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Public company info - WuXi XDC Cayman Inc , 02268.HK
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WuXi XDC Cayman Inc, 02268.HK - Company Profile
Chairman Ke Wentuo
Share Issued (share) 1,243,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Papermaking
Corporate Profile Business Summary: The Company acts as an investment holding company. The principal activities of its subsidiaries are manufacturing and trading of wrapping tissue paper, wall paper products, copy paper and other products. Performance for the year: Revenue of the Group for the year ended 31 December 2018 was RMB4,059.8 million, representing an increase of approximately 53.9% from RMB2,638.8 million for the year ended 31 December 2017. Profit and total comprehensive income attributable to owners of the Company decreased by approximately 31.3% from RMB962.0 million for the year ended 31 December 2017 to RMB661.0 million for the year ended 31 December 2018. Basic earnings per share for the year ended 31 December 2018 decreased by 33.4% to RMB0.532 per share when compared with the RMB0.799 per share for the year ended 31 December 2017. Business Review In recent years, the supply side reform for the paper manufacturing industry undergone in China enabled optimisation of the internal environment of the industry with further regulation and consolidation. The Chinese Government requires faster closure of outdated and inefficient capacity and much more stringent approval requirements on new capacities, which is a move to solve over-capacity problem and regulate one of its most heavily heavy-polluting industries. The results of tightening measurements imposed is getting more obvious. The outperformance of the Group was partly attributed to the improving supply-demand relationship in the country’s paper sector, where the supply has been strictly disciplined while the demand for paper products is dominated by the daily consumption of the online shopping. Limited new capacity and rising prices benefitted the Group. Moreover, the Group’s proactive strategy to achieve the appropriate balance among selling prices, sales volume and inventory levels for optimal profitability was effective. Prices of raw pulp continued to keep climbing resulting from the growing furnish costs and tightened regulation on waste paper imports imposed by the government. Nevertheless, the profit margin of the Group is secured as benefiting from using self-manufactured de-inked pulp. As for finished paper products, the prices have been upheld at a favourable level given the demand for package-use paper products continued to grow steadily in China and supply is getting tighter, with the difficulty of adding new capacity and continuous inefficient closures. Segmental Analysis Wrapping tissue paper Wrapping tissue paper includes double-sided machine-finished (“MF”) tissue paper, single-sided MF tissue paper, food wrapping tissue paper, semi-transparent wrapping tissue paper and colour wrapping tissue paper. Total revenue generated from wrapping tissue paper was RMB2,171.6 million, contributed to approximately 53.5% of the Group’s revenue for this reporting period. Wall paper products Wall paper products including Polyvinyl Chloride (“PVC”) wall paper, non-woven wall paper, fabric wall covering and wall paper backing paper. Total revenue generated from wall paper products was RMB1,380.9 million, contributed to approximately 34.0% of the Group’s revenue for this reporting period. Copy paper Revenue generated from copy paper was RMB290.1 million, contributed to approximately 7.1% of the Group’s revenue for this reporting period. Other products Other products, comprising paper towel, ivory boards and core boards, generated revenue of RMB217.2 million and contributed to approximately 5.4% of the Group’s revenue for this reporting period. Geographical Analysis The entire Group’s revenue was generated from mainland China. Eastern China and Southern China are the largest markets of the Group (in term of locations from which sales were originated), with over 83.5% of Group’s revenue for this reporting period was derived from these two regions. Operational Analysis As at 31 December 2018, notwithstanding the Group remained operated 37 production lines, the designed annual production capacity increased from 428,000 tonnes to 466,000 tonnes in aggregate after maintenance and upgrade, including 298,000 tonnes for wrapping tissue paper, 52,000 tonnes for copy paper, 35,000 tonnes for wall paper backing paper and 81,000 tonnes for other products. In addition, the Group operated 14 production lines with a designed annual production capacity of 27 million rolls for wall paper products. The Group is also equipped with 3 in-house de-inked pulp production lines with designed annual production capacity of 176,000 tonnes in aggregate for its own use. Prospects: Looking ahead, the global economy is expected to remain volatile while the trade tensions with the United States casting more variables to the global markets and dragging down China’s economy which influences spending. The supply in the paper industry in China will continue to be affected by the government policies where more rigorous measures in environmental inspection and enforcement will be exercised resulting in a continuous elimination of backward production capacity by paper manufacturers. Despite the weakening economic outlook leading to market challenges, we believe that the demand for wrapping tissue paper and wall paper in the domestic consumption market will maintain the momentum of stable growth. The Group will reinforce its competitive advantages and adopt a more responsive operating strategy to solidify its leading position in the ever-changing environment. After consolidating wall paper manufacturing business a year ago, the Group is empowered to capture opportunities across different sectors of paper business and continued leveraging its competitive advantages in traditional wrapping tissue paper business. The Group strives to improve its existing production and ancillary equipment for production output and increase synergies, and thus differentiating itself in the industry for the best shareholders’ value.

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