Zhejiang Glass expansion plan

Zhejiang Glass, which makes construction and vehicle glass, announced second-half capital expenditure of 300 million yuan (HK$282.8 million) to expand its upstream business.

The plan was unveiled after the firm said its profit for the first half nearly doubled to 110 million yuan, or 19 fen per share.The H-share company plans to use 90 per cent of the budget to fund its recently approved 1.6 billion yuan soda ash manufacturing project in Delingha in Qinghai province.Soda ash is the key raw material for glass production, accounting for about a quarter of the firm's unit costs. ``It will not only help to stabilise the raw materials supply for flat glass, but will also allow the company to significantly lower its unit cost and to realise its vertical integration strategy,'' said chairman Feng Guangcheng.

The soda ash plant, expected to open in the third quarter of 2005, will have an annual production capacity of 900,000 tonnes.

Feng said the venture will get tax breaks from Qinghai government, under which it will receive 100 per cent refund of local income tax for the first six years and a 50 per cent refund in the following four years. The company has secured a bank loan and has injected 400 million yuan of its own resources to fund the project.

Meanwhile, Feng said the company had invested about 300 million yuan to construct a low-emissivity glass plant with annual production capacity of two million square metres. The plant will start production by October. Low-emissivity glass is energy saving glass used in the construction and automotive industries.

With gross profit margin up to 35.2 per cent from 25.9 per cent a year ago, the company declared an interim dividend of 5.6 fen per share for the first time since listing in 2001.

Shares of Zhejiang Glass ended Tuesday 3.53 per cent higher at HK$2.20.

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