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Friday, 13 March 2015, 22:20 HKT/SGT

Source: China Wood Optimization (Holding) Limited
China Wood Optimization's 2014 Net Profit Up 20% to a New Record at RMB63.7 million
Strives to Expand Processed Wood Business
To Capture the Enormous Business Opportunities

HONG KONG, Mar 13, 2015 - (ACN Newswire) - China Wood Optimization (Holding) Limited ("China Wood Optimization" or the "Group", stock code: 8099), an advanced new technology group engaged in processing, manufacturing and sales of wood products, today announced its FY2014 annual results with new heights in turnover and net profit.

For the year ended 31 December 2014, turnover increased to approximately RMB512.7 million, mainly attributable to the improved product quality and wider market recognition as well as increasing market demand of its processed wood products, including processed wood panels and processed finger joint wood panels. Gross profit margin remained at a healthy level of 26.3%. Benefitting from a lower proportion of administrative expenses in total income, reduction in finance costs and increase of other income, profit attributable to equity shareholders rose by approximately 20% to approximately RMB 63.7 million with a net profit margin of 12.4%.

With the increasing popularity of the Group's products in the market, the total volume of processed wood products sold substantially increased from approximately 124,588 cubic meters in 2013 to approximately 140,186 cubic meters in 2014.

Ms. Yim Tsun, Chairlady of China Wood Optimization, said, "The year 2014 marks an important milestone in our development history. The Group was listed on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited last year, which has enhanced our capital position. While our product quality continues to improve and our reputation and brand awareness continues to be enhanced, our products have gained more widespread customer recognition and our sales volume continues to increase steadily. Turnover and net profit have reached record high, which has further consolidated our leading position in the industry."

Processed Wood Panels
Processed wood panels are the Group's principal products which are generally used to produce floor planks, doors, sound box and furniture. With the increasing popularity of processed wood panels, the Group has been actively promoting less-shaved processed wood panels to its customers. This type of panel involves fewer production processes and less waste of production materials, which shortens the production cycle and increases production output and efficiency while ultimately boosting the sales volume. Since their launch, less-shaved processed wood panels have been welcomed by the market, driving total sales revenue of the segment to rise by around 19.2% to approximately RMB465.3 million. The average selling prices of this segment has been adjusted from approximately RMB3,811 per cubic meter in the same period last year to approximately RMB3,600 per cubic meter. This was mainly because of the fewer production processes to create less-shaved processed wood panels resulting in an average selling price lower than that of traditional processed wood panels.

Processed Finger Joint Wood Panels
Cut-offs and small pieces produced during the trimming of processed wood panels are pressed and further processed before lamination to form processed finger joint wood panels. Processed finger joint wood panels are in the form of standard-sized boards of wooden panels and are generally used to produce wooden furniture, doors and window frames. To utilise production capacity more efficiently, the Group reduced the sales of processed finger joint wood panels and focused on processed wood panels as the latter involve fewer procedures thus total sales revenue of this segment dropped to approximately RMB47.4 million. Even so, the Group managed to increase its average selling price from RMB4,103 per cubic meter to around RMB4,342 per cubic meter while delivering improved product quality.

With profound understanding on the importance of product and technology development to its success, the Group has been striving to make breakthroughs. Four patent applications have all been approved during 2014. Last April, the Group's products passed the inspection for 151 SVHC under European Union REACH regulations, as well as the inspection for 19 heavy metal elements under European Toy Safety Requirements, which further verified that the Group's products are eco-friendly and safe for use.

Complementing a strong R&D capability and technology, the Group participated in major building material and furniture exhibitions during the past year to expand and consolidate its market share. It has also established three sales offices in Beijing, Chengdu and Shanghai respectively to expand its network and provide better services for customers, keeping abreast of the market and offering the best strategies and solutions.

China lacks rich natural wood resources, meanwhile, its three major wood sources, Russia, New Zealand and Canada, have imposed export restrictions. Supply for the forest resources has become more intense, providing enormous opportunities for the Group as its processed wood products can replace natural wood. To meet the huge market demand, the Group has signed an agreement with the administration committee of Huai'an Industrial Zone in Huai'an City, Jiangsu Province to build a production plant, which is expected to commence operation in the fourth quarter of 2015, thereby doubling its total production capacity. This new factory in Huai'an will consume less energy for higher production efficiency, facilitating the Group to expand its foothold in the entire China market.

As for R&D, the Group has been researching the application of impregnation fluid on coniferous and broad leaf trees in order to diversify its product range of processed wood products. To date, the progress has been satisfactory. Besides, the Group has also commenced research on wood staining and high temperature processing technologies aiming at a better product quality and wider product portfolio to generate a greater income.

About China Wood Optimization (Holding) Limited

The Group is principally engaged in the processing, manufacturing and sales of processed wood products, by employing its self-developed wood processing procedure. The Group's processed wood products are broadly divided into two categories, namely processed wood panels and processed finger joint wood panels. The Group's wood processing procedure can improve the hardness, shrinkage and swelling rate, density, deformation resistance, cracking resistance, anti-corrosiveness, bending strength and elasticity of poplar wood. Its processed wood products can be used as substitutes of natural solid woods. The Group's products are widely used to make furniture and indoor furnishing materials. Customers of the Group mainly include manufacturers of floor planks, sound box, furniture, doors and window frames and wholesalers of wooden panels.

Strategic Financial Relations Limited
Veron Ng        +852 2864 4831  [email protected]
Angelus Lau     +852 2864 4805  [email protected]
Janet Fong      +852 2864 4817  [email protected]
Fax  +852 2527 1196

Mar 13, 2015 22:20 HKT/SGT
Source: China Wood Optimization (Holding) Limited

Topic: Press release summary
Sectors: Daily Finance, Daily News
From the Asia Corporate News Network

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