Strong Demand and Increased Market Share Drives Double Growth of Turnover and Gross Profit

 

Financial summary:

Six months as at 30 June (RMB Million)	2019年	2018年	變化
Turnover	2,806.6	2,347.7	19.5%
Turnover	356.1	309.3	15.1%
The shareholder of the company should take the dividend	149.5	84.4	77.0%
Basic Earnings Per Share (RMB)	0.059	0.036	63.9%

[Hong Kong, August 20, 2019] The Board of Directors of Tiangong International Limited (Tiangong International or Group; Stock Code: 0826.HK) is pleased to announce the unaudited consolidated gains and losses for six months up to 30 June 2019 ("during the reporting period") and the comparative figures for the same period in 2018.

 

 

 

During the reporting period, the total annual turnover of Tiangong was RMB 2.807 billion yuan, up 19.5% from RMB 2.348 billion yuan in 2018. Gross profit was 356 million yuan, up 15.1% from 309 million yuan in 2018. Equity holders should account for a 77.0% increase in the spillover from RMB 84.4 million in 2018 to RMB 150 million in 2019, mainly due to (i) the increase of market share in the group, resulting in an increase in the sales of die steel parts; (ii) the sales of titanium alloy parts of the group during the reporting period due to the increased market demand for titanium alloy products. Rise.

 

 

 

During the reporting period, the Group has actively explored various marketing channels, strengthened its direct sales efforts, and strived to enhance its market share of die steel. In the first half of 2019, sales of die steel products increased by 9.4%. Average prices rose moderately by 1.7%. As a result, the turnover of die steel division increased by about 11.3% to RMB 1.1 billion. As for the high-speed steel division, the demand for high-speed steel in domestic and overseas markets remains strong, with domestic market sales increasing by 1.7% and overseas market sales increasing by 9.5%. In the cutting tool division, the Group continues to focus on mid-end products in domestic and overseas markets to reduce market competition and avoid price wars. This has led to a decline in overall sales, while raising average prices. As a result, overall sales fell by 18.6%, while average prices rose by 28.0%, and total turnover increased by 4.3% to 282 million yuan. In the Titanium Alloy Division, the increase in sales is mainly due to the stricter environmental protection requirements, resulting in the increased demand for titanium tubes and titanium containers in the chemical industry. The overall sales volume of titanium alloy products increased by 22.4%, while the average selling price increased by 10.8%. As a result, turnover increased by 35.5% to 145 million yuan.

 

 

 

In terms of product development strategy, the Group will continue to expand the market of high-end new materials. On the one hand, it will find opportunities for M&A of overseas new materials enterprises, on the other hand, it will make every effort to develop the field of powder metallurgy. The group plans to invest 500 million yuan to build the first domestic powder metallurgy production line of tool and die steels to provide high quality raw materials for automotive and aerospace industries. The production line has been started in March 2018, and the overall trial operation will be scheduled for the fourth quarter of this year. The initial annual output of powder metallurgy is as high as 2,000 tons, and the group already has batch orders for related products. It is expected that this project will not only fill the domestic supply gap and open up the international market, but also enhance customer loyalty and overall profits by providing high-end products.

 

 

 

In terms of marketing strategy, the Group will further strengthen its sales channels, reduce the cost of intermediate links and increase the overall gross profit rate. On the one hand, the group will continue to increase the proportion of direct sales and reduce the dependence on distributors. On the other hand, through the opening of online sales channels to sell their brands directly.

 

 

 

In terms of achievements, the Group's "Development and Application of Key Technologies for High Quality Die Casting Dies" project has won the "Metallurgical Science and Technology" award awarded by China Iron and Steel Industry Association, China Metal Society and Metallurgical Science and Technology Award Committee, which shows that the Group's R&D technology is highly recognized by the industry.

 

 

 

In 2019, the U.S. government imposed import tariffs on steel. Nevertheless, the Group believes that as a reliable supplier in the specific material industry, it can survive the current difficult trading environment through the quality of its products and services. Import tariffs did not have a significant negative impact on the group's financial performance. During the reporting period, the group's turnover from North America increased from 228 million yuan in the first half of 2018 to 297 million yuan in the first half of 2019, a significant increase of 30.3% compared with the first half of 2018.

 

 

 

Looking ahead, Mr. Zhu Xiaokun, Chairman of Tiangong International Board of Directors, said that Sino-US trade friction would inevitably hit China's economy. However, the market is looking forward to the Federal Reserve rate cut, which is expected to offset some of the negative impact. Some analysis indicates that the growth rate of infrastructure investment will continue to pick up in the second half of the year, and the long-term performance of the steel industry will be stable. In view of the fact that the Group's four main products, high-speed steel, die steel, cutting tools and titanium alloy, are widely used in aviation, automotive, high-speed train, petrochemical and other industries and mechanical processing, it is expected that the company's business will maintain growth momentum. The Group will continue to enhance its strength in all aspects, including core technologies and products, to cope with complex international situations and challenges.