China Zhongwang Holdings Ltd - Asia's largest aluminum extrusion product manufacturer - said it would invest 10 billion yuan ($1.6 billion) to build a plant in Tianjin for the production of high value-added merchandise that can yield better returns.

The company said the facility would be built to produce aluminum flat rolled products (FRP), which are widely used in aerospace, equipment manufacturing and transportation industries on the mainland.

At present, these high-end products are all imported, Lu Changqing, executive director and vice-president of Zhongwang, said in Hong Kong on Tuesday.

So far, the company has invested about 20 billion in the new plant. The money, he said, was mainly spent on buying the land and building the factory. Zhongwang plans to invest another 10 billion this year on buying machinery for its Tianjin production line. The plant is expected to start production at the end of 2015, said Lu, noting that output at full capacity would reach 500,000 tons.

Cheung Lap-kei, Zhongwang's chief financial officer, said the company's gross profit margin was 28 percent in 2014 - 1.2 percentage points higher than in 2013. Its net profit margin was 15.5 percent - up 0.6 percentage point from a year before.

He said the Tianjin plant is expected to contribute two-thirds of the company's total revenue in the long term.

Zhongwang posted revenue of 15.97 billion yuan for 2014 - up 11.6 percent from 2013. Its profit attributable to shareholders rose by 16.5 percent to 2.48 billion yuan.

Zhongwang said it earned 86.4 percent of its total revenue on the Chinese mainland last year, with the rest from overseas markets. Its major export market is the US. In 2013, the mainland market contributed 88 percent of the company's total revenue. The company declared a final dividend of 8 Hong Kong cents.

Lu said the operating environment for the aluminum processing industry in 2014 was favorable, thanks to government efforts in structural economic reforms and industry upgrade. What's more, market demand for aluminum alloy products had increased significantly, he said.

sophie@chinadailyhk.com

(HK Edition 03/18/2015 page1)