Source: China Securities Journal

China Zhongwang Holdings Ltd. (01333.HK), the second-largest industrial aluminium extrusion manufacturer in the world and the largest in China and Asia, announced its interim results on August 12. In the first half of 2011, the company recorded revenue of RMB4.27 billion and profit of RMB412 million. Revenue for the second quarter rose 97% from the previous quarter, and profit also increased 50% quarter-on-quarter.
  　China Zhongwang’s management said the rapid restructuring of product mix and increased sales from the China market are leading the company out of the U.S. anti-dumping and countervailing worries, which started to have an impact on Chinese aluminium exports in the second half of last year.
  　
Domestic Sales Drive Profit Up
  　
The industry has been badly hit for the past three quarters since the U.S. decided to impose a 59.31% anti-dumping duty on aluminium exports from China. In light of this, China Zhongwang began to shift its focus from export to domestic sales and increased the proportion of its high value-added products at the beginning of this year. The strategy has begun to show its effects.
  　
The interim results showed that sales revenue from the China market rose 58% compared to the same period last year, becoming a major source of income and profit for the company. Sales for the second quarter surged 87% from the previous quarter to RMB2.78 billion. Sales from the China market increased 94% to drive quarterly profit up 50% to RMB247 million.
  　
Lu Changqing, Executive Director and Vice President of China Zhongwang, said the company strived to increase its domestic market share and the proportion of its high value-added products in the first half of this year to reduce the impact of the U.S. anti-dumping and countervailing investigations.
  　
Focus on High-end Market
  　
The management said the company aims to become the world’s leading developer and manufacturer of high value-added processed aluminium products, and will focus on the high-end market and the development of deep-processed industrial aluminium extrusions.
  　
Not only will this raise gross profit margin, but also reduce the impact of the U.S. anti-dumping and countervailing investigations. The company has set up a dedicated deep-processing team to process its industrial aluminum products into finished ones through cutting, welding and surface processing. Deep processed products of the company are currently sold in the U.S. market. It is expected that the new industrial aluminium deep-processing centre will become a growth driver for the company after it starts operations.  
  　
In addition, China Zhongwang plans to tap the high value-added flat rolled aluminium market as its future focus. The company expects to develop a three-million-ton high-precision flat rolled aluminium project in stages and has initially decided to start the business in Tianjin, Liaoning’s Panjin and Heilongjiang’s Daqing. The production line is expected to be completed in 2014 and operate at full capacity in 2018. 
Flat rolled aluminium products include medium-to-high thickness plates, high-end foils and high-end sheets for use in aviation and aerospace, ships, rail transport, automobile, machinery and equipment, packaging and electronics. The applications and clientele for these are closely related to the industrial aluminum extrusion industry.
  　
Lu said China Zhongwang will leverage its technology and customer base to develop the high-precision flat rolled aluminium business, creating synergy with its existing business. This will enable the company to implement its strategy for becoming a high-end deep-processed aluminium manufacturer and achieving rapid growth.