Production Capabilities Expansion in Jiangmen Posted on 28 Aug 01

Hong Kong, August 28, 2001 - Laminates manufacturer, Kingboard Chemical Holdings Limited (SEHK: 148) today announces a series of expansion and investment plans in Jiangmen, Guangdong Province. On August 28, 2001, the Group has entered into several acquisition and investments agreements with The People`s Government of Jiangmen City, including: 1) acquire the entire shareholding of Jiangmen Yian Laminates Factory Limited for a consideration of around RMB25 million; 2) invest around USD30 Million in expanding production facilities in Jiangmen; and 3) acquire the formalin business of Jiangmen Solvents Factory for a consideration of around RMB6.5 million.

"Jiangmen is at the neighbourhood of Zhongshan and Zhuhei, the region with many PCBs (printed circuit boards) manufacturers which support the manufacturing of computers and advanced electronic products. The Group expanded glass epoxy laminates ("FR4") production capabilities in Jiangmen providing more efficient delivery services to our customers as well as reducing transportation costs. This will enable us to capture a bigger market share in the Guangdong region." Mr Paul Cheung Kwok-Wing, Chairman of Kingboard Chemical, commented on the Group`s latest development.

The People`s Government of Jiangmen City highly appreciate the Group`s investments in Jiangmen. Mr Lu De Pei, Jiangmen`s Vice Mayor and a number of officials from Jiangmen development zone and representatives from the SOEs (state-owned enterprises) were present in the signing ceremony. Mr Lu commented, "Privatization is a critical move in reforming SOEs with potential for improvements. New style of management will enable them to operate more efficiently under the market driven economy. Kingboard`s expansion in Jiangmen will play an important role in supporting the electronic downstream industries in the region."

In the past, Jiangmen Yian`s principal business was the production of paper laminates. The Group entered into a lease agreement with Jiangmen Yian last year to have the right to operate the whole factory. The plant started to commence production as well as set up a new FR4 production line. Kingboard plans the FR4 monthly production capacity to reach 300,000 sheets. Together this with the monthly production capacity of 100,000 paper laminates, Jiangmen Yian plant will be able to produce 400,000 sheets monthly.

Besides the production of FR4, the Group also continues the vertical integration by manufacturing essential raw materials and chemicals both for its own consumption and external sales. The Group has recorded a remarkable increase in the sales of chemical products. "The acquisition of formalin manufacturing facilities will expand our formalin market share in Guangdong Province from 50% to 65%." Continued Mr Cheung.

Jiangmen Solvent Factory is principally engaged in the production of formalin and other chemical solvents. The factory has a monthly production capacity of 6,000 tons of formalin, a major raw material for manufacturing laminates, and is estimated to contribute annual revenue of over HK$50 million to the Group.

"There is tremendous growing demand for our products in the Pearl River Delta and orders on hand exceed the Group`s total production capability from time to time. Thus we are looking for the opportunities in investing in existing production facilities, which requires relatively less investments but provides an additional capacity in a short period of time. By contracting with Jiangmen Yian last year, the Group has gained substantial knowledge of their factory management operation and the local operating environment, which has greatly helped to reduce our investment risk." Continued Mr. Cheung Kwok-Wing, Chairman, Kingboard Chemical.

Kingboard Chemical, the leading Hong Kong and PRC laminates manufacturer and one of the largest in the world, with more than 10 plants operating in different parts of China, has successfully integrated vertically in-house the production of copper foil, glass fabric and hydrogen peroxide needed for its laminates business. The Group has the honour of being named one of the "World`s 300 Best Small Enterprises" by FORBES Global in October 2000 and one of the "20 Best Managed Companies in Hong Kong" in an institutional investors survey conducted by Asia Money magazine in December last year.

Issued by :
Kingboard Chemical Holdings Limited