Chia Hsin eager to cement place in Top-10

Chia Hsin eager to cement place in Top-10
Published: 23 November 2006

Hong Kong-listed Chia Hsin Cement Greater China seeks to boost its annual production capacity to about 10Mt in a couple of years and to 30Mt by 2016. 
 
"Our aim is to become one of the top 10 cement producers in China in about 10 years, with our production capacity reaching 30Mt," Chia Hsin Cement CEO Jason Chang said recently. 
 
The company’s wholly owned subsidiary Jingyang’s output capacity will double from 4Mt after its second production line starts functioning, he said. 
 
"Our newly acquired Jiangsu Union Cement will produce 2Mt of cement a year... (hence) we expect our total production capacity to reach about 10Mt soon." 
 
Before the new production line, Chia Hsin Cement will build a new jetty at the Union work site. 
 
"Our estimated investment on the new jetty and the infrastructure around it will be about US$20m... the new jetty’s throughput capacity will be 3.8Mt to 4Mta." 
 
Taiwan-invested Chia Hsin Cement already runs four jetties through Jingyang, with a yearly throughput capacity of 8Mt. 
 
The company has enough cash to complete Jingyang’s second production line that would cost US$100m, Chang said. 
 
"But we have to raise funds if we go in for any new merger and acquisition (M&A)," he said, without elaborating how it would be done. 
 
Chia Hsin Cement is seeking to enter joint ventures with five to six mainland cement and clinker suppliers. 
 
"We are in talks with them... we do not rule out the possibility of taking the controlling stakes in them (through M&A) later," he said. 
 
Chang expects the overseas sales to continue contributing a large proportion of the company’s total revenue. "Our overseas sales in 2007 will still be better than domestic." 
 
Company CFO Elizabeth Wang had earlier said that the company’s gross profit margin from exports had reached 23 per cent against 15 per cent from the domestic market.
 
In the first three quarters of 2006, the company’s exports amounted to US$67.1 million, or 71.2 per cent of its total turnover of US$94.2 million. Its accumulated cement and clinker export volume reached 1.83 million tons, up 390 per cent year on year. 
 
And its net profit surged to US$5.1m, an increase of 10.2 times year on year.
 
"We will also expand our exports from the United States and the Middle East to Africa and Australia," Chang said. 
 
The US is Chia Hsin’s largest cement market, accounting for 75 per cent of the company’s exports. 
 
Chang seems to have handled the competition between his company and Anhui Conch Cement well. 
 
As the larger of China’s two major cement exporters to the US, Anhui Conch Cement’s "production capacity is higher than ours but we have more jetties and better shipping facilities that allow us to ship out the cement much more smoothly", Chang said.