SINOMA LTD Interim results 2010 increase substantially

On August 25, China National Materials Co., Ltd (01893 HK) announced its interim results 2010 inHong Kong. Turnover of 2010 H1 amounted to RMB 18,210 million, representing an increase of 45.48 % as compared with that of the same period of 2009.Profit Before Tax amounted to RMB 1,654 million, representing an increase of 54.02 % as compared with that of the same period of 2009. Earnings per share amounted to RMB 0.126, representing an increase of 45.28 % as compared with that of the same period of 2009.

Mr. Zhou Yuxian, President of SINOMA LTD, Mr. Gu Chao, Vice President and Secretary of the board, Mr. Wang Guanglin, Vice President and Chairman of Ningxia Building Materials Group Co., Ltd, and Mr. Wang Wei, Vice President and Chairman of Sinoma International Engineering Co., Ltd, attended the 2010 Interim Results Announcement.

In the first half of 2010, SINOMA LTD actively took the advantage of the national policies like expanding domestic demand, accelerating transformation of the economic development patterns and structural adjustment. Leveraging on its advantages in strategy, technology and comprehensive competitiveness in the industry, SINOMA LTD expanded markets at home and aboard with all its strength and continued to push forward M&A in order to enhance the market share. At the same time. SINOMA LTD continuously made efforts in operation management and strengthened advantages in regional markets, products and service, which laid the foundation for the substantial growth of the interim results.

Numbers of new order of cement equipment and engineering services increased by 53%

During the first half of 2010, SINOMA LTD continued to actively explore domestic and overseas markets. The number of new orders for overseas cement projects clearly picked up and the number of domestic contracts reached a new high. The amount of new contracts in the first half of the year was RMB16.318 billion, representing a period-on-period growth of 52.96%. As at the end of June 2010, the amount of our backlog was RMB55.334 billion, which further consolidated our leading position in the market share. The abundance of reserved orders guaranteed the stable growth in revenue of the segment in the next few years.

Mr. Zhou Yuxian analyzed that with recovery of the economy of emerging markets and reboot of credit market, cement demand would maintain growing. The trend of substantial increase in new orders of global cement engineering markets has appeared. It is expected that new capacity is mainly from Arica, Middle East, India, Brazil and East Europe.

During the first half of 2010, SINOMA LTD further strengthened its ability to allocate project resources, enhanced its cost control and improved risk control ability to ensure the smooth implementation of projects under construction in a high-quality and high efficiency way. SINOMA LTD, being a leader of the industry, set its development target at the forefront, focused on its self-innovation and adopted a technology-oriented approach, endeavored to boost the commercialization of its technological achievement by further increasing its investments in research and development. SINOMA LTD developed a large number of new technology, new equipment that are widely used by cement production companies, thus making contribution to the development of the cement industry. In 2010 H1, the Lafarge Indonesia, Lafarge Uganda, Tanzania TCCL production lines constructed by the Company successfully commenced production. The Songtao EP project in Vietnam successfully passed the performance tests and acceptance checks; the RCC Phase II project in Saudi Arabia received the Provisional Acceptance Certificate (PAC); the production lines in Guizhou Wujiang, Yunnan Zhenkang, Tianrui Nanzhao, Sichuan Desheng, Sichuan Dongfanghong, Hanzhong Mianxian Yaobai were completed and commenced production successively; and the Kaisa Phase II clinker production line in Vietnam obtained the Final Acceptance Certificate (FAC) from the owner.

Cement Income increased by 65.98%

During the first half of 2010, demand in cement in the Northwestern China, the primary market of SINOMA LTD, continued to rise, and cement prices exceeded the national average and remained high. Moreover, the cement market in Guangdong improved compared to last year so SINOMA LTD took this favorable opportunity and increased its profitability. Results of the cement segment of the Company grew significantly in the first half of the year, with sales volume of cement and clinker of 18.281 million tonnes, representing a period-on-period increase of 69.98%. Its turnover amounted to RMB5, 209.63 million, representing a period-on-period increase of 65.98%. The segment results recorded a period-on-period growth of 61.54%.

SINOMA LTD continued to carry out its strategies of maintaining its position as the largest cement enterprise in Northern China and as a regional leader, accelerated the pace of regional market integration and capacity expansion. Xinjiang Tianshan Cement Co., Ltd., a subsidiary of SINOMA LTD, completed its private placement of shares and reinforced its potential strength for development, laying a solid foundation for gaining additional market share in Xinjiang. Such measures further consolidated the leading position of SINOMA LTD in the cement market in Northwestern China. As at the date of this report, total controlled cement production capacity of SINOMA LTD reached 58.20 million tonnes, among which 6.20 million tonnes were newly added. The cement production capacity of SINOMA LTD in the Northwestern region reached 34.20 million tonnes. Meanwhile, 15 production lines of various scales were under construction or proposed for construction in the North region, and upon their commencement of production, will provide an additional production capacity of 18.70 million tonnes.

Mr. Zhou Yuxian said that SINOMA LTD would take the opportunity of West China Development to accelerate the project construction and acquisition in this region. SINOMA LTD intends to further expand the production capacity in Norhwest China and makes sure that its cement output of 70 million tonnes can be reached by the end of 2010.

Besides, SINOMA LTD places great efforts in energy-saving and emission-reduction in order to improve profitability. In 2010 H1, the pure low temperature waste-heat power generation projects constructed with six cement production lines commenced production, which had an additional waste-heat power generation installed capacity of 36MW. A total of 173.7996 million KWh of electricity was generated during the first half of 2010 and carbon dioxide emission reduced by 156,000 tonnes. Two clinker production lines that produce cement clinker from carbide slag and with a daily capacity of 2,000 tonnes will be put into production in Midong, Xinjiang in the second half of 2010. Upon completion and commencement of production in the second half of the year, it is expected that such two clinker production lines will consume over 1 million tonnes of industrial waste such as carbide slag per year. Compared to production of cement using limestone, this production method can reduce carbon dioxide emission by 600,000 tonnes per year and reduce production costs by more than 20%.

Wind power blades business continued to grow and glass fiber business bounced back

During the first half of 2010, wind power blades business of SINOMA LTD continued its rapid growth since 2009, recording increases in both production and sales volume. Production efficiency and capacity had further increased with further reduction in production costs, resulting in the continuous rapid growth in profitability.

Relying on its strong leading position in technology and product performance, SINOMA LTD successively launched construction projects for production lines of wind power blades in Baicheng in Jilin, Jiuquan in Gansu and Badaling in Beijing, which are expected to commence production in the second half of 2010 with additional production capacity of 600 sets of 1.5MW wind power blades and 600 sets of 3MW wind power blades. Besides, the moulding time of production of wind power blades decreased from 32 hours to 24 hours as SINOMA LTD reinforced the internal technological management, streamlined innovation procedures, optimized technology process, facilitated quality upgrade and increased the utilization rate of materials and production efficiency.

The glass fiber business of SINOMA LTD recovered rapidly. On one hand, SINOMA LTD took advantage of the favorable opportunities of strong growth in the domestic composite material sector and the significant increase in glass fiber consumption arising from the continuous expansion of the sector to position itself in the market and expand domestic market share. On the other hand, SINOMA LTD exerted great efforts in response to the anti-dumping measures by the European Union and other countries, adjusted its international market structure and focused on developing markets in America, the Middle East and the Asia Pacific. SINOMA LTD seized market opportunities to increase its production capacity and strengthened the business scale. In 2010 H1, a production line with a capacity of 60,000 tonnes commenced production and two other production lines completed technology transformation.

About the business outlook of the second half of 2010, Mr. Zhou Yuxian said that SINOMA LTD would closely pay attention to the macro-economy and market fluctuations and push forward the strategies of each business sectors. SINOMA LTD would optimize its capital structure, further reduce the cost of capital and increase the return of capital. SINOMA LTD would actively carry on M&A, continuously push forward technology progress and develop core competitiveness in order to achieve a substantial growth in turnover of 2010. He also said that SINOMA LTD was confident of creating more brilliant results in the second half of 2010 and achieving a healthy and rapid development in all the businesses.

More than 100 analysts and journalists attended the Interim Results Announcement in Hong Kong.

SINOMA LTD President Zhou Yuxian briefed on the results of the company

SINOMA LTD President Zhou Yuxian answered the questions

SINOMA LTD Vice President and Secretary of the Board Gu Chao answered the questions

SINOMA LTD Vice President Wang Guanglin answered the questions

SINOMA LTD Vice President and Chairman of Sinoma International Wang Wei answered the questions