Recently, in the light of the unstable performance of the European and American markets due to the sovereign debt crisis, the Group has continued its business strategy of focusing on expanding its market in Mainland China.

After stepping up efforts in expanding its business segment in Mainland China, the Group has received an increasing volume of orders from large scale Mainland enterprises. Thus the turnover from the China market has increased. For the Mainland China market, the Group’s Tianjin sales office, which started operation last June, and the existing sales office in Shanghai secured new customers in Northern and Eastern China. The Group also received a number of new orders from heavy industry manufacturers during the year, such as the silicon materials to be used in electrical equipment for electricity industry, and nylon materials for car industry, including intake manifold, exhaust pipe and window seal.

The colourant and compounded plastic resin business recorded turnover growth. The Group has developed tailor-made colourant and compounded plastic resin products for customers, enabling better control of the selling price and gross profit. Gross margin was maintained at the similar level of same period last year. Through the link with the International Colour Alliance, the Group has secured more orders from the processing factories of internationally renowned brands in Mainland China. The Group’s new plant in Tai Po commenced production this year, serving customers that require product shipment in Hong Kong. Products from the new facility also enjoy the preferential tariff treatment offered under the Closer Economic Partnership Arrangement (“CEPA”) between Mainland China and Hong Kong.

The engineering plastics business was affected by the Euro debt crisis and slowed down in the second half of the financial year. The relocation of the factory in Hong Kong was completed this year. The new Tai Po Plant boosted the number of production lines from five to six, bolstering capacity while lowering the production cost. As the Group has gradually been moving the facilities since this march, which affected the operations temporarily, gross margin remained at the similar level of last year. The Group has also committed itself to research and development of new products, including the development of wood replacements for household products, and metal replacements for industrial applications such as pulleys.

The Group possesses abundant experience in the plastics industry. Despite of operating in an unstable economic condition, its good relationship with the banks established over years will assure the Group sufficient financial resources for supporting business development. The management is confident of achieving steady growth and generating satisfactory returns for the shareholders through exploring business opportunities.
 

HUI Sai Chung
Chairman