China Zhongwang 2015 First Quarter Net Profit Rises 15.9% to RMB 580 Million
Gross Margin Widens to 29.3% as Share of High-End Products Increases
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Seizing Light-Weight Development Opportunities in the Transportation Sector
Aluminium Flat Rolled Product Project Advances in Full Gear
On 22 April 2015, 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 its unaudited consolidated results for the three months ended 31 March 2015 (the “review period”). While quarterly revenue remained flat at approximately RMB3.59 billion, the Group benefited from the increasing share of high-end aluminium extrusion products in its product mix and achieved 2.5 percentage points year-on-year increase in gross margin to 29.3%. Net profit increased by 15.9% to RMB580 million.
Mr. Lu Changqing, Executive Director and Vice President of China Zhongwang, said,“In the first quarter of 2015, we continued to step upon R&D in high-end aluminium extrusion and deep-processed products in a drive to increase the share of high-end products in our product mix, resulting in enhanced profitability of the Group.In view of the accelerating pace of light-weight development in the global transportation sector, industrial aluminium alloy products have been widely applied in various types of vehicle structures and parts.Moreover, the Chinese Government has been aggressively pushing forward the “high-speed railwaydiplomacy” and the “One Belt One Road”initiative, leading to greater demand for high-end industrial aluminiumproducts from both within and outside China.The first production line of Tianjin Zhongwang Aluminium Co., Ltd, and the most advanced aluminium plate production line in the world, after five years in preparation, will commence official operation by the end of 2015. An accurate prognosis of the market trends has placed China Zhongwang in a more advantageous position to capture the ever increasing vast demand”.
Industrial aluminium extrusionbusiness–leveraging technical and capacity advantages to increase the share of high-end products
The Group continued to leverage its technology and production capacity advantages of the four-in-one model, i.e. the integration of research and development capability, smelting and casting, die design, and advanced equipment,in its effort to promote the high-end development of its industrial extrusion business and hence ensure a steady growth in product profitability. Two large extrusion presses of 225MN, currently the largest extrusion power of its kind in the world, will be ready for installationin 2015.With the advanced equipment, China Zhongwang will be able to fulfillboth domestic and overseas customers’ requirements for the manufacturing of high-precision, large and complex cross-section industrial aluminium extrusion products in the shortest production cycle.
Deep processing business –providing tailor-made light-weight solutions for customers
During the review period, China Zhongwang strived to optimize its product structure and intensified its efforts in developing new products. The newly established product and process design team provided downstream clients with customized light-weight solutions and related aluminium products such as aluminium bodiesof new energy vehicles, bumper systems of light vehicles and heavy duty trucks, carriages of light vehicles, and light-weight designs of passenger cars. Certain products have completed prototype production and testing and are ready for commercial applications. A number of some other newly developed products arecurrently going through testing and inspections, 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. As of now, the Group has successfully developed products such as aluminium-intensive fire trucks, garbage trucks, semi-trailers and oil tank trucks. The timely launch of these new products places the Group in a very advantageous position in future competition of the aluminium-intensive commercial vehicle market in China.
Aluminium flat rollingbusiness–extending industry chain to capture market opportunities
To meet the increasing demand for aluminium plates in the global aluminium transportation sector, the Group continued to actively advance the construction of its high value-added aluminium flat rolled product project in Tianjin. Equipment installation of the first production line of Phase 1 was completed and equipment testing is currently underway. It is expected to commence operation by the end of 2015. The first production line will primarily supply medium-to-high-thickness aluminium alloy plates, which are extensively used in the transportation 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, thereby increasing the Group’s long term profitability.
2015 is the year the Chinese government outlines its“13thFive-Year Plan”. The government has begun to map out the railway development blueprint in the “13thFive-Year Plan” with a focus on the construction of the intercity networks and the railway links in central and western regions. In the meantime, it is actively pushing forward the “One Belt One Road” initiative beyond its borders. The “New Silk Road Economic Belt” and the “Maritime Silk Road of the 21st Century” connect up to 65 countries, where 63% of the global population is living and 24% of the world’s cargo and service exports are conducted. The launch of the “One Belt One Road” initiative will drive the railway construction development in both China and the entire Asia-Pacific region, bringing business opportunities to the transportation sector and its related upstream and downstream industries. China Zhongwang is one of the few aluminium processing companies with capability to manufacture aluminium extrusion products for high speed trains. Faced with such an unprecedented opportunity, the Group will continue to leverage its technical and production scale advantages in servicing downstream customers including railway customers with technically advanced and reliable products.