HONG KONG (Dec. 6, 12:40 p.m. ET) — Two publicly listed Chinese injection press makers, Chen Hsong Holdings Ltd. and L.K. Technology Holdings Ltd., are reporting flat sales on weakness in China's economy. But both are nonetheless in the midst of capital investments to target the market for large-tonnage machines.
Chen Hsong, one of China's largest injection molding machine makers, said in a Nov. 26 report to the Hong Kong Stock Exchange that overall sales were down two percent in the six months ending Sept. 30, to HK $941.5 million (US$121.5 million) as it said business in mainland China and Taiwan declined compared to the year ago period.
The company said its profits in the period declined 46 percent, to HK$56.0 million (US$7.2 million), which it said was largely due to currency fluctuations.
“China's economic structure has traditionally been heavily dependent on exports and investments in infrastructure and real estate, and the pitfalls of such over-dependence are now becoming apparent,” Chen Hsong said, with the sharpest declines among Chinese firms buying small and medium-sized machines to make export goods.
“With exports weakening quarter by quarter, faced with slowing domestic consumption growth, and over 50 percent of GDP generated by investments, China's economy is showing more and more structural imbalance, the physical manifestation of which is the emerging weakness in industrial production.”
But the Hong Kong-based company reported sales up 18 percent in international markets, to HK$265 million (US$34.2 million), even with severe problems in parts of Europe.
It said it saw solid sales growth in the Americas, led by a recovery in automotive markets in the United States, and it said it was beefing up its presence in Brazil and Turkey to try to increase market share.
And it said demand was rising for its new two-platen ultra-large tonnage machines. It said it would ship its first 4,500-ton two-platen machine, the largest such machine manufactured in China to date, to a customer in Europe by the end of the year.
“Since the launch of the two-platen large and ultra-large-tonnage injection moulding machines, the Group has seen healthy sales growth amid increasing customer acceptance,” it said, predicting that two-platen large-tonnage machines would “in the near future” begin to replace toggle-style large-tonnage machines.
Chen Hsong said it expected to complete by early 2014 a previously announced HK $300 million (US$38.7 million) expansion of its capacity at its Shenzhen factory, to beef up production capacity by 30 percent in its bid to increase its market share in ultra-large tonnage machines.
Its smaller Hong Kong press manufacturing counterpart, LK Technologies, also said that it was planning a new production facility, in Ningbo.
In a Nov. 29 stock market filing, LK said it bought a 100,000 square meter plot of land there in early in 2012, as part of a HK$200 million (US$25.8 million) investment in a factory that will become its production base in east China.
It said it expects the new factory to be operating by mid-2013.
Echoing in part Chen Hsong, it said overall sales for its injection molding machines fell 11 percent in the six months ending Sept. 30, to HK$262.5 million (US$33.8 million), but it saw growth in large tonnage machines, servo-controlled machines and more advanced direct clamping models.
“Once the production headquarters in eastern China starts production, the group's productivity of plastic injection molding machines will be enhanced and its product series will be strengthened,” it said.