HONG KONG (April 4, 6:25 p.m. ET) — China's largest plastic pipe extruder, Liansu Group Holdings Ltd., is broadening its business, launching a unit to make other home building products such as plastic doors and windows, and setting up a subsidiary in Canada.
The Shunde, Guangdong province-based company announced the expansion into new markets as it reported its 2011 financial results, which it said saw sales rise 31 percent to 10.14 billion Chinese yuan (US$ 1.61 billion) and profit rise 11 percent to 1.26 billion yuan (US$200 million).
The company said the Chinese government's moves to limit bank lending and slow the real estate market did impact its business, putting pressure on demand for plastic pipes in the commercial property market.
But it said in its March 16 financial report to the Hong Kong Stock Exchange that China's rapid urbanization and growth in infrastructure spending, including a government plans to spend 4 trillion yuan to double water conservation infrastructure in the next decade, will fuel growth.
“The government still stood firm on regulating the real estate market, bringing challenges to development of [the] plastic pipe industry,” said Chairman Wong Luen Hei in a statement accompanying Liansu's annual report. “Nevertheless, the group saw new development opportunities driven by the government's policy of boosting domestic demand and striving to improve people's living standard.”
Liansu said its previously announced expansion plans were progressing and it said it opened its new factory in Changchun, Jilin province, in the second quarter of 2011 and plans to open its Shaanxi province factory this year.
The company has 13 pipe and pipe fitting factories and has been on an expansion binge in China in recent years. It plans to add 330,000 metric tons (727.5 million pounds) of production capacity in 2012.
But executives said they now want to put more energy into developing international markets.
In addition to the new Canadian subsidiary, which will start selling its new home building products this year, Liansu is also “actively exploring” other overseas markets, Wong said.
It said its home building materials business would include kitchen and bathroom accessories.
Liansu, which gets about two-thirds of its sales in South China, said it was able to pass on price increases in raw material costs to its customers, keeping its profit margins steady.