Chinese State-Owned Industrial Giant Returns to Profit After USD850 Million Loss Last Year
Liao Shumin
DATE:  Aug 18 2017
/ SOURCE:  Yicai
Chinese State-Owned Industrial Giant Returns to Profit After USD850 Million Loss Last Year Chinese State-Owned Industrial Giant Returns to Profit After USD850 Million Loss Last Year

(Yicai Global) Aug. 18 -- State-owned China First Heavy Industries Co. [SHA:601106], one of the largest heavy machinery and equipment manufacturers in the country, had a landmark turnaround in fortunes in the first half of this year, with net profits up to CNY19.6 million (USD3 million) after a CNY678 million (USD102 million) loss a year earlier.

The company recorded an overall CNY5.67 billion (USD850-million) loss for the full-year 2017.

CFHI reported first half revenues of CNY3.99 billion, an annual increase of 165 percent, and attributed the earnings to the deepening corporate reform.

The firm adopted a marketing-oriented management model in the second half of 2016, leading to rapid growth in orders and a significant increase in revenue. A range of measures were also implemented to reduce costs.

First-half sales increased 268.4 percent on the year to CNY6.07 billion, while payments grew 165.5 percent to CNY5.78 billion.

Founded in 1954, CFHI is one of 53 state-owned backbone enterprises managed by the central government. The State-owned Assets Supervision and Administration Commission of the State Council holds a 62.1 percent stake in the company, and China Securities Finance Corp. Ltd. and Central Huijin Investment Ltd. hold 1.35 percent and 0.62 percent stakes, respectively.

CFHI produces large castings and forgings parts for nuclear power components and can provide a complete set of nuclear reactor pressure vessels, stabilizers, and evaporators in China. As a former leading nuclear power concept stock, it once recorded a market value of over CNY130 billion. It's currently worth around CNY27.2 billion.

Since 2015, the firm has suffered 24 consecutive months of losses. It attributed this to the macroeconomic situation. Overcapacity in the machinery and equipment making sector and a sluggish market resulted in fewer orders and a sharp drop in sales revenue.

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Keywords:   MSCI,China First Heavy Industries,Nuclear Power