China Zhongwang 2014Net Profit Grows 16.5% to RMB2.48Billion

Full Year Dividend Totals HK$0.16 per Share

China Zhongwang Holdings Limited (“China Zhongwang” or “the Company”, together with its subsidiaries “the Group”, stock code: 01333), the second largest industrial aluminium extrusion product developer and manufacturer in the world and the biggest one in Asia, announced the audited annual results for the 12 months ended 31 December 2014(the “year under review”). Sales volume and profit of the Group maintained steady growth during the year under review. Revenue and profit attributable to equity shareholders rose 11.6 % and 16.5% year-on-year respectively, to approximately RMB15.97 billion and RMB2.48billion. Gross profit margin widened to28.0%.Earnings per share was RMB0.36. The Board of Directors has recommended a final dividend of HK$0.08 (approximately RMB0.06) per share.  Together with an interim dividend of HK$0.08 (approximately RMB0.06) per share for the six months ended 30 June 2014,the total dividend payout ratiofor 2014 amounted toapproximately 36.2%.
 

 Mr. Lu Changqing, Executive Director and Vice President of China Zhongwang, said, “During theyear under review, the aluminium processing industry was presented with favourable operating environment, due in part to the Chinese government’s efforts in driving structural economic reforms and promoting industry upgrade, and the accelerating pace of the light-weight development in the global transportation sector.As China intensifies its efforts in reducing air pollution and raisingthe awareness of energy conservation, emission reduction and environmental protection, market demand for aluminium alloy products is expected to rise considerably.The Group achieved sustainable growth in line with the nation’s development directions through multi-faceted progress in product research, equipment upgrading, market development and extension of the industry chain.”
 

During the year under review, the sales volume of aluminium extrusion products increased by 14.0% year-on-yearto approximately 745,000 tonnes. Driven by a rise in deep-processed product sales volume, export sales volume of the Groupclimbed by 35.3% to approximately 84,000tonnes, withexport sales revenue increasing by 26.9% to approximately RMB2.18 billion. New subsidiaries were set up in Japan and Germany to tap into relevant markets, laying a strong foundation for the Group’s long-term development.  
 

Industrial aluminium extrusionbusiness–leveraging technical and capacity advantages to drive high-end development

The Group continued to leverage its technical and capacity advantages in the manufacturing of sophisticated large-section industrial aluminium extrusion products, in its effort to drive the high-end development of its industrial extrusion business. These initiatives yielded stable growth in product sales and profitability. During the year under review, the volume and sales revenue of industrial aluminium extrusion products grew by 12.8% and 10.4% year-on-year to approximately 618,000 tonnes and RMB13.14billion respectively.In addition to the 21 aluminium extrusion presses of 75MN or above that had been put into production, two large extrusion presses of 225MN, currently the largest extrusion power of its kind in the world, will be ready for installation in 2015. Once the equipment becomes operational, the Group’s competitiveness in the production of high-precisionlarge-section, and complex-section industrial aluminium extrusion products will be further strengthened.
 

Deepprocessing business–researching and developinglight-weight products to expand overseas markets

The Group spared no efforts in expanding both the domestic and overseas marketsduring the year under review. Sales volume of deep-processed products increased by 18.9% year-on-year to approximately 63,000tonnes, withsales revenue climbingby 17.6% to approximately RMB1.73 billion. 

The newly established product and processdesign team provided customized light-weight solutions for a number of downstream customers.  Certain newly developed products had been delivered to customers for testing and inspection, with expectation of commercial orders for those products in the coming year. In addition, the Group accelerated the development of aluminium-intensive commercial vehicles and the related capacity building in order to embrace the rapid growth that will emerge in this market segment in China.   
 

Aluminium flatrollingbusiness–extending industry chain to capture market opportunities 

The Group continued to actively advance the construction of the high value-added aluminium flat rolled product project. During the year under review, plant and infrastructure construction for the first production line of Phase 1 of theproject was completed.Equipment installation and testing is now underway and trial operationwill follow immediately. The first production line will primarily supply medium-tohigh-thickness aluminium alloy plates, which are extensively used in thetransportation sector (including aviation and aerospace, vessels, commercial vehicles, special utility vehicles,railways and vehicles) and chemical vessels. The high-end aluminium flat rolled product project will complete the Group’s industry chain and graduallyreverse the current situation in China’s high-end aluminium plate and sheet sector ofprolonged reliance on imports due to serious lack of domestic capacity in the high-end segment.
 

R&D–integrating research findingswith market analysis tooptimisehigh-end product mix 

During the year under review, the Group continued to strengthen its internal R&D capabilities, broaden exchanges and cooperation with external institutions, and integrate fundamental research findings with market trend analysis to enhance its overall competitiveness.  R&D investments in the year under review amounted to RMB510 million. The Group was granted more than 20 issued patents, won eighttechnology awards, and obtained the provincial and municipal authorities’ approval for another seven technology projects. Recognized as a “high and new technology enterprise” for its outstanding research and development capabilities, the Group has enjoyed a15% preferential corporate income tax rate. 
 

Mr. Lu concluded,“China’s continuous push for new urbanization plan, together with the implementation of “high-speed rail diplomacy” and “one belt, one road” strategy, will drive up China’s demand for aluminium alloy products.Against the backdrop of these favourable development opportunities, the Group will spare no efforts in advancing the synergistic development of its three core businesses, namely industrial aluminium extrusion, deep processing and aluminium flat rolling. On top of that, we will also strengthen our fundamental research and development in alloy and processing technologies, improve the technology design capabilities for new products, promote downstream applications of aluminium alloys and accelerate the related capacity building to seize market opportunitiesand realize the Group’s sustainable development.”