Sunday, April 18, 2021
Martin Hennecke
HKEx Stock Code : 01812 
Corporate Profile
Principally engaged in manufacture and sale of paper products, construction materials, chemical products, arboriculture of tree and sale of electricity and steam.

Business Review - For the year ended December 31, 2012

It is my pleasure to present the financial report for the year ended 31 December 2012 to all shareholders and express my gratitude, on behalf of the board of directors, for all shareholders' concern and support to Chenming Paper.

2012 had seen the smooth operation of the 600,000 tonne white coated linerboard project of the Company, as well as the normal operation of Zhanjiang Chenming's pulp project and Meilun's 800,000 tonne coated paper project. The Company's production capacity achieved leapfrog growth. Meanwhile, the Company also invested in magnesite mining and Zhanjiang waterfront regulation works to increase the sustainable profitability of the Company, thereby expanding the industry chain of the Company.

The papermaking industry was confronted with oversupply in the short run due to sluggish market demand and the availability of the production capacity of some paper products released at the same time against the backdrop of the industry downturn brought about by the macroeconomic situation. The new capacity of the Company was unable to improve the results of the Company in the short run. Compared to the prior year, the profitability of the Company declined.

During the reporting period, the Company completed machine-made paper production of 3.93 million tonnes, representing an increase of 530,000 tonnes or 15.59% as compared with 3.40 million tonnes in 2011. The Company's revenue amounted to RMB19,761.6792 million, up by RMB2,014.1893 million or 11.35% from 2011. The operating costs were RMB16,693.7683 million, up by RMB1,762.6151 million or 11.80% from 2011. The operating profit and net profit attributable to equity holders of the Company were RMB-416.2283 million and RMB221.0348 million respectively, down by 210.69% and 63.66% respectively.

Business Outlook - For the year ended December 31, 2012

The industry to which the Company belongs is the paper making industry, which is a light industry. The business sentiments of the industry are highly related to the macroeconomic growth. The papermaking industry was affected by the slowdown in the macroeconomic growth in 2012. However, in the long run, the development conditions of the paper making industry gradually improve. The National Development and Reform Commission, Ministry of Industry and Communication and State Forestry Administration have jointly issued the Twelfth Five-Year Plan for the Development of the Paper Making Industry, which clearly states the general direction of ˇ§controlling total volume, promoting concentration, optimising raw materials and reducing energy consumption and emissionˇ¨, from which the Company is expected to benefit in the long run.

In recent years, the Company is committed to the integrated development of forestry, pulp and paper with a longer industry chain and more comprehensive paper types. In 2012, the Company carried out a series of capacity expansion on paper types with better prospects. The Company's direction of development is in line with the requirements of the development plan of the entire paper making industry. Meanwhile, the Company has expanded its industry chain with a more rationalised industry positioning, which further strengthens the Company's competitiveness and development potential. As the economy and industry gradually recover, it is expected that the result of the Company will record stable growth. The Company's future performance is what the market can look forward to.

In 2013, the Company will deal with the following major areas based on the strategic objectives formulated by the Company.

(1) Adhere to strategy guidelines and making a blueprint for development plan. We shall focus on project establishment at first. The establishment and upgrading of the projects of Jilin Chenming, Zhanjiang Chenming, Wuhan Chenming and Shouguang 100,000-tonne papermaking additive are our high priorities. Moreover, we will promote technology upgrading. In respect of the technology upgrade projects such as Shouguang 120,000-tonnes art coated printing paper energy saving and upgrade project and Wuhan Chenming 4,800 cultural paper machine (for glassine paper) upgrade project, we will make verification and pick up the pace to ensure high quality and good results. Thirdly, we will make more efforts to conduct scientific research. We optimise the combination of production, learning, research and utilisation in both channel and system, and developing the surface enhancement technology and finished paper ash content technology with great effort. Meanwhile, we will comply with environmental protection policies, apply new technology and skills, promote the recycle economy, enhance comprehensive utilisation of resources and improve energy saving and emission reduction.

(2) Strengthen innovation management and enhancing working efficiency. First of all, we optimise purchase management. Advanced management mode is introduced, to step into the futures and spot markets, establish strategic cooperative relationships with quality customers, the mode named ˇ§purchase on demandˇ¨ was put on trial. Secondly, we will enhance financial management. A finance company is established to intensify the centralised management of the Group's fund and improve the efficiency of capital use so as to further increase the fund settlement, management, investment and financing ability. We make full use of the financing platform of the Hong Kong market. The capital of Chenming (HK) is increased in order to increase its credit line and expand its business scope, thereby lowering our financial costs and improve our profitability. Thirdly, we strengthened quality management. Quality is the essence of a corporation. Adhering to the object of improving quality and increasing economic benefits, the Company will strive to realise ˇ§all staff, whole process and the entire corporationˇ¨ quality management. Fourthly, we enhance the internal control construction. We optimise flow of internal control, bring risk-prevention management system into perfection, intensify and promote the transformation of internal audit into management audit and risk audit, perfect corporate legal risk-prevention mechanism and strengthen process oversights and management and control over significant risks.

(3) Adjust product portfolio and explore new markets. The Company will enhance product quality management, increase the development on high value-added products, produce popular products as well as increase the market competitiveness of products. Focusing on efficiency, the Company endeavour to develop its products into highend and high value-added products. It also endeavours to produce low-end products at low cost in order to meet client's needs, leverage on its low-cost edge and increase the efficiency. The Company will put more efforts in direct marketing and expand its overseas sales channels. The Company will target on major direct clients. Meanwhile, the Company will explore cooperation opportunities with strong major distributors, and increase the overseas market exposure of products via their sales channels. The Company will expand the marketing channels for its brand. The Company will organise promotion activities such as new products presentation based on the marketing needs of products, the Company and region. Hence, the recognition of Chenming brand will increase, which will fully enhance the brand image and influence of the Company.

(4) Strengthen team-building and improve staff quality. Human resources are the ˇ§major essentialˇ¨ for corporate development. First, the Company will develop an innovative staff development programme. Based on the development needs, the Company will recruit talents who possess advance and new technology knowledge, and management talents. The Company endeavours to develop a high quality team with the same philosophy as the Company and adaptable to the strategic development needs. Secondly, the Company will focus on its recruitment and training works. It aims to maintain a fair staff system and adhere to recruit talented staff with high moral standard while improving the structure of management team. Thirdly, the Company will enhance its staff training. The Company will conduct a people-oriented training. The Company will also increase its training efforts and enhance the technical standard of various position, aiming to develop as a learning and knowledgeable enterprise. A good working and living environment will be established, which strengthens staff's loyalty and unity to the Company.

(5) Build up Chenming corporate culture and promote culture promotion and implementation. The Company adheres to the establishment of corporate culture. It regulates the staff's conduct, strives to ˇ§achieve a high degree of integration of corporate governance and corporate cultureˇ¨ as well as ensures proper internal cooperation with all works conducted orderly. The Company will strengthen the establishment of culture system, its promotion and implementation, aiming to make all staff have a deeper understanding on Chenming corporate culture. Hence, the staff will voluntarily incorporate corporate culture into their works. In addition, this can promote incorporation of culture into thought and management and make corporate culture as a direction of all works, which can improve the quality and execution ability of staff. Hence, a brand new Chenming corporate culture is established.

Source: Chenming Paper (01812) Annual Results Announcement
Chairman CHEN Hongguo Issued Capital (shares) 391M
Par Value RMB 1 Market Capitalisation (HKD) 1,143M
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