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Dongfang Precision released its new annual report to the capital market after settling down dispute over the performance compensation for Pride Power. The report showed that the Company generated an operating income of about 9.974 billion yuan in 2019; among them, about 7.106 billion yuan was generated by Pride Power and included in the consolidated items between January and November 2019. As Pride Power has been sold off, with the said income deducted, the Company derived an operating income of about 2.868 billion yuan from premium intelligent equipment, up by about 20.64% than that in 2018.

In the interview to the reporter, Tang Zhuolin, Chairman of Dongfang Precision, remarked that the hard-won operating results in last year were attributable to Dongfang Precision’s perseverance and insight into the “new development cycle” for the transformation and upgrading of China’s manufacturing industry. He said, in the future, Dongfang Precision would focus on intelligent packaging equipment, promote digital transformation, reinforce Industry 4.0, take the lead in the industry in the transformation towards service-oriented intelligent manufacturing, extend to the high end of the industrial value chain, improve the closed-loop of the manufacturing industry ecosystem, and have more control and say on the international market.

A hidden champion in the field of intelligent corrugated cartons packaging equipment

When talking about the dispute over the honored performance undertakings and the profit compensation concerning the Company, Pride Power and its original shareholders in 2019, Tang Zhuolin admitted, the Board of Directors and the management of Dongfang Precision shouldered enormous internal and external pressures; but the Company always stuck to principles, abode by laws and regulations, and properly settled the dispute over the performance compensation for Pride Power with a package of solutions in December 2019, thereby eliminating the great potential risks to the listed company, and safeguarding the legal interests of the listed company and ordinary investors.

According to the announcement, by selling off Pride Power, in 2019, Dongfang Precision had an increase of 1,355 million yuan in total profit, recovered 1,500 million yuan in cash, improved its financial position, optimized its structure of assets and liabilities, improved its solvency indexes such as current ratio for reference and quick ratio, significantly increased its gross margin, and greatly enhanced its operational efficiency and quality. “After the power battery system business with large fluctuation in performance and low profitability was separated from the Company, Dongfang Precision’s business of intelligent packaging equipment came under the spotlights.” According to Tang Zhuolin, Dongfang Precision thus built a more solid foundation to refocus on the business of intelligent packaging equipment.

Dongfang Precision was a hidden champion in the field of intelligent corrugated cartons packaging equipment in China, and even had a very high reputation and influence in the global market. The Company had a presence in the whole industrial chain covering the corrugated board production lines, unit equipment, corrugated cartons printing line, automatic logistics system, and could provide integrated solutions for high-end intelligent corrugated packaging equipment.

Tang Zhuolin added, when Dongfang Precision went public, the corrugated cartons printing line had been the primary business of the Company, which had developed in this field for over 20 years. It continuously fostered independent innovation for high-end corrugated cartons printing equipment, and added varieties of products, thereby being able to meet the extensive demand from global customers. The corrugated cartons printing line was operated by Dongfang Precision (China) and Dongfang Precision (Europe), and the two generated total revenue of about 6,220 million yuan in 2019 with steady growth.

For high-end corrugated board production lines, the Company made acquisition in two steps before taking the full ownership of Fosber Group in 2017. Fosber Group was one of the two largest high-speed wide corrugated board production line suppliers in the world, and it had about 30% worldwide share in the high-end market. It serves renowned international large packaging enterprises such as International Paper, Smurfit Kappa, and Turnhout. It was an important technology driver and innovator in the field of high-end corrugated board production line the world.

Besides, the Company established Fosber Asia, a joint venture in China, for domestic production of Fosber Group. Tang Zhuolin remarked that by the overseas merger & acquisition through “acquisition and joint venture”, Dongfang Precision realized domestic production and effective transfer of high-quality overseas technologies and assets.

Digital transformation to reinforce Industry 4.0

According to Tang Zhuolin, Dongfang Precision was actively promoting the upgrading of intelligent manufacturing. Fosber Group has accumulated rich experience in the application of Industry 4.0 in corrugated board production lines, such as intelligent identification, intelligent diagnosis, intelligent correction, and self-study, and could realize sustainable intelligent manufacturing of the product families that named after PRO.

Due to the accelerated integration in the downstream corrugated packaging industry, the greater concentration, and the increasingly stricter requirements from domestic end-users for the quality, efficiency, cost-effectiveness, and delivery speed of packagings, large corrugated cartons manufacturers tend to purchase midrange or high-end intelligent corrugated packaging production lines.

Tang Zhuolin said, on the basis of the manufacturing experience in the field of intelligent packaging equipment, the deep insight of downstream customers’ production process, and the practice in the developed intelligent production management system, the Company expedited technological innovation, promoted the development of the digital software systems for equipment, and the digital upgrading of intelligent packaging equipment. The Company organically combines mass data on production processes and production equipment, and algorithm analysis and processing, integrated software, hardware, and outputs, improved the intelligent progression of the Company’s intelligent packaging equipment. The Company facilitates the upgrade of intelligent packaging equipment and technologies, and promotes industrial innovation to meet the upgrade demand from downstream large corrugated cartons manufacturers, accelerates integration in the corrugated packaging industry from top to bottom. And in turn, this has an impact on the fields of corrugated board manufacturing equipment and corrugated cartons printing equipment, further quicken the pace of the corrugated packaging equipment industrial integration and capacities concentration.

Promoting the transformation towards service-oriented intelligent manufacturing

Tang Zhuolin told the reporter, Dongfang Precision took the lead in the industry in the transformation towards service-oriented intelligent manufacturing. Basing on the application of digital intelligent manufacturing in corrugated board production lines, Fosber Group could automatically analyze the machine operation data collected, for intelligent diagnosis, automatic production planning, and manage equipment maintenance. Fosber Group could also monitor the state of the customers’ equipment in a real-time and remote manner, remotely control the operation parameters obtained before the problem being detected by the customers, detect and estimate possible problems in advance, contact the customer earlier, and thus provide the customer with more efficient technical support with a better experience.

Further, to ensure timeliness and professionalism in services, Fosber Group provides 24/7 network and remote technical support service, has technical support teams comprising of professional and experienced technical experts, and provides all-round technical solutions and custom services according to customers’ requirements.

As for the supply of spare parts, he revealed that, in the past several years, Fosber Group conducted continuous in-depth cooperation with Toyota Institute, applied the concept of JIT (just-in-time production) to production and customer services. Besides, it also made use of the automatic spare part inventory management system and good partnership with major transportation companies as well as mail companies, realized timely supply of spare parts to customers.

(Source: China Securities Journal)