Continues to Optimize Product Mix, Gross Margin Expanded to 38.3%
China Zhongwang Holdings Limited ("China Zhongwang" or the "Company", together with its subsidiaries, the "Group", stock code: 01333), a world’s leading fabricated aluminium product developer and manufacturer, announced its unaudited consolidated results for the nine months ended 30 September 2016 (the “Period under Review”). During the Period under Review, the Group’s external sales volume increased by 4.3% year-on-year to approximately 587,000 tonnes. The total revenue amounted to approximately RMB12.47 billion. As the revenue contribution from high-end products continued to increase, gross margin expanded by 3.5 percentage points, year-on-year, to 38.3%. Adjusted net profit rose by 4.1% to RMB2.62 billion when compared to the corresponding period of last year.
Mr. Lu Changqing, President and Executive Director of China Zhongwang,said, “During the Period under Review, the Group seized the opportunity brought by the transformation and upgrading of industries and maintained stable business growth by optimizing our product mix, upgrading production capacity, and investing in R&D and innovation. These contributed to the increase in gross margin. The first production line of Tianjin aluminium flat-rolled product project is currently undergoing trial production and is expected to commence production by the end of the year. In addition, the Group received a majority of votes in support of its proposed A-share spin-off of the industrial aluminium extrusion business at the Extraordinary General Meeting held in September. Upon completion of the spin-off, the Group will have a clearer business structure, which will benefit the Group’s long-term development.”
Aluminium Extrusion Business –
Capitalize on the Competitive Edge of Self-supply Materials to Enhance Profitability
During the Period under Review, the Group continued to optimize its product mix. Phase I of the high-precision aluminium project at Yingkou has been put into full operation, providing the Group with high quality raw materials at below market prices and further enhancing its profitability. One of the two ultra-large 225MN extrusion presses is expected to commence production in 2017 and the other has been delivered to the plant for installation. The newly added capacity will enable the Group to meet the demand for high-end fabricated aluminium products from the sectors of transportation, machinery and equipment and electric power engineering, etc.
Deep Processing Business –
Continue to Grow, Adding Impetus to Business Development
Benefited from the light-weight material development in the transportation sector, the Group continued to augment sales of the existing deep-processed large-sized products and optimize its product mix. During the Period under Review, sales volume of deep-processed products saw a year-on-year increase of 39.8% to approximately 75,000 tonnes. Leveraging its outstanding design and R&D capabilities of products, the Group will continue to increase the proportion of high-end finished products to enhance its overall profitability.
Aluminium Flat-rolled Product Project in Tianjin –
Commence Production by the End of the Year to Develop Long-term Competitiveness
The first production line of the high value-added aluminium flat-rolled product project in Tianjin is expected to commence commercial production by the end of this year and is currently processing small-volume orders from potential customers on a trial basis. In the meantime, the Group will accelerate the pace of product certification to be fully prepared for the gradual production of high value-added products upon operation.
Looking into the future, Mr. Lu concluded, “With the material upgrade in the transportation sector and equipment upgrade in the industrial sector, the market has shown increasing needs for light-weight materials. China Zhongwang will proactively strengthen its long-term competitiveness through production capacity expansion and industry chain extension. The production of the aluminium flat-rolled product project will become the Group’s long-term growth driver while the smooth progress of the proposed spin-off will enhance its overall value as well. The Group is committed to strengthening its foothold as a leading comprehensive developer and manufacturer of high-end fabricated aluminium products, striving to reward shareholders with positive returns.”
