Qunxing Paper 3868

[winston]

Paper firm's hopes written in the wind by Derek Yiu, The Standard HK

Qunxing Paper Holdings (3868) will spend up to 563.5 million yuan (HK$639.74 million) for a wind farm in Inner Mongolia to diversify its business development, chairman Zhu Yuguo said.

Zhu said he had started developing the wind energy business years ago and thinks the time is right to include the Tongliao Changxing Wind Power Company into Qunxing.

"Our original business is production of high- end decorative base paper, which is a good business in itself," Zhu said. "But the management has long been looking for new growth opportunities."

He added: "The government is very supportive of new energy development. We think wind energy is the best choice of all."

Construction of the 49.3 megawatt wind farm will be completed in March next year. The unit will generate revenue in May after it starts selling energy to the national grid.

Financial controller Victor Poon Tsz-hang said the electricity tariff of the wind farm has been set at 0.54 yuan per kilowatt hour. It is expected to operate at a minimum 25 to 30 percent of capacity - the industry average.

The purchase of wind turbines will take up 90 percent of 563.5 million yuan capital expenditure.

Under favorable official policies, Qunxing's wind power sales will be levied a value added tax of 8.5 percent - half the 17 percent official rate.

Qunxing's new unit will be totally exempt from profit tax for the first three years and then have a 50 percent exemption for the following three years, Poon said.

As for core business, sales have risen in line with the ongoing capacity expansion.

The company is on track to add 320,000 tonnes of capacity mid-2010. Also, the profit contribution of the firm's premium decorative base paper is rising, thereby helping to expand its overall profit margin. Both selling prices and major production costs - wood pulp and titanium dioxide - remain stable in the second half, Poon said.

Poon is "confident of shifting the burden to customers if costs increase next year."

Qunxing has no plan to export decorative base paper given a rapidly growing mainland market. The entry barrier has remained high for outsiders since the government integrated small paper producers years ago.


http://www.thestandard.com.hk/news_deta ... 91102&fc=1

[lithium]

This one I like, in my watch list as well....... but just not moving.......