China Zhongwang’s Revenue Increases by 14% to RMB18.7 Billion in the First Nine Months of 2019

Results Highlights:

• Sales volume and revenue in the first nine months of 2019 recorded double-digit growth
• Aluminium extrusion business grew organically, rapidly expanding the aluminium alloy formwork leasing business
• Production capacity of aluminium flat rolling business continued on the rise, doubled the revenue and productivity

Financial Highlights:

CHINA – 31 October 2019 – China Zhongwang Holdings Limited (“China Zhongwang” or the “Company”, together with its subsidiaries the “Group”, stock code: 01333), a world-leading fabricated aluminium products developer and manufacturer, announced its unaudited consolidated results for the nine months ended 30 September 2019 (“the Period under Review”).

During the Period under Review, the production efficiency of aluminium extrusion products and aluminium flat rolling products continued to rise, propelling the Group’s sales volume to increase by 32.5% to 760,000 tonnes. The total revenue grew 14.0% to RMB18.7 billion. Gross profit was up by 3.0% to RMB5.42 billion, with a gross profit margin of 29.1%. Net profit was RMB2.22 billion.

Mr. Lu Changqing, Chairman and President of China Zhongwang, said, “To support the sustainable development of the Group’s businesses, we have been exploring the feasibility of various business models for the last few years. In mid 2019, the Group commenced the leasing business of aluminium alloy formwork, which provided the Group with direct access to the end market and promoted light-weight solutions for green construction . At the same time, the production capacity of the aluminium flat rolling business continued to expand, constantly driving up the production efficiency to bring positive impact to the Group’s sales volume.”

Boosted Promotion of Aluminium Alloy Formwork Leasing Business
During the Period under Review, the Group persisted in promoting the leasing business of aluminium alloy formwork. Compared with the aluminium alloy formwork sales business, the aluminium alloy formwork leasing business has a higher gross profit margin and profit margin. In the medium and long term, the leasing of aluminium alloy formwork can create a recurring income source and contribute to a higher profit.

After a few months of operation, the Group has gained a deeper understanding of the key factors in the execution and has made improvements in various stages, including production, assembly, transportation, warehousing, application, maintenance, and retrieval process. The aim was to raise the efficiency and leverage the advantage of the leasing model. In addition, the Group’s capability to produce a comprehensive range of aluminium formwork that includes supporting components and connectors has been developing according to schedule. By unlocking the potential of aluminium formwork’s applied usage, it can become the long-term growth engine for the Group.

Productivity of Aluminium Flat Rolling Further Unleashed
The Group continued to explore the market for aluminium flat-rolled products. During the Period under Review, aluminium flat-rolled products contributed the biggest proportion to the Group’s sales volume. Benefitting from the persistent increase in efficiency, the sales volume of flat-rolled products in the first nine months of 2019 doubled.

At present, the Group produces premium flat-rolled products for industrial customers and in the fields of new energy vehicles and green packaging. Once the Group receives certification for premium products such as automotive body sheets, its product portfolio will be fully upgraded and profitability enhanced. The Group’s second production line has commenced small-volume pilot production.

Looking ahead, Mr. Lu said, “China is speeding up its high-quality development of the economy, the aluminium fabrication industry has been attracting an unprecedented level of attention, boosting our confidence in the prospects of aluminium’s applied use. The Group will keep on optimising its production capacity and diversifying its product portfolio. We will maintain our focus on product research and development and innovation, in order to make our contribution to the sustainable development of the society.”