Hangzhou Advance Gearbox Group Reports 358.22% Net Profit Surge in H1 2020 Amid Mixed-Ownership Reform Led by WeDoctor-Affiliated Guangfa Technology

On August 10, Hangzhou Advance Gearbox Group Co., Ltd. (Stock Code: 601177) disclosed its 2020 semi-annual report, revealing robust profit growth. The performance report showed that the company achieved main business revenue of RMB 931 million in the first half of 2020, a year-on-year increase of 6.02%. Basic earnings per share amounted to RMB 0.1157, up by 357.31% year on year. Net profit attributable to shareholders of the listed company was approximately RMB 46.3 million, representing a year-on-year increase of 358.22%. During this reporting period, the net profit margin reached 7.05%, hitting the highest level recorded in the last three semi-annual reports. Meanwhile, the company’s accounts receivable turnover ratio, inventory turnover ratio, and total asset turnover ratio all experienced significant year-on-year growth, indicating a substantial improvement in operational efficiency.

At the end of 2018, to implement mixed-ownership reform of state-owned enterprises and optimize the equity structure of state-controlled listed companies, Xiaoshan State-owned Assets, the controlling shareholder of Hangzhou Advance Gearbox Group Co., Ltd. (Hangchi Qianjin), publicly sought a strategic partner. Guangfa Technology, an affiliate of WeDoctor Group—a digital health unicorn also based in Xiaoshan, Hangzhou—was selected. In April 2019, Guangfa Technology signed a share transfer agreement with Xiaoshan State-owned Assets, acquiring a 19.99% stake and becoming the second-largest shareholder of Hangchi Qianjin.

Steady growth in core businesses, coupled with the transformative upgrade of mixed-ownership reform, has enabled Hangzhou Advance Gearbox Group to achieve counter-trend growth amidst the complex market environment caused by the pandemic. In this year of integrated reform between internet-born forces and traditional state-owned enterprises, the synergy created by the rapid iteration and refined operations of internet companies colliding with the steady, methodical approach of traditional industrial enterprises has allowed Hangzhou Advance Gearbox Group to deliver an “impressive report card” for SOE mixed-ownership reform.

The semi-annual report disclosed that the company has achieved phased results in advancing lean digitalization projects, ERP upgrade initiatives, and upgrades to refined management. Meanwhile, by optimizing its business structure, improving internal management mechanisms, and enhancing information connectivity, the company has significantly stimulated its vitality and endogenous growth momentum. During this reporting period, asset impairment losses and period expenses decreased year-on-year, leading to a substantial improvement in the company’s overall operational quality and efficiency.

Macroeconomic policies have further stimulated industrial growth momentum, with “new infrastructure” and the “domestic circulation” strategy becoming key measures to propel China’s economy toward high-quality development. As fundamental products supporting national economic development, gear transmission devices see their demand driven by the growth of downstream industries. Hangzhou Advance Gearbox Group Co., Ltd. is a large, backbone enterprise with strong comprehensive competitiveness, boasting the widest range of product applications in China’s gear industry, the largest sales volume of marine propulsion systems and marine gearboxes, and the broadest coverage in construction machinery transmission devices. During the reporting period, the company’s main products produced and sold included marine gearboxes and marine propulsion systems, wind power增速箱 (step-up gearboxes) and industrial gearboxes, construction machinery transmissions, automotive transmissions, as well as castings, forgings, and accessory parts for these products. As important foundational industries, the downstream sectors for the company’s products—such as shipbuilding, construction machinery, wind power generation, and agricultural machinery—clearly possess significant long-term growth potential, which will also generate substantial market demand for the gear industry in which Hangzhou Advance operates.

In addition, the Company maintains a leading position in the industry in terms of product technology and R&D innovation capabilities. As of the end of the reporting period, the Company held 329 patented technologies, including 41 invention patents; led or participated in the revision of 32 national and industry standards; and is currently involved in four national scientific research projects.

Technological innovation and the application of internet technologies are driving state-owned enterprises to transform and upgrade toward high-quality development. It is foreseeable that, through the further deepening of mixed-ownership reform, Guangfa Technology, as an internet enterprise, will continue to inject greater innovative momentum and expertise into Hangzhou Advance Gearbox Group in areas such as technological innovation and operational management. As the epidemic prevention and control situation continues to improve and the industrial economy gradually recovers, Hangzhou Advance Gearbox Group’s development in the second half of the year may be even more promising, empowered by favorable national policies, technological reforms, and innovations.