Monday, November 30, 2020
 
Columnist
Martin Hennecke
 
CHALIECO
HKEx Stock Code : 02068 
 
Corporate Profile
The Group is a leading technology, engineering service and equipment provider in the nonferrous metals industry in China, capable of providing full business-chain integrated engineering solutions throughout various stages of the nonferrous metals industry chain.

Business Review - For the year ended December 31, 2012

During the financial year ended 31 December 2012, the domestic and global economic environment faced heightened complication and uncertainties, coupled with structural changes in various domestic industries, enterprise transformation as well as the fierce competition in engineering infrastructure market. In face of the headwind generated from the changing operation environment and competition pressure, the group has leveraged on the advantage inherent in the integrated platform of the Company by means of state ¡V owned company and finance channel. Its leading position in design and engineering and construction in nonferrous metals field has been maintained by strengthening its cooperation with the government and actively engaging in business communication and project negotiation with various local governments. The Groups remarkable engagement has landed it with large number of engineering projects beyond the industry of construction municipal facilities, affordable housing and civil construction industry. The group has significantly enhanced its brand awareness and lay solid foundation for market expansion in other industries in 2013. The highlights in this regard are as follow:

1. Enhanced competitiveness and expanded business coverage. In converging its pace with the development trend of emergent industries and meet the need for business expansion, the Group has enhanced its qualification on professional consultation by introducing relevant professional consultation, assessment, design and construction consultation. The process involved upgrading original qualification. All the above measurements have granted a permit for the company to penetrate the new business arena. Conjunctively, the Group's effort is seen in integrating energy conservation, environmental protection and safe technology into its product and services. The development outlook of the Group is promising particularly driven by its development of new businesses and growth generator by means of industrialization.

2. Business features with typical export-oriented structure. Business areas beyond the nonferrous industry experienced significant growth and showed diversities, which involved area reconstruction of inner-city village, construction of affordable houses, municipal facilities and highway. The Group achieved remarkable accomplishments on strategic transformation and structure restructuring.

3. The profitability of the Group has been secured by seeing the smooth progress of several projects under construction.

On 26 December 2012, the alumina plant situated in Lam Dong, Vietnam as contracted by the Group's EPC successfully commenced its production. This is the first plant ever in the history of Vietnam which has been officially put into production. Apart from this, over RMB400 million of investment fund has been recovered from the conclusion of repurchase contract of Chongqing Liangjiang Public Rental Housing projects. Following this on, contracts of subsequent projects will be executed on more favourable terms and conditions which will avoid the risk in capital injection in the projects. This project is the first close loop operation for our BT (Build ¡V Transfer) project and the Company has achieved valuable experience in this area. As for the first EPC contracting project of the Group located in Venezuela ¡V the production capacity restoration project of ALCASA aluminium industry is smoothly progressing according to plans. The design, purchase and relevant equipment manufacturing are 80%, 78.5% and 50.85% completed respectively.

4. Implementation of overseas business layout and accelerating the coverage of networking. In accordance with the oversea developing plans, which intend to build four major overseas business bases in South East Asia, South America, Middle East and Central Asia, the Group established branches or subsidiaries in Venezuela, Saudi Arabia and India, and set up a representative office in Vietnam, gradually formed an international information network and operation network, creating fundamental pre-conditions for target market penetration and development, i.e. the regions with rich resources. Meanwhile, we strived to pitch potential clients and carry out preliminary tracking by developing international markets, such as Venezuela, Norway, Turkey, Russia, Brazil and Kazakhstan, providing a solid basis for projects to be implemented in 2013.

The aggregated value of contracts newly signed amounted to RMB36,700 million, representing an increase of 27% as compared with the corresponding period over last year. For the year ended 31 December 2012, the aggregated value of outstanding contracts amounted to RMB46,500 million, representing an increase of 45% as compared with the end of 2011.

Business Outlook - For the year ended December 31, 2012

The year of 2013 will be the first ten-year anniversary of the Company since its establishment, and also be a crucial year for the Company to realize the development target of ¡§Twelfth Five Year Plan¡¨, a year serves as a link between the past and future of the Company.

The uncertainties are still shrouding over the global economy, depressed growth rate with rocky recovery path. The economy growth of China still faces various risks and challenges given the continuous implementation of proactive fiscal policies and prudent monetary policies.

Looking at to the engineering construction market, investment sentiments may be curbed as a result from over production capacity in the domestic nonferrous metals industry, pressures from environmental protection and losses across the industry. Engineering projects such as municipal, building material and transportation projects confronted harsh competition and high demand of capital advancement that may stress profit margin. However, generally speaking, China and emerging markets of the world are in such circumstances with strategic opportunities. The Group will firmly grasp the new opportunities to develop and adjust its strategy timely in accordance with the trend as well as become well-prepared for the risks, so as to achieve our objective of becoming the first-class engineering company.

As such, the Group proposes its guiding ideology for 2013: aiming to become an engineering technology services group with unique advantage, by leveraging market reform serves as opportunity, innovative technology serves as driving force, structural adjustment and operational transformation serve as grasp, so as to actively enhance our management level and competitive edges and ensure the full realisation of operational targets of the year for a new dimension of the Group's development. The following areas are set to be focused in 2013:

(1) Actively Introducing Market Mechanism and Spurring up the Vitality of Corporate Development

The Group will advance market-oriented reform in full swing to activate the operational management, enhance the quality and efficiency of the Group's development. It would be tackled in the following ways: firstly, implementing a market-oriented operating mode. By pursuing a variety of equity interests in the new industrialisation projects, fully refer to the successful experience of excellent private enterprises in the existing industrialisation projects to enhance the competitiveness edges; secondly, utilizing market-oriented method to select and employ talents. The Group will gradually kick off open recruitment pilots in its branches and subsidiaries to break the bureaucratic limits and actively promote rejuvenation of cadre; thirdly, utilizing market-oriented method to hire labor force. Under the framework of Labour Contract Law, flexible and various forms of laboring usage are chosen to form a mechanism that allocates human resources in a market-oriented way and an employment mechanism under which the employees can be easily hired or dismissed; fourthly, allocation of remuneration in market-oriented way. The remuneration of the Group's core staff and key positions will be in line with the market while the staff's remuneration is maintained with minimum basic salary without cap in order to truly realize the gain of remuneration according to efforts and contribution; fifthly, assessment mechanism with market-oriented. It aims to further optimize the standard system of assessment and enhance the scientificity and operability. Importance will be attached on the enhancement of assessment on construction projects and industrialisation projects to optimize the system of risk management and evaluation, award and penalty.

(2) Overall Planning to Utilize International Resources and Supporting the Group's Leaping Development

In 2013, the Group will fully leverage the beneficial advantage of its international reputation and enhancement of financing ability after the listing in Hong Kong in order to solidify crucial steps of ¡§go abroad¡¨ and towards the path of internationalized operation.

Firstly, globalized market. The Group will devote more efforts on developing overseas markets by exporting advanced technology and core products. It will also seize the preliminary work in those key projects in countries such as Venezuela, Brazil, India and Turkey to procure early execution of contracts and construction commencement. The Group will place importance on enhancing the influence of overseas institutions and plan to establish branches or representative offices in places such as Brazil and Russia.

Secondly, globalized resource. We will strengthen our communication and contacts with industry associations, commercial departments, diplomatic institution, international contractors, suppliers, research institutions and commercial banks all around the world, so as to obtain resources such as various information, technology, fund and talents; we will enforce our co-operation with world-renowned engineering companies and technical companies, so as to accumulate experience by means of joint design, technical research and development general contracting, as well as culture and introduce international talents; we will intensify our co-operation with multi-national companies in China, leveraging their overseas operational capability and funding approach to carry out our business so as to take advantage of the existing resources and develop new resources.

Thirdly, globalized operation. The Group will encourage our overseas subsidiaries and representative offices to contract business or even implement the project independently, and promote the localisation of overseas departments. We will proactively explore the operation mode of our overseas business and building own brand of China Aluminum in the global market.

(3) Building Concept of Value Firmly and Advancing Market Expansion of the Group

First of all, we will solidify a concept of creating value to customers and further transform this concept into voluntary action of the staff. We will adhere to the marketoriented principle and treat the need of the customers as our direction and driving forces, at the same time, adjust our work planning to set up and reinforce a working system to provide service to our customers.

Secondly, we will strengthen our efforts on exploring the market so as to support sustainable development of the Group with sufficient volume of business contract. We will intensify our competitive edges in nonferrous metals industry, with an attempt to realize the upgrading and reformation of the industry, to capture high-end part of industrial value chain by means of core technique and professional services. We will continue to advocate transformation of business structure to more diversities in full swing, and closely follow the development trend of urbanisation, moreover, with the social financing tools, our financing channel would be broaden and the expansion of general contracting was thus be supported.

(4) Accelerating in Building a Platform for Research and Development and Promoting Transformation of Technological Achievements

Our technological work will be set to be market-oriented, and the selected scientific research subjects will be based on market demands, which aim at fundamentally solving the issue of disconnection between technological achievements and market trends with the goal of promoting the application and transformation of technological achievement. We will enhance our protection on intellectual property, further facilitate the implementation and industrialisation of intellectual property, which will serve a role to the scientific research, production and operation of the Group.

Furthermore, we will enforce our fundamental work in scientific construction, support subsidiaries to build technical center for research and development and apply to become a provincial or national engineering or technical center. We will actively engage in carrying out material co-operation with world-renowned technical companies in the areas of electrolytic aluminum, alumina, carbon, copper-smelting and processing, and establish an international research and development platform. We will build a technical team with strong innovative ideas, high technical level and various hierarchy, with an effort on creating a scientific research environment which emphasizes on technique and talents.

(5) Overall Implementing of Operational Transformation and Consolidating the Foundation of Management

Promoting the operating transformation is an important step to consolidate the fundamental management of the Group. The quality of investigation and design will be the prioritized issue to be solved in the investigation and design subsidiaries. Selfexamination and rectification as well as diagnosis on the management will be conducted all-roundly, in order to identify the prominent problem and weakness the curb so as to enhance the project quality. Regarding to this aspect, the relevant subsidiaries will firmly implement, ensure the elimination of the limits and achieve breakthrough. Besides, cost control will also be the key issue that construction subsidiaries should work out, which will put great efforts on the bench marking with excellent companies both domestic and aboard, fine-tune and optimize measures in equipment materials purchasing, project sub-contracting, tendering and bidding management and contract management, so as to overall enhance the economic efficiency of projects constructing and contracting.

Source: China Aluminum (02068) Annual Results Announcement
Chairman Zhang Chengzhong Issued Capital (shares) 399M
Par Value RMB 1 Market Capitalisation (HKD) 1,178M
 
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