In a statement filed with the Shenzhen Stock Exchange, Hubei Maiya Co. Ltd (000971) announced that the company’s losses in the first half of 2008 could expand. Preliminary calculations and estimates compiled by the accounting staff of the company show losses estimated at RMB 55 mln, higher than the previous estimate of RMB 40 mln, for the period between Jan and Jun 2008. In the same period last year, the company booked RMB 28.28 in losses, and EPS was RMB (0.125).

The company ascribed its losses to several reasons: first, due to market resource integration, the company is not operating normally; second, the implementation of a new labor law has increased labor costs by 30%; and third, costs for core raw materials like wool tops have increased by 20%, while fuel costs have also increased. The company has thus encountered tremendous cost pressures.

In addition, the appreciation of the RMB against the USD has exacerbated losses, as the company’s foreign exchange losses have expanded. Its capital costs have also increased due to the increased reserve ratio. Moreover, policy changes for tariffs and export rebates have also squeezed profits in the textile industry.


Source: China Securities Journal

Date: 6 Jun 2008

CN01/DM/MM