Pipe maker sees steady profit flow

China Liansu Group Holdings, a Hong Kong-listed leading manufacturer of plastic pipes and pipe fittings on the mainland, saw revenue rise steadily last year as it announced annual results for the year ended December 31.

The group recorded steady operating and financial performance, with revenue amounting to 10.14 billion yuan (HK$11.83 billion), an increase of approximately 31.5 per cent over 2010.

The company said profit attributable to shareholders was 1.26 billion yuan, an increase of approximately 11.4 per cent over 2010. Basic earnings per share were 0.42 yuan.

The board of directors recommended a final dividend of 12 HK cents per share.

China Liansu says the steady growth in revenue is attributable to the acceleration of urbanisation and government support for infrastructure, including water conservancy. The group leveraged its advantages in strategic planning, technological research and development, and brand building to expand into target markets and achieve steady business growth.

Wong Luen Hei, chairman, executive director and founder of the company, says the global economy experienced uncertainty last year.

On the mainland, the government implemented a contradictory fiscal policy in the first half of last year and continued tight housing measures over the entire year. On the other hand, the government boosted domestic demand, strived to improve people's living standards and proposed a number of policies favourable to urbanisation and water conservancy.

'Facing these opportunities and challenges, the group, as the industry leader, leveraged its advantages to continue to strengthen and refine its sales network to further enhance its competiveness and consolidate its market position,' Wong says.

Despite rising raw-material prices, the group was able to maintain its gross profit margin at a reasonable level of 24.2 per cent during the year.

As the group's major market, southern China accounted for 67.6 per cent of total sales last financial year, followed by southwestern and central regions, that accounted for 9 per cent and 8.2 per cent of total sales respectively.

The company says the sales network was further expanded and enhanced during the year, laying a solid foundation for the group's long-term development. As of December 31, the group had 1,200 independent distributors serving

its customers throughout the mainland. As a leader in the plastic pipe industry, the group says it is determined to go global and develop potential overseas markets.

With 13 plastic pipe and pipe-fitting production plants in operation, that are strategically located across the mainland and in close proximity to target markets and potential customers, the group was able to reduce transport costs. In response to ever-rising market demands, the group is carrying out production capacity expansion plans. The production based in Changchun was completed for operation in the second quarter of last year. The Shaanxi production base is under construction and expected to be completed for operation in the second half of this year, boosting the group's presence in the region.

China Liansu started the research and development (R&D) of new composite plastic pipes in addition to the seven major categories of plastic pipes, energy-saving solar heat-collection pipes and water-saving irrigation systems. Moreover, in response to market trends, the group began to develop a series of new home-building products, such as bathroom and kitchen accessories, plastic doors and windows that will be a new growth driver of the company.

Looking ahead, Wong says that to be well-prepared for long-term development, the group will focus on 'New Record, New Chapter' as the core strategy in the future.

'As an industry leader, the company will adjust its business strategies according to government policies and market demand with a vision, detailed planning and preparation. We believe that during the period of the 12th five-year plan, the group will capture opportunities presented and the urbanisation of the plastic-pipe sector, expanding and refining the local sales network and developing overseas markets,' Wong says.

He adds that the group will also expand production capacity and enhance the R&D of new products to further strengthen its competitiveness, industry position and create value for investors.