Wednesday, March 3, 2021
Martin Hennecke
HKEx Stock Code : 00564 
Corporate Profile
The Group is a comprehensive coal mining and excavating equipment manufacturer in the PRC in terms of total sales of coal mining and excavating equipment. The Group focuses on the manufacturing and sale of hydraulic roof supports.

Business Review - For the year ended December 31, 2012

1. Rapid growth in operating results

In 2012, the Company realized revenue of RMB10,213 million, representing an increase of 26.71% over the previous year, successfully achieved a revenue of over RMB10 billion. Net profit was RMB1,614 million, representing an increase of 32.99% over the previous year. Net profit attributable to shareholders of the parent company was RMB1,589 million, representing an increase of 33.09% over the previous year. As at 31 December 2012, the net assets amounted to RMB9,354 million.

2. Continuous growth in production capacity and production volume

The Group has generally established a system of ¡§co-development of one headquarter, two operation bases, subsidiaries together with social resources¡¨. With the headquarter as the controlling base, subsidiaries as supporting establishments and social resources as supplementary devices, the Group sets to carry out an integration operation model. By implementing the pull production mode toward the one-stop production system, the production capacity and production volume were furthered enhanced. In 2012, the Company realized an increase of 40.77% in terms of annual production capacity as compared with that of last year, allowing us to maintain the market leading position in the PRC.

3. H Shares successfully listed and the diversification of interests materialized steadily

The Company's H Shares were successfully listed and traded on the main board of the Stock Exchange on 5 December 2012. 221 million H Shares were issued and an aggregate of approximately HK$2,295 million was raised. The Company has two capital platforms, comprising of the domestic A Shares platform and H Shares platform in Hong Kong currently, realizing a more scientific shareholding structure with stateowned shareholding, onshore and offshore public shareholding and shareholding by the key personnel of the Company. The listing of H Shares marked another milestone on the development of the Group. It means that the Group has formally entered into the international capital market. By leveraging the international platform, the Group strives to adopt international management skills and systems, build up international brandname and recruit international talents so as to establish a solid foundation for further expansion in the world arena.

4. Steadily maintaining a leading market share and further extending strategic collaboration

Amid the extremely competitive environment in the domestic market in 2012, the Group encountered the challenges and endeavoured to expand the market. The winning bid of the Company accounted for 39.62% of the total tenders for the year, which enabled us to maintain our leading position in terms of the market share. We entered into strategic partnership with China Huadian, Heilongjiang Longmay, China Sanwei Group and Erdos Coal Group.

5. New progress in technology development and process innovation

The development and design of new products, such as ZF21000/25/45D top coal caving roof support, ZY15000/33/72D high mining height hydraulic roof support and ZC6000/17/35 filling hydraulic roof support were completed in 2012. The research and development team dedicated to study the thin coal seams workplace was established and the research and development for a comprehensive machinery and automatic technology on coal seam with a thickness of 0.8 to 1.2 meters was commenced. Process innovation also made new progress in 2012 with massive application of robotic welding systems. Advanced processes such as upsetting and narrow gap welding enhanced the operating efficiency greatly and production lines for oil tank and small tank were being planned.

6. Preliminarily formulating a collectivized corporate governance structure

With the sound financial fundamentals and information technology as means, the Group initiated a comprehensive control over purchasing, production, cooperation and quality control, which gradually enhanced management and leadership towards its subsidiaries and built up an effective assessment and information feedback system. The collectivized corporate governance structure was preliminarily formed in the Group. A total number of 22 companies including wholly-owned subsidiaries, holding companies and associates such as ZMJ International Trading (Hong Kong) Co., Ltd., Heilongjiang Zhenglong Coal Mining Machinery Co., Ltd and Zhengzhou Coal Mining Special Forging Pressing and Manufacturing Co., Ltd. were set up as wholly owned enterprises or joint venture during 2012.

Business Outlook - For the year ended December 31, 2012

The Company will adhere to carry out the development strategy of ¡§diversification of interests, integration of products, internationalization of high-end products, leasing of medium-end market and demutualization of low-end market¡¨ and is ready to position in the coal mining machinery industry. By using the financing platform of A Shares and H Shares, the Company will explore the domestic and international markets by consolidating the industry resources worldwide. The Company will continue to develop the upstream and downstream supply chain with an aim to provide the customers with comprehensive, high efficiency and reliable coal mining machinery and service and become the leading supplier of comprehensive coal mining machinery solution in the world.

The Company formulates the working objectives for 2013 which focus on ¡§updating mindsets for market development, organization streamlining to increase efficiency, expanding working capital and lean management¡¨. Achievements are to be made as follows:

1. Explore new ways for market development and further enhance market share

The Company will further leverage on its technology and branding advantages and base on the strength of 4S service centers to expand the regional services. By investment, equity and various ways of joint venture, the Company will explore more strategic partnerships and new operation models.

2. Further streamlining the manufacturing and production structure

Based on the ¡§Dos and Don'ts¡¨ principle, the Company will focus on optimizing the high value-added sessions to improve the production capacity and efficiency of oil tanks, structural parts and accessories. By further strengthening the organization layout of ¡§co-development of one headquarter, two operation bases, subsidiaries together with social resources¡¨, the Company will explore the possibility to transform the manufacturing method of certain non-critical parts.

3. Further enhancing the lean management model

The Company adopted the lean management model to improve the management capability, staff quality and key processes. For 2013, the Company will establish a lean management training center and provide systematic and intensive training programme for its staff. The Company will further improve its lean management design, graphical processing procedure, training of talents and management of quality. The Company will focus on upgrading the management and quality of the Company's products.

4. Further promoting professional development for staff and teambuilding

With the branding of a listed company of A Shares and H Shares, the Company is committed to provide a good development environment for quality staff and attract domestic and international professional talents to join the Group. By building on the corporate philosophy of talent first, the Company will optimize the remuneration package and reward systems to establish management, research and development, sales and production teams with high execution ability and competitiveness and to consolidate the international talent resources based on the establishment of overseas research center.

Source: Zhengzhou Coal Minin (00564) Annual Results Announcement
Chairman Jiao Chengyao Issued Capital (shares) 243M
Par Value RMB 1 Market Capitalisation (HKD) 1,194M
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