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Public company info - Zhejiang Cangnan Instrument Group Company Limited- H Shares , 01743.HK
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Zhejiang Cangnan Instrument Group Company Limited- H Shares, 01743.HK - Company Profile
Chairman Hong Zuobin
Share Issued (share) 18,000,000
Par Currency Renminbi
Par Value 1.0
Industry Industrial Goods
Corporate Profile Business Summary: The group is principally engaged in the manufacturing and sales of gas metering instruments and other related products. Performance for the year: The group's ecreased by 23.2% from RMB630.3 million in 2018 to RMB484.3 million in 2019. Profit of the Group in 2019 was RMB140.0 million, representing a decrease of RMB81.4 million compared to profit of RMB221.4 million in 2018. Profit attributable to equity holders of the Company was RMB136.5 million for the year ended 31 December 2019, decreased by RMB83.7 million from RMB220.2 million for the year 2018. Business Review I. INDUSTRY OVERVIEW In recent years, China has witnessed growing demand for natural gas driven by consistent economic growth, structural adjustment to energy resources, steady progress in urbanization and priority given to environmental protection. Notwithstanding, as a result of both considerable downward pressure on China’s macroeconomy and less efforts exerted in “Coal-to-Gas Switching Project” in Northern China, the consumption volume of natural gas across the country in 2019 saw a moderate increase amid stable performance. According to a market report issued by China Insights Consultancy, natural gas consumption volume in China over the year of 2019 amounted to 306.7 billion cubic meters, representing an increase of 9.4% from the previous year. The year of 2020 serves as a critical year for China’s three-year Blue Sky Protection Campaign. Under the favourable policies in terms of environmental protection, the demand for natural gas will continue to maintain its growing momentum, positive results will be initially achieved thanks to the establishment of a comprehensive system integrating the processes of production, supply, storage and sales. Accordingly, the capacity for gas supply will be promisingly improved and the market condition on the whole is tending to be favourable for The group’s operation. In 2020, natural gas consumption volume in China is estimated to be approximately 330.0 billion cubic meters, representing a year-on-year increase of 9% and will further reach over 500.0 billion cubic meters in 2024. The CAGR of natural gas consumption volume from 2019 to 2024 will remain at a higher level, reaching up to 10.3%. II. BUSINESS OVERVIEW The Company is a leading industrial and commercial gas flowmeter manufacturer in China. Leveraging over 40 years of industry experience, the Company is dedicated to the manufacture and sales of a wide range of industrial and commercial gas flowmeters, which are generally used by gas operators to measure the flow volume of gas. The Company is engaged in a comprehensive business, integrating research and development, manufacture, sales and aftersales services. The Company ranked second in the industrial and commercial gas flowmeter industry in China in terms of revenue in 2019, with The group’s revenue from the sales of industrial and commercial gas flowmeter products amounting to RMB402.4 million. Through The group’s extensive sales network covering most of the provinces in China, The group mainly sell The group’s industrial and commercial gas flowmeter products to gas operators in China. The group’s major customers include certain leading enterprise groups of the gas industry in China. The group have established longterm stable relationships with The group’s major customers. In particular, four leading gas enterprise groups in China remained among The group’s top five customers throughout the last few years. As of 31 December 2019, The group had maintained business relationships with these customers for 9 to 15 years. In 2019, sales to The group’s top five customers accounted for approximately 33.3% of The group’s revenue in the same period. Prospects: (I)Current Conditions and Future Development Trends of the Development of the Industry The sales revenue of industrial and commercial natural gas flowmeter in China increased from RMB919.6 million in 2012 to RMB1,972.6 million in 2019 at a CAGR of 11.5%. The PRC government facilitated further utilization of oil, gas and other clean energy resources on a consistent basis, which significantly stimulated the market demand for industrial and commercial natural gas flowmeter. Certain policies that stresses guarantee and peak shaving of gas supply were consecutively promulgated by the government since the end of 2016. During the period of the 13th Five-Year Plan, the government, in tandem, issued a series of guiding documents such as Opinions on Expediting the Utilization of Natural Gas (《關於加速推進天然氣利用的意見》) and Certain Opinions in relation to Establishment of Long-term Mechanism for Stable and Guaranteed Supply of Natural Gas (《關於建立保障天然氣穩定供應長效機制若干意見》), which provides encouraging policy-level indications for the future development of the natural gas sector. Moreover, the 13th Five-Year Plan also includes instructions on sustainable construction of natural gas network, based on which, the industrial and commercial natural gas flowmeter market will maintain in great demand in the future. By virtue of the ongoging demand for industrial and commercial natural gas flowmeter, it is expected that the sales revenue of such flowmeter will sustain a higher growth rate and reach RMB3,318.0 million in 2024, at a CAGR of 11.0% from 2019 to 2024, according to a research report. (II)Development Strategy and Planning of the Company The Company will continue to uphold the operating philosophy of “dedication and integrity and commitment to excellence”, deepen the reform and accelerate innovation. Focusing on the strategies of national energy development, “Blue Sky Protection Campaign”, Coordinated Development in the Beijing-Tianjin-Hebei Region and “Internet + Action Plan”, the Company will closely capture the growing market demand brought by the controlling of air pollution and the strategic changes of energy structure in the national ecological civilization construction, endeavour to keep track with the latest technological development of “Internet + Energy”, accelerate the development of new products and improve the core competitiveness, so as to achieve the optimization and upgrade of product mix, and The group’s core value of maximizing the contribution to the society. (III)Business Plan for 2020 1.The Company will continue to value knowledge and creation and invest more in research and development under the principle of mastering core technologies so as to ensure that its featured products continue to keep the leading position nationwide. While paying close attention to the development trend of intelligent natural gas, the Company will accelerate the technological innovation and to promote the informationization, intelligence and networking of its products, thereby enhancing the competitive edge of its products. In view of the impact arising from current outbreak of COVID-19, the Company will make a comprehensive research and analysis on the shift of service mode of gas enterprises and adjust the direction for its products development, so as to improve the market adaptability of its products. In addition, the Company will introduce and adopt new technologies, new processes, new materials and new equipment to continuously seek for breakthrough of key technological bottleneck with an aim to continuously upgrade the product technologies and accumulate the technological reserve for development of new products. Moreover, the Company will strengthen its foundation of technical management, optimize and allocate research and development forces and continue to promote the extensive cooperation with various universities and institutes. 2.Proactively explore the market and build a new marketing service system The Company will keep abreast of the development trends of the gas industry, strive to capture the opportunities brought by the national strategies such as “Coal-to-Gas Switching Projects” and “Blue Sky Protection Campaign”, and proactively maintain and explore markets. Focusing on greater regional marketing, the Company will consolidate and use the resources to coordinate and collaborate the development of the entire regional market. The group will adopt The group’s new four-level interactive service system, with The group’s group headquarter as the core service center, greater regional service sub-centers, provincial service offices and local urban service units. 3.Construct intelligent plants and achieve intelligent manufacturing We will devote great efforts to promote the construction of intelligent gas flowmeter modification and upgrade project. In the construction of the Cangnan Instrument Industrial Park, The group will introduce an informationization management system to conduct scientific management covering all aspects including human, machine, material, method and environment. The group will build automated and intelligent processing and assembling lines featuring sophisticated production equipment equipped with robot, mechanic arm and transmission line, in which, The group will apply cutting-edge sensors, electronic and information technology. Thanks to the modernized and intelligent warehousing system that brings about more adaptability and flexibility in supply system, The group will enhance the corporate production and management level in response to change in market demand. 4.Optimize the mechanism for talent introduction and cultivation, and consummate performance appraisal mechanism We will facilitate the function of talents as the most valuable resource and constantly consummate the mechanism for talent introduction and cultivation, with a view to building an expertise team that adapt to modernized, innovative and technological enterprise that can continue as a going concern. The group will push forward The group’s team building based on scientific thinking, gradually strengthen cultivation of employees across the board, arouse intrinsic potentials through performance appraisal for continuous enhancement of human resources quality so as to satisfy the Company’s need for innovative development. Furthermore, The group will establish a new and appropriate system favourable for talent introduction, using as well as retention and consolidate The group’s talent base with a view to driving the enterprise forward on a consistent manner.

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