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According to an exclusive report from the Luoyang City SASAC, China's leading mining machinery manufacturer, CITIC Heavy Machinery Co., Ltd. (CITIC Heavy Machinery), is expected to complete its listing in 2008. The company is likely to go public on the mainland A-share market, making it the 11th listed subsidiary under the CITIC Group. This move is seen as a significant step forward for the company, which has long been a key player in the heavy machinery sector.
Despite the overall growth in the equipment manufacturing industry, many Chinese companies in this sector have struggled with slow development and limited access to financing. CITIC Heavy Machinery is no exception. Although it currently holds around 5 billion yuan in assets, its bank loans are only about 600 million yuan, and the proportion of debt continues to decrease. This highlights the challenges faced by the company in securing sufficient capital for expansion.
To address these issues, several major players in the industry, such as Weichai Power and China National Heavy Duty Truck, have successfully gone public in recent years. Their experiences suggest that the listing process for CITIC Heavy Machinery could be smooth and beneficial. Industry insiders believe that going public will not only improve the company’s financial standing but also help it grow stronger through access to capital markets.
In October of the previous year, Xie Bilin, deputy director of the Industry Department at the National Development and Reform Commission, explicitly stated support for the listing of equipment manufacturing companies. Additionally, the "State Council’s Opinions on Accelerating the Revitalization of the Equipment Manufacturing Industry" emphasized increased government support for major technology equipment firms. The document also encouraged eligible companies to raise funds through methods like listing and other forms of financing.
CITIC Heavy Machinery traces its origins back to the Luoyang Mining Machinery Factory, one of the 156 key projects during China’s First Five-Year Plan. It joined the CITIC Group in 1993 and has since grown into the country's largest mining machinery manufacturer and one of the top heavy machinery producers in China. According to internal reports, the company supplies most of the hoisting equipment used in China’s coal production, which exceeds 2 billion tons annually.
By the end of December 2007, CITIC Heavy Machinery had exceeded all its key performance indicators for the year. Its machinery output reached 130,100 tons, sales revenue hit 6,006 million yuan, and total orders amounted to 12,655 million yuan, with foreign trade orders surpassing $430 million. The company has also made significant progress in R&D, with products like its “LK†brand speed reducer, rotary kiln, and roller press earning recognition as China Famous Brands.
Over just four years, the company expanded its machinery output from 60,000 tons in 2003 to 130,000 tons, orders grew from 3.6 billion yuan to over 12 billion yuan, and sales revenue jumped from 1 billion yuan to 6 billion yuan. These achievements reflect the company’s rapid growth and strong market position.
After its listing, CITIC Heavy Machinery plans to implement the “four high strategy.†This includes focusing on high-end technology, high-end products, high-end markets, and high-end customers. The company aims to develop advanced products, build a strong brand, expand internationally, and cater to large-scale, high-value clients. As a heavy machinery manufacturer, CITIC Heavy Machinery will produce customized solutions tailored to customer needs.
It is also reported that CITIC Securities, another subsidiary of the CITIC Group, is expected to take on the underwriting role for the company’s IPO. This further strengthens the group’s internal coordination and support for the listing process.