Continues with prudent strategy for development
grasps opportunities for developing the overseas market and
overcomes the market challenges with strengths and great resilience to create shareholder value for the long term
(29 August 2024 - Hong Kong) China Lesso Group Holdings Limited (“China Lesso” or the “Group”, SEHK stock code: 2128), a leading large-scale industrial group that manufactures piping and building materials in China, announced its interim results for the six-month period ended 30 June 2024 (the “Period”).
In the first half of 2024, despite the pressure exerted by the domestic economic slowdown and subdued property sector on businesses’ operation, China Lesso continued to forge ahead and adhered to a prudent approach to development and maintained steady development in its business with great resilience. During the reporting period, it recorded revenue of RMB13,564 million (1H 2023: RMB15,297 million). Gross profit was RMB3,728 million (1H 2023: RMB4,259 million) and gross profit margin was stabilised at 27.5% (1H 2023: 27.8%) mainly because decrease in sales volume of plastic piping systems business with costs of the raw materials stayed at a low level and the Group made timely adjustments to the products’ average selling prices. Profit attributable to owners of the Company decreased by 30.2% year on year to RMB1,043 million (1H 2023: RMB1,494 million). The decrease in the profit was mainly due to gross profit decline of RMB531 million and decrease in share of results of associates of RMB117 million. Basic earnings per share were RMB0.34 (1H 2023: RMB0.49).
In the first half of 2024, the Group further developed its mainstay business of piping system. It proactively innovated its products horizontally for various sectors and vertically along their value chains and diversified its piping by developing and launching more new products while gradually reducing its reliance on the market of the property sector. It developed new products such as piping for the transmission of hydrogen and oil to grasp opportunities in the markets for the application of piping in certain sectors with growth potential, and thus expand its market share. The plastic piping systems business recorded revenue of RMB11,219 million (1H 2023: RMB12,233 million), accounting for 82.7% of the total revenue of the Group (1H 2023: 80.0%).
In the first half of 2024, sales volume of the Group’s products decreased by 5.7% year on year. The average selling price edged down by 2.8% year on year to RMB9,330 per tonne (1H 2023: RMB9,596 per tonne). The gross profit margin at this business was 29.5% (1H 2023: 30.0%).
The Group stepped up its pace of expansion into overseas markets by accelerating the localisation of its brand there with its strong technology capabilities and its advantageous piping product systems. In addition to its production bases in Indonesia, Cambodia, Thailand and Malaysia which have already been put into operation, the Group had also been preparing to develop the markets of Tanzania in Africa and Vietnam by localising its production and sales there. Presently, the Group is carrying out preliminary work for setting up factories in the two countries with good progress. Specifically, its production base in Vietnam is expected to start operation in the fourth quarter of 2024. Through its mainstay business, the Group will enhance the synergy between its diverse operations when developing the overseas markets so as to expand its share of the international market and increase its overall influence there. Overall, management is confident about the future development of the plastic piping systems business, and believes that the operation will be able to deliver steady business performance for the Group.
For other businesses, the building materials and home improvement business recorded revenue of RMB1,080 million, accounting for 8.0% of the Group’s total revenue. The environmental protection business recorded revenue of RMB131 million. The new energy business recorded revenue of RMB157 million. In addition, the Group succeeded in spinning off its subsidiary, EDA Group Holdings Limited, through a separate listing on the main board of the Hong Kong Stock Exchange. For the first half of this year, supply chain service platform business recorded revenue of RMB769 million.
Mr. Wong Luen Hei, China Lesso Chairman and Executive Director said, “In the second half of 2024, the world’s complicated political and economic environment will still pose challenges to China’s economic growth, but the momentum of the country’s development for the better will continue. The Chinese government is expected to proactively push forward with its macroeconomic measures to revitalise the market, stimulate its organic growth, and foster the high-quality and healthy development of the economy. China Lesso will continue with its prudent strategy for development according to the market conditions, and try its best to minimise the impact of the business environment on its business development. It will also give full play to the core competency of its intelligent manufacturing and unceasingly conduct product innovation and upgrading, thereby adding impetus to the Group’s high-quality development. Meanwhile, it will grasp opportunities for developing the overseas market through the localisation of its brand, production and sales, thus increasing its brand’s influence and market penetration and broadening its income source. The Group will overcome the challenges in the market with its strengths and great resilience to create shareholder value consistently for the long term.”
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About China Lesso Group Holdings Limited
China Lesso Group Holdings Limited is a leading large-scale industrial group that manufactures piping and building materials in China. After 38 years of rapid development, the Group has evolved into a leader in the industry of building materials and home improvement. It provides high-quality products and services such as plastic piping, building materials and home improvement, new energy, environmental protection, and operates a supply chain service platform.
Currently, the Group has established over 30 advanced production bases in 19 provinces of China and in foreign countries. The Group has established a nationwide sales network and has also developed long-term strategic partnerships with 2,891 independent and exclusive first-tier distributors that enable timely and efficient supply of comprehensive, quality products and professional services to customers. As an integrated manufacturer of a comprehensive range of piping and building materials, China Lesso provides over 10,000 types of quality products, which are widely applied to such fields as home improvement, civil architecture, municipal water supply, drainage, energy management, electric power transmission, telecommunication, gas supply, fire services, environmental protection, agriculture and marine aquaculture.
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