Samson Paper 2010 profit up 15.4% to HK$72.21mn

Optimistic on China’s sustained economic growth, the company opened six new sales offices in the PRC to capture the opportunities ahead.

Samson Paper Holdings Limited (“Samson Paper”), a vertically integrated paper trader and manufacturer in Hong Kong and the PRC, announced on Monday its annual results for the year ended 31 March 2011.

For the year under review, Samson Paper recorded a satisfactory performance. Driven by the synergies gradually created within its trading business plus the rapid growth of the manufacturing business, the Group has set a new record in total turnover. Turnover grew by 21.1% year-on-year from HK$3,861,000,000 to HK$4,677,000,000. In terms of volume, it increased by 7.5%. Profit for the year has risen by 15.4% from HK$62,555,000 last year to HK$72,211,000. In order to grapple for larger market share amidst fierce competition as a result of tightened monetary policy in the PRC since October 2010, the Group’s overall gross profit margin was 9.2% (2010: 11.4%), while net profit margin declined slightly to 1.5% (2010: 1.6%). Earnings per share were HK 6.7 cents, compared to HK6.0 cents last year, according to a Samson Paper report.

The Board recommended payments of a final dividend of HK1 cent per share, which is comparable to last year’s HK2 cents prior to the issuance of one-for-one bonus share. Together with the interim dividend of HK1 cent per share, the total dividends were HK2 cents per share for the year.

Mr. Sham Kit Ying, Chairman of Samson Paper, said, “Samson Paper has made significant progress during the year. We have opened six new sales offices in the PRC to capture the opportunities brought about by the rapid growth of the PRC economy. It is encouraging that the expanding sales network in the PRC also served as an ideal sales platform for the manufacturing business, and enabled the Group to maintain a balance between production and sales since the paper mill commenced production. In addition, the Group continued to implement prudent credit measures, leading to a solid financial position.”

According to the forecast of the International Monetary Fund (IMF), the GDP of the PRC for 2011 and 2012 are expected to maintain its leading position among G20 members. The Group remains cautiously optimistic about the long-term development of the country.

Under the Twelfth Five-year Plan, reduction of carbon emission is one of the key priorities of the country. The Ministry of Industry and Information Technology of the PRC has announced that the target of elimination on non-compliant paper production capacity has been significantly increased from 4,320,000 metric tonnes in 2010 to 7,445,000 metric tonnes in 2011. This accounts for around 7 to 8% of capacity of the entire paper manufacturing industry in the PRC.

Mr. Dennis Lee, Deputy Chairman & CEO of Samson Paper, said, “This industrial consolidation provides a golden opportunity for us to capture a greater share in the PRC market and advance our leading presence in the paper manufacturing industry. Hence, in the long run, the Group strives to boost itself to the next level and become one of the leaders within the PRC paper manufacturing industry.”

The new production line (PM5) at the Shandong paper mill has commenced production in late February 2011. The Group’s total annual capacity more than doubled to 370,000 metric tonnes. It is expected that the new capacity of this production line is to be fully reflected in the next financial year. The Group intends to increase production facilities as appropriate to boost its capacity in response to market demand.

Mr. Sham concluded, “We will steer in the direction consistent with our development strategies, by increasing the number of sales offices in the PRC, to build a more expansive sales network and enhance the market penetration of our businesses across the country. Samson Paper’s overall long-term objectives are to develop into one of the leaders in the paper manufacturing industry and consolidate the leading presence of its trading business in the PRC and Hong Kong, leveraging the expanding economy of the PRC.”