China Zhongwang 2017 First Quarter Net Profit Reaches RMB510 Million

Time:28 April 2017 Font size

Optimises Product Mix and Extends Industry Foothold 

To Increase Long-term Profitability

Financial Highlights (Unaudited) 

(Hong Kong, 28 April 2017) –China Zhongwang Holdings Limited ("China Zhongwang" or the "Company", together with its subsidiaries the "Group", stock code: 01333), a world-leading fabricated aluminium product developer and manufacturer, announced its unaudited consolidated results for the three months ended 31 March 2017 (the "period under review"). In order to enhance its long-term profitability and competitiveness, the Group has embarked on product-mix adjustments during the period under review. Newly developed high value-added aluminium extrusion products, such as aluminium alloy formworks, brought an 25.5% increase in the average selling price to external customers to RMB 25,710 per tonne, and the increase in average processing fee from approximately RMB11,000 per tonne for the corresponding period of 2016 to approximately RMB14,000 per tonne for the period under review. Nevertheless, the export of its deep-processed products was impacted by the increasingly heating up trade friction in aluminium industry between the US and China during the period under review, thus cast a shadow over the Group's revenue during the period under review. For the first quarter of 2017, the Group recorded a revenue and net profit of approximately RMB3.1 billion and RMB510 million, respectively. 

Mr. Lu Changqing, President and Executive Director of China Zhongwang, said, "The Group focused on capturing growth opportunities arising from high-end products in the PRC market. The newly developed aluminium alloy formwork is widely recognised by construction companies due to its light-weight, high loading capacity, reusable and recyclable features. The product leverages the Group's existing strengths in alloy smelting and casting, production capacity, die design, and R&D capabilities. While formwork has occupied a higher production capacity in its manufacturing processes, it will enhance the profitability of the Group as sales volume increases in the long run."

Extend Industry Foothold and Achieve Synergies among Three Core Businesses

As China has placed increasing emphasis on light-weight development, the use of aluminium in the transportation industry is getting more prevalent. The Group has actively fostered in-depth cooperation with major domestic automobile and bus manufacturers to custom design and produce aluminium body parts, thereby accelerating its transition into an integrated light-weight solution provider.

The Group ordered two ultra-large 225MN extrusion presses earlier, with the first one undergoing testing and will commence production in the second quarter of 2017 and the second one being installed. Additional extrusion presses that the Group purchased last year will also be put into operation in the next two to three years. These new facilities will provide timely support in production capacity to the manufacturing of high-end products, effectively realising the value enhancement brought by the product-mix adjustment. In addition, the first production line of the Group's high value-added aluminium flat rolling plant in Tianjin has commissioned trial orders in small quantities for certain potential customers.

Mr. Lu Changqing added, "Since last year, the US has been taking a series of actions on imports of fabricated aluminium products from China, which may create new trade barriers for exports to the US. China Zhongwang is actively developing new export markets. Our products have been exported to a dozen countries and territories, with overseas clients mainly located in Germany, Belgium, the Netherlands, the UK, and Japan. In China, the development plans and policies introduced by the Central Government have created a favorable landscape for fabricated aluminium producers. The Group will continue to develop high-end aluminium products, create synergies among our three core businesses, namely, industrial aluminium extrusion, deep processing, and aluminium flat rolling, so as to strengthen the Group's long-term competitive edge."