omniture

China Zhongwang 2015 First Quarter Net Profit Rises 15.9% to RMB580 Million

Gross Margin Widens to 29.3% as Share of High-End Products Increases
Seizing Light-Weight Development Opportunities in the Transportation Sector
Aluminium Flat Rolled Product Project Advances in Full Gear
2015-04-22 15:30 2573

HONG KONG, April 22, 2015 /PRNewswire/ --

Financial Highlights

RMB Million

For the three months ended 31 March

Change

2015

2014

Revenue

3,594

3,571

+0.6%

Extrusion Business Revenue

3,572

3,565

+0.2%

-    Industrial & Deep-processed Products

3,442

3,463

-0.6%

-    Construction Products

130

102

+26.6%

Gross Profit

1,054

956

+10.2%

Gross Margin (%)

29.3%

26.8%

+2.5 pct pts

Net Profit

580

501

+15.9%

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 up our 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 railway diplomacy" and the "One Belt One Road" initiative, leading to greater demand for high-end industrial aluminium products 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 extrusion business -- 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 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 installation in 2015. With the advanced equipment, China Zhongwang will be able to fulfill both 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 bodies of 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 are currently 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 rolling business -- 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.

Outlook

2015 is the year the Chinese government outlines its "13th Five-Year Plan". The government has begun to map out the railway development blueprint in the "13th Five-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.

About China Zhongwang Holdings Limited

China Zhongwang is the second largest industrial aluminium extrusion product developer and manufacturer in the world and the biggest one in Asia. It has, over the years, been focusing on the light-weight development of transportation, machinery and equipment and electric power engineering sectors through the provision of quality industrial aluminium extrusion products. It now has 93 internationally advanced aluminium extrusion production lines including 21 production lines of large-scale aluminium extrusion presses of 75MN or above.

In addition, to further leverage its existing strengths in the industry, the Group is developing the high value-added aluminium flat rolled product project. With a total designed annual production capacity of 3 million tonnes, the project is scheduled for development in two phases. Phase I of the project with a planned annual production capacity of 1.8 million tonnes consists of two production lines. Plant construction has been completed and equipment installation and testing is underway, to be followed closely by trial operation. This new business venture will not only enable the Group to further capitalize on its leading edge in aluminium alloy smelting and casting and product research and development, but also achieve synergies with its existing industrial aluminium extrusion and deep processing businesses by taking full advantage of their customer and market resources in related downstream application sectors.

For further information on the Group, please visit www.zhongwang.com

Source: China Zhongwang Holdings Limited
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