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| New acquisition and expanding power grid infrastructure investment in China fuel further growth |
HONG KONG, Apr 1, 2014 - (ACN Newswire) - Jiangnan Group Limited ("Jiangnan Group", together with its subsidiaries, the "Group") today is pleased to announce the annual results for the year ended 31 December 2013. For the year of 2013, the Group recorded a revenue of RMB6,477.3million, representing an increase of approximately 20.9% over RMB5,356.4 million recorded in the year of 2012. The gross profit of the Group rose by 18.8% from 842.4million in the year of 2012 to 1,000.4million in the year of 2013. Profit for the year attributable to owners of the Company significantly increased by approximately 33.9% from RMB 376.1million in the year of 2012 to RMB503.5 million in the year of 2013. The Board declared a final dividend of HK3.3 cents per share for the year ended 31 December 2013 (2012: 2.2cents). Because of the implementation of stringent financial principles, the Group has maintained adequate cash flow and healthy financial position by recording a bank balance and cash of 1,682.6million and net bank borrowings of 432.1million as at 31 December 2013.
Performance review
Being one of the leading players in the China's wires and cables market, despite the continuously dropping of copper and aluminum prices in 2013 which lowered the average selling price of products and offset some of the Group's revenue growth, the sales volume and revenue of the entire product lines of the Group still recorded an encouraging growth. Power cables of the Group remained the main source of revenue which contributed approximately 65.5% of the total revenue and recorded satisfactory performance, In addition, the successful acquisition of Jiangsu Zhongmei Cable Group Co., Ltd.("Zhongmei Cable") brought to the Group a new business segment, rubber cables, which contributed approximately 5.8% of the Group's revenue. In view of year 2013, there are three key factors driving the growth of the Group's business.
First, during the year, benefiting from rural reform in China, the central government put huge effort in the constructions of infrastructure in rural areas. Projects improving livelihood in the rural areas have been accelerated. These will create strong demand for the infrastructures in rural areas such as roads, transformation of electricity grid network and reconstruction of housing. All these are directly related to the upgrade and transformations of the power facilities, forming a long-term momentum for the demand of wire and cable industry. In October 2013, the Group won tenders of the second batch of power cables and wires supporting rural power grid construction by the State Grid Corporation of China with a total sum of RMB260 million. The tenders cover a range of products, which include power cable, aluminum conductor steel-reinforced cable, aerial insulated conductor and bunched conductor. The tender projects cover 10 provinces or autonomous prefectures, which include Zhejiang, Sichuan, Henan, Ningxia, Anhui, Jiangsu, Shandong, Xinjiang, Hubei and Hebei. Together with the tenders won in the first batch of power cables and wires supporting rural power grid construction in 2013, the Group acquired contracts with an aggregate amount of RMB500,000,000 during the two public tenders.
Secondly, the ever-increasing pace of urbanization in China has triggered a large-scale infrastructure investment and stimulated the persistent growth of demands for different kinds of wires and cables in the domestic market which include wires used in property constructions, cables used in the electrical devices, reconstructing and establishment of rural electricity grid networks and rail transits. Currently, Jiangnan Group's products have been widely used in rail transits, property development and various infrastructure development projects. Compared with last year, the client base has been widened further to include such as property developer, Wanda Commercial Properties, airport projects, coal mining company, Huaibei Mining Industry (Group) Co. Ltd. and wind power company, CSR Zhuzhou Institute Co. Ltd. etc..
Thirdly, the large scale construction of high-voltage electricity grid network in China is undeniably a great interest to Jiangnan Group that, as one of the leading players in the industry, has been prevailing in the market with its absolute advantage in delivering high-end high-voltage power cables with distinguished product quality. Driven by the urbanization, the construction of high-voltage electricity grid network and the launch of infrastructure construction projects, the Group won numerous tenders for contracts relating to high-voltage and ultra high-voltage wires and cables in the second half of 2013. Customers include State Grid Shandong Electric Power Company, State Grid Tibet Electric Power Company Limited, State Grid Sichuan Province Electric Power Company, State Grid Jibei Electric Power Company Limited,Dalian Metro, Line 2 of Wuxi Metro, Shandong Province Construction Project Bidding Center - purchasing project of power cable engineering materials in West Railway Area and other main projects. In October, 2013, the Group entered into several contracts for the ultra high voltage power cable with the subsidiaries of the State Grid Corporation of China in Nanjing, Xuzhou, Nanchang and Baofeng, and the total contract sum is approximately RMB91.0 million. In October, 2013, the Group won another tender for 10kV power cable of Jiangsu User Contribution Second consultative inventory project, with a contract sum of approximately RMB46.0 million.
Sales in overseas market has been a business segment with brilliant success for Jiangnan Group in 2013. At present, the Group's products have been exported to more than 50 countries and regions. In 2013, the Group successfully opened up the markets in Vietnam and Ethiopia. In September 2013, the Group won the tenders of the supply of Aluminum Conductor Steel-Reinforced cable ("ASCR") to National Power Transmission Corporation under the Vietnam Electricity, with a contract sum of USD14.1 million (approximately RMB86.5 million), the supply of All Aluminum Alloy Conductor ("AAAC") to Ethiopian Electric Power Authority with a contract sum of USD3.6 million (approximately RMB22.3 million) and the supply of power cable to Power Works Pte Limited of Singapore, with a contract sum of approximately SGD53 million(approximately RMB255 million). The production plant in South Africa commenced operation duly in the second half of 2013.
Prospect
Looking forward, commented on the future growth drivers of the Group, Mr. Rui Fubin, Chairman and Chief Executive Officer of the Group said, "The satisfactory performance of the Group in 2013 has laid a solid foundation for future development. Looking ahead, the Group will expand through strengthening internal development and looking for external acquisition in order to achieve greater success. We will beef up our services for power companies, maintained our tight grip on the opportunities from the ascending market consolidation. We planned to acquire more than one special power cables enterprise, further expand production capacity as to fulfill customers' requirement. In order to expand our market share, our target of acquisition will own products and technologies complementary to our existing business.
In the second half of 2013, the Group has been intensifying R&D and production capabilities in producing high-end products. In addition to our existing production facility with a annual production capacity of approximately 1,000 km for high and ultra-high voltage cables with rated voltage of 220-500 kV in Yixing production base, in 2014, an additional production line for ultra-high voltage cables of 900 km will be built and is expected to commence production by the end of 2014 in order to lower down our operating cost and enrich our strengths that lead us to be a forerunner in the high-voltage cable market. In addition to high-voltage cable products, our another key product, aluminum alloy cables will be a key growth driver. Due to the higher level of acceptance for aluminum alloy cables in overseas markets, we expect the product will become one of our major products selling overseas. Wuxi New Suneng Composite Material Co., Ltd. that commenced production in January 2013 will have an estimated full production capacity for aluminum alloy rods and double capacity conductors of 70,000 tonnes and 30,000 tonnes per annum respectively.
We have even more confidence in the future prospect of overseas market. It is expected that the new 5-year agreement entered into with Eskom Holdings Limited will be realized in 2014 and therefore the sales in South Africa will record a remarkable growth from that of 2013. Other than South Africa, the Group will continue to explore new markets in Africa, South East Asia and South and Central America. Jiangnan Group is one of the largest exporters of wires and cables in China. With our better overseas market recognition on our products, we decided to take a bolder step in strengthening our overseas market with an aim to increase of our export sales to total sales proportion to 30% in 3 to 5 years. We will consider deny any merger and acquisitions opportunity in overseas as one of the means to quickly crack the overseas market. Looking towards the future, we will spare no efforts in rewarding our shareholders with more satisfactory return."
Topic: Press release summary
Source: Jiangnan Group Limited
Sectors: Daily Finance, Daily News
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