Electronic materials growth lifts Red Avenue’s nine-month profit 5.7%
New materials manufacturer Red Avenue New Materials Group Co. Ltd. (9607.HK; 603650.SH) reported on Tuesday that its revenue rose 29.37% year-on-year to 3.26 billion yuan ($489 million) in the first nine months of this year. Its net profit for the period increased 5.66% to 522 million yuan, while its profit excluding non-recurring items rose 4.99% to 490 million yuan.
The company’s pretax profit from its electronic materials segment surged 292.74% to 163 million yuan during the nine-month period. However, investment income from associates and other sources fell by about 102 million yuan, while foreign exchange losses increased by 30.78 million yuan, limiting its overall profit growth.
In the third quarter alone, the company’s revenue grew 29.87% to 1.13 billion yuan. But its net profit fell 7.09% to 133 million yuan. The company said investment income from associates declined by 74.15 million yuan during the quarter.
Its net operating cash inflow fell 57.21% to 115 million yuan in the first nine months of the year. The company attributed the decline to timing differences arising from customer payment terms as sales of new products grew rapidly. Revenue from specialty rubber additives and electronic chemicals totaled 1.65 billion yuan and 1.09 billion yuan, respectively.
The company’s shares opened lower on Wednesday, but reversed course to reach HK$37.6 by the midday break, up 1.51%. The stock is still down 14.5% from last month’s IPO price of HK$44.
By Lee Shih Ta
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