1. Company profile: The founder of the company, Mr. Zhou Keming, started the stainless steel trading business in 1989 and established Daming Stainless Steel Company in 2002. After years of development, the company has become a large-scale stainless steel processing and trading enterprise with a good reputation in China. The group currently has 5 processing centers in Wuxi, Hangzhou, Taiyuan, Wuhan and Tianjin, and the stainless steel processing capacity will reach 1.35 million tons in 2014. As a pipeline supplier, the company is TISCO's largest customer; as a service platform company, the company is committed to building a stainless steel supermarket for customers. Currently, it has 8,000-9,000 customers. Downstream industries include the machinery industry, petrochemicals, hardware and appliances, transportation, construction, and renewable energy.
2. Operating conditions in 2013: The company recently announced Yingxi. It is estimated that as of December 31, 2013, the sales volume and processing volume of the company's stainless steel processing services will be 974,133 tons and 1,419,663 tons respectively, up 38.6% and 45.5%, respectively; the processing ratio will rise from 1.39 in 2012 to 1.46 in 2013. The data shows an increase in demand for the company's deep processing services. Due to the increase in sales and processing volume, as well as improvements in internal management efficiency and operating costs, and adjustments to the depreciation period of equipment, the company's net profit in 2013 is expected to increase significantly year-on-year.
3. Current construction situation: Currently, the company's operating rate is high, the capacity utilization rate is saturated, and some production lines require three shifts of production.
4. What is the company's purchasing and sales pricing model: The company's procurement uses the method of purchasing quantity from a stainless steel factory at the beginning of the month. In terms of sales, the company uses retail, processing and distribution methods, and uses high-end materials, mainly targeting high-end customers. Currently, the company has more than 8,000-9,000 customers, and the future development of the company will focus on developing and distributing high-end material customers.
5. What is unique about the company's business model: The company's business model can be summarized as a processing service industry. As the main bridge between Chinese stainless steel producers and high-end stainless steel users, the company's operating model is similar to that of supermarkets. It integrates and allocates upstream resources and downstream requirements, providing downstream with the most comprehensive, in-depth, and low-cost one-stop processing service for stainless steel products in China. This model has made its customers far more loyal than in the same industry, and it is increasing year by year. With its first-mover advantage, the industry's top and most comprehensive stainless steel processing capacity, and high customer stickiness, Daming International is continuously increasing its total number of active customers while gradually crowding out competitors from the market.
6. How is the industry doing: The stainless steel processing industry is a very scattered industry. Many small businesses have a single product line and are small in scale. Domestic stainless steel processing enterprises are mainly concentrated in the two regions of Wuxi and Shunde, Guangdong, each accounting for half of the area. Daming International is a large-scale stainless steel “supermarket”, and it also has many retail customers, and the number of active customers per month is stable at 2000-3,000. It is expected that in the future, stainless steel sales will be dominated by intermediate processing, while direct sales from steel mills and agent sales will gradually disappear. The reason is that downstream stainless steel consumer terminal companies are willing to outsource part of the rough processing to save capital expenses.
7. The company's position in the industry: Based on the amount of stainless steel processed, the company is the largest domestic enterprise.
8. The company's inventory situation: Currently, the company's stainless steel inventory is about 100,000 tons. The inventory is maintained to meet the needs of downstream customers.
9. Capital expenditure: This year, capital expenditure will exceed 300 million dollars, mainly in the Jingjiang plant. Production capacity can be released in 2015. Own funds can cover existing expenses.
10. The entry threshold for the industry: the first is a technical barrier; the company uses high-precision equipment; the second is a financial barrier, where the industry invests heavily. The third is the customer. The company has tens of thousands of customers, all of which require time accumulation and continuous development. The fourth is the brand. The company has been in business for more than ten years and has formed a certain reputation in the industry. Fifth is supply. The company mainly procures raw materials from Baosteel, TISCO and Zhangpu. Currently, the company has joint ventures with TISCO.
11. The company's growth point in the future: The first is the expansion of production capacity. Second, the company will increase the deep processing ratio. This measure is expected to increase gross profit margins. Currently, it is still in the market search stage.