Monday, November 30, 2020
 
Columnist
Martin Hennecke
 
CHI SILVER GP
HKEx Stock Code : 00815 
 
Corporate Profile
The principal activity of the Group is the manufacture of silver and other non-ferrous metals for sale in the People's Republic of China (the ˇ§PRCˇ¨).

Business Review - For the year ended December 31, 2012

Despite market volatility in the macro-economic environment, the Group still managed to record outstanding growth.

For the year ended 31 December 2012, the Group's revenue reached approximately RMB1,540 million (2011: RMB984 million), representing an increase of approximately 56.5% over the previous year. Profit attributable to owners of the Company was approximately RMB158 million (2011: RMB115 million), representing an increase of approximately 36.7% over the previous year. Excluding one-off listing expenses which is non-operational in nature, the adjusted net profit for the year would be approximately RMB184 million, representing a substantial surge of approximately 59.1% over the previous year.

Our key product, silver ingot under our popular Longtianyong brand, continues to be our major source of revenue, representing over 70% of our total revenue. We are the only company listed in Hong Kong enjoying such a high percentage of revenue generated from sales of silver ingots.

Silver is a precious metal that has a very special nature. It not only possesses superior characteristics that make it suitable for the use in a wide range of industrial applications, but at the same time, carries unique investment value, comparable to gold.

Due to the continued increase in disposable incomes in China, demand for silver in China has grown rapidly in the past few years. Notably, China has transformed from a net exporter of silver into a net importer. As we are confident in the consumption power of Chinese consumers, we therefore are optimistic about the long-term outlook for silver demand going forward, particularly in the area of silver for investment.

Nevertheless, due to several economic issues discussed earlier, the commodity market was volatile during the year and our profitability was inevitably affected by short-term market fluctuations. However, thanks to our proprietary production model through which we produce high quality silver and other non-ferrous metals which have commercial value, we managed to largely offset market volatility and continued to record strong growth in both our revenue and profit on a yearly basis.

Furthermore, in order to offset the fluctuations in the price of silver, we are committed to improving our production efficiency and utilization rate. Since July 2012, we produced approximately 20 tonnes of silver ingots per month, and achieved full utilization of our current production capacity. We also gradually improved our production efficiency by reducing our inventory of raw materials, shortening our production lead time, and cutting our average inventory turnover days.

Business Outlook - For the year ended December 31, 2012

Looking ahead, despite the uncertainty in the global economic conditions, China's GDP is expected to continue to grow steadily. The Chinese Government is widely expected to reinforce its economic restructuring policies to expand domestic demand. Riding on the sustained growth in China's consumption power, fabrication consumption of silver is expected to maintain a healthy growth. Moreover, the demand for silver for investment purposes will continue to drive strong growth for silver products in China. Leveraging our well-known brand and our unique proprietary production process, and with the strengthened financial position subsequent to the Listing, we are determined to capture the opportunities brought by these healthy market trends.

We plan to expand our production capacity of silver ingots from the current designed capacity of 250 tonnes per annum to 400 tonnes per annum in 2013 and further to 550 tonnes and 650 tonnes per annum in 2014 and 2015, respectively. We will also continue to improve our research and development capabilities to develop new non-ferrous metal by-products.

Furthermore, we will look for suitable merger and acquisition opportunities. We are particularly interested in high-quality upstream opportunities that can help us secure raw materials so as to enhance production stability and bring strategic and economic long-term value to the Group. We are determined to become one of the leading integrated silver producers in the world.

Source: China Silver Group (00815) Annual Results Announcement
Chairman Chen Wantian Issued Capital (shares) 906M
Par Value HKD 0.01 Market Capitalisation (HKD) 807M
 
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