Zhongfu Industry: Give full play to the advantages of the whole industry chain Aluminum deep processing + IDC dual engine development

In the first quarter of 2017, Zhongfu Industrial achieved a net profit of RMB 3,0. In the first quarter, the company realized operating revenue of 2.832 billion yuan, a year-on-year decrease of 12.25%; operating costs of 286,500 yuan, a year-on-year decrease of 9.76%, of which financial expenses fell 12.20% year-on-year, mainly due to the company's bond issuance debt repayment. The net profit attributable to the shareholders of the listed company was RMB 3,604,800, a year-on-year decrease of 96.80%; the investment income was RMB 1,310,000, a year-on-year decrease of 149.07%.

The aluminum deep processing project was put into production, and the entire industry chain has obvious advantages. The company has now formed an integrated industrial chain of “coal-electricity-aluminum-aluminum deep processing” with deep processing of aluminum. The company has an electrolytic aluminum production capacity of 7.4 million tons, aluminum processing capacity of 750 million tons, coal production capacity of 2.55 million tons, and carbon production capacity. 150,000 tons. The company has an annual output of 130,000 tons of high-precision aluminum strip cold rolling projects and an annual output of 50,000 tons of high-performance special aluminum materials. The project mainly produces high-strength and high-toughness alloy plate for aerospace, petrochemical, transportation and other industries, and related products. It has obtained certifications from China Classification Society, American Classification Society, British Classification Societies, and the Norwegian Classification Society for product certification and TS16949 automotive panel certification. It has obtained the CE-PED pressure vessel product factory certification certificate from the European Union. As the company's aluminum precision deep processing project is gradually put into production, it is expected that the production and sales volume of aluminum deep processing products will also gradually increase.

It is scheduled to increase its entry into the IDC and its future performance will be expired. The company plans to raise funds with non-public offering of shares not exceeding RMB 3.150 billion to repay interest-bearing liabilities and invest in Henan Cloud Computing Data Center project. It is estimated that within 10 years (including the construction period), the project will realize a total operating income of 6.273 billion yuan, a cumulative net profit of 2.128 billion yuan, and a construction investment recovery period of 5.48 years (including the construction period), which will effectively increase the company's profit level. In April 2017, the company’s non-public offering of bonds received a letter of no objection on the listing of the Shanghai Stock Exchange. Within 12 months from the date of issuance of the “No Objection Letter,” the company will stage company bonds for non-public offerings of QFII that are not to exceed RMB 2 billion in installments. The funds raised will be used to supplement liquidity and repay the company’s various interest-bearing debts. Greatly ease the financial pressure of the company.

Under the double influence of supply side and environmental protection, the price of electrolytic aluminum rebounded and the self-sufficiency of electric power was controllable. Affected by both the supply side and the environmental protection policy, the aluminum price in 2016 showed an overall upward trend and the oversupply situation improved significantly. More than 94% of the power required by the company's headquarters was purchased from its subsidiary Zhongfu Power and the installed capacity of thermal power generators was 900,000 kilowatts. The subsidiary Linfeng Aluminum Power Co., Ltd. became a pilot unit for direct power supply in September 2013, and the cost of electricity continued to decrease. The industry is picking up, the cost is controllable, and future performance can be expected.