· A market leader and the second largest industrial gas supplier in the Jing-Jin-Ji Region
The Group was the second largest industrial gas supplier in the Jing-Jin-Ji Region in terms of revenue in 2019, according to the Frost & Sullivan Report. The Jing-Jin-Ji Region comprises Beijing, Tianjin and Hebei Province and is the largest urbanised megalopolis region in North China. According to the Frost and Sullivan Report, the Jing-Jin-Ji Region industrial gas market accounted for approximately 17.3% of the total industrial gas market in China in terms of revenue in 2019. Its business involves the production and supply of both pipeline and liquefied industrial gas. The Group optimises the utilisation rate of its production facilities and improves production efficiency by producing liquefied industrial gas at its production plants after its customers’ demand for pipeline industrial gas has been fully satisfied. The production and sales of liquefied industrial gas gives rise to additional revenue for its operations. As at 30 June 2020, its total designed production capacities for oxygen, nitrogen and argon were 218,500 Nm3/hr, 247,000 Nm3/hr and 7,785 Nm3/hr, respectively.
· Strategic relationship with the HBIS Group as its industrial gas supplier
The Group has been the exclusive pipeline industrial gas supplier to a few iron and steel companies of the HBIS Group since the commencement of its operations at the Tangsteel Gases headquarters plant, the Tangsteel Gases Ironmaking Branch plant and the TTG Stainless Steel Branch in April 2007. The HBIS Group, comprising HBIS and its subsidiaries, was the second largest state-owned iron and steel group in the PRC and the largest state-owned iron and steel group in Hebei Province in terms of crude steel production volume in 2019, according to the Frost & Sullivan Report.
Over years of cooperation and given its special relationship with the HBIS Group, the Group has developed a strategic and mutually beneficial relationship with them.
· An efficient, established and proven business model for over 12 years
The Group has autonomously run an efficient, established and proven business model for over 12 years. The Directors consider that the success of its business model is built upon the stable and predictable earnings secured by long-term pipeline industrial gas supply contracts and its efficient production process driven by advanced proprietary technology.
The Group has developed its own advanced, reliable and cost-efficient production process and technology. The Group has a dedicated team of engineers based in its TTG headquarters who possess the capability to design and develop gas production solutions. The operation of its gas production facilities involves the application of a series of computer programmes, which enables the automated and coordinated production of pipeline and liquefied industrial gas. This system enhances its production precision and efficiency. As at 20 October 2020, the Group had obtained 52 utility patents and 11 software copyrights in respect of the system that optimises its industrial gas production.
· Favourable government initiatives and good government relationship leading to strong and sustainable support
Based in Tangshan, Hebei Province, the Group enjoys benefits from government initiatives concerning the Jing-Jin-Ji Region and its integration. Hebei Province will become an important national base for trading and logistics, a pilot zone for industrial transformation and upgrading, a demonstration area for modern urbanisation and urban-rural integration and an ecological buffer zone. Also, Hebei Province is expected to move away from heavy industries by upgrading and modernising its industrial base, towards higher-end manufacturing industries which include the downstream industries of industrial gas supply, such as electronic chip manufacturing industry, bringing about opportunities for industrial gas providers in Hebei Province like it. Better infrastructure within the region including an upgraded and more integrated transportation system will also reduce the logistical costs of selling its liquefied industrial gas and will expand its customer base to more diversified industries.
· Top quality management and industry experts from CGI and experienced engineering team from HBIS Company
The management team is supported by well-trained staff and engineering teams with experience and knowledge of the industrial gas industry. Most of the managerial and technical staff have experience working with the oxygen supply division of iron and steel plants within the HBIS Group and have accumulated extensive knowledge in the construction, design and operation of gas production facilities. The technical and engineering teams have strong loyalty to the Company and most of them have been with the Company for over 10 years. The Group considers them to be its assets and the Group dedicates resources to their training and development. The Group seeks to provide them with ample opportunities and incentives and continue to invest in their training, which the Group believes is important for its long-term success and sustainable future growth.