Net Profit Surges 225.2% to HK$703 Million
Ready to Expand Production Line and Strengthen Profitability
HONG KONG — Lee & Man Chemical Company Limited (“Lee & Man Chemical” or the “Group”; HKEx: 746) today announced its annual results for the year ended 31 December 2017, with revenue amounted to HK$2,974 million (2016: HK$1,814 million), up by 63.9% as compared with a year ago. Net profit was HK$703 million for the year (2016: HK$216 million), representing a 225.2% leap, owed mainly to increase in product sales and prices. Net profit margin was 23.6%, up 11.7 basis points as compared with last year.
The Board of Directors declared payment of a final dividend for the year ended 31 December 2017 of HK 20.0 cents per share (2016: HK4.0 cents per share). Together with the interim dividend of HK10.0 cents per share already paid (2016: HK5.0 cents per share), total dividends for the year amounted to HK 30.0 cents per share (2016: HK9.0 cents per share).
Ms Wai Siu Kee, Chairman of Lee & Man Chemical, said, “Benefitting from the increase in infrastructural projects in China last year, demand for chemical products grew. Some of our chemical products, including caustic soda, hydrogen peroxide and polytetrafluoroethylene, were sold at consistently high prices. The Group believes the market will continue to rebound thus is optimistic about the outlook of the Chinese chemical market.”
The Group’s new production lines for chlorinated polyvinyl chloride, thionyl chloride and styrene-acrylic latex, which commenced operation last year, have been contributing to the Group’s profitability. Chlorinated polyvinyl chloride is deemed as a kind of new engineering plastic, which can be used for producing pipes for cold and heated water supply, pipes in chemical plants and for crude oil transportation. As for thionyl chloride, it is mainly used in the pharmaceutical, dyes and pesticides industries to chlorinate chemical compounds, whereas styrene-acrylic latex is mainly used in papermaking, for instance corrugated paper and craft paper. In the coming year, the Group will add a new styrene-acrylic production line in its Jiangsu factory, and expand one of the new caustic soda production lines in the Jiangxi factory.
Furthermore, the Group has already picked the location for building a new plant in the Zhuhai Gaolan Port Economic Zone for producing Lithium battery electrolyte additives. The new plant is expected to commence operation in mid-2019.
The Group’s liquidity position remains strong with bank balances and cash of HK$468 million (31 December 2016: HK$228 million). The Group’s net debt-to-equity ratio (total borrowings net of cash and cash equivalents over shareholders’ equity) as at 31 December 2017 was 55.04% (31 December 2016: 74.33%).
Mr Norman Lee, Chief Executive Officer of Lee & Man Chemical, concluded, “The Group is committed to new product research and development and has devoted more resource in employing scientific research experts who possess rich chemical experience and acquiring more scientific research equipment, to help expand and enhance the internal research and development team. The management expects the Group to be able to develop in the near future new products that agree with the trend of refined chemical development. With our management team, shrewd in unleashing the Group’s capability in technical innovation and scientific research and development, the Group has pushed forward with strength its aggressive yet pragmatic approach in growing its business. This approach will enable the Group to gradually gather growth momentum and bring substantial returns to shareholders.”