Xinyi Glass Announces 2020 Annual Results
Revenue, Gross Profit and NetProfit Climb to Historic New Highs
Glass Market Rebounds Quickly BusinessPerforms Well in 2H
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Expands Capacity Strategically to
Seize Opportunities Emerging from Market Recovery
(Hong Kong, 1 March 2021) –Xinyi Glass Holdings Limited (“Xinyi Glass” or the “Group”) (stock code: 00868), a leading integrated automobile glass, energy-saving architectural glass and high-quality float glass manufacturer, today announced its annual results for the year ended 31 December 2020 (“FY2020”).
During the year under review, the Group maintained its leading position in the glass industry, and its core businesses performed well with revenue, gross profit and net profit climbing to new highs. Revenue increased by 14.5% to HK$18,615.9 million (2019: HK$16,258.5 million), while gross profit jumped by 32.1% year-on-year to HK$7,771.4 million (2019: HK$5,883.3 million). Gross profit margin was 41.7% (2019: 36.2%). While net profit declined in the first half of FY2020 due to COVID-19’s adverse impact, it rebounded along with that of the industry in the second half, and even set the highest half-yearly net profit in the history of the Group. For the FY2020, Xinyi Glass recorded a net profit of HK$6,422.2 million (2019: HK$4,477.8 million). Basic earnings per share were HK159.5cents (2019: HK 111.8 cents).
The Group’s financial status remains sound. As of 31 December 2020, it had cash on hand of HK$5,304.1 million (as of 31 December 2019: HK$ 5,142.1 million). The Board has recommended payment of HK62.0 cents as final dividend. Together with the interim dividend of HK17.0 cents that was already paid, total dividend was HK79.0cents, with a payout ratio of 49.7%.
Dr. LEE Yin Yee, B.B.S., Chairman of Xinyi Glass, said, “The COVID-19 outbreak in early 2020 has undoubtedly created short-term adverse effects on the entire glass industry. Thanks to the Central Government’s effective prevention and control measures, China was among the first to contain the pandemic and to see a recovery of its economy. In 2020 Q2, China’s glass market gradually showed signs of warming up and it posted stronger growth momentum in the second half. Benefiting from strong demand and contracted supply, the average selling price of float glass surged to a new high, thus bolstering the Group’s overall operating results. With higher profit contributed by our associate companies, Xinyi Solar and Xinyi Energy, the Group’s revenue, gross profit and net profit climbed to historically high levels during the year. By keeping a comprehensive, differentiated and high value-added product mix, the Group maintained its unique competitive edge amid industrial consolidation and it further improved its profitability. Complementing its active capacity expansion plan, it has laid down a solid foundation for future development and for seizing opportunities in the market.”
Float Glass - Average product prices surged to new highs, business fully recovered
Benefiting from rising demand from completed construction projects and limited supply, the prices of float glass products in the PRC have rebounded strongly since May 2020, giving a significant boost to the Group’s float glass business performance in the second half. Revenue in the second half spiked by around 92.3% sequentially. During the year, revenue of this segment totaled HK$11,794.7 million, while gross profit increased by 62.5% to HK$4,624.5 million, with gross profit margin at 39.2% (2019: 29.5%). The Group has adhered to its operating strategy of maintaining a comprehensive and differentiated product mix, and it has further expanded its production capacity to meet business growth.
Automobile Glass – Business steadily grew and new customers stimulated sales volume
This segment performed satisfactorily during the year, with turnover up 2.4% to HK$4,609.0 million. Gross profit also rose 4.2% to HK$ 2,176.9 million, while gross profit margin increased from 46.4% to 47.2%. Demand came back steadily as the pandemic was gradually contained overseas, thus benefiting Xinyi Glass, the leader in the automobile glass after-market. In addition, the Group has successfully expand its customer base during the year. Complementing the Group’s flexible and active sales and marketing strategies, these products still have room to grow.
Architectural Glass – Benefiting from its industry leadership and economies of scale, this segment performed well as the PRC real estate market picks up
This segment has performed satisfactorily during the year. Revenue increased by 4.8% year-on-year to HK$ 2,212.2 million. Gross profit rose 2.4% to HK$ 970.0 million, with gross profit margin at 43.9%. The government has encouraged the use of energy-saving and green construction materials, thereby stimulating demand for energy-saving, low-e coating architectural glass in China’s construction market. The segment posted healthy growth in the second half, along with property indicators such as property sales and stocks. The indicators point to prospects of demand for architectural glass likely expanding steadily, thus underpinning the Group’s optimism on its future growth.
Geographic Market Analysis
In FY2020, the Greater China region has remained the Group’s largest geographical market, with revenue expanding over 20% to HK$13,636.4 million and accounting for 73.3% of total revenue. Revenue from overseas markets amounted to HK$4,979.5 million, including HK$ 591.0 million and HK$1,964.0 million from Europe and North America, respectively, as they represented a combined 13.7% contribution to the Group’s total revenue.
Profitability has been favorable since the start of 2021, boosted by the low cost of some materials such as soda ash. While market demand is expected to remain strong and the penetration of higher-margin specialty glass is on the rise, the Group is cautiously optimistic on the performance of its float glass business in 2021. Looking ahead, the Group will retain the operating strategy of maintaining a comprehensive and differentiated product mix, increasing the proportion of premium specialty float glass products and optimizing the overall product mix to maintain the market competitiveness.
Relating to production capacity, the Group will strive to enlarge its market share under its active expansion strategy. The Group is currently accelerating the expansion of its capacity. The annual float glass production capacity has increased from 5.6 million tonnes in 2019 to 6.35 million tonnes at the end of 2020. Five new high quality float glass production lines installed in 2020 also expanded its production capacity, which is expected to increase by over 25% year-on-year. The Group will also press ahead with its global business plan and expand steadily its production capacity in areas with rich resources and stable power supply, thereby putting it in a prime position to meet long-term business growth.
Dr. LEE concluded, “Established in the late 1980s, the Group has experienced different economic cycles during more than 30 years of its operating history. The COVID-19 pandemic has swept across the globe in 2020, but the Group has managed well to pass through it until the industry has warmed up, thanks to the solid foundation that we have built over the years which has enabled us to bounce back quickly. In 2021, efforts will be made to expand production capacity strategically so the Group can enlarge its market share, seize opportunities and bring satisfactory returns to our shareholders.”