Hong Kong plastics machinery and processing company, Datong Machinery Enterprise Co., Ltd., said that due to the rejuvenation of the market, its simultaneous growth in sales and profits in 2010 prompted it to further increase its investment in China's domestic market.
Cosmos Machinery stated that its new energy-saving machine series saw significant sales growth last year. However, the company cautioned that it still faced some challenges, including rising labor costs, the Chinese government's measures to control inflation and tightening corporate financing, and the pressure from the appreciation of the renminbi.
Cosmos Machinery said that overall, its business has been rejuvenated from the global financial crisis. In 2010, total sales increased by more than 40% to 2.42 billion Hong Kong dollars, of which sales of mechanical equipment, the largest share of sales, soared by 80% in 2010. It reached HK$1.04 billion.
Cosmos Machinery reported to the Hong Kong Stock Exchange on March 30th that after deducting the 200 million Hong Kong dollars raised by Shenzhen Hao Ning Da Instrument Co., Ltd., its subsidiary, listed on the Shenzhen Stock Exchange last year, the Group’s profit for 2010 The amount reached 75 million Hong Kong dollars.
Datong Machinery is a diversified operating company. In addition to its machinery production, it also covers plastic processing, industrial product trading and printed circuit board production.
Among them, the mechanical business unit has the strongest recovery momentum, from a loss of 23 million Hong Kong dollars in 2009 to a profit of 42 million Hong Kong dollars in 2010. However, the company stated that the plastics processing business department still suffers from the dual pressure of salary and rising plastic raw material costs.
Both of these business units are increasing their investment in China's domestic market, with the Machinery Business Unit setting up new sales offices in smaller cities in China, and the Plastics Processing Business Unit plans to build another factory in Hefei, Anhui Province.
Hefei has become China's third major home appliance manufacturing center after Qingdao in Shandong Province and Shunde in Guangdong Province. Cosmos Machinery stated that it is expected that the continuous expansion of the Chinese market will further promote the business growth in Hefei.
However, Cosmos Machinery also stated that the Plastics Processing Business Unit is “not satisfactory†in terms of overall profitability, and therefore the company is now focusing on improving efficiency.
The company said: "Especially in the second half of last year, the cost of plastic materials, purchases, and labor costs have continued to rise, directly undermining the profitability of the processing business."
Cosmos Machinery stated that as for machinery, as of the end of 2010, its Greenline SE series of energy-saving injection molding machines had risen to 70% of the total sales of injection molding machines, compared with only 30% at the beginning of the year.
Cosmos Machinery stated that the SE series is the only model in China that has obtained the highest level of energy-saving certification from the China National Quality Supervision and Inspection Center for plastics machinery products, with a clamping force exceeding 1,600 tons.
The company said it intends to further apply its energy-saving servo motor technology to other equipment series, including rubber injection molding machines, extruders and sheet metal processing machines.
Cosmos Machinery also established a joint venture plant in India to produce the SE series locally. In addition, a new plant in Wuxi, Jiangsu Province, will be completed by mid-2011.
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