(Hong Kong, 28 October, 2011) – The world’s second largest industrial aluminium extrusion product developer and manufacturer 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 the unaudited financial results and operating figures for the nine months ended 30 September 2011 (the “review period”). The Group continued to focus on the China market during the review period, resulting in a significant rise in sales volume from the domestic market. It offset the decline in export sales and drove the overall sales volume up by 9.6% year-on-year to 300,999 tonnes in the review period (2010: 274,727 tonnes). For the nine months ended 30 September 2011, the Group’s revenue and profit attributable to shareholders amounted to RMB6.82 billion (2010: RMB8.799 billion) and RMB 666 million (2010: RMB2.559 billion) respectively.
Adjustment in strategy paid off; sales from China jumped 52%
Mr. Lu Changqing
, Executive Director and Vice President of China Zhongwang
, said, “The Group’s operating performance has been walking out of the woods since the second quarter of 2011. We continued to see stable development in the third quarter following the significant improvements in the second quarter. This is a clear indication that our business strategy adjustments has paid off. Earlier this month, the Group has embarked on the development of the high-end aluminium flat-rolled project. We have placed order for imported production equipment from Germany and the US as the first step. Together with our well-established industrial aluminium extrusion business and the deep-processing business which is developing in full gear, the Group is setting three core businesses and moving steadily towards the goal of being the world’s top developer and manufacturer of high-end processed aluminium products.”
The Group continued to expand its customer base in China and secured new orders for industrial aluminium extrusion products from large enterprises. In the review period, revenue from the China market increased significantly by 52% to RMB6.632 billion (2010: RMB4.349 billion), accounting for 97% of the Group’s total revenue. The China market has already become the main source of revenue and profit of the Group.
In the review period, the Group continued to optimize its production capacity of high-end large-section industrial aluminium extrusion products. Large-tonnage extrusion presses have been added as planned. These included two 75MN extrusion presses which have been put into production in the first half of this year. On top of that, seven 75MN, six 90MN and three 125MN extrusion presses are under installation. The production capacity of industrial aluminium extrusion product is expected to reach one million tonnes by end of 2012 upon completion of installing 18 large-tonnage extrusion presses at or above 75MN in 2011 and 2012.
In addition, the development of the deep-processing business progressed as planned. The Group has completed construction of a new plant for this business in the first half of 2011 and is now installing equipment. Deep processed aluminium extrusion products are expected to become a new profit growth engine of the Group in 2012.
Kick-started the high-end aluminium flat-rolled project
The Group has just embarked on the development of the high-end aluminium flat-rolled project. It announced the signing of equipment purchase agreements with three large state-owned enterprises on 17 October 2011 to import equipment from Germany and the United States. The equipment include hot continuous rolling mills and cold rolling mills for the production of medium-to-high thickness plate and sheet products, smelting and casting lines, quenching furnaces and heat treatment furnaces for the ancillary production of medium-to-high thickness plate and sheet products, and aluminium foil rolling mills, etc. The total consideration for the equipment purchase amounted to approximately USD3.8 billion (or HKD29.5 billion) which will be payable in four installments between 2011 and 2014. The Phase 1 development of this project, which has an annual production capacity of 1.8 million tonnes of flat-rolled products, will commence production in several phases in 2014. The Group plans to further expand the scale of the project to the full designed annual capacity of 3 million tonnes by 2018.
The Group has made financial planning well in advance to fund the business expansion. With over RMB19 billion (approximately HKD23 billion) cash on hand and excellent relationship with banking corporations to obtain sufficient credit facilities, the Group has ample financial resources for the purchase of new aluminium flat-rolled production equipment and to meet the needs of its related business development.
“The Group sees tremendous potential in the high-end aluminium flat-rolled industry as the products are widely applied in different sectors. Expanding into the production of flat-rolled products is a crucial step towards the long-term and sustainable development of the Group. Globally, high-end products accounted for approximately 35% of total consumption, but in China, the high-end product segment fell far below the global level and accounted for only 12% of total consumption, providing strong upside for growth. Along with the growth of China economy, the consumption of these products is expected to escalate, offering China Zhongwang immense opportunities,” Mr. Lu added.
According to a report by Boston Consulting Group, the global consumption of aluminium flat-rolled products is expected to grow from 15.6 million tonnes in 2009 to 28 million tonnes in 2020. As the world’s fastest growing economy, China will become the driver of the industry development in the globe. Consumption on flat-rolled products is expected to grow from 5.9 million tonnes in 2009 to 14 million tonnes in 2020 and by then will account for 50% of the world’s total.
Solid foundation built on three core business
“The Group has commenced to build a business model of having industrial aluminium extrusion products, deep-processing products and aluminium flat-rolled products as the three core businesses. Synergies among the businesses will be achieved. The addition of large-tonnage extrusion production lines will enhance the product mix of our industrial aluminium extrusion business, while the high-margin deep-processing business, which will be put into operation soon, will strengthen the Group’s profitability. In the long term, high-end aluminium flat-rolled products will become the main growth engine of the Group when it commences production in the second half of 2014. We look forward to seeing a big leap in the development of China Zhongwang and are confident about our future,” Mr. Lu concluded.
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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, been committed 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 September 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 customized industrial aluminium extrusion product die design and manufacturing centre in Asia. The Group’s annual production capacity as at 30 September 2011 was approximately 700,000 tonnes. The close coordination among the processes, namely product development, smelting and casting, die and extrusion, and the advanced technologies applied is the 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 Group will continue to focus on sectors such as transportation, machinery equipment and electric power engineering, with emphasis placed on 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. For further information on the Group, please visit www.zhongwang.com
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