Huabao attended our Access China Conference in 14-15 January 2013. There is nofresh news as most of the updates were discussed during the 1HFY13 analystmeeting in November 2012.
Guidance likely to be maintained. We believe management will maintainits sales guidance for FY13 of mid-teens growth with the RTL businessgenerating HKD600m, as communicated to investors during the 1HFY13analyst meeting in November 2012.
RTL operation. For the RTL operation, we expect ASP to reach HKD30-35kper ton. Currently, the utilization rate for the first plant is 100%, while anew plant installed two months ago has a utilization rate of 50-60%.
The derivative transaction. Management explained that the extension ofthe expiry date for the 95m shares derivative transaction agreement toDecember 2015 will give the chairlady time to resolve the overhang.
Will look for new CEO in future. With Mr. Lau Chi Tak stepping down asCEO, management will find a replacement in the future. In the short term,however, the CEO’s duties will be undertaken by Ms. Chu, the chairlady.
Capex. Management expects capex for FY13 to be c.HKD700m. It hasbudgeted HKD550m for the RTL business this year. Capex for the next twoyears will be c.HKD600m each year.