A dynamic and diversified future for Xinyi Glass

Xinyi Glass is one of the largest integrated manufacturers of glass products in China, engaged in the production of automobile, construction, float and PV (photovoltaic) glass products. Although 95% of its operations are located in mainland China, Xinyi Glass is based in Hong Kong.

Since the company’s initial public offering in February 2005, it has secured a HK$500 million ($64 million) syndicated loan facility, which was fully repaid last month. And it has just recently secured a second syndicated loan facility of HK$1.1 billion over four years.

Jason Lau, CFO at Xinyi Glass, spoke to FinanceAsia about the unique challenges he faces everyday at the financial helm of such a large and fast expanding company.

Please describe your role at Xinyi Glass.
I am the CFO and company secretary at Xinyi Glass and I joined the company in 2003. Prior to my appointment, I worked as a financial controller of a subsidiary of a main board listed company, and I have also been an auditor at PricewaterhouseCoopers.

I was responsible for the expansion plans of the company when I joined seven years ago. The [accounts] were not up to listing standard and I took a systematic approach in organising the finance department from ground zero all the way up until we launched our IPO in February 2005. One of my most important roles is cash management, but my role has expanded to overseeing the finance and accounting operations, compliance, corporate governance and investor relations.

Can you explain how your treasury model works?
We have more than 100 finance staff at Xinyi Glass, including five finance department heads at our main factory locations in Tianjin, Wuhu, Dongguan, Shenzhen and our corporate office in Hong Kong, who report to me on a daily basis. I would say Xinyi Glass has a blended treasury model; it can be classified as a decentralised treasury, as each head of finance is responsible for the treasury operations in their respective regions.

However, one could also define our treasury model as a centralised one because my team and I at the Hong Kong corporate office are responsible for monitoring the cash flow at each of our locations in Hong Kong and China. We allocate cash to each location on a weekly basis; in turn the finance heads are responsible for making the payments in their region for that week.

What is your cash management strategy?
We use many banks in Hong Kong and in China. Part of my job is to take care of all the banking facilities here and in the mainland. In 2003 we only worked with Bank of China in Hong Kong; now we have expanded our bank list to HSBC, Hang Seng Bank, Standard Chartered, Citibank, SMBC, ANZ and KBC. Similarly in mainland China, we have strengthened our relationship with Bank of Communications and added Bank of China and the Agricultural Bank of China to our bank list.

What would you say is the biggest challenge in your role at Xinyi Glass?
One of the biggest challenges is to provide enough funding for the company’s expansion plans. When I joined Xinyi Glass there was one factory location in Shenzhen, now we have expanded the number of factories to six; in Baoan, Dongguan, Jiangmen, Wuhu and Tianjin. Internationally we originally had two locations in Toronto and Vancouver; this has now expanded to Germany and Tokyo.

Internally, in a fast expanding company, it is important for me to keep everyone happy, especially the division heads as they generate and provide the cash for the company’s operations and expansion plans. Externally, our shareholders must be happy with the return on their investment in the company. In addition we need to ensure that the banks are happy with our status, in terms of our finances and ability to repay loans.

Looking ahead, what can we expect from Xinyi Glass?
We have very dynamic and diversified expansion plans. There is a planned expansion of production lines in the Pearl River Delta, the Yangtze River Delta and the Bohai economic zone with fully-integrated product lines, and the implementation of clear energy -- we use natural gas at all new production facilities for better cost and energy consumption efficiency -- in early 2011. We are also looking to split our float glass and PV glass operations as our PV glass business matures, so that we will have four distinct business operation segments in total.

Apart from expanding our capacity in OEM and aftermarket automobile glasses, energy-saving construction glass products, solar-related glass products as well as float glass products, we also want to further explore business opportunities in electronic glass products. Riding on our proactive development plan, we are aiming to increase profitability, while further reducing our net debt to equity ratio at the same time.