2017 INTERIM RESULTS ANNOUNCEMENT. August, 2017

Transcription

1 2017 INTERIM RESULTS ANNOUNCEMENT August, 2017

2 Disclaimer This document has been prepared for general information purpose only and is not, and should be not construed as an offer for sell or a solicitation of an offer to buy any securities. Information and opinions contained herein have been complied in good faith by China Hengshi Foundation Company Limited from source believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness. All opinions and estimates contained in this document are provided in good faith but without legal responsibility and are subject to change without notice. Neither China Hengshi Company Limited and/or any of its subsidiaries of affiliates, nor any of its or their officers, employees or representatives, accepts any responsibility or liability whatsoever from any actions or claims arising from any use or interpretation of the information contained herein. 2

3 Table of Content Section Interim Results Review 2 Financial Analysis 3 Development Strategies 4 Questions and Answers 3

4 Section I 2017Interim Results Review 4

5 2017 Interim Results Summary Sales Volume 51,400 tones, 6.91% down from the same period of 2016; Revenue 594 Million RMB 3.10% down from the same period of 2016; Sales revenue related to wind turbine industry 483 Million RMB, 11.1% down from the same period of 2016; Gross Profit 218 Million RMB 7.17% up from the same period of 2016; Net Profit 105 Million RMB, 5.92% down from the same period of 2016, while operating profit increase 9.23% from the same period of RMB Million FY2017 FY2016 Change % % Gross Profit % Net Profit % Operating profit* % Sales Revenue - wind turbine blade sector 5 Notes * Operating profit refers to the net profit after 1) other income 2) other gains and loss

6 Products and Application(1) Multi-axial Fabrics * E/PP Compofil Fabrics Principally used in transportation, construction and sporting goods industries Principally used in wind turbine blades, ship manufacturing, transportation, pipelines, pressure vessels, sporting goods pipelines and chemical containers 59.5% Bi-axial fabricstri-axial fabrics Quad-axial fabrics Uni-directional Fabrics* Principally used in wind turbine blades, pressure vessels and pipeline manufacturing materials Stitched Mats Principally used in ship manufacturing and pipelines 3.6% Woven Roving Combo Mats 6 Notes: 1 Based on 2017 Interim revenue * Mainly used in wind industry Principally used in ship manufacturing, pipelines and sporting goods

7 Optimize the structure, improve the quality of operations Strengthen customer maintenance, optimize customer structure For overseas markets, further consolidate and strengthen cooperation with existing customers, focusing on promoting the old customers - new product certification work, and pay more visit to customers and communicate with them frequently; For the domestic market, strengthen communication and cooperation with Goldwind and Envision, the wind turbines manufacturer, and Sinoma and Lianyungang Zhongfu Lianzhong Composites Group Co., Ltd., the blade manufacturers, at the same time, reduce the credit limit for the domestic customer with slow payment collection and poor credit, and strengthen the collection of payment collection. Actively optimize the product structure Further consolidate the market share of high modulus products and strengthen the testing and promotion of E8 products ; To provide customers with tailoring services and customized products so as to enhance the competitive advantage of differentiation and customer satisfaction and loyalty; Actively expand the non-wind field market, which contributes to accelerated growth of composite 7 cloth business, with sales revenue increasing 54.07% compared to the same period in 2016, accounting for 4.46% of the company's overall sales revenue in the first half of year, up 1.65% compared to the same period in 2016.

8 Wide Coverage for Major Global Wind Markets (1) Europe North America China Rest of World 8 Note 1. The wind data of the world based on Global Wind Statics 2016 from Global Wind Energy Council and the ratio of Hengshi is based on 2017 interim Financial Report.

9 Global Business Analysis RMB Million Change Europe % North America % Asia (1) % Latin America % Australia % Africa Overseas market % PRC market (2) % Total % 9 Note 1.Asia includes Hong Kong, Macau and Taiwan, but excludes the PRC; 2.PRC market excludes Hong Kong, Macau and Taiwan;

10 Company Honors Awards 2016 Mayor Quality Award in Jiaxing City Zhejiang Made-Leading Export Enterprise "by the Department of Commerce of Zhejiang Province; 2017 Zhejiang Provincial Industrial Design Center "by Zhejiang Economic Commission 10

11 Overseas Construction & Layout Hengshi Egypt Hengshi Egypt Phase has been put into operation in the first half of the year, with total production capacity reaching 27,000 tons; We have passed the certification of key customers and started to supply in bulk. It s expected that the sales volume will increase substantially in the second half of the year, which will contribute more profit. Hengshi USA Plant purchase has been completed, and a plant renovation contract has been signed; It s expected to be ready for production in the first quarter of

12 Section II Financial Analysis 12

13 Financial Highlights RMB million Change Sales Revenue % Gross Profit % Net Profit % 36.7% 33.1% 3.6% Net Profit Margin 17.7% 18.2% -0.5% Earning per share RMB % Gross Profit Margin Notes In the first half of 2016, the company received non-productive subsidy of RMB 93,800. Excluding non-operating subsidy, the net profit of the Company increased by 1.95% in the first half of 2017 compared to the same period in

14 A Comparative Analysis of the Company 's Profit Margin Gross profit and margin RMB Million Gross margin (%) Analysis Prices of major raw materials and accessories have declined Product integrated production rate increased The Hengshi Egypt project is put into use this year 14

15 Banlance Sheet Summary RMB Million Non-current Assets Current Assets Inventories Account receivables Bills receivables Bank balances and cash Others Total 1,542.0 Non-Current liabilities 10.1 Current Liabilities Account payables , ,207.1 Bank borrowings Others Total liabilities Total equities Gearing Ratio : Total Liabilities / Total Assets (1) Gearing ratio is approx. 20.7% 3.7 percentage points lower than 2016 Average turnover day of inventory is 65 days 11 days higher than 2016; 1, Bills payables Healthy financial position No bank borrowings strong cash position; Good relationships with both domestic and offshore banks

16 Section Ⅲ Development Strategies 16

17 Development Strategies Further consolidate and enhance our market leadership globally and become the global leader for the R&D and manufacture of fiberglass fabrics used in the wind turbine blade sector Expand Market Share Continue to consolidate the leading position globally and focus on the fiberglass fabrics used in wind turbines with a unit capacity of 5.0 MW+; Target to become the largest global manufacturer and supplier of fiberglass fabrics used in the wind turbine blade sector in the next 2 to 3 years Expand Product Portfolio Strengthen the development of products and markets for nonwind applications and actively foster new areas of growth ; Develop new fiberglass fabrics and applications so as to broaden our revenue sources Optimize Supply Chain Further closer to the customer to improve customer satisfaction and improve market share through the overseas layout; Strategically select locations in order to capture cost synergy arising from fiberglass procurement from China Jushi Capabilities & Efficiencies Optimization Enhance R&D Capabilities Continue to optimize the production process and upgrade equipment so as to improve product applicability; Continue to maintain and enhance the strong R&D capabilities; Adopt a customer-oriented R&D strategy to identify market opportunities 17

18 Investor relations contacts: Website: Tel:(86) Fax:(86)