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Public company info - China Zhongwang Holdings Ltd. , 01333.HK
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China Zhongwang Holdings Ltd., 01333.HK - Company Profile
Chairman Lu Changqing
Share Issued (share) 5,449,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Nonferrous Metal
Corporate Profile Business Summary: China Zhongwang is a world-leading fabricated aluminium products developer and manufacturer. The Group provides a myriad of quality fabricated aluminium products and offers integrated light-weight solutions for such downstream sectors and fields as ecological construction, transportation, machinery and equipment and electric power engineering. With shared resources, the Group’s core businesses, namely industrial aluminium extrusion, aluminium flat rolling and further fabrication have achieved synergistic development. Performance for the year: During the Year under Review, overall sales volume of the Group amounted to approximately 962,071 tonnes, representing a year-on-year increase of approximately 4.9%. Total revenue of the Group amounted to approximately RMB23.58 billion, representing a decrease of 7.9% as compared with that in the Year 2018. Profit for the year of the Group was approximately RMB3.18 billion, representing a decrease of 28.8% on a year-on-year basis. Overall gross margin of the Group was 30.1%, which is basically in line with that in the Year 2018. Earnings per share of the Group were approximately RMB0.43. Business Review During the Year under Review, the Group remained committed to its development strategy of “focusing on China market as primary and on the overseas markets”. Under this strategy, the Group prudently planned its market presence, focused on developing the market for high-end products, and actively explored diversified business models so as to propel the sustainable development in the long run. During the Year under Review, overall sales volume of the Group amounted to approximately 962,071 tonnes, representing a year-on-year increase of approximately 4.9%. Total revenue of the Group amounted to approximately RMB23.58 billion, representing a decrease of 7.9% as compared with that in the Year 2018. Profit for the year of the Group was approximately RMB3.18 billion, representing a decrease of 28.8% on a year-on-year basis. Overall gross margin of the Group was 30.1%, which is basically in line with that in the Year 2018. Earnings per share of the Group were approximately RMB0.43. As it actively explored feasibility of various business models during the Year under Review, the Group launched a pilot run of the aluminium alloy formwork leasing business model. Leasing revenue was attributable to such business recognised in instalments over the lease period, resulting in a decrease in both revenue and profit during the Year under Review. Aluminium Extrusion Business — Explored Diversified Business Models for Long-term Business Development During the Year under Review, sales volume of the Group’s industrial aluminium extruded products amounted to 251,628 tonnes, and sales amount was approximately RMB6.59 billion. Aluminium alloy formwork, one of the main products of the Group’s aluminium extrusion business, is primarily used in large-scale construction projects. During the Year under Review, the sales volume of aluminium alloy formwork was 221,484 tonnes, and the sales amount was approximately RMB8.39 billion. The volume of leasing of aluminum alloy formwork was 96,214 tonnes, generating a revenue of approximately RMB700 million. As compared with the sales revenue and profit which are recognised for the period when relevant transactions take place, leasing revenue and profit are recognised in instalments over the lease period, which can generate sustainable income to the Group with higher profitability and considerable profit margin in the medium and long term. Through developing the leasing model for aluminium alloy formwork, the Group has closer access to the end market, which helps promote light-weight ecological construction solutions and benefit the Group’s business development in the long run. The Group will continue to optimise various processes in the execution, including, among others, production, assembly, transportation, storage, application, maintenance and recycling, so as to maximise the leasing model’s advantage of sustainability. Meanwhile, the Group has made full use of the light-weight, efficient, reusable and recyclable features of aluminium alloy formwork, complementing those with its advantages in formwork design, techniques and technology to produce a comprehensive range of aluminium formwork that includes supporting components and connectors, therefore effectively expanded the field of application of aluminium alloy formwork. The Group has always fostered collaboration with well-known domestic and overseas automobile manufacturers, actively carried out technical cooperation, deepened the high-end application of products, and tapped into the sector of high-end aluminium profiles for vehicles. The Group has successively become a Tier-1 supplier of high-end aluminium extrusion products to a number of international automobile manufacturers including the U.K. plant of Jaguar Land Rover and other top-tier automobile manufacturers. In addition, the Group has taken a crucial step in the sector of high-end aluminium profiles for vehicles with the receipt of a nomination letter from the Munich headquarters of BMW Group during the Year under Review, which nominated the Group as an aluminium profile supplier for BMW. This marked an important milestone of the Group to become the supplier of European high-end Luxury automobile brands and has enhanced its influence in the global automotive market. Aluminium Flat Rolling Business — Continued Capacity Ramp-up Driven by Growth in both Sales Volume and Revenue During the Year under Review, sales volume of the Group’s aluminium flat rolled products amounted to 449,971 tonnes, representing an increase of 56.7% from 287,154 tonnes in the Year 2018. Sales amount reached approximately RMB6.88 billion, representing a year-onyear increase o f 36.2%. As the aluminium flat rolling business gradually obtained certifications in various industries, the Group continued to optimise its production operations and progressively enhanced its production capacity. During the Year under Review, the Group focused on the operation of the first production line, accomplished production targets on schedule, and strived to provide high-quality aluminium flat rolled products to its customers in the sectors of industrial materials, transportation, aviation and aerospace. Furthermore, the Group also steadily commissioned pilot production in the second production line, mainly focusing on aluminium alloy products for green packaging, as well as developed and produced can lids, computer casings and battery soft-pack. In terms of product research and development, the Group proactively advanced with the research and development of high-end aluminium flat-rolled products, including high thickness aluminium alloy plates and skin plates for aviation use, special high thickness aluminium alloy plates for aerospace use, aluminium alloy products for vessels, aluminium alloy products for semiconductors and other high value-added products. Remarkable results have been achieved with the relevant research and development efforts, and some of these products have been supplied in small quantities. In terms of automotive body sheets, the Group has received the certifications of a number of domestic automakers and carried out small-volume pilot production. The Group will continue to step up its efforts to obtain certifications from European, American and Japanese automakers and accelerate sample preparation process, so as to comprehensively optimise its product portfolio and improve its profitability. Further Fabrication Business — Capitalised on Industry Development Trends to Accelerate the Group’s Transformation and Breakthrough During the Year under Review, sales volume of the Group’s further fabricated products amounted to 37,724 tonnes. Sales amount was approximately RMB990 million. As the highend transportation sectors such as new energy vehicles and rail vehicles are moving towards light-weight development, the Group, leveraging its advantages in R&D capabilities and production efficiency, has been focusing on the development of further fabrication business to provide driving force for its transformation into an integrated light-weight solution provider. With regard to passenger cars, the Group thoroughly understood the industry development trend of replacing steel with aluminium in vehicle body, and has ramped up its efforts on the R&D and manufacture of large vehicle components such as aluminium body frames, making an important step in the development of high-end aluminium extruded products for vehicles. During the Year under Review, the Group, together with FAW Jiefang Automotive Co., Ltd., jointly manufactured an all-aluminium alloy electric van logistics vehicle, Xiake K16, the prototype of which has successfully passed road test. In the sector of new energy vehicles, the Group has persistently abided by the concept of energy conservation and environmental protection, and jointly explored the light-weight vehicle market with many leading domestic automakers such as Chery and BYD. The Group’s products have been widely used in the rail transit sector. It not only provided further fabricated products, including body aluminium profiles and large vehicle components, for such rail transit vehicles as inter-city trains, commercial maglev trains and subway trains, but also supplied high-quality further fabricated products in batches for the “Fuxing EMU” high-speed trains as the largest supplier of “Fuxing EMU” train body aluminium profiles. Meanwhile, through cooperation with CRRC, some of the Group’s vehicle body aluminum profiles and further fabricated products have entered overseas markets. Remarkable Achievements of Overseas Production Plants During the Year under Review, Alunna, a high-end aluminium extrusion subsidiary based in Germany, continued to contribute stable revenue and profit to the Group. In the yachts business, Silver Yachts, the shipyard based in Australia, delivered an all-aluminium alloy luxury superyacht “BOLD” with a hull length of 85 meters, winning the 2020 BOAT International Design & Innovation Award. Meanwhile, during the Year under Review, the Group commenced production of the first all-aluminium alloy yacht in Jiangmen, Guangdong Province. Emphasis on R&D and Innovation to Energise Business Growth The Group highly values R&D and innovation. It has been constantly developing high-end terminal aluminium products, and has made progress in high value-added projects. It has also opened up the upstream and downstream industry chains and made great strides in various sectors, achieving synergistic business development. During the Year under Review, the Group accomplished various technological R&D achievements and drew attention in the industry. It was listed in “2019 Manufacturing and Internet Integration Pilot Demonstration Projects” (2019 年製造業與互聯網融合發展試點示範項目) by the Ministry of Industry and Information Technology (“MIIT”). Five important technologies independently developed by the Group have successfully passed the scientific and technological achievement evaluation by a national military-civilian integration technology evaluation institution recognized by the MIIT. In particular, the key technologies for the production of all-aluminium body and chassis of new energy passenger vehicles have attained advanced international standards. At the same time, Liaoning Zhongwang Group Co., Ltd. (“Liaoning Zhongwang”), a subsidiary of the Group, has obtained the review certification on national technology innovation demonstration enterprises. Alunna, a subsidiary of the Group based in Germany, has received a number of qualification certifications in the international aerospace and defense industry sectors, reflecting the comprehensive technological superiority of the Group. Prospects: In 2019, the domestic and global environment remained complex and volatile with the rise of trade protectionism and frequent geopolitical events. The ongoing US-China trade war also cast a shadow on the global economy. However, China’s economic development is at the stage of industrialisation, and aluminium is still in demand in high-end and emerging markets. Driven by a series of favourable national macro policies, the operation of the aluminium industry is generally stable with improved market demand. The MIIT has continuously reinforced the supply-side structural reform, actively expanded the application of aluminium and directed the high-quality development of the aluminium industry, so as to ensure the orderly progress of the aluminium industry towards transformation and upgrade as well as high-quality development. In addition, at the Central Economic Work Conference held at the end of 2019, the policymakers pointed out that it was necessary to facilitate the development of the real economy and to improve the standards of manufacturing industry. Benefiting from the support of national policies, aluminium alloy products have been widely used. The aluminium application market has been fully expanded with fabrication industry achieving continuous breakthroughs. Along with the advancement of urbanisation in China, the newly-developed residential projects mainly consisted of mid-to-high rise buildings. Coupled with increasingly strict environmental protection and construction waste disposal policies increasingly strict, aluminium formwork has been widely used in the construction industry due to its irreplaceable advantages of being light weight, high strength, easy to assemble, high turnover with high recycling value. It helps to improve project construction quality, reduce costs and increase efficiency, and promote energy conservation and environmental protection. At present, the aluminium formwork industry is at the stage of rapid development, and has been penetrating into various sectors such as housing construction and infrastructure. According to the “Thirteenth Five-Year Plan” for the Development of Construction Industry ( 建築業發展「十三五」規劃) issued by the Ministry of Housing and Urban-Rural Development, the total output value of the national construction industry will grow at 7% per annum on average in the next five years. According to the report published in March 2020 by Beijing Antaike Information Company Limited, an industry research institute, the market share of aluminium alloy formwork in China will increase to approximately 56% by 2024. Looking ahead, the aluminium alloy formwork market will continue to grow steadily. In recent years, environmental protection and energy conservation requirements have become increasingly strict, and light-weight transportation has become an irrepressible trend for the development of world’s automobile industry. Against this backdrop, China encourages the development of new automotive materials, which has also fueled the booming development of the new energy vehicle industry. According to the Ministry of Public Security, the development of new energy vehicles still maintains a long-term positive momentum. In 2019, the new energy vehicle ownership in China increased by 46.05% on a year-on-year basis, delivering rapid growth. Pursuant to the forecast in the Report on 2019 Long-Term Outlook for New Energy Vehicle Market” (《2019年新能源汽車市場長期展望》)released by Bloomberg New Energy Finance, sales volume of new energy vehicles will account for 57% of that of global passenger vehicles by 2040. China will continue to lead the global electric vehicle market. The sales volume of electric passenger cars in China is expected to account for 48% of that of global electric passenger vehicles in 2025. Moreover, in June 2019, the National Development and Reform Commission and other two ministries jointly issued the “Implementation Plan for Promoting the Upgrading of Key Consumer Goods and Smooth Resources Recycling (2019–2020)” (推動重點消費品更新升級暢通資源循環利用實施方案(2019–2020年)》), stating that the restrictions on purchasing and driving new energy vehicles should be lifted across the country, and those already implemented should be cancelled. These further add to the growth potential of aluminium application in the automotive industry. As the preferred choice for light-weight vehicles, aluminium alloy has been the focal point of automakers. Aside from light weight, strength and safety, aluminium alloy also possesses various unique advantages such as significant weight reduction effect, ease of recycling and high assembly efficiency. It is expected that the demand for aluminium in the automotive industry will grow rapidly with the further development of new energy vehicle market in the future. To this end, the Group will firmly grasp market opportunities, actively establish its presence in related industries, and carry out technical cooperation with well-known domestic and international automakers to jointly develop new energy vehicles and explore prospective market for aluminium applications. As at the end of 2019, the total mileage of high-speed railway in operation in China has exceeded over 35,000 km, accounting for approximately 70% of the total mileage of highspeed railway worldwide. As the Belt and Road Initiative progresses, some domestic aluminium materials have gone abroad with China’s high-speed rail projects for the construction of overseas rail projects, raising the requirements on the tenacity of aluminium alloy materials. Apart from high-speed rail, aluminium alloy has also been widely used in the manufacturing of urban rail trains, such as subway trains, light rail trains and maglev trains. According to the latest statistics of China Association of Metros, urban rail train systems have been established in 40 cities in aggregate in mainland China with railway tracks in operation totalling 6,730 km by the end of 2019. Meanwhile, the production of private aircrafts, civil aviation and large aircrafts has been increasing year by year, and the aircraft manufacturing industry has entered a period of development. Although currently, aluminium for aircraft use still mainly imported, with the implementation of government’s favourable policies and the application of R&D achievements by related enterprises, aircraft aluminium products are expected to be supplied domestically in the foreseeable future. The prospect of the aircraft aluminium market is promising. The market trends and government policies mentioned above are favourable to the suppliers of fabricated aluminium products in China. To seize the opportunities, the management of the Company has formulated the following strategies for development: 1. Continue to optimise the Group’s aluminium fabrication capacity so as to reinforce its overall competitiveness: as more aluminium extrusion equipment is put into operation in phases for commercial production, the Group’s overall competitiveness will be further reinforced in the high-end aluminium fabrication industry; 2. Diversify high-end product offerings and enhance the overall added value of products: the Group will continue to leverage on its strengths in cutting-edge production techniques and the ability of its design team to meet the demand from various customers, especially for middle and high-end products, and provide customers with more integrated lightweight solutions. By strengthening its R&D and technological advantages, the Group will continue to diversify its product offerings, improve product quality and enhance the overall added value of the products; and 3. Unlocking the value of the Group’s aluminium flat rolling plant in Tianjin, thus adding new impetus to the Group’s long-term development: the Group will further improve the product quality and production efficiency of the first production line in said plant to provide customers with high-quality aluminium flat-rolled products. The second production line has commenced pilot production and the target date for commercial production is in 2020. The Group will also step up its effort in developing new products and obtaining certifications for high-end products, paving the way for the optimisation of product portfolio. The above development strategies will fully capitalise on the synergy of the Group’s core businesses, and enable the Group to tap the opportunities brought about by the industrial upgrade in China with a more competitive product structure and more comprehensive business strategy.

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