?

Hailiang Company Limited is Expected to Reach 700000 tons of Copper Sales Volume

On Oct., 23, Hailiang Company Limited released the report on progress of Phase 1 employee stock ownership (ESOP) initiative. According to the report, by Oct., 22, 2018, 426 employees including corporate senior management level and core technicians, based on their confidence for the Company’s future development and judgement of the Company’s share value, actively subscribed with own funds Phase 1 ESOP initiative, total subscription of RMB 94.3407 million; Phase 1 ESOP initiative has accumulatively subscribed company shares totally 5.0293 million shares in the way of call action in SZSE by “Guangfa Yuanchi Hailiang Shares No.1 Oriented Assets Management Initiative” established by Guangfa Securities Assets Management Co., Ltd, with total turnover of RMB 36.8439 million and average trading price of RMB 7.33/share, accounting for 0.2966% of corporate equity base.

Some analysts believe the subscription of company shares by employees represents their huge confidence for the Company’s future and share price. This time, Hailiang employee share-holding initiative being implemented through call action in secondary market will contribute to establishing and improving the mechanism of benefit sharing and risk sharing, enriching the Company’s motivation patterns and optimizing motivation systems, so as to further enhance internal cohesion and facilitate the long-run, continuous and sound development. A research report released by Zhongtai Securities also pointed out that ESOP initiative by Hailiang Company Limited manifests the huge confidence among management level.

According to disclosed information, Hailiang Company Limited has been dedicated to the R&D, manufacturing, sales and service of high-end copper products, copper-aluminium composite material, and aluminium material. This company has grown into one of the key domestic copper pipe manufacturers. In 2018, Hailiang Company Limited reached operating income of RMB 31.989 billion in Q1, Q2 and Q3, with a YOY growth of 54.42%; net profit attributable to listed company shareholders was RMB 691 million, with YOY growth of 20.18%; in the reporting period, net cash flow generated by operation was RMB 2.147 billion, with YOY increase of 199.01%.

Based on the Hailiang’s performance in Q1, Q2 and Q3, Zhongtai Securities believes Hailiang’s copper sales volume is expected to reach the scale of 700000 tons in the whole 2018, with YOY increase of 26.5%. Continuous growth of yield of copper is a main driving force for great progress in performance in Q1, Q2 and Q3. In the meantime, it is estimated that by 2020, Hailiang’s copper pipe capacity will increase to 820000 tons. Its future is worth our expectation.

In the larger picture, the whole industry where Hailiang lies in, now we are facing an inflection point of copper pipe and leading enterprises will be likely to welcome brand premium. When it comes to demands, downstream clients in copper pipe manufacturing world are in greater needs for high-performance, high-precision and low-consumption copper pipes. Since 2015, Hailiang’s copper pipe has been on the rise in market share, reaching 14.53% in 2017. According to the plan, by the end of 2025, the Company’s copper pipe sales volume will be 1.23 million tons and the market share will increase to 42%. Consumption upgrading will lead to the acceleration of copper pipe needs in building tubes so copper consumption is likely to increase. The supply side tells us that backward capacity will be eliminated and industrial concentration will be further enhanced. In the context, as a leading enterprise, Hailiang will further consolidate its bargaining power and its copper pipe products is hopefully approaching brand premium. Its copper pipe product is very like to enjoy a situation where quantity and price both go up.

Hailiang Company Limited expressed itself that in the future, it will rely on its tremendous strengths to plan new development and goals from the views of wholeness. Starting from 2025 development strategy, it will continue to improve its copper processing industry and strive to bring about its development vision of “being a global great master in nonferrous material smart manufacturing”.