Hangyang, the largest air separation unit (ASU) manufacturing company in China and listed in the Shenzhen Stock Exchange, has announced its 2013 annual results and seen gross revenue rise.

Compared with 2012, the gross revenue in 2013 has increased by 3% to RMB 5.502bn (approx US$917m), operating profit has dropped drastically by 41% to RMB 323m, of which the profit attributable to the parent company has dropped significantly by 49% from RMB 452m to RMB 231m.

In 2013, the company won a contract to supply six 100,000 Nm3/h ASUs to Shenhua Ningxia Coal Industry for its indirect 4 million tonnes per year (tpy) coal liquefaction project, with a contract value of RMB 1.695bn, and has supplied a 120,000 Nm3/h ASU in Iran. Revenue generated by sales of ASUs in 2013 reached RMB 3.131bn, a decrease of 15% from 2012.

The company explained in its announcement that the performance is due to the unfavourable macro financial situation, as well as price competition and increase in costs, leading to a decrease in gross sales profit, operating profit and net profit compared with 2012. In particular, the drop in ASU business is because of the priority of its manufacturing capabilities on serving the development of industrial gas business and so, selling the equipment to customers has decreased as expected.

Under the regulations, equipment manufactured and sold to the industrial gas companies of the parent company cannot be accounted for in the sales revenue. Nevertheless, the total sales value of the contracts signed in 2013, to supply 22 sets of ASUs, has increased by 9% to RMB 4.625bn (in which petrochemical equipment accounts for RMB 620m).

“ASUs are indispensable equipment for the new coal chemistry industry and so the construction of new coal chemistry projects in the future will expedite the new demand of ASUs”

The company also stated in its annual report that, “In recent years, there is over-capacity in traditional industry, together with the serious competition, [this] has caused the demand of medium and small size ASUs to drop gradually.”

“However, the boom of coal chemistry industry, especially the new coal chemistry industry, has brought new market opportunities for large size and very large size ASUs. ASUs are indispensable equipment for the new coal chemistry industry and so the construction of new coal chemistry projects in the future will expedite the new demand of ASUs. And with the support of relevant policies of the country, the domestic manufacturing of large size and very large size ASUs is expected to gain more share, year-by-year. The company, as the leading enterprise of the domestic ASU equipment industry, will benefit substantially from the major development of the coal chemistry industry.”

For the industrial gas business, 2013 saw the company establish four new gas companies, making it a total of 26 gas companies and a total investment of RMB 6.250bn. With the start-up of its new 80,000Nm3/h ASU in Guangxi running smoothly, revenue generated from the industrial gas business has increased by 66.64% compared with 2012, to approximately RMB 1.938m – accounting for 36% of gross revenue.

At present, the total installed capacity of all its gas companies in operation is 950,000 Nm3/h; it is expected that when all units are put into commercial operation, the company will generate a revenue of around RMB 4bn per year.

Looking ahead

As for 2014, the company has set several points for its business plan and is keen to strengthen its activities across the broad spectrum of its operations.

These points include:

1. Exploring with full force the equipment sales market

2. Optimising the production organisation and enhancing site management

3. Strengthening the management and developing the industrial gas business steadily

4. Basing on scientific research to develop innovations to lift the core technical levels of the enterprise

5. Improving internal control and enhancing the overall management of the company.