CIMC’s revenue rose by more than 40% in the first half with impressive result in its main businesses
On the evening of August 28, China International Marine Containers (Group) Ltd. (CIMC) released its performance report in the first half of 2017. As the report suggests, due to the recovering industry worldwide and continuously improving internal operations, CIMC’s revenue reached around 33.4 billion yuan in the first half of 2017, up more than 40% YoY. The net profit for shareholders and stakeholders neared 800 million yuan, much higher than that in the same period of 2016. The result looks quite impressive for CIMC since it became listed in 1994 and stays sustainably profitable. This September will mark the 35th anniversary of CIMC.
The report shows CIMC’s revenue reached 33.387 billion yuan, up 41.81% YoY. Compared with 2016, CIMC’s main business grew significantly, especially the two largest business segments - Container and Vehicles increased by 105% and 38% respectively, which are major contributors to CIMC’s revenue and profit. CIMC attained a big revenue rise in China, other regions of Asia and America, that is, up 90%, 75% and 56% respectively in America, China and other foreign countries.
Container business revenue doubled YoY, and the prospect remains promising
Though the proportion of container business revenue shrinks to less than 1/3 amid years of business diversification, it becomes No.1 contributor to CIMC’s revenue and profit again as global shipping industry is gathering steam.
Due to global macroeconomic environment, dwindling trade and periodic fluctuation of shipping industry, CIMC’s container business almost hit the rock bottom last year, but it rebounded robustly in 2017. According to performance data, CIMC remains dominant in global container market, and it is the world’s sole enterprise capable of independently designing and manufacturing 300+ types of container product. In the first half of 2017, CIMC’s container revenue reached about 10.05 billion yuan with net profit of 680 million yuan, up more than 105% YoY. 535,700 TEU dry containers were sold, up 124.8% YoY; 35,100 TEU refrigerated containers were sold, up 57.4% YoY.
According to the mid-year report of CIMC, global container transport grew more than expectation in the first half of 2017, contributing to a moderate reversal in supply-demand imbalance and rising freight rates. Customers purchased more new containers, as containers are in short supply presently and showcase a promising prospect. However, as the majority of container manufacturers in China began to introduce water paint into their production lines according to the industry’s self-discipline pact for environmental protection, the effective production capacity was affected. In addition, manufacturing cost started to rise in Q2, leading to a steady growth in container price in the first half of 2017.
The mid-year report of CIMC predicts global economy will continue to recover with growing international trade in the second half of 2017. Major securities institutions are all optimistic about container transport market and container demands in the second half of 2017 in their analysis reports. CIMC is expected to augment its container production capability in the future. The report reveals CIMC has increased HSE (Health, Safety and Environment) input in the process of container manufacturing, and new factories will be constructed. In addition, the project of new container factory in Fenggang, Dongguan, is under way and the Project Phase I is planned to be put into production in the beginning of 2018.
Vehicle business revenue neared 10 billion yuan, achieving record high
In the first half of 2017, CIMC’s vehicle business continued to grow robustly as it did last year and in Q1 2017, posting 38.6% revenue increase YoY and 57% profit increase.
It is noteworthy that the vehicle business revenue reached around 9.72 billion yuan in the first half of 2017, ranking No.2 in the eight business segments of CIMC. CIMC Vehicles’ business revenue hit record high on a semi-annual basis. Historical data showed Vehicles Segment’s annual business revenue peaked at 17.6 billion yuan in 2011, 90% of which came from China’s market. A few years onwards, China’s market began to shrink, so CIMC expanded its vehicle business presence in north America, Europe, Asia and Australia based on the operation philosophy of “Global Operation, Local Wisdom”. Presently, CIMC has established 25 production and R&D bases around the world and developed a product line covering 10 series and 1000+ types, including container transport semitrailer, flat/plate transport semitrailer, low flat transport semitrailer, vehicle transport semitrailer, box truck, van truck, tank truck, sanitation truck, special vehicles, etc. Overseas business makes up more than 50% of Vehicles Segment.
Years of thoughtful planning and efforts have finally paid off in recent years. In 2016, several business segments of CIMC grew slowly due to global macroeconomic environment, but vehicle business performed remarkably with 14% revenue increase and 34% profit increase. In the first half of 2017, the vehicle business performance remained impressive with a total of 81,500 units sold, up 39.9% YoY, which has further consolidated CIMC’s leadership in global semitrailer industry. More importantly, its profit grew faster than sales and revenue, and the net profit arrived at 570 million yuan in six months, up 57% YoY.
In the first half of 2017, CIMC Vehicles paid close attention to the policy of “stringent control on overloading and oversize” in China and took advantage of lightweight product trend and upgrading, achieving 55% of the projected revenue and profit of 2017; new factories were opened in north American market to boost production capacity, serve more territories and mitigate negative effects of periodic fluctuation; the century-old UK-based Retlan acquired by CIMC continued to collaborate with the other two production bases in Europe and took advantage of low cost to develop markets; among emerging markets of Asia, Australia and Africa, CIMC Vehicles grew rapidly in Malaysia, Vietnam and other countries along the “One Belt, One Road”. Thanks to effective collaboration in different markets, CIMC Vehicles thrived on the whole.
Other main businesses were on the rise, heralding huge market opportunity for natural gas equipment
CIMC ENRIC specializing in energy, chemical and liquid food equipment became profitable in the first half of 2017 with the revenue of 5.06 billion yuan (up 16.65% YoY) and net profit of 52.26 million yuan. CIMC ENRIC’s energy, chemical equipment products and services extend to every part of China, and are exported to south Asia, Europe, north America and south America; its liquid food equipment production base is located in Europe and China and provides products and services worldwide. In the first half of 2017, the three businesses of energy equipment, chemical equipment and food equipment realized revenue growth, and the UK’s famous liquid food equipment company-Briggs acquired by CIMC last year came into play.
CIMC ENRIC recovered from the loss resulting from the risk caused by the acquisition of Sinopacific Offshore & Engineering (SOE) last year.
In July, ENRIC made an outright purchase of SOE again with 800 million yuan spent to pay off all debts of SOE, and obtained the latter’s assets worth 1.3+ billion yuan, excellent management team and several operating projects. The deal was closed in August. Sinopacific Offshore & Engineering held a resumption ceremony and was renamed “CIMC SOE”, extending ENRIC’s strong business in natural gas storage and transportation equipment to offshore engineering. This move has further improved ENRIC’s natural gas equipment industry chain. According to the debt-paying ability analysis report provided by the bankruptcy administrator of SOE, CIMC ENRIC could recover about 191 million yuan from the previous fund offered to Sinopacific by June 30, 2017. Therefore, CIMC needs an additional provision of 106 million yuan for depreciation within the reporting period.
During the purchase in July, thirteen departments like NDRC and National Energy Administration issued the Opinions on Accelerating the Utilization of Natural Gas. According to the Opinions, China’s energy consumption structure will prioritize natural gas. The proportion of natural gas consumption will increase to 15% by 2030 from 4% presently. Industry participants are affirmative that China’s natural gas industry will enjoy a long “golden period” of development. As China’s natural gas industry has huge room, quite a few analysis institutes are positive on this deal.
CIMC’s offshore business didn’t stop losing money, as it was hit hard by the industry’s persistent doldrums. However, as oil price rose, offshore market was recovering slowly with increasing offshore inquiries and bidding projects. CIMC Offshore Segment is continuously exploring diversified offshore service industry, so it inked Letter of Intent on Smart Net Case worth 250 million USD with Norway and cooperation agreement of two floating power ships with an Indonesian company. In addition, the “Blue Whale No.1” built by CIMC succeeded in mining “combustible ice”, which generated an income of 3-month lease.
Logistics Segment achieved the revenue of about 3.75 billion yuan and net profit of 57.34 million yuan. The revenue experienced an increase. CIMC sold 4438 heavy-duty trucks, up 48% YoY, which generated sales revenue of 1.28 billion yuan, up 49.15% YoY. Airport Facilities Segment realized sales revenue of 1.18 billion yuan, up 4.65% YoY. Finance Segment realized the revenue of about 1.15 billion yuan, up 3.02% YoY. Real Estate Segment generated the revenue of about 300 million yuan and profit of 65 million yuan. The profit went up. In July, CIMC Industry & City brought in strategic investor Country Garden Holdings, which will make better use of CIMC’s land resources and provide new driver for growth.
New business achieved gratifying breakthrough, Modular Building Business formulated first enterprise standard
Apart from the eight business segments, CIMC also had new breakthroughs in innovative business. Modular Building Business made breakthroughs in the world market: it closed the first deal of batch project in the US market; it will be likely to ink the first deal of high-rise buildings in Australian market in the second half; it delivered several Hilton Hampton projects at Aberdeen Airport, Bristol Airport, becoming a major supplier of British hotel market; it got the deal of first sample house in African market in the first half and is expected to win batch order in the second half of 2017.
The Norms on Steel Structure Integration Modularized Building System developed by CIMC was approved and became China’s first enterprise standard of such building system. It will become an important means to lead and develop modular building market in China. Meanwhile, CIMC’s self-developed pre-installed cladding made significant progress, representing a symbolic measure to develop high-rise buildings and promising more efficient modular building completion in the factory. In addition, a few important modular building projects are under way in Shenzhen and Jiangmen, and will be delivered in the second half.
In the second half of 2017, Modular Building Business will continue to boost its presence in England and Australia, and make more efforts to expand new markets in Africa and north Europe. The implementation of “One Belt, One Road” Initiative and Xiongan New Area construction have brought new opportunities for CIMC Modular Business, so several big projects will be carried out. CIMC is committed to upgrading enterprise-level technical norms to Chinese industry standard and advancing the standardization of modular building in China through establishing standards on modular steel structure. In addition, CIMC signed strategic cooperation agreement with China Construction Steel Structure Corporation so as to maximize collaborative advantages and grow integrated steel structure building market.
CIMC Intermodal Development Co., Ltd. taps into CIMC’s strong resources, takes advantage of the government policy of further encouraging the development of intermodal transport and realizes effective use of multimodal transport. Meanwhile, CIMC Intermodal Development is also increasing efforts to expand markets at home and abroad. In the first half of 2017, CIMC Intermodal Development Co., Ltd. made steady business development in rail-sea intermodal transportation and formed companies in the US to grow US market and develop China-north America intermodal transportation business. In highway-railway combined transport, CIMC Intermodal Development opened 6 railway container trains in China and initially formed intermodal transport network covering south China, central China and northwest China; it continuously promoted applications of new containers like tank container, 35t open top container and coil steel container; it achieved rapid growth in international rail-sea intermodal transport business, equipment logistic, steel business and highway-railway combined transport business.