China's largest injection press maker, Haitian International Holdings Ltd., expects 2010 profit of at least 900 million yuan ($133 million), on the strength of rising demand globally and in China, and on improved margins for the company.
Haitian, based in Ningbo, said it is still crunching numbers for 2010 but that its preliminary analysis shows that 2010 profit will show a substantial increase over 2009, when profit rose 11 percent to 450 million yuan ($69 million).
The company's Feb. 20 statement to the Hong Kong Stock Exchange, along with a similar recent positive earnings report from another large Chinese press maker Chen Hsong Holdings Ltd. suggests continued strength in mainland China's machinery market.
Haitian said profit and sales growth in 2009 were held down by a very slow first half, during the worst of the economic crisis. But demand skyrocketed in the second half of 2009 and continued into the first half of 2010, with profit of 542 million yuan ($79 million) for the six months ended June 30.
New York-based Morgan Stanley, in a Jan. 3 report on China's construction machinery market, estimates that Haitian's profits are likely to keep growing, rising 20 percent in 2011 and 15 percent in 2012, on sales growth of more than 20 percent in each of the next two years.
Morgan Stanley estimates Haitian's 2010 sales will be 6.6 billion yuan ($974 million), up nearly 70 percent from 2009's 3.9 billion yuan ($594 million).
The plastics machinery market in China is projected to grow 10 percent a year, and Haitian is positioned to expand its market share of that from 36 percent now to about 38-39 percent, because rising energy costs are boosting sales of its energy-efficient models, said Kevin Luo, an analyst with Morgan Stanley Asia Ltd. in Hong Kong.
Haitian expects to release its year 2010 financial report sometime this month.
Haitian's announcement comes after its rival, Hong Kong-based Chen Hsong said its profit for the six months ended Sept. 30 rose to HK$130.9 million (US$16.8 million). That compares with profit of HK$45.9 million (US$5.9 million) in the same period in 2009.
Chen Hsong said demand from plastic molders that focused on China's internal markets, like automotive, was red hot. But, the firm said orders from its traditional customer base of export-oriented firms in China remained poor because of sustained weakness in economies in the United States and Europe.
Demand for small-tonnage machines had recovered to levels before the financial crisis in 2008, Chen Hsong said, but it had difficulties with its supply chain meeting demand for medium- and large-tonnage machines because of measures enacted during the financial crisis.
Still, the firm said it was putting effort on expanding its supply base and ramping up manufacturing capacity, which will be a long and tough task because of shortages of raw materials and components and chronic shortages of labor in China's coastal provinces, where it has many of its factories.
Chen Hsong expects capacity for medium-tonnage machines to be back to pre-financial crisis levels by the end of its fiscal year, in March.
Chen Hsong also expects China's economy to continue to grow through the second half of the company's fiscal year, notwithstanding interest rate hikes and other government controls to lower the risk of the economy overheating.