Focusing on the Main Business, KEDA Industrial Group Recorded Nearly 2.5 Billion RMB in Revenue in the First Quarter

KEDA Industrial Group (600499) released its report for the first quarter of 2023 on the evening of April 25th. Data showed that KEDA Industrial Group had achieved a revenue of 2.491 billion RMB in the first quarter. The net profit attributable to the parent company and net profit before non-recurring gains and losses had achieved 402 million and 371 million RMB respectively, both of which had seen a certain decline due to macro and market factors.

It was worth noting that the investment income of KEDA Industrial Group from Lake Lithium had decreased due to the cyclical adjustment of the lithium carbonate industry. Therefore, the results of this quarter reflected the operation performance and strategic achievements of KEDA Industrial Group's main business to a greater extent than ever. Excluding the investment income from the participating stock company Lake Lithium, KEDA Industrial Group's net profit attributable to the parent company was 203 million RMB, an increase of 6.85% based on the estimates, demonstrating the resilience of its main business.

Deepening Globalization Strategy 

Overall, KEDA Industrial Group continued to focus on its main businesses and globalization strategy, and continued to explore and cultivate overseas incremental markets in the first quarter. The performance of building materials business was outstanding, achieving not only a balanced production and sales, but also a revenue and profit growth of over 30%; the ceramic machinery business was under pressure with a declined result, but KEDA Industrial Group still strengthened the construction of overseas bases; focusing on the productivity construction of anode materials, the lithium-ion battery material business had increased the production capacity, which however, had not been able to see rising on both volume and price due to the impact of periodic fluctuations of industry.

With the advantages of channels established overseas, the brands of "KEDA, HLT&DLT, Welko" had improved their product lines actively, and also explored and expanded overseas markets during conditions of stress. They undertook many benchmark projects for overseas customers in the first quarter of 2023.

On the basis of the original subsidiary's light asset operation, spare parts warehouse and after-sales services in Turkey, KEDA Industrial Group had upgraded its construction of base and started the construction of BOZUYUK factory there, so as to construct the supply chain and manufacturing of some machinery, auxiliary equipment and spare parts consumables locally. And equipment maintenance and renovation business had been added to speed up feedback to the market. As a strategic pivot of the company, the new base would provide service to the Middle East, North Africa and European markets as well.

Currently, KEDA Industrial Group is planning to add overseas bases in Indonesia etc. to move forward to overseas markets further and strengthen the services of accessories and consumables. The company is transforming from a ceramic machinery manufacturer to an industrial service provider who provides comprehensive solutions.

"The company's building materials business had achieved a balanced production and sales, with revenue and profit growth exceeding 30%, and maintained a high profitability." The public data showed that the gross profit of KEDA Industrial Group's building materials business was 43.33% in 2022.

In March and April this year, KEDA Industrial Group's Senegal Phase II project and Ghana Sanitary Ware Phase I project had been put into operation successively. Meanwhile, its Zambia Phase II, Ghana Phase V architectural ceramic projects and Kisumu Sanitary Ware project would also be put into operation successively within this year according to Group's previous announcement. At the same time, Tanzania glass project, launched in the first quarter as well, was a newly expanded category of KEDA Industrial Group's building materials business, which may enter markets in South America in the future.

Along with the improvement of KEDA's strategic layout of "pluralistic building materials" and the steady progress of various projects, KEDA Industrial Group is now expected to approach its goal of "Tens of billions of building materials" — "Keep No. 1 in Africa's building ceramic industry and extend markets in South America with development of building materials" gradually, under the framework of "ceramics + sanitary ware + glass".


Continuous Expansion of Production Capacity of Anode Materials and Signature of Multiple New Projects for Lithium-ion Battery Materials Machinery

KEDA Industrial Group had different focuses on lithium-ion battery materials and machinery business in the first quarter. In terms of anode materials, KEDA Industrial Group focused on the construction of 100,000 ton anode material projects in Fujian and Chongqing, and optimized the "process + equipment" to reduce costs and increase efficiency for an enhanced competitiveness. And in terms of lithium-ion battery materials machinery, KEDA Industrial Group explored actively and signed multiple projects, including KEDA Phase 1.5 pretreatment line project for anode materials with capacity of 20,000 ton/year in Fujian, the anode material pre-carbonization rotary kiln project for Shinzoom, as well as KEDA intelligent production project for anode materials in Chongqing.

Although the prices of upstream materials for new energy are currently under pressure, the trend of green development is irreversible according to "double carbon strategy" in China. Therefore, KEDA Industrial Group maintains its strategic focus and strengthens skills internally during the downturn of industry by leveraging its own advantages in machinery and technology to optimize projects, increase sales and reduce costs. And relying on the accumulation of income in the early stage, the company will overcome difficulties and promote productivity construction to achieve the strategic goal of "Tens of billions of new energy materials" firmly.
 

Securities Times (Sui WEN)