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Haitian reports solid results but sees choppier waters

Kent Miller | PLASTICS NEWS CHINA

Haitian International Holdings Ltd., China's biggest maker of injection molding equipment, saw sales jump a healthy 16.7 percent to 5.877 billion yuan ($858.2 million) in the first half of the year but warned of risks from global economic uncertainty and the U.S.-China trade conflict.

Gross profit for the six months ending June 30 edged up 3.1 percent to 1.824 billion yuan ($266.3 million).

Domestic sales rose 18 percent to 4.178 billion yuan ($609.5 million), while strong sales in India, Turkey and Germany pushed exports up 13.5 percent to 1.580 billion yuan ($230.5 million).

Despite the solid results -- which Haitian noted was a half-year sales record -- the company sounded a wary note.

"The global economy is still under the influence of volatilities in emerging markets, trade protectionism and the risk of geopolitical conflicts. Therefore we remain cautious in the future [for the] Chinese and global economies for the second half of 2018," the company said in comments attached to the results.

Haitian does not see a quick resolution to the U.S.-China trade war and said it will hurt its sales in the United States.

"The China-U.S. trade dispute brings uncertainty to the macro-economy and the prospect of our industry," the company said bluntly. "Although we will adopt different measures to mitigate the effect of such additional tariff, the sales for our U.S. market will inevitably [be] subject to negative impact."

While Haitian does not break out sales by country, it said U.S. sales were off slightly due to the emerging imbroglio. Starting July 6, the United States government slapped 25 percent tariffs on plastic production machinery from China.

Domestic customers represented 71.1 percent of Haitian's sales, up slightly from 70.3 percent in the first six months of 2017.

The figures were announced on Aug. 21 in Hong Kong, where Haitian is traded on the stock exchange.

Haitian reported growth for its all-electric injection molding machines for smaller tonnages and two-platen machines for larger tonnages. Sales of all-electric Zhafir machines rose 30.6 percent to 680.5 million yuan ($98.37 million), while sales of Haitian's big, two-platen Jupiter series climbed 32.6 percent to 835.2 million yuan ($121.6 million).

The company's workhorse Mars series saw sales rise 10.9 percent to 3.910 billion yuan ($570.9 million).

As part of its Industry 4.0 push, Haitian announced the acquisition of Hangzhou Keqiang Intelligence Control System Co. Ltd., which specializes in control units for injection molding machines.

In its financial report, the company expressed uncertainty about Beijing's efforts to focus the national economy on domestic consumption.

Echoing comments of some other publicly traded Chinese firms, the company said a slowdown in domestic investment, falling liquidity and government policies tightening loan requirements all put a damper on domestic growth.

"The future growth in [the] domestic economy, which is expected to rely on domestic demand as [a] driving force, is still uncertain," the company said, pointing to a "slow-down in domestic investment and inflation rate and shrinkage in liquidity for some companies and local governments under the policies of stronger regulation and deleveraging."

Haitian attributed the sluggish growth in gross profits to higher prices for raw materials and the falling value of the Chinese yuan.

The company also said a strong U.S. dollar and interest-rate hikes by the Federal Reserve will push down the value of currencies in emerging markets.

Still, Haitian is bullish on those markets. Last month, it opened a 54,000-square-foot sales, training and support center in Turkey.

Since entering the Turkish market in 1996, Haitian said it has sold more than 10,000 machines there. Its announcement quoted Turkish industry officials as saying that country is the second-largest market for plastics processing in Europe.

Meanwhile, the company in April opened an assembly plant in India. The 210,000-square-foot facility, in Kadi will mainly produce servo-hydraulic injection molding machines. It will have a capacity of 1,800 machines a year, the company said.

 

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