China Liansu's revenue shows slight rise

Construction of affordable housing and domestic demand spur growth

PUBLISHED : Monday, 27 August, 2012, 12:00am
UPDATED : Monday, 27 August, 2012, 7:31am

China Liansu Group Holdings, one of the largest manufacturers of plastic pipes and fittings on the mainland, announced a slight increase in its financials for the first six months of the year.

During the interim period, the group recorded steady operating and financial performance, and announced that the company's revenue was 4.82 billion yuan (HK$5.64 billion), an increase of about 5.6 per cent over the same period last year.

China Liansu said profit for the period was 598 million yuan, an increase of about 11.6 per cent over the same period last year. Basic earnings per share were 0.20 yuan.

Reviewing the financial results of the first half of the year, Wong Luen-hei, chairman, executive director and founder of the company, says that in order to maintain the steady development of domestic economy, the central government continued to expand domestic demand and improve people's livelihood despite of the sovereign debt crisis of the euro zone and the economic slowdown of the United States.

"Urbanisation process continued to advance in solid strides, with pressing demand for plastic pipes facilitated by increasing construction of affordable housing, investments in water conservancy and revamping of outdated pipe networks," Wong says.

"Such expansions of domestic demand and beneficial measures have created opportunities for the development of the plastic pipe industry. As a leader of the industry, the group continued to achieve stable business development as it embraced every challenge and seized every opportunity by capitalising on its strengths in terms of sales network, research and development of new products and technologies and brand-building, while refining and optimising its target market segments."

During the period, China Liansu's gross margin increased to 25.9 per cent from 23.7 per cent for the same period last year because the group enjoyed economies of scale and raw material cost reduction. The group has strengthened market penetration in various target regional markets, including southern China, on the back of its strengths as an industry leader and its brand name advantage.

As a result, an extensive sales network has been built to provide a solid foundation for the group's long-term development. The group's extensive sales network constitutes one of its competitive advantages. China Liansu had 1,300 independent distributors as at the end of June. On the back of its existing marketing ability, the company has continued to make strong efforts in expanding its domestic sales network, while starting to develop the overseas market.

The company has 14 production bases for plastic pipes and fittings, which are strategically located on the mainland, close to target markets and customers. To meet increasing market demand and further strengthen the group's coverage, the company has acquired sites in Maoming, Hainan, Yunnan and Shandong for new production bases in addition to the scheduled commission of its new production base in Shaanxi later this year.

Looking ahead, Wong says that as a leader in the plastic pipe industry, the company is confident about its healthy and stable business development for the second half of the year despite uncertainties in the industry spurred by the economic conditions.

"The group will continue promoting sustainable business development and creating value for shareholders through three major development strategies: expanding the nationwide sales network and tapping the international market; ongoing orderly expansion of production capacity; and novel home building material products development," Wong says.

At present, China Liansu has 28 subsidiaries and 25 production bases (some under construction) on the mainland, North America and Canada. The company's global services and sales networks are distributed throughout China, to provide products and services to its customers on time and efficiently.