Business summary

The Group is mainly engaged in the manufacture and sale of standard prefabricated pipe joint products and steel pipe products. It supplies products of various lengths, outer diameters and surface finishes, and designs and supplies various assembly piping systems for customers to meet the various physical and functional characteristics of the customer's designated floor. In addition, it also sells unused raw materials purchased from suppliers, mainly steel coils. According to the report, based on export figures, the group ranked first in the Chinese standard prefabricated pipe joint industry in 2018, accounting for 7.1% of the market share, while in 2018, the Chinese steel pipe manufacturing industry had a market share of 0.2%. The Group's clients mainly include gas and HVAC companies, water supply companies, infrastructure and construction companies, wholesalers and distributors, who resell the Group's products to their own customers. The Group's products were sold separately to the domestic market and overseas markets, accounting for 56.1% and 43.9% of the operating value for the 5 months ended May 2019. The group operates two production plants in Jinan, China, with a total area of about 232,655 square meters and 80,334 square meters. It also operates a production plant in Dong Nai Province, Vietnam, with a total area of about 3,842 square meters.

Competitive advantage

Provide high-quality standard prefabricated pipe joint products and steel pipe products of different specifications to meet different international and domestic standards

The Group's industry knowledge and professional knowledge help it provide customized steel pipe products of different specifications to meet customer needs

Risk Factors

The Group's business and operating performance may be adversely affected by export tariffs imposed in the countries where overseas customers are located

The Group relies on key customers, which account for a significant portion of the Group's revenue

Use of proceeds

Approximately 19.0% was used to add three new production lines

About 22.3% was used to upgrade a spiral submerged arc welded steel pipe production line

Approximately 9.4% was used for the construction of new industrial facilities

Approximately 9.4% was used for overseas expansion to increase production capacity

Approximately 10.0% was used for acquisitions/partnerships for horizontal expansion

Approximately 10.0% was used to invest in four R&D projects

Approximately 10.0% was used to repay partial loans

Approximately 9.9% is used as general working capital