Sinopipe nine month profit up 6.3% to CNY47.9mn

Growth mainly due to higher revenue generated offset by the higher operating, financial and tax expenses incurred.

Sinopipe Holdings Limited (“Sinopipe”) and its subsidiaries (collectively the “Group”), who are engaged in the design, manufacture, distribution and installation of a variety of plastic pipes and pipe fittings, announced today its financial results for the three months and nine months ended 30 September 2011 (“3Q2011” and “9M2011” respectively).

Boosted by a substantial increase in revenue from the drainage and sewerage operating segment, the Group reported a revenue increase of RMB 33.5 million or 14.4% to RMB 267.3 million for 3Q2011 from RMB 233.7 million recorded in the previous corresponding period (“3Q2010”). Gross profit recorded for the period increased by 25.9% to RMB 64.1 million as compared to RMB 50.9 million recorded in 3Q2010. Gross profit margin increased by 2 percentage points to 24.0% in 3Q2011 as compared to 21.8% in 3Q2010. In line with higher revenue generated offset by the higher operating, financial and tax expenses incurred, net profit registered increased by RMB 1.7 million or 8.1% to RMB 22.1 million in 3Q2011, from RMB 20.4 million recorded in 3Q2010.

For 9M2011, revenue grew moderately by RMB 86.1 million or 14.1% to RMB 697.3 million, compared to RMB 611.2 million recorded in the previous corresponding period (“9M2010”). The growth in revenue was primarily attributable to an improvement in revenue for drainage and sewerage and telecommunication and electrical operating segments under the plastic pipe business.

Gross profit recorded for 9M2011 increased to RMB 153.8 million, up 24.9% from RMB 123.1 million in the year-ago period. Gross profit margin increased to 22.1% in 9M2011 as compared to 20.1% in 9M2010.

As a result, net profit totalled RMB 47.9 million in 9M2011, a 6.3% period-on-period increase from RMB 45.0 million in 9M2010. The increase was mainly due to higher revenue generated offset by the higher operating, financial and tax expenses incurred.

Overall, earnings per share for 9M2011 rose to 20.65 RMB cents as compared to 20.01 RMB cents for 9M2010. Net asset value per share as at 30 September 2011 stood at 259.45 RMB cents, compared to 252.88 RMB cents as at 31 December 2010.

In his comments on the Group’s latest set of financial results, Mr Chen Li Hui, Chief Executive Officer and Executive Director of Sinopipe said, “Amidst the challenging market conditions and backdrop, we are pleased to deliver a healthy quarter over quarter increase in revenue and earnings. For the last nine months, we have seen increasing demand for our plastic pipes which has been largely strengthened by the urban and infrastructural developments in China.”

“Our product innovation and diversification as well as the expansion of our distribution network will continue to be our key growth drivers. Moving forward, we will continue to focus in the water supply and drainage and sewerage segments while leveraging on our technical and project management capabilities to manage and secure build-transfer (BT) projects,” Mr Chen continued.

The Group believes that the plastic pipe industry in the People’s Republic of China (the “PRC”) will remain a fast growing sector, with the PRC government continuing to develop and upgrade its infrastructure facilities to keep pace with the country’s robust economic growth. The Group will continue to participate in exhibitions which provide a platform for it to showcase its brands and products as well as actively seek to expand sales and distribution network through the appointment of distributors in new markets in the PRC.