The Fong’s Group celebrates its 50th anniversary this year. In order to explore new avenues and create a better future, besides setting cost control as the main target for future operations, the group injected a series of new elements into its business development. These included speeding up the commencement of the water recycling system and equipment business to form a new aspect of growth in its results, and launching more dyeing and finishing machines that fulfill market demand, conserve energy and are more environmental-friendly to form a new sales highlight, in a bid to seize a greater market share in the fastest and most economical way.
For the year ended December 31, 2012, the Fong’s Group’s consolidated revenue amounted to approximately $273.92 million (2011: $2,83.33 million), a decrease of three per cent as compared to the previous year. The profit for the year was approximately $19.58 million (2011: $7.6 million), an increase of 158 per cent. The significant increase in profit was due to the one-off gain of approximately $37.11 million on “gain on remeasurement of previously held interests in jointly controlled entities” from the acquisition of the German Monforts Group during the year.
2012 was the first year of operation under the management of the newly-formed Board after the acquisition of the company by China Hi-Tech Group Corporation (“China Hi-Tech Group”) on June 3, 2011. In 2012, the group’s core businesses continued to be dyeing and finishing machine manufacturing, stainless steel trading and stainless steel product casting.
Despite the challenging conditions of the group’s business and the market, the Board will continue to strive to expand markets. In respect of the dyeing and finishing machine business market, there are signs that the macro-economic environment this year is better than last year. Therefore, the number of orders received by the group is expected to increase.
Given the group’s diverse and one-stop portfolio of product supply, strong market leadership, advanced technology development and solid foundation, together with the strong support from various parties, the group is well positioned to achieve sustainable growth and a brighter future.
Facing increasing operating costs in the Chinese market, certain textile buyers have shifted their orders to other countries in the Asia-Pacific region. As a result, the group’s new overseas order intake showed a significant rebound during the year under review. Both Fong’s and THEN brands have continued to see stable development and recorded an impressive performance in emerging markets such as Bangladesh, India, Indonesia and Turkey.
Following the restructuring of its sales and marketing strategy in the previous year, the group successfully re-established key referential and impressive orders for the GOLLER brand in India, Thailand and Malaysia, highlighting customers’ confidence in the group’s products. Building on an established base with years of overseas market development experience, the group will continue to enhance its competitive edge and to explore and capture the overseas market with its cost advantages. The group has the confidence that the overseas market will continue to expand steadily.
On November 30, 2012, the group completed the acquisition of the German Monforts Group, which will expand the whole industry chain of weaving, dyeing and finishing of the group, and allow both parties to share their sales network with each other. After the completion of the acquisition, the Monforts Group and Monforts Fong’s Textile Machinery Co. Ltd. (“Monforts Fong’s”), originally the jointly controlled entities of the group, became subsidiaries of the group. It is believed that the synergies generated by the acquisition will gradually take effect next year.
In addition, the group commenced the construction of phase II of the Zhongshan plant during the year, which is expected to be completed by 2015, upon which all production facilities of the group will be relocated to Zhongshan from Shenzhen. As a result, the group’s production capacity will double as compared to the current level.
Member-companies engaging in this manufacturing segment have been restructured so that production bases in various locations and related products and brands can be centrally managed for maximizing resources and making room for expanding the group’s dyeing and finishing machine business.
The new production plant in Zhongshan, which is in excellent condition, has commenced full production since September 2012. Together with the synergy generated from the acquisition of the Monforts Group, production and operation of Monforts Fong’s is on track as its overall productivity is gradually increasing. It is expected that the business will achieve greater improvement.
Furthermore, the product range and market coverage of Monforts Fong’s will be further expanded through the acquisition, and its competitiveness in the market will be further enhanced. In the future, the group will be able to provide the German Monforts Group with components purchased or produced with lower production costs in PRC.
The group will continue to produce high-end Monforts brand textile machinery in Austria, so as to provide better service to customers who prefer machines to be manufactured in Europe. Meanwhile, with lower production costs and the group’s sales network, the Monforts brand textile machinery will be able to quickly enter traditional textile markets such as India, Bangladesh, Turkey and Indonesia, thereby facilitating the future profit growth for these markets.
On December 31, 2012, the group implemented a new management structure with a view to enhancing efficiency and capitalizing on the strong synergy within the group. Mr. Ji Xin, Executive Director of the company, joined the group in March 2012 and has assumed the role of Chief Executive Officer with effect from January 1, 2013. He is responsible for the daily management of the group and reports to the Board.
Mr. Ji is also the Chairman (and previously was also the General Manager) of Qingdao Textile Machinery Co. Ltd., a corporation affiliated to the China Hi-Tech Group. He has over 20 years of experience in the textile machinery industry. The Board believes that with his experience in the textile machinery industry, he can lead the group to achieve further development and bring its operations to new heights.
The group’s core strategy is to continue to create value for customers. The group has undergone new model upgrades and product design optimization, including the areas of operating efficiency, level of automation, energy saving and environmental protection. Such optimization is to enhance the performance of the dyeing and finishing machines, so as to help customers in reducing their overall production cost.
The newly launched products, namely, the TEC series of hydraulic dyeing machines and the SYNERGY series of airflow dyeing machines, continue to be well received by the market and will gradually supersede the older models. Despite the dim outlook of the market, the corresponding orders of the group are still relatively satisfactory and are expected to become a new sales growth point.
As the global community has placed greater importance on environmental protection, many old and new customers plan to upgrade their existing dyeing and finishing machines, and set up additional sewage treatment facilities in the near future in order to improve their product quality and capacity standards, as well as to be prepared for compliance with new emission standards that are more demanding.
In 2007, the Fong’s Group already took the initiative to successfully develop a wastewater reuse system and equipment mainly designed for dye factories through its own R&D team, which is entering the harvest stage now. The group will actively seek projects to make it become its new profit growth point in the near future.