Sinotruk (Hong Kong), the nation's largest heavy-duty truck manufacturer, announced a 40 percent gain in net profits to 768 million yuan in the first half.

The company's chairman, Ma Chunji, said the company is striving to raise heavy truck production capacity to 120,000 units this year from 110,000 units in 2007, while the production capacity of engines will surge from 110,000 to 200,000 units.

The company has decided to raise the annual production capacity to meet the soaring market demand. "The monthly orders of trucks were about 30,000 units between March and May, which significantly exceeded our existing production capability," he said.

Although the sale eased off in July as a result of the release of new regulation on heavy trucks, Ma believed this could be solved soon and there will be growth in sale again after September.

The new regulation regarding heavy-duty trucks took effect in July and the engines are now subject to the environmental requirement set by National Development and Reform Commission (NDRC) and the Ministry of Environmental Protection.

The company is now working on the promotion of the National III-compliant new diesel engine, which has been approved by NDRC, Ma added.

Besides, the company sold 67,694 units heavy trucks through June, up 57.2 percent year-on-year. Ma expressed hope that the company can maintain its leading position in the industry.

"The company enjoys a 21 percent market share in China. We hope our business will grow one percent every year."

Hit by the steel price hike, the company's gross profit margin dropped to 14.4 percent in the first half of 2008 from 17.9 percent in 2007.

The company's vice president, Wang Guangxi, said that Sinotruk has marked up its trucks three times to offset the impact of rising steel price. "Although the steel price has lost some steam recently, we don't intend to reduce the price of our products any time soon," Wang added.

When asked whether the heavy truck market will decline in response to oil price hikes, Wang said the fluctuating oil price is unlikely to undermine the demand for heavy trucks.

Looking forward, Ma laid down the main objectives of future development - deepening development of new products and technology, pressing forward overseas expansion, and expanding production capacity and refitting the sales network.

Share of Sinotruk (Hong Kong) yesterday closed at HK$6.62, up 7.29 percent.

(HK Edition 08/30/2008 page2)