Interim results 2009- Sinoma s performance growths rapidly

On September 16 China National Materials Co. Ltd (Sinoma Ltd 01893 HK) announced its interim results 2009 in Hong Kong. Turnover in H1 2009 climbed 8.50% to RMB12 500 million. Net profit amounted to RMB 847 million soared by 24.3%.

In the first half of 2009 Sinoma seized the opportunities arising from the increase in fixed-asset investment in China to develop the domestic market while consolidating its position and market share in overseas markets. To cope with the more competitive market conditions Sinoma further improved its internal management and enhanced its competitiveness and efficiency by reducing energy consumption wastage and costs through technological innovation benchmark management adjustment of product mix optimization of financial resources and increasing the reserve of low-price raw materials. As a result Sinoma overcame operation pressure arising from difficult economic conditions and maintained growth in operation and profitability.

Cement equipment and engineering services

In the first half of 2009 despite the shrinkage in the demand of overseas cement investors not only no effects have been made to the business development of Sinoma but also more advantages have been gained compared with our competitors. In the first half of 2009 the total amount of new domestic and overseas contracts was RMB10 700 million representing a positive business development as the contract amount exceeded that of the corresponding period last year. As at the end of June 2009 Sinoma s order backlog amounted to more than RMB50 billion ensuring the growth of operations in the coming years. Sinoma further extended the coverage of its cement equipment and engineering services to the provision of on-site repair and maintenance and spare parts services to cement enterprises. In addition Sinoma also took advantage of the expertise to extend its ability by undertaking the outsourcing services of mining business and adding extra profit growth points.

Cement

Sinoma implemented its strategy to become the largest cement producer in Northern China and accelerated its business expansion in the Northwest region. In May 2009 Sinoma completed the acquisition of minority interests in Ningxia Building Materials Group Company Limited which then became a wholly-owned subsidiary of Sinoma. Sinoma successfully expanded its production capacity. In the first half of 2009 two clinker cement production lines with 2 500 tpd each commenced production in Xinjiang and Ningxia respectively. Sinoma is committed to scientific development to improve the environment. In the first half two low-temperature and waste-heat power generation facilities for cement production lines commenced operation with an additional installed capacity of 11MW and three waste-heat power generation facilities commenced construction with a designed capacity of 18MW.

Glass Fiber

In face of an unfavorable environment Sinoma proactively adjusted its marketing strategies. Focusing on the retention of existing major clients development of new clients and expansion of domestic sales regions to develop domestic glass fiber market proportion of domestic selling increased from 36% in the beginning of 2009 to 52%. Sales volume also rebounded from sharp decline to rapid growth. Sales volume in June 2009 has surpassed the average sales volume of last year. Sinoma closely monitored the trend of the glass fiber market and focused on the development of reinforcing thermoplastic glass fiber and glass fiber textile for wind power generators and other high-end products to meet the needs of customers. Glass fiber textile used in fan blades of major wind power generators is one of the highlights in the National New Products Program. In view of the developing trend in the industry Sinoma increased the production and sales of processed products such as woven roving chopped strands and chopped strand mats and enhanced the added values of products.

Hi-tech Materials

The rapid growth of the wind power industry has bolstered the demand for wind power equipment. The 1.5 MW fan blades for wind power generators developed and manufactured by Sinoma are well recognized by the market for their outstanding performance. In light of the insufficient supply of the product Sinoma has seized the market opportunity and significantly increased its production capacity through technological improvements to the existing production line of fan blades for wind power generators with an annual capacity of 300 sets as well as optimization of production process and operation procedures and technical standards. In the first half of 2009 Sinoma produced 199 sets of fan blades for wind power generators representing 352.3% period-on-period growth and sold 185 sets of fan blades for wind power generators representing a 413.9% increase as compared with the corresponding period last year. In addition Sinoma accelerated the capacity expansion of fan blades for wind power generators. The bulk production of a production line of fan blades for wind power generators in Badaling Beijing and the project of fan blades for wind power generators in Jiuquan Gansu both with an annual capacity of 500 sets have commenced production. Fan blades for wind power generators have become the primary contributor of revenue and sources of profit growth in high-tech materials segment.

Sinoma Chairman Tan Zhongming President Zhou Yuxian Supervisor Wang Wei Vice President and Company Secretary Su Kui attended the Interim Result Announcement and answered questions from analysts and journalists.

Sinoma 2009 Interim Results Announcement