China Zhongwang Net Profit Increases by 30% to RMB2.52 Billion in the First Three Quarters of 2015
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Gross Margin Expands to 34.8% as Share of High-end Products Increases
Export Sales Rises 10.7% on New Market Expansions
On Oct.30, 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, announced its unaudited results for the nine months ended 30 September 2015 (the “review period”). During the review period, the Group’s revenue rose 3.0% year-on-year to RMB12.68 billion. As sales of high-end industrial aluminium products increased, together with reduced raw material costs due to a decline in the price of aluminium, the Group’s gross profit margin increased by 6.2 pecentage points to 34.8%. Profit attributable to equity shareholders surged by 29.1% year on year to approximately RMB2.52 billion.
Mr. Lu Changqing, Executive Director and Vice President of China Zhongwang, said, “Seizing opportunities arising from China’s industry upgrade and the light-weight development trend of the transportation sector, the Group continued to focus on new product development while enhancing its production efficiency and optimizing product mix during the review period. Our gross margin and profitability were therefore substantially strengthened. In addition, the Group continued to explore potential overseas markets other than the U.S., leading to a substantial growth in sales volume in other countries and regions. Revenue contribution from overseas sales rose to RMB1.88 billion, an increase of 10.7% as compared to the same period of last year. Going forward, we will continue to adhere to the strategy of focusing primarily on China and to a lesser extent on the overseas. Dedicated efforts will be made to strengthen our business network in Mainland China while tapping into opportunities in new markets with growth potential in a bid to develop solid and stable revenue streams.”
Industrial Aluminium Extrusion Products: Average Selling Price Rose 5.8% Year on Year
The major extrusion production lines of the Group were all running at full capacity during the review period. As such, the Group focused its business operations on securing the production and sales of products with higher gross profit, resulting in 4.1% decline in output of industrial aluminium extrusion products, to 457,527 tonnes. Nevertheless, as the share of high-end, relatively high-priced industrial aluminium extrusion products expanded, the average selling price of the Group’s industrial aluminium extrusion products increased by 5.8% to RMB22,540 per tonne for the review period.
New Deep-processed Products Continued to Grow
Currently, the Group’s deep-processed products sold were mainly pallets for industrial use and train-body accessories. During the review period, the sales volume of deep-processed products increased by 5.7% year on year to 53,658 tonnes.The average selling price of deep-processed products was RMB27,614 per tonne for the review period, about the same as that for the corresponding period in 2014.
In an effort to enrich its product offerings, the Group has developed high value-added deep-processed products with enormous market potential, such as aluminium-intensive semi-trailers, oil tank trucks, fire trucks and aluminium high-speed train carriages suitable for alpine cold regions.On top of that, 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 being road tested and is expected to commence commercial production upon completion of the test.
Tianjin Plant to be Commissioned as Planned at the End of This Year
China Zhongwang’s high value-added aluminium flat rolled product project in Tianjin comprises of two phases. Phase I, with a designed annual production capacity of 1.8 million tonnes, is the world’s largest single-plant flat rolled aluminium project investment ever. Phase I has two production lines. The first production line has completed plant construction and equipment installation, and is in the final stages of equipment testing. The project is scheduled to commence production by the end of this year. Focusing on high-end flat rolled projects with high added value, the Tianjin project will contribute to broadening the Group’s revenue streams and increasing its profitability in the mid-to long-term.
Commenting on future plans, Mr. Lu said, “The ‘Made in China 2025’ plan issued by the State Council outlined in explicit terms the general principles and the road map for the development of manufacturing industries in China for the next ten years. It advocates the development of the effective integration of innovation with research. Accordingly, the aluminium processing industry will follow suit and forge ahead. Furthermore, the ‘One Belt, One Road’ policy initiated by the Chinese government is expected to offer enormous potential for the transportation and infrastructure development sectors, thus bringing new opportunities to the aluminium processing industry. To capture these opportunities, in terms of the Group’s industrial aluminium extrusion business development, one of the the two sets of cutting edge ultra-large 225MN extrusion presses the Group previously ordered has been delivered and is now under installation. When put into operation, these presses will reinforce the Group’s dominant strength in the production of high-end, large cross-section industrial aluminium extrusion products. Meanwhile, the Group will continue to expand its deep-processing plant, and accelerate the capacity build-up of its Special Vehicle Plant. Our high value-added aluminium flat rolled product project in Tianjin, which will soon commence production, is the most siginificant driving force for the Group. The Group will firmly seize opportunities brought by China’s industry upgrade and light-weight development in the transportation sector to bring sustainable growth and returns to shareholders.”