Glass firm mulls A-share listing to fund expansion

Zhejiang Glass Company, which makes construction and vehicle glass, is exploring future fund-raising options, including an A-share listing, to cope with its expansion in the growing Chinese market, according to a senior company executive.

The H-share company is also looking at investing about 150 million yuan (HK$141 million) from internal resources to build a sixth production line by the end of 2005 as it prepares to tap into a new business segment - ultra-thin glass used in electronic products, the executive said.``Expansion is a must if we want to further develop,'' Zhejiang Glass chief financial officer John Chung said.``We are currently studying alternatives for possible fund-raising.Issuing A shares is one of the options because China's A-share market still commands a relatively higher valuation compared with H shares.''

However, Chung stressed that no decision has been made on an A-share listing because it was still being considered by management and had not been proposed to board members and shareholders. He added that there was no urgency for the company to raise money at present as its cash stood at 589 million yuan at the end of June.

Nonetheless, the company, whose first-half earnings nearly doubled to 110 million yuan, said it needed to build a new production line to overcome its near-saturated production capacity. ``We are facing production constraints as the capacity of our five existing production lines is almost fully utilised. This limits our growth and brings pressure to build the [sixth] production line,'' Chung said.

Annual production capacity at Zhejiang Glass has reached 15.5 million weight cases, or 2,350 tonnes per day, compared with its maximum of 17 million weight cases.

The company will start producing ultra-thin glass in an attempt to expand into the electronics market in 2005.

However, Chung said the nearly full production capacity would make it difficult. ``We will invest in our sixth production line specialising in the production of 0.63-millimetre to 1.1mm ultra-thin glass.''

He said the company was already working on research and development and looking for a site.

600450 Glass firm mulls A-share listing to fund expansion
Date: 2 November 2004

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