China's largest plastic pipe extruder, Liansu Group Holdings Ltd., is broadening its business, launching a unit to make other homebuilding products, such as plastic doors and windows, and setting up a subsidiary in Canada.
The Shunde, China, firm announced the expansion into new markets as it reported its 2011 financial results. Liansu said sales rose 31 percent to 10.1 billion Chinese yuan ($1.6 billion) and profit 11 percent to 1.26 billion yuan ($200 million).
The company said the Chinese government's moves to limit bank lending and slow the real estate market did affect its business, putting pressure on demand for plastic pipe in the commercial property market.
But in its March 16 financial report to the Hong Kong Stock Exchange, it said China's rapid urbanization and growth in infrastructure spending, including a government plan to spend 4 trillion yuan ($635 billion) 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,” Chairman Wong Luen Hei said 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,” he said.
Liansu said its previously announced expansion plans are progressing and the firm opened its new factory in Changchun, China, in the second quarter of 2011. It also plans to open a factory in Shaanxi province 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 727.5 million pounds of production capacity this year.
But executives said they now want to put more energy into developing international markets.
In addition to the new Canadian subsidiary, which plans to start selling its new homebuilding products this year, Liansu also is “actively exploring” other overseas markets, Wong said.
It said its homebuilding materials business will 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.