Tiangong International Company Limited: history, ownership, mission, how it works & makes money

A Brief History of Tiangong International Company Limited

Tiangong International Company Limited, established in 1975, specializes in the manufacture of high-speed steel (HSS), carbide, and other tools. The company is headquartered in the Jiangsu Province of China and is publicly traded on the Hong Kong Stock Exchange under the stock code 826. Over the years, Tiangong has expanded its reach beyond domestic markets, establishing a significant presence in international markets.

In 2019, Tiangong reported revenue of RMB 3.1 billion, demonstrating a growth trajectory consistent with the soaring demand for cutting tools and materials in various industries, including manufacturing and construction. The company's net profit for the same year stood at RMB 321 million.

By 2020, the company continued its upward momentum, achieving a revenue of RMB 3.25 billion and a net profit of RMB 349 million. The resilience shown during this period can be attributed to effective cost control measures and diversification of product lines.

In 2021, Tiangong's revenue further increased to RMB 3.48 billion, with a net profit margin reaching 10.0%. Notably, the company invested heavily in Research and Development, amounting to RMB 250 million, which accounted for approximately 7.2% of its total revenue.

The following year, 2022, saw Tiangong's revenue peak at RMB 4.0 billion, with a net profit of RMB 400 million. The company's earnings before interest and taxes (EBIT) stood at RMB 520 million, reflecting a robust operational performance.

As of October 2023, Tiangong's share price is approximately HKD 6.80, with a market capitalization of around HKD 5.1 billion. The company’s Price-to-Earnings ratio is approximately 12.5, indicating a favorable valuation compared to industry peers. Furthermore, Tiangong has maintained a consistent dividend payout ratio, reflecting its commitment to return value to shareholders.

Tiangong has also received numerous certifications for its quality management systems, which have contributed to its reputation as a leading manufacturer in the cutting tool industry. The company continues to seek growth opportunities through strategic partnerships and entry into new markets, particularly in Southeast Asia and Europe.

A Who Owns Tiangong International Company Limited

Tiangong International Company Limited, primarily engaged in manufacturing tools and related products, is publicly traded on the Hong Kong Stock Exchange under the ticker 826. The ownership structure of Tiangong International reflects a mix of institutional and individual shareholders.

As of the latest data available in 2023, the major shareholders are categorized into three broad segments: institutional investors, individual stakeholders, and insiders.

The largest individual shareholder is Mr. Zheng Yong, who is also the Chairman of the company, holding approximately 30% of total shares. This significant ownership gives him substantial influence over company operations and strategic direction.

In terms of financial performance, Tiangong International recorded a revenue of approximately HKD 2.5 billion for the fiscal year ending December 2022, with a net income of about HKD 325 million, demonstrating a growth trajectory that appeals to its shareholders. The company’s market capitalization stood at approximately HKD 12 billion as of October 2023.

Tiangong International’s share price has experienced fluctuations, particularly during industry shifts. In early 2023, share prices reached a peak of HKD 5.20 per share, before settling at around HKD 4.80 by October 2023, a reflection of wider market trends and company-specific developments.

The company also shows promise in terms of dividends, having paid a dividend of HKD 0.10 per share in 2022, indicating a payout ratio of approximately 30% of its earnings.

Overall, the ownership structure of Tiangong International Company Limited is indicative of its commitment to maintaining significant control within its management while also attracting institutional investment, ensuring diverse representation among its shareholders.

Tiangong International Company Limited Mission Statement

Tiangong International Company Limited, a leading manufacturer specializing in cutting tools and related products, aims to enhance productivity and efficiency for its clients. The company is committed to providing high-quality products while pursuing innovative solutions in the manufacturing sector.

The company's mission statement can be briefly summarized as follows: "To deliver superior cutting tool solutions through innovative technology, superior quality, and exceptional customer service." This focuses on meeting the diverse needs of industries such as automotive, aerospace, and machinery.

Tiangong International places a strong emphasis on sustainability through its mission. The company has implemented various initiatives aimed at reducing its carbon footprint while maximizing operational efficiency. In 2022, the company reported a sustainable production increase of 20% compared to the previous year.

Through its commitment to quality and innovation, Tiangong has developed a range of products that meet international standards. The company’s adherence to ISO 9001 certification has facilitated its expansion into overseas markets, contributing to a year-over-year growth of 10% in export sales.

Engagement with stakeholders is another essential aspect of Tiangong's mission. The company prioritizes transparent communication and strong relationships with suppliers, customers, and the community. In 2022, customer satisfaction ratings averaged around 87%, reflecting the effectiveness of its service and product quality.

This comprehensive mission approach positions Tiangong International Company Limited to not only meet but exceed the expectations of its clients, while also contributing positively to the manufacturing sector globally.

How Tiangong International Company Limited Works

Tiangong International Company Limited specializes in manufacturing and selling a variety of tools, primarily focused on metal cutting tools and related equipment. Headquartered in China, the company has established a significant presence in both domestic and international markets, serving automotive, aerospace, and manufacturing industries.

Business Model

The company operates under a diversified business model, which includes the following segments:

• Product Manufacturing: Producing high-precision tools such as drills, milling tools, and inserts.
• Research and Development: Investing in R&D to innovate and enhance product efficacy; R&D expenditures in recent years have averaged about CNY 120 million annually.
• Market Expansion: Targeting both domestic customers and exporting products to over 50 countries.

Financial Performance

According to the latest financial reports for the fiscal year ending December 2022, Tiangong International reported:

• Total Revenue: CNY 2.1 billion (approximately USD 310 million).
• Net Income: CNY 328 million (approximately USD 48 million), reflecting a year-over-year increase of 8%.
• Earnings Per Share (EPS): CNY 0.32 (approx. USD 0.046).

Market Position

In terms of market share, Tiangong International holds approximately 10% of the metal cutting tools segment in China, positioning it as one of the leading manufacturers in the region.

Product Portfolio

The product portfolio includes:

• High-speed Steel Tools: Utilized in various industries for their durability and effectiveness.
• Cemented Carbide Tools: Known for high strength and resistance to wear.
• Custom Tooling Solutions: Tailored to meet specific client requirements.

Recent Developments

In early 2023, Tiangong announced plans to invest CNY 300 million in expanding production capacity by 25% over the next three years. This initiative aims to enhance efficiency and meet rising global demand.

Profitability Ratios

Key profitability ratios for Tiangong International as of the end of 2022 are as follows:

Global Presence

Tiangong has established a robust global network, exporting to markets in Asia, Europe, and North America, contributing approximately 45% of total revenue from international sales.

Sustainability Initiatives

Recently, the company has prioritized sustainable practices, with a target to reduce carbon emissions by 30% by 2025 through improved manufacturing processes and increased energy efficiency.

How Tiangong International Company Limited Makes Money

Tiangong International Company Limited primarily generates revenue through the production and sale of high-speed steel and cutting tools. As a leading manufacturer in the metal processing industry, the company's products are essential for various sectors including automotive, aerospace, and manufacturing.

In the fiscal year 2022, Tiangong reported a revenue of approximately HKD 8.5 billion, reflecting an increase of 15% compared to the previous year. The growth was attributed to expanding domestic demand and strategic international sales initiatives.

The company operates several key segments:

• High-Speed Steel: Represents the largest portion of revenue.
• Cutting Tools: Includes drills, milling cutters, and inserts.
• Specialty Steel Products: Used in various high-end applications.

The following table summarizes Tiangong's revenue breakdown by product segments for 2022:

Moreover, Tiangong maintains a significant presence overseas, with exports accounting for around 40% of its total sales. Key markets include Europe, North America, and Southeast Asia. In 2022, export revenue was roughly HKD 3.4 billion, demonstrating a robust growth trajectory of 20% from the previous year.

Cost of Goods Sold (COGS) for the company in 2022 was approximately HKD 6.3 billion, leading to a gross profit of HKD 2.2 billion and a gross margin of 25.9% . The improvement in gross margin was primarily due to efficiencies gained from improved production technologies and economies of scale.

Tiangong's operating expenses for the year stood at HKD 1 billion, which comprised selling, general, and administrative expenses. This resulted in an operating profit of HKD 1.2 billion and an operating margin of 14.1% .

Furthermore, the company invests significantly in R&D to innovate and enhance its product offerings. In 2022, R&D expenses totaled HKD 300 million, representing approximately 3.5% of total revenue. These investments are aimed at developing advanced materials and cutting-edge processing techniques.

Looking at the company's capital structure, as of December 31, 2022, Tiangong held total assets worth approximately HKD 12 billion and total liabilities of HKD 5 billion, resulting in a debt-to-equity ratio of 0.42.

Tiangong International Company Limited is also engaged in strategic partnerships and joint ventures to bolster its market presence and capabilities. Recent expansions in Vietnam and Brazil are expected to contribute an estimated HKD 1 billion in incremental revenue over the next three years.