On August 20th 2015, China Zhongwang Holdings Limited ("China Zhongwang" or the "Company", together with its subsidiaries the "Group", stock code: 01333), the world"s second largest industrial aluminium extrusion product developer and manufacturer and the biggest one in Asia, announced its unaudited results for the six months ended 30 June 2015 (the “review period”). During the review period, the Group’s total revenue stood at approximately RMB 7.89 billion, roughly the same level for the corresponding period of last year. Benefitted from the optimisation of the product structure, gross profit margin rose from 28.2% in the corresponding period of 2014 to 32.2%. Profit attributable to equity shareholders increased by 17.9% year on year to approximately RMB1.5 billion. Basic earnings per share also rose by 13.2% to approximately RMB0.21.

 

To reward shareholders’ support, the Board of Directors has declaredan interim dividend of HK$0.11 (approximately RMB0.09) per share to all shareholders of the Company, representing a dividend payout ratio of 42.8% (1H2014: 35.0%).

 

Mr. Lu Changqing, Executive Director and Vice President of China Zhongwang, said, “Our operational strategy in the first half of 2015 focused on maintaining our market share while increasing the share of high-end products as a percentage of total sales. As such, our gross profit margin rose notably, marked by a 15% increase in average processing fees per tonne. This is attributable to our continued investment in product R&D and innovation, as well as the concerted effort of our entire staff force. We will adhere to this strategy in the second half of this year and continue to increase the share of high-end products in our product mix.”

 

Sales volume of aluminium extrusion products was 345,000 tonnes, representing a year-on-year decrease of 6.4%. This was mainly due to the fact that the major extrusion production lines of the Group were all running at full capacity during the review period. The Group therefore focused its business operation on securing the production and sales of products with higher gross profit, resulting in a slight drop in output. In light of the optimal adjustment of the product structure during the review period, the overall gross margin of the Group’s aluminium extrusion business rose to 32.0% (1H2014: 28.2%), of which the gross margin of industrial aluminium extrusion products and deep-processed products rose to 33.1% (1H2014: 28.2%) and 36.5% (1H2014: 36.1%) respectively. 

 

At present, though industrial aluminium pallets and automotive accessories remain its main deep-processed product, the Group has also successfully developed various high-end aluminium alloy deep processing applications including semi-trailers, oil tankers, fire trucks, high-speed train carriage bodiessuitable for alpine-cold regions, and construction formworks etc. In support of the development of these new applications, the Group has invested in expanding its production capacity. Liaoning Zhongwang Special Vehicle Manufacturing Company Limited (the“Special Vehicle Plant”), which the Group acquired during the review period, has obtained the relevant licenses for the production and sales of a number of aluminium-intensive commercial vehicles. Located in Liaoyang, the Special Vehicle Plant is now building two production lines with an annual production capacity of 4,000 vehicles on one shift. Production is expected to commence at the end of this year. Furthermore, the Group’s product and process design team established last year has scored repeated successes. It has developed new aluminium components or vehicle bodies for a number of transportation clients, including a brand-new aluminium-intensive new energy bus designed and manufactured for Brilliance Bus, a prototype of which is now on road test and is expected to commence commercial production upon completion of the test.

 

The construction of phase I of the Group’s high value-added aluminium flat rolled product project in Tianjin entered the critical stage. Phase I has two production lines with a designed annual production capacity of 1.8 million tonnes. The first production line has completed plant construction and equipment installation and is in the final stage of equipment testing. In light of the project’s current progress, the aluminium flat rolled product project is expected to commence production by the end of this year.

 

Going forward, Mr. Lu said, “With increasing application of various new materials, aluminium alloy has become the preferred choice for advancing green development due to its reasonable cost, well-developed production technology, abundant supply, light weight and recyclable characteristics. Closely in line with the global trend, the Chinese government has created favorable conditions for promoting the application of aluminium alloy in a wide range of industrial fields. Furthermore, the Chinese government has detailed the strategic layout of “One Belt, One Road” which will make breakthroughs in transportation and infrastructure, thus bringing new opportunities to the aluminium processing industry. In addition, the State Council promulgated the notice of “Made in China 2025”, outlining in explicit terms the general principles and the road map for the development of manufacturing industries in China for the next ten years. “Made in China 2025” advocates the development of the effective integration of innovation with research. Accordingly, the aluminium processing industry will follow suit and move toward “Industry 4.0” of the aluminium processing industry by reinforcing the development of equipment automation, professional management, technical innovation and high-end products.”

 

The two cutting edge ultra-large 225MN extrusion presses previously ordered by the Group will arrive at the plant to begin installation in the second half of 2015.The Group will endeavour to complete installation and trial run as scheduled and further enhance the Group’s dominant strength in the production of high-precision and large cross-section industrial aluminium extrusion products. Along with the industrial aluminium extrusion business, China Zhongwang will continue to expand its deep processing plant, and accelerate the capacity build-up of the Special Vehicle Plant. The high value-added aluminium flat rolled product project in Tianjin, our future growth engine will soon be put into operation. The synergistic development of the three core businesses will enable the Group to firmly seize opportunities brought by China’s industry upgrade and light-weight development in the transportation sector, bringing sustainable growth and returns to shareholders.”