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August 23, 2011 02:00 AM

Haitian says exports up, China slowing

Steve Toloken
Assistant Managing Editor
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    HONG KONG (Aug. 23, 3:30 p.m. ET) — Haitian International Holdings Ltd., China's largest injection press maker, saw revenues rise 15 percent in the first half of the year to 3.70 billion yuan ($578.3 million), as record-high exports, particularly to Southeast Asia and Eastern Europe, offset a slower Chinese market.

    The company, which is also one of the world's largest press makers, said at an Aug. 23 Hong Kong press conference that it was looking to exports and its all-electric Venus machines to drive near-term growth, a switch from its previous domestic-led growth.

    Executives with the Ningbo, Zhejiang province-based firm also said they are scouting potential technology-related acquisitions, using a sizable war chest of 2.07 billion yuan ($323.5 million) in cash reserves the firm has accumulated.

    Echoing others in the Chinese industry, Haitian's financial filing to the Hong Kong stock market said the plastics industry's growth in China has slowed because of government policies to fight inflation, and because of global economic uncertainty.

    Haitian said in its Aug. 22 filing that its domestic sales for the first half showed a “satisfactory” increase of 10.7 percent compared to a year ago, to 2.63 billion yuan ($411.0 million). That is well below last year's unusual 80 percent sales jump.

    Exports, by comparison, rose 25 percent to a record 988 million yuan ($154.4 million), pushing overall first-half profits after taxes up 32 percent to 600.9 million yuan ($93.9 million).

    “In view of the enormous demand… in China and other emerging markets, we plan to continue strengthening our penetration in these regions,” said Executive Director and CEO Zhang Jianming.

    In the press briefing, company officials did not unveil any new products or strategic initiatives, but outlined two capacity expansions at their Ningbo base: a new assembly plant for the higher-end machines from its Zhafir Plastics Machinery subsidiary, and the acquisition of another facility to expand capacity for exports.

    Haitian said it has about a 40 percent market share of China's injection molding machinery exports.

    In addition to Eastern Europe and Southeast Asia, the company has seen growth in the North American market, with interest there in its large-tonnage and Venus models, said Executive Director Helmar Franz.

    North America was 5.9 percent of Haitian exports in the first half of 2011, compared with 2.7 percent in the first half of 2010, the company said.

    The company also is interested in India, with the Zhafir subsidiary, which makes its Venus and Mercury lines, planning to set up a direct office there, Franz said.

    Haitian is selling machines in India from both its German Zhafir factory and its new Vietnam plant, which opened in May.

    Both are able to ship machines to India without being subjected to the high tariffs the Indian government put on Chinese-made machines in 2009, Franz said.

    Franz also said the company is eyeing technology acquisitions, part of the reason it is maintaining a large cash reserve.

    “We are looking at technology which would help us to pursue such targets in new applications for plastics faster than we could do by ourselves,” he said. “Of course we could do it by ourselves but it would take us maybe more time than to acquire what's available.”

    “I cannot tell you anything about any particular thing we are looking at now but we want to keep some cash in hand to be ready once such opportunity comes up, to act fast,” Franz said.

    One of the first of those technology partnerships, although a small one financially, is with the American firm Trexel Co. Ltd., Franz said.

    Haitian and Trexel have a licensing and joint development agreement to engineer what Franz called a “MuCell light” version of Trexel's foaming technology that is a less sophisticated version of MuCell.

    Haitian's license with Trexel covers many of the world's key emerging markets: the BRIC nations (Brazil, Russia, India and China), along with Vietnam, Turkey and South Africa.

    Franz said the main research and development need for injection molding companies is resource savings, whether that's for energy, water or resin.

    Part of that resource conservation need is showing up, he said, in rising sales of the Venus all-electrics, which jumped 78 percent, albeit from a small base. They remain only about four percent of the company's overall sales.

    Franz said the company still sees plenty of opportunities globally, particularly by trying to replace more expensive import machines in China's market, further developing its all-electric models and winning more business with major international companies.

    “We are still a minor player in such issues,” he said. “There is still a lot of potential for us.”

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