, and Jiangmen plant, Guangdong province, in the current year to capture business opportunities for thin and high-performance laminates.

Similarly, the PCB division was also impacted by rising costs, softer demand as well as aggressive inventory adjustment by customers in FY2011 Q4. Turnover for the PCB division declined by 7% to HK$8,116.1 million and EBITDA decreased 35% to HK$1,056.5 million. The Group has allocated resources in the past few years to expand its production capacity for high-density interconnect ("HDI") PCBs. HDI PCB sales increased by 30% against the previous year, accounting for 17% of total PCB sales and generated good earnings contribution to the division.

The new PCB facility at Yi Zheng Industrial Park, Yangzhou, Jiangsu province, is expected to commence trial production in FY2012 Q2. Annual capacity is expected to reach 6 million sq. ft. by the end of this year. Furthermore, two dedicated HDI PCB plants in Kunshan, Jiangsu province, and Kaiping, Guangdong province, also plan to expand production capacity in 2012 to meet customer demand.

Turnover (including inter-segment sales) for the chemical division jumped 18% to HK$17,076.7 million and EBITDA rose by 6% to HK$2,120.9 million. Share of associates results (the bulk of which were contributed by the methanol joint venture with China BlueChemical Limited) increased by 29% to HK$259.5 million as a result of higher methanol selling prices against last year.As crude oil prices increased in 2011, chemical products selling prices showed an uptrend during the year. In FY2011 2H, the ongoing tightening monetary policy of the Chinese Government to tame inflation caused certain chemical prices to soften in the second half of 2011. During FY2011, the Group's phenol/acetone plant in Huizhou, Guangdong province, continued to achieve outstanding performance. The Group's other chemical projects including the coke/methanol plant in Xingtai, Hebei province, as well as the caustic soda plant in Hengyang, Hunan province, also delivered attractive earnings for the Group. The new phenol/acetone plant at Yangzhou, Jiangsu province, with an annual capacity of 300,000 metric tonnes is expected to commence trial production in the FY2012 Q2. Meanwhile, capability enhancement plans for the Huizhou phenol/acetone plant are currently under review and expected to be completed in 2012.

With regards to the property developments division, as at 31 December 2011, the Group had a land bank of over 4 million square metres with investment properties and residential projects located in prime locations in eastern and southern China. Total rental income for the Group increased substantially by 88% to HK$236.9 million in 2011 from HK$125.7 million in 2010. Investment properties including ShanghaiKingboardModernPlaza and GuangzhouZhanWangDigitalPlaza located in central locations enjoyed good occupancy rates. In addition, the newly renovated GuangzhouDongZhaoBuilding was completed in March 2011 and occupancy reached over 60% by the end of the year.

Another key commercial project, GuangzhouKingboardPlaza located in a prime location in Zhujiang Xincheng, Guangzhou, is expected to be completed by the end of this year. These projects will fuel rental income growth in China over the next two years. The Group's first residential project - Shanghai Yu Garden in Kunshan, Jiangsu province - has pre-sold almost all the units with cash receipts in excess of RMB1.1 billion. Owing to the processing time required to obtain the title deeds from the authorities, earnings in connection with this project are expected to be booked in the first half of 2012. In addition, construction of a residential project - Qiandeng Kingboard Yu Garden in Kunshan, Jiangsu province - has commenced with target completion by the end of 2013. To date, around 30% of the available units have been sold under Phase I of the project.

"The operating landscape for the Group in 2012 remains challenging. Nevertheless, our experienced management team will maintain a prudent financial management strategy and continue to sharpen the competitive edge of our core businesses. The Group will respond promptly to changes in the market and 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).

Press enquiries:

t6.communications limited, Jenny Lee or Angus Ho

tel : (852)2511 8388 / fax : (852)2511 8238

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