Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
CECEP COSTIN
HKEx Stock Code : 02228 
 
Corporate Profile
The Group is principally engaged manufacture and sale of non-woven fabrics and other types of non-woven materials; manufacture and sale of chemical fibres produced from recycled materials such as PET chips; and manufacture and sale of chemical fibres produced from recycled materials such as PET chips.

Business Review - For the year ended December 31, 2012

In 2012, overwhelmed by the macro-economic environment, the debt crisis in Europe and the US lingered with lackluster global demand and escalating trade frictions. The global economic outlook remained gloomy as the manufacturing sector continued to contract throughout the first three quarters of the year. In spite of that, the breakneck growth for over 30 years brought along severe environmental pollution and made environmental protection an inevitable issue in the People's Republic of China (the ˇ§PRCˇ¨). In the National 12th Five-Year Plan, the PRC Government expressed the stance to tighten the regulation on environmental pollution and listed the new materials industry as one of the key development fields. We believe that the potential for market growth in the PRC will persist with increasing emphasis on the market as desire for environmental protection surge and construction standards raise. In response to the changing market, we strive to facilitate product upgrade and production model transformation, so as to embrace the growth opportunities for the Group in the course of satisfying future market demands.

Key products of the Group include differential recycled chemical fibres, non-woven materials with 3D engineering structure and thermal resistant filtration materials. The Group's products have been widely applied as raw materials in the manufacturing of consumer goods and industrial products including filter materials and filtration bags, decoration materials, shoe materials, household materials, chemical fibres and chemicals. The Group also provides tailor-made products that satisfy the specific requirements of different customers, including non-woven materials with special functions such as waterproof, antibacteria, anti-UV and flame retardant.

Non-woven materials with 3D engineering structure

In respect of non-woven materials with 3D engineering structure, as at 31 December 2012, the Group has 17 stitch-bonded production lines with a production capacity of approximately 103 million yards per annum; and 9 needle-punching production lines with a production capacity of approximately 57 million yards per annum; bringing the aggregate production capacity to approximately 160 million yards per annum. Such materials are less susceptible to downturns of an individual industry as they have a wide range of applications, leading to a broad customer base. Despite the economic slowdown in 2012, the sales volume of non-woven materials of the Group increased by approximately 5.1% with sales revenue up about 12.7% as compared with 2011 . Meanwhile, the average product selling price was 6.8% higher than that of 2011 , retaining a higher gross profit margin.

Recycled chemical fibres

As at 31 December 2012, the Group has 2 production lines in total with an annual production capacity of 42,000 tons, handling 53,000 tons of PET chips per annum. Affected by the dormant market environment in the PRC, the selling price of recycled chemical fibres declined slightly in 2012. However, the gross profit margin of recycled chemical fibre products only decreased slightly as the price of PET chips, a major raw material for the fibres, also dropped.

Thermal resistant filtration materials

In respect of thermal resistant filtration materials, the Group currently has 3 production lines with a production capacity of 21 million sq.m. per annum. As the production lines of thermal resistant filtration materials were put into operation only in the fourth quarter of 2011 , and the sale is still at its incipient stage, there has been little profit contributed to the Group. Although the filtration materials business stands at the incipient stage, the market response is positive as the products have been used by down-stream and associated enterprises engaged in the manufacturing of environmental protection equipment. It is believed that the bag-type thermal resistant filtration materials sector will keep the momentum in next year as the PRC Government raises the smoke and dust emission standards for coal-fired power generation and related industries. In March 2013, the Group signed a framework sales agreement with China Energy Conservation and Environmental Protection Group (ˇ§CECEPˇ¨), which has further strengthened the sales cooperation between the Group and the CECEP.

Business Outlook - For the year ended December 31, 2012

To tackle the challenges brought by international financial crisis and global climate change, major economies in the world have turned to green policy and green economy as a solution to stimulate economic growth and transformation. In recent years, the PRC has been vigorously promoting the energy conservation and environmental protection industry which becomes a new economic growth engine and an emerging pillar industry as well as one of the national accentuations of sustained development.

Domestically, the environment issues such as severe air pollution and water pollution caused by the progress of industrialization have garnered increasing attention to environmental protection. To this end, the PRC firmly implements the National 12th Five-Year Plan, which includes accelerating the development in the energy conservation and environmental protection industries, advancing energy conservation and emission reduction with established binding targets, developing green economy, expediting the upgrading of the technical equipments and service standards of the energy conservation and environmental protection industries, so as to maintain a steady and healthy momentum of the PRC's sustainable development.

Source: CECEP COSTIN (02228) Annual Results Announcement
Chairman CHIM, Wai Kong Issued Capital (shares) 776M
Par Value HKD 0.1 Market Capitalisation (HKD) 2,679M
 
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