Haike Chemical Group Regulatory News (HAIK)

21 Sep 2007 09:43

HaiKe Chemical Group Ltd.21 September 2007 HaiKe Chemical Group Ltd. Trading update and Speciality Chemical Expansion HaiKe Chemical Group Ltd ("HaiKe" or the "Company"), the AIM quoted (AIM: HAIK)petrochemical, speciality chemical and biochemical business based in China, ispleased to provide an update on current trading and details of further capacityexpansion projects in the Company's speciality chemical businesses. Current trading The Directors of HaiKe note the comments made this week by the PRC NationalDevelopment and Reform Commission that no further price adjustment notices foroil products are expected this year. Therefore with the price of refined oilproducts expected to remain steady any further increase in crude oil prices willreduce the profit margin available for the Company's petrochemical business. As stated in the announcement of the Company's unaudited results for the sixmonths to 30 June 2007 on 10 September 2007, the Company has adopted a number ofcountermeasures to minimise any impact of the current pricing regime goingforward. The Company has shifted production to higher margin products andrestricted production in those areas most affected by the current pricingenvironment. The Company has also adopted a series of stringent cost controlmeasures. These countermeasures and the flexibility that has been built into theproduction facilities mean that despite challenging market conditions, theCompany anticipates its petrochemical operations will provide a positivecontribution to the group in the second half of 2007. HaiKe's speciality and bio chemical businesses continue to trade in line withexpectations and we are confident of seeing further growth during the remainderof the year. The outlook for 2008 and beyond remains positive, boosted by thecapacity expansion projects we are announcing today. Speciality Chemical Expansion The Company's subsidiary Hi-Tech Spring is one of the leading producers ofdimethyl carbonate ("DMC") and associated products in China. DMC is widely usedin medical applications, agricultural pesticides and the manufacture ofsynthetic materials and is sold by the Company both in China and exported toEurope. Due to the increasing demand the Company has for its DMC and associated productsit is due to commence shortly a production facility expansion project that isexpected to increase the Company's DMC production capacity from the current15,000 tonnes per annum to 45,000 tonnes per annum by the third quarter of 2008. The Company's subsidiary HI-Tech Shengli is a leading Chinese producer of sodiumhydroxide based products such as caustic soda and a range of chlorine basedchemical products. Caustic soda is used in many industries, for example as achemical base in the manufacture of pulp and paper, textiles, detergents anddrinking water. Due to the increased demand the Company is experiencing for caustic soda, afacility expansion project is due to commence shortly which is expected toincrease the Company's production capacity for caustic soda to 100,000 tonnesper annum from the present 55,000 tonnes per annum. The increased productioncapacity is expected to be on stream from the third quarter of 2008. The Company expects to fund both expansion projects through its current cash anddebt facilities. Mr. Yang Xiaohong, Executive Chairman, said: "Whilst the announcement by the PRC National Development and Reform Commissionis disappointing, the counter measures we have already adopted in response torising oil prices will ensure that the impact is minimised and that thepetrochemical business should remain profitable in both the short and longerterm. The completion of the heavy oil catalytic cracking project will alsoassist the repositioning of our petrochemical business to higher marginproducts. The performance of our specialty chemical businesses continues in line with ourexpectations and the capacity expansion projects announced today will furthershift the weighting of our Company to this area where we see significantopportunities to deliver further growth and shareholder value." The company will be holding a dial in conference call for interested analystsand investors hosted by Johnson Lau, Chief Financial Officer, at 11.00am UK timeon Monday 24th September 2007. Details of the call are available from EmmaConsett on +44 (0) 20 7930 0777. For further information please contact: HaiKe Johnson Lau, Chief Financial Officer +86 (0) 546 8289173HansonWesthouse Tim Metcalfe / Anita Ghanekar +44 (0) 20 7601 6100Cardew Group Rupert Pittman / Shan Shan Willenbrock +44 (0) 20 7930 0777 This information is provided by RNS The company news service from the London Stock Exchange