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Public company info - China Hengshi Foundation Co. Ltd. , 01197.HK
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China Hengshi Foundation Co. Ltd., 01197.HK - Company Profile
Chairman ZHANG Yuqiang
Share Issued (share) 1,000,000,000
Par Currency U.S. Dollar
Par Value 0.001
Industry Industrial Goods
Corporate Profile Business Summary: The group is a leading global manufacturer and supplier of fiberglass fabrics used in wind turbine blades. Performance for the year: During the Reporting Period, the Group recorded revenue of approximately RMB1,458.1 million, representing a year-on-year increase of approximately 19.85%, the gross profit realized was approximately RMB529.8 million, representing a year-on-year increase of approximately 18.07%. The net profit realized was approximately RMB252.8 million, representing a year-on-year increase of approximately 17.15%. Business Review: ANALYSIS AND DISCUSSION ON THE RESULTS Benefitted from the healthy growth of the global wind power industry, particularly the significant recovery of the wind power market in the PRC, the predominant leading position of the Group in the industry and the proper capture of market opportunities by the management, during the Reporting Period, the Group achieved a boost in both production and sales, resulting in a significant outcome of the development of new customers and new products, further expansion of market share, steady progress of the international layout, further strengthened quality management and products quality level, continuous upgrade of production capacity and efficiency, as well as remarkable enhancement in the soft powers of the Company. 1.Production and sales During the Reporting Period, the Group attained a record high in its revenue and gross profit. Revenue was approximately RMB1,458.1 million, representing a year-on-year increase of approximately 19.85%, the gross profit was approximately RMB529.8 million, representing a year-on-year increase of 18.07%. The net profit realized was approximately RMB252.8 million, representing a year-on-year increase of 17.15%. 2. Market development During the Reporting Period, the Group continued to uphold the philosophy of “marketoriented, customer-centered”, further enhanced the customer maintenance capability and increased its effort on customer development. On the one hand, by fully leveraging on the advantages of the global industrial layout, and the favorable conditions of close proximity between overseas factories and the Group’s customers, as well as the strategy of “supplying the overseas market with overseas plants”, the Group further strengthened and deepened the cooperation relationship with existing customers. In the meantime, the Group has established the customer service department during the Reporting Period to build a business chain that covers market, research and development, production, sales and customer service with a view to handling the feedbacks from customers in a timely and effectively manner and solving the customers’ problems and improve the satisfaction of customers. On the other hand, the Group pushed forward the strategy of customer development. Through the collaboration between the wind turbine plant and the turbine blades plant, it further enhanced the development pace and success rate of new customers and sub-new customers (that is, customers developed in the recent two years). During the Reporting Period, the Group successfully secured five new customers from wind energy sector, five new customers from non-wind energy sector, as well as having a total of 109 products passing the testing and certification by customers and available for use in bulks, achieving a stable growth of orders on hand. During the Reporting Period, the Group continued to actively engage in the promotion and application of high performance fiberglass fabrics (E7 fiberglass fabrics and E8 fiberglass fabrics). By seizing the market opportunities, the Group achieved a year-onyear increase of 32.5% in high performance fiberglass fabrics. 3.Production management and creative optimization During the Reporting Period, the Group continued to apply the guiding ideology of “innovating management with reducing cost and increasing efficiency” thoroughly and consistently to each and every stage along the Group’s operating activities: (i) introducing preliminary quality programming and control planning at the stage of product R&D, developing a comprehensive quality management system that covers R&D quality, raw material quality, process quality, product quality, quality checking and after-sales service quality which has greatly enhanced product quality; (ii) further increasing the efficiency of equipment operation and significantly increasing efficiency and reducing cost by applying the measures such as equipment TPM management, tooling improvement and process modification; (iii) enhancing operation efficiency and reducing production cost effectively through measures such as improving the working practices, merging the positions, streamlining the organization and using recyclable packing. 4. Technical R&D Since its establishment, the Group persisted in taking product R&D and technical innovation as its core driving force, and kept strengthening and enhancing them. During the Reporting Period, the Group continued to put more efforts in developing new technologies and new products, to combine technical innovation and iterative upgrade of products, so as to maintain the innovation and advancement of the Group’s products in wind power sector. In the meantime, the Group paid great attention on the building of talent pool of technical R&D. A talent nurturing system was created during the Reporting Period and the R&D strength was enhanced effectively. Intellectual property rights are the key to protect innovation, and the Group actively protects its core technology through intellectual property rights. In recent years, as the number of patents applied by the Group has gradually increased, the structure is evolving accordingly with enhancing quality. During the Reporting Period, the Group has obtained 16 patents authorized by the PRC, in which 14 were authorized utility model patents and 2 were authorized invention patents. As at the end of the Reporting Period, the Group has in total 85 patents authorized by the PRC. During the Reporting Period, Zhejiang Hengshi Fiberglass Fabrics Co., Ltd. (“Hengshi Fiberglass”) Testing Center (the “Testing Center”) has successfully passed the reassessment of laboratory accredited by China National Accreditation Service for Conformity Assessment (“CNAS”), and the number of testing items accredited by CNAS increased from 11 to 17. The Testing Center has also successfully passed the review of expansion items by DNV GL which is the combined institute of Det Norske Veritas and Germanischer Lloyd, and the number of testing items accredited by DNV GL increased from 13 to 17. The scope of testing capabilities of the Testing Center was greatly enlarged. During the Reporting Period, Hengshi Fiberglass was jointly certified as the State Class “Single Champion in the Manufacturing Industry” by the Ministry of Industry and Information Technology and China Federation of Industrial Economics, which demonstrates the R&D innovation capability, the production strength and product quality level of the Group in the wind power base materials sector. Being selected as the Single Champion in the Manufacturing Industry would further lead the Group to focus on the R&D innovation, product quality enhancement and brand establishment in the wind energy base materials sector. During the Reporting Period, Hengshi Fiberglass has successfully passed the review of High and New Technology Enterprise and continued to be accredited as a high and new technology enterprise, which would entitle it a preferential tax rate in respect of high and new technology enterprises in the PRC for three consecutive years starting from 2018. In addition, the Group also actively engaged in modifying the fiberglass fabrics industry standards in the PRC. During the Reporting Period, the Group has engaged in formulating 3 industry standards altogether, among which, it played a leading role in formulating 1 provincial level industry standard and engaged in drafting and formulating 2 state level industry standards. Its industry influence and brand awareness are constantly elevating. 5.Overseas subsidiaries During the Reporting Period, the Group continued to uphold the international development strategy. While orderly promoting the construction of its overseas production base, the Group strengthened the management of overseas subsidiaries and built up a global collaborated layout for production capacity, so as to further unleash the Group’s market experience and strong customer base advantages that were accumulated through the Group’s long-term profound exploration in international market, to facilitate the Group’s ability in keeping abreast with the market, customers, and to provide better products and services for overseas customers. During the Reporting Period, various measures were implemented to focus on promoting the enhancement of the management level and quality control level of Hengshi Egypt Fiberglass Fabrics S.A.E. (“Hengshi Egypt”), and to gradually explore and optimize the management system of overseas subsidiaries. While the management level, quality control level and production operation efficiency of Hengshi Egypt were effectively enhanced, the production capacity of Hengshi Egypt was further released. In addition, in order to cope with the unfavorable condition brought by Sino-US trade friction, the Group actively promoted the production transfer to overseas subsidiaries. During the Reporting Period, Hengshi Egypt had passed the testing and certification from top 10 wind turbine and blade manufacturers in the world and realized the bulk supply. The competitive advantages of overseas layout have been widely recognized. During the Reporting Period, the Group orderly carried out the production base construction of Hengshi Turkey Fiberglass Industry and Trade (Commerce) Joint Stock Company (“Hengshi Turkey”). The plant of Hengshi Turkey is undergoing renovation. The procurement and installation of relevant equipment and production preparation have been in full swing. It is expected that the plant would be able to commence operation in the first quarter of 2019. Hengshi Turkey was one of the strategy deployments as the Group insists on carrying out its globalized industrial planning. On the one hand, it could further strengthen the security of supply to the customers in Turkey and neighboring countries and enhance customers’ satisfaction and loyalty. On the other hand, it would be conducive to decrease the possible damages brought by Sino-US trade friction. Prospects: Facing the unprecedented opportunity of new energy development and capitalizing its leading position in the industry, the Group will continue consolidating the business advantages in respect of the research and development, manufacturing, sales and services of fiberglass fabrics used in wind turbine blades, while stepping up the research and development of production of fiberglass fabrics used in blades with high megawatts which have more potential development values. As always, the Group insist on following the international development direction, further realizing the internationalization of the Group’s technology, talents and capital and striving to be the leading manufacturing enterprise of wind energy base materials, so as to contribute to the development of new energy industry and deliver rich returns to the Group’s shareholders. 1.Market (1)Overseas market The Group will continue to uphold the mindset of “market-oriented and client-centered”. By fully leveraging on the international market resources that the Group has continuously developed and carefully maintained over the years and the overseas subsidiaries’ advantages of “supplying the overseas market with overseas plants”, the Group aims to provide the overseas customers with better products and services so as to further increase their satisfaction and loyalty; to continue thoroughly expanding the scope of cooperation with new and existing customers and deeply excavating the cooperation space; to actively maintain customers and establish a multidimensional communication channel in order to further solidify, strengthen and better the cooperation relationship with new and existing customers; to continue proceeding the Group’s global supply chain layout and striving to maintain the Group’s position as the top supplier in the overseas market. (2)Domestic market The Group will steadily capitalize the opportunity of the recovery of domestic wind power market, perform timely sales structure adjustment, optimize customer structure and strengthen the control over and prevention of customer credit risk and actively capitalize the development opportunities for offshore wind power and distributed wind power to continually promote the R&D, certification and market development applicable to offshore wind power and fiberglass fabrics in distributed wind power turbine blades. While focusing on the development of wind energy market, the Group should also take into account the new product development and marketing of non-wind energy composite materials market, so as to foster new profit growth point. 2.Overseas subsidiaries In 2019, the Group will continue strengthening the guidance and support for operation management and market development of its overseas subsidiaries, and coordinate and manage the procurement and financial arrangements, production organization management, production planning and sales, product quality control and other aspects of its overseas subsidiaries, with an aim to ensure that their production, operation and management are conducted in a smooth and orderly manner. 3.Quality In 2019, the Group will put energy on the quality management on an on-going basis and continue to reinforce the mindset of “product quality and enterprise credibility as the life of an enterprise” in order to sift the concept of quality compliance to the concept of quality suitability. With the help of the advanced management tools and methods, the Group will establish quality warning system, improve quality prevention capability, enhance comprehensive quality management and realize sustainable improvement of quality management and product quality level. 4.Production In 2019, the Group will continue to transform, upgrade and optimize the production facilities and process technologies in order to keep on improving the productivity. The Group will establish information system of the production process to further step up the automation, informationization, intellectualization and refinement level of production management; and attach more emphasis on the management of intangible and indirect cost to achieve lower cost and higher efficiency. 5. Product In 2019, the Group will continue to optimize product structure, increase the proportion of high value-added products and continue to promote R&D creativity through constantly launching new products with iterative upgrade for the existing ones. The Group will keep abreast of the development trend of big-turbine, lightness and high megawatts to maintain the competitive advantage of the Group in the wind power field, and actively expand the application of fiberglass fabrics in non-wind energy field to accumulate new forces for sustainable growth of the Group.

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