China Zhongwang records net profit of RMB 2.6 billion for 2010
Dividend RMB0.19 per share　Dividend payout 40%
*  *  *
Gross margin expanded to 40.6% as focus shifted to industrial aluminium extrusion products
Expand to high value-added aluminum FRP business to form new growth engine

Financial Highlights (For the year ended 31 December)

	2010 RMB million	2009 RMB million
Revenue	10,521.9	13,852.7
Gross Profit	4,276.4	5,290.1
Gross Margin	40.6%	38.2%
Net Profit	2,595.9	3,528.8
EPS – Basic (RMB)	0.48	0.72
Dividend (RMB)	0.19	0.23
Dividend Payout (%)	40%	35%
Cash and Bank Balances	17,263.4	13,709.6

Limited (“China Zhongwang” or the “Company”, together with its subsidiaries the “Group”, stock code: 01333), the largest aluminium extrusion product manufacturer in Asia and China*, with a particular focus on the transportation, machinery, industrial equipment and electric power engineering sectors, announced its annual results for the year ended 31 December 2010 (“year under review”). The Group’s revenue and profit attributable to shareholders for 2010 amounted to RMB10,521.9 million and RMB2,595.9 million, respectively, representing a year-on-year decrease of 24.0% and 26.4% respectively. The declines were mainly due to the decrease in export sales arising from the US anti-dumping and countervailing duties investigations.

The Group continued to implement the strategy of focusing on industrial aluminum extrusion products in 2010.  Sales value and volume of industrial aluminum extrusion products accounted for 95% and 92% of the Group’s total sales and volume respectively in 2010, increasing from 83% and 74% for 2009, respectively. It has become the Group’s major source of revenue and profit. As a result of the product mix enhancement, the average selling price of the Group’s products increased from RMB27,749 per ton in 2009 to RMB30,283 per ton in 2010, leading to a 2.4 percentage point increase in the Group’s gross profit margin, to 40.6% for 2010.

Basic earnings per share for 2010 amounted to RMB0.48 (2009: RMB0.72). To reward shareholders for their support, the board of directors proposed to declare a final dividend of RMB0.19 per share, which is equivalent to a dividend payout ratio of 40%.

To cope with the development of high-end industrial aluminium extrusion products, the Group optimised its production capacity as planned.  As at 31 December 2010, the Group’s production capacity was approximately 640 kilotons. Further capacity expansion principally designed for large-scale equipment is currently in progress.

Going forward, the Group will continue to enhance its competitive advantage and market leadership in the high-end industrial aluminium extrusion sector, and drive ongoing business growth via four development strategies as follows:

I. Optimising production capacity: Capacity expansion for high value-added industrial aluminium extrusion products will be ongoing. New, large-scale extrusion presses for large-section industrial aluminium extrusion products will be installed and put into operation.

II. Strengthening research and development: The Group will continue to enhance its aluminium alloy smelting and casting capabilities. It will also develop deep-processing technologies, so as to expand its product offerings to include different types of processed aluminium products in finished or semi-finished form.

III. Intensifying market development efforts: The Group plans to increase its market resources to tap opportunities in the domestic sectors of transportation, machinery equipment and electric power engineering. In addition, the Group will also step up its market development efforts in other countries and regions in order to build a diversified income base.

IV. Developing high value-added aluminium flat rolled products (“FRPs”): Capitalising on its existing technological edge and customer resources in the industrial aluminium extrusion segment, the Group plans to develop the synergistic high value-added aluminium flat rolled product business, mainly consisting of medium-to-high thickness plates, high-end foils and sheets. High value-added aluminium flat rolled products are principally applied in the transportation, machinery, electronics, chemical, metallurgy, medical and food packaging sectors.

Mr. Liu Zhongtian, Chairman and President of China Zhongwang, said, “Not only will the planned expansion into the FRP business further leverage the Group’s leading edge in aluminium alloy smelting and product research and development capabilities, it will also fully make use of the Group’s downstream customer and market resources to generate synergistic effect with its existing business to fuel profit growth. Facilitated by these strategies, the Group has begun a new chapter in its committed efforts to create favourable returns for shareholders,” Mr. Liu concluded.”

 

About China Zhongwang Holdings Limited
China Zhongwang is the world’s third largest and Asia’s and China’s largest aluminum extrusion product manufacturer, with a particular focus on the transportation, machinery equipment and electric power engineering sectors. It currently operates 73 extrusion production lines, including a 125MN oil-driven dual action extrusion press which is currently the largest of its kind in China and one of the most advanced in the world. These facilities enable the Company to produce large-section and high-precision industrial aluminium extrusion products tailored to its customers’ needs. These products are widely used in the transportation sector such as cargo and passenger carriages, metropolitan railway, aviation, vessels, automobiles, as well as machinery equipment and electric power engineering sectors.

This press release is issued by Porda Havas International Finance Communications Group on behalf of China Zhongwang Holdings Limited. For enquiries, please contact:

China Zhongwang Holdings Limited
Harriet Lau  Tel: +852 2905 3104 Email: harrietlau@zhongwang.com
Shirley Ho  Tel: +852 2905 3119 Email: shirleyho@zhongwang.com