China Zhongwang Posts RMB412 MillionNet Profit for 1H2011

Time:12 August 2011 Font size


China Zhongwang Posts RMB412 MillionNet Profit for 1H2011
Strong Sequential Growth in Second Quarter of 2011 with
87% Rise in Total Revenue and94% Surge in China Sales

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Preliminary Cities Selected for  High-precisionAluminium Flat-Rolled Project
With 3-million-tonneProduction Capacity

Financial Highlights (Unaudited)

RMB Million
For the 6 months ended30 Jun
1Apr – 30 Jun
1 Jan – 31 Mar
-       China
-       Overseas
Sales Volume(Tonnes)
Gross Profit

Financial Position

As at 30 June, 2011
As at 31 December, 2010
Cash and Bank Balances

(Hong Kong, 12 August 2011) – The second largest industrial aluminium extrusion product developer and manufacturer in the world and the biggest one in Asia and China, China Zhongwang Holdings Limited, (“China Zhongwang” or “the Company”, together with its subsidiaries “the Group”; Stock code: 01333) announced its interim results for the six months ended 30 June 2011 (the “review period”).The Group’s revenue and profit attributable to shareholders in the review period amounted to approximately RMB4.27 billion (2010:RMB6.47 billion) and RMB412million (2010: RMB2.09 billion) respectively.In the first half of the year, the Group continued its strategic transformation by increasing the weight of the China domestic market and that of high value-added products in a bid to offset and alleviate the adverse impact of the anti-dumping and countervailing duty investigations by the US in respect of certain aluminium extrusion products exported from China.Several large China enterprises became customers of the Group. As such, sales revenue from the PRC market in the review period rose 58% year-on-year, making the PRC market the Group’s main source of revenue and profit. 

Strong Sequential Growth in the Second Quarter Marked by an 87% Rise in Revenue
Net Profit Surged 50% QoQto RMB 247 Million

The Groupstarted reaping the fruits of the business transformation in the second quarter of 2011. Sales revenue rose 87% quarter-on-quarter to RMB2.78 billion and sales in China grew at an even more impressive rate of 94%. Driven by the strong sales growth in Chinawhich propelled a 50% rise in profit attributable to shareholders to RMB247 million in the second quarter of 2011, the Group’s business was gradually out of the woodsof the US anti-dumping and countervailing duty investigations.

Adding 18 Large Aluminium ExtrusionPresses Each with Pressing Power at or above 75MN in Two Years

In view of the development of aluminium extrusion equipment towards large, modern, sophisticated and automotive models, the Group continued to optimise its production capacity as planned during the review period. Currently, the Group has built the world’s leading aluminium tilt smelting and casting equipment in the industry, as well as the largest customised industrial aluminium extrusion product die design and manufacturing centre in Asia, enabling the Group to rapidly develop tailor-made products to suit the needs of different customers. As at 30 June 2011, the Group owned 75 aluminium extrusion production lines, including the world’s most advanced 125MN oil-driven dual action aluminium extrusion press, and its annual production capacity exceeded 700 kilotonnes.

Mr. Lu Changqing, Executive Director and Vice President of China Zhongwang,said,“Going forward, the Group will continue tooptimise and expand the production capacity of large-section industrial aluminium extrusion products to improveour profitability.We are installing 18large tonnage production lines in 2011 and 2012, each with a pressing power at or above 75MN, including three 125MN oil-driven dual action aluminium extrusion presses. Among these, two of the 75MN production lines have been installed and put into operation and one 125MN extrusion press has just been delivered and started installation. Under this expansion plan, the Group’s production capacity will exceed 1 million tonnesupon completion of installation of the new equipment.”

Focus on High-end Segment and Extend to the Manufacture of Deep-processed Industrial Aluminium Extrusion Products

The Group has been striving to become the top aluminium product developer and manufacturer in theworld.  Ithas been actively developing the deep-processing business to realise this mission and has set up a specialised deep-processing technicalteam, through such processes as cutting, welding and surface treatment, to further process industrial aluminiumextrusion products into finished products ready for use by customers. Thisinitiative allowed the Group to command a higher gross profit margin while alleviating the adverse impact of the US anti-dumping and countervailing duty investigations.  Some of these deep-processed aluminum extrusion products have been exported to the US.

In addition, the Group has completed the construction of a deep-processing centrefor producing deep-processed industrial aluminium extrusion products for applications in the transportation, machinery equipment and electric power engineering sectors.  Newly imported globally advanced equipment has begun installation. The centre is expected to become a new profit growthengine of the Group after its commencement of production.

Earmarked Three Cities for Developing Manufacturing Base for High-precision Aluminium Flat Rolled Products with Annual Production Capacity of 3 Million Tonnes

As an industry leader with foresight, the Group is actively looking for new opportunities with high growth potential. The plan to enter the market of high value-added aluminium flat rolled productshas been underway. This project has been earmarked as a priority venture of the Group who plans to complete in several stages the developmentof a high precision aluminium flat rolled product project with planned total annual production capacity of 3 million tonnes. It has tentatively decided to develop this business in Tianjin, Panjin City in Liaoning Province and Daqing City in Heilongjiang Province.Commercial operation is expected to commence in 2014 and full capacity to be reached in 2018.

Aluminium flat rolled products, mainly consisting of medium-to-high thickness plates, high-end foils and sheets, etc., are principally applied in sectors such as aviation and aerospace, vessels, railway transportation, automobiles, machinery equipment, packaging and electronics, etc. The scope of application and customer base have an indivisible relationship with those of the industrial aluminium extrusion products. The Group will leverage its existing technology as well as market and customer resources to enter the market of high-precision aluminium flat rolled products. Combining these two businesses will create synergies that enable them to complement and reinforce each other, achieve the matching and integration of resources, and facilitate the Group to attain leapfrog development.

Mr. Lu Changqing concluded,“Discerning and quickly responding to market opportunities has been Zhongwang’s key to success. The PRC’s industrial aluminium extrusion product enterprises have a much shorter history than their global peers; however, thanks to the indispensable contribution by its foresighted strategic transformation and sustained investment in key production equipment and research and development, the Group quickly became the world’s secondlargest industrial aluminium extrusion product developer and manufacturer in the world and the biggest one in Asia and the PRC. Looking ahead, the Group willcapitalise on its core competency with respect to alloy smelting and casting, extrusion, die design and product R&D. It will further optimiseits production capacity by applying advanced equipment, build up our manufacturing and deep-processing capabilities of high-end products through technological research and development, and leverage our strength to develop the high-end aluminium extrusion and aluminium flat rolled product sectors which are increasingly booming in the PRC and overseas markets. These initiatives will establish a solid foundationfor sustainable growth in profitability.”

About China Zhongwang Holdings Limited
China Zhongwang is the second largest industrial aluminium extrusion product developer and manufacturer in the world and the biggest one in Asia and China. Headquartered in Liaoning province, China, the Group has, over the years, committed itself to the energy-saving and light-weight development of, amongst others, transportation, machinery equipment and electric power engineering sectors through the provision of high quality industrial aluminium extrusion products.

After 18 years of dedication and hard work since its founding in 1993, the Group owned 75 leading aluminium extrusion production lines in the world as at 30 June 2011, of which the 125MN oil-driven dual action aluminium extrusion press is one of the largest and most advanced presses in China and in the world. It has built the world’s leading aluminium tilt smelting and casting equipment in the industry, as well as the largest customised industrial aluminium extrusion product die design and manufacturing centre in Asia. The Group’s annual production capacity as at 30 June 2011 was approximately 700 kilotonnes. The close coordination among the processes, namely product development, smelting and casting,die and extrusion, and the advanced technologies applied isthe Group’s important source of competitiveness and outstanding features.

The Group is principally engaged in the production of high precision, large-section and high value-added industrial aluminium extrusion products which are widely used in the transportation sector (including railway passenger and cargo carriages, metropolitan rails, automobiles, heavy trucks, vessels, aviation and aerospace) as well as machinery equipment and electric power engineering fields.

In order to consolidate its leading position in the industrial aluminium extrusion industry, the Groupwill continue to focus on sectors such as transportation, machinery equipment and electric power engineering, with emphasis placedon the light-weight development towards the target of reducing energy consumption and achieving low carbon emission. In addition, the Group plans to extend its business into the high value-added aluminium flat rolled product segment. This new business venture will not only enable the Group to further capitalize on its leading edge in aluminium alloy smelting and casting and product research and development, but also achieve synergies with its existing business by taking full advantage of its customer and market resources in related downstream application sectors.

To sum up, the Group strives to become a driving force for light-weight development in China to build a new and brighter future.