Sinoref Holdings Limited Announces 2010 Interim Results

Revenue during the first half of 2010 significantly jumped 228.4% to RMB175 million. Gross profit margin and net profit margin surged 70.3% and 40.1% respectively while net profit rocketed by 214.8% to HK$ 70.08 million. Basic earnings per share reached RMB0.08. As at 30 June 2010, bank balances and cash amounted to approximately RMB120 million (As at 31 Dec 2009: RMB66 million). The Group had no outstanding bank borrowings, reflecting its solid financial condition. Total equity was RMB 220 million (As at 31 Dec 2009: RMB150 million).
Mr. Xu Yejun, Chairman and CEO of the Group, said, "In the first half, our actual profit after taxation was 6.5% higher than the estimated of RMB 65.8 million in the prospectus. We believe our outstanding first results are the best reward for the solid support of shareholders during and after our listing and proof of our growth momentum. Sinoref has become the second largest steel flow control manufacturer in China in just three years' time after starting business. In 2009, we owned around a 19% share in the high-end market. As our products are irreplaceable in cast steel production, our strong capability demonstrates our bright future. Looking ahead, benefiting by the growing market demand and large operational scale of the Group, we have confidence that Sinoref can continue to deliver strong growth and record high profit."
After listing, the Group has continued to expand its sales and marketing teams. While increasing its market share in China, it has also actively sought to develop markets overseas. During the period under review, the number of its customers in mainland China increased from 18 to 20, highlighted by the major steel manufacturing groups in China such as Baosteel Group, Hebei Steel Group, Wuhan Steel Group and Shandong Steel Group. To develop overseas markets, the Group has signed a Memorandum of Understanding with Carboref GmbH for the distribution of Sinoref products in Europe. Chairman of Carboref GmbH visited Sinoref between July 31 and August 2 for further discussions of future sales activities of steel flow control products from Sinoref in Europe and the Middle & Near East region. The Group has also entered into a framework agreement with Sinosteel Shanghai Limited in relation to the distribution and sales of Sinoref products in Taiwan and Korea.
The Group's strong emphasis on R&D capability and technological development has led its research and development team to closely partner with universities, such as Inner Mongolia University of Science and Technology and Shanghai University, to keep abreast of the latest global technology trends. The Group holds two new utility patents for its subentry nozzle and mono block stopper in the reporting period, three more has passed assessment and notices of payment for the patent fee have been received showing its technological research and development efforts have been effective.
For the advanced continuous casting process, the Group continues to collaborate with customers to develop optimized solutions to their compact strip casting process (CSP) and Benxi strip casting process (BSP) in both geometric design and material development. During the period under review, the Group has partnered with Inner Mongolia University of Science and Technology to develop the BSP subentry nozzle, which has enabled it to work with major steel enterprises such as Tangshan Iron & Steel Co. under the Hebei Group and Tonghua Iron & Steel Co. under the Shougang Group. The related works are underway and are expected to be completed by the end of August this year. In thin strip casting technology, the Group has established a partnership with Casco (USA) Inc in the US whereby it has become the exclusive supplier of its monolithic materials, steel flow distributors, and side dams in China. To provide the necessary products required for the thin strip casting process, the Group has cooperated with Shanghai University for the joint research and development of steel flow distributors and side dams incorporating the latest casting technology. These are two of the major products for the thin strip casting process and the project is underway.
The Group plans to expand production capacity by building a new production plant with an additional production line to meet the current increase in orders and better position it to capture the immense opportunities in the domestic and overseas markets. Construction of the new plant is to be completed in the second half of 2011 with production commencing in early 2012. Production capacity of the Group is to be boosted by 8,600 tonnes with the annual production volume of its steel flow control products reaching 16,800 tonnes.
Mr. Xu concluded, "Our listing on the Main Board of the Hong Kong Stock Exchange in July 2010 marked a new milestone for our growth on a larger scale. The listing has provided us with capital of HK$200 million for our development to be used to enhance the Group's competitive advantage in different aspects and to capture market opportunities in order to drive business growth and profitability. Looking ahead, as stated in the prospectus, we plan to improve production capacity, broaden our product mix, enhance marketing and R&D capabilities, actively expand the domestic and overseas markets, enlarge market share and enhance brand awareness. We are confident that the Group will become a leader in the high-end steel flow control products market in China riding on our stronger position. In this way we not only can generate a strong return for our shareholders, but take our business to new heights while boosting the entire industry."