Corporate Profile

Hu An Cable Holdings Ltd ("Hu An Cable" or the "Company") and its subsidiary companies (collectively, the "Group") is among the top 10 wire and cable manufacturers in China. It is principally engaged in the manufacture and sale of various electrical wires and cables under its own ShenHuan ( 申环 ) brand.

Hu An Cable was listed on the main board of Singapore Exchange on 8 February 2010, followed by a dual listing through issuance of depository receipt on the main board of Taiwan Stock Exchange on 28 October 2010.

Hu An Cable is one of the few approved suppliers of wires and cables which are mainly used in power generation, power transmission and distribution, transportation and construction for State-owned enterprises such as State Grid Corporation of China ( 国家电网 ), China Southern Power Grid ( 中国南方电网 ), China Guodian Corporation ( 中国国电集团公司 ), China Huadian Corporation ( 中国华电集团公司 ), China Power Investment Corporation ( 中国电力投资集团公司 ), China Petroleum & Chemical Corporation ( 中国石油化工股份有限公司 ), China National Petroleum Corporation ( 中国石油天然气集团公司 ), China Railway Group ( 中国中铁股份有限公司 ), and etc.

Strategically located in Yixing City, Jiangsu Province, otherwise known as the largest wire and cable hub of China, Hu An Cable's production facilities are fully integrated to support the whole production process from copper or aluminum smelting to insulation materials processing and finished products of wires and cables.

Hu An Cable sells over 18,000 types of products under three categories: cables and wires, copper rods, aluminum rods and plastic cable materials. The ratio of sales mix from the three business segments was about 65:25:10 for the past two years.

The Group's existing production facilities for cables and wires have a total production capacity of about 144,250 kilometers (km) per annum, among which 3,000km is for the production of mid voltage (6Kv-35Kv) power cables. The Group is currently in the process of establishing a new factory and installing five production lines of mid- to ultra-high voltage power cables. Upon completion, the new production lines are expected to almost double the Group's annual production capacity in its high-end segment to 5,760km. At present, the Group has successfully delivered three production lines and expects to complete the remaining two production lines by 3Q2012.

Foreseeing the rising demand of copper rods as a major raw material of wires and cables, Hu An Cable has started its copper rods manufacturing business with an annual production capacity of 21,000 tons since 2009. By September 2011, the Group has introduced another vertical copper melting furnace production line, which tripled its annual production capacity of copper rods to 75,000 tons.

The vertically integrated business model has allowed the Group to benefit from high quality products at the advantage of logistical proximity to its manufacturing facilities. The business model has panned out well as the Group has benefited from the faster cash cycle of the external sales of copper rods, which helps to enhance the Group's cash flow.

Hu An Cable is committed to research and development of new products and materials, as well as improvement in product quality and production processes. The proactive attitude taken by the Group is part of its strategy to deliver excellence to meet the stringent requirements of customers. In 2011, Hu An Cable has introduced 22 new products and 11 new patents.

As a testament to product quality and brand reputation, Hu An products have been certified by various international standard bodies such as the International Electrotechnical Commission ("IEC"), the Prufstelle Testing and Certification Institute ("VDE") and the Lloyd's Register. Hu An is also accredited by Conformity Assessment Services Co Ltd ( 中国检验认证集团质量认证有限公司 ) with ISO10012:2003, ISO 9001:2008 and ISO14001:2004. In April 2008, Hu An's ShenHuan brand was awarded the "China Renowned Trademark" ( 中国驰名商标 ) by The State Administration for Industry and Commerce of the People's Republic of China ( 国家工商行政管理总局 ).

Chairman's Statement

Extracted from Annual Report 2011
Scaling New Heights
We continue to redefine and transform our product offerings, services and technology, and delivery channels to navigate through uncertainty in the current business environment in order to upkeep our leading position.

Dear Shareholders,

I am pleased to report that our company has delivered commendable financial performance this year. We are on track to reap multi-fold financial and economic benefits, stemming from our strong foothold in the power transmission and generation infrastructure in China.
Progress This Year

Our net profit grew 1.2% to RMB174.3 million from RMB172.3 million for FY2010. Revenue increased 36.2% year-on-year, thanks to healthy growth in volume and higher selling prices across all business segments.

Overall gross profit margin reduced to 12.5% from 14.8% for FY2010. This is attributable to change in product mix where less contribution from high-end special power cables and lower profit margin of copper rods. While margins were lower, our cash flow was enhanced by the faster cash cycle from the copper and aluminum businesses.

During the year, we improved our efficiency in working capital that saw a robust operating cash flow of RMB296.0 million as compared to RMB143.7 million for FY2010. Balance sheet remained healthy with a low net gearing ratio of 3.0% as at 31 December 2011.
Business Prospects

We are in a sweet spot to achieve our long-term strategic plan by expanding manufacturing facilities and widening sales and marketing network.

We will continue to improve on our market position through a vigorous assessment of our industry peers, in terms of production capacity, brand value, customer portfolio and product innovation. Through this proactive engagement for excellence, we are strengthening the base for our businesses to take full advantage of the changes happening on the economic front and industry level.

We are also mindful of the unpredictability of the current market, arising from the eurozone financial markets and the volatility in raw material prices. Moreover, China cut its 2012 economic growth target to 7.5% from an 8.0% goal in place since 2005 a signal that Chinese leaders aim to cut reliance on exports and capital spending in favour of consumption.

On the flip side, we expect our domestic-oriented business model and well-established clientele to protect the Group's earnings' ability.

We stand to benefit from the centralisation of the public bidding process for infrastructural projects that will be farmed out by the State Grid Corporation of China, the largest electric power transmission and distribution company in China. The new practice will favour companies with established brands, proven track records and relevant capabilities. In addition, we expect the public bidding process to attract contracts with larger value exceeding RMB100 million each and with longer account receivables collection period, which will create more business opportunities for our Group.

Our products and services are aligned with China's proposed investment of RMB5.3 trillion for the power and renewable energy sectors, a national move that was announced under China's 12 th Five-Year Plan (2011-2015).

Under this 12 th Five-Year Plan (2011-2015), China's investment in ultra high voltage and rural power grid will reach up to RMB540.0 billion and RMB200.0 billion respectively. In this regard, the power cable industry will usher in a new round of development opportunities.

In addition, the proportion of renewable energy to the total electricity consumption in China is expected to grow to 9.5% for FY2011-FY2015, bringing strong demand for cables.

We are capable in providing a comprehensive range of cables and wires to meet the requirements of government-related projects. A 20-year government initiative to modernise third and fourth-tier cities, which is expected to improve the lives of about 400 million rural residents, will create opportunities for various businesses including land and property development, construction, infrastructure, telecommunication, retail, and others.

According to industry data, China has overtaken the United States to become the world's largest wire and cable manufacturer in 2011, in terms of industrial output value. In 2003-2010, the operating revenue of China's wire and cable industry grew at a compounded annual growth rate of 30.6%.
Riding On Solid Capabilities

The strong demand from China's power infrastructure and construction upgrading projects has translated into solid earnings of the Group for the past two years.

We have been stepping up and improving our technological advancement to produce higher value-added cable products over the years. By the end of 2011, we had established two mid-voltage and one high-voltage production lines, with a combined design capacity of 2,160km per annum.

By 1H2012, we expect to complete one production line of power cable accessories and one production line of fire-resistant power cable. Following this, in 3Q2012, we will add two production lines to manufacture ultra-high voltage power cables. Due to this, we expect to further lift the Group's profitability and maintain the growth momentum.

The Group's improved performance was also attributable to our effective marketing strategies through the expansion of sales network. We expanded into eight new locations, which enlarged our sales network to 32 provinces or municipalities.

This strategy translated well for the Group - our substantial clientele, of which each customer contributed at least RMB5 million to the Group's revenue, rose to 102 from 78 in FY2010.

This year, we also bagged the award of "National AAAA-class Standard of Good Conduct Enterprise" and became the first winner among the wire and cable manufacturers in Yixing City, Jiangsu Province.
Returns To Shareholders

In FY2011, our commitment to enhancing shareholders value by focusing on growth areas and delivering improved financial figures made us one of the respected players in the cable industry.

Announcing our FY2011 results on 29 February 2012, we have proposed a final cash dividend of 0.7 Singapore cents per share, representing a dividend yield of 4.7%. Since our listing on Singapore Stock Exchange in February 2010, we have built a track record of dividend payout by declaring cash dividends of S$1 cent for FY2009, S$1cent for FY2010, and S$0.7cent per share for FY2011.

We achieved this in the backdrop of volatile prices for raw materials, rising cost of labor, and higher financial charges owing to the tightening monetary policies in China.
Appreciation

On behalf of the Board, I would like to thank our management and staff, business partners, shareholders and clients for their trust, efforts and commitment in the past year, as their support have ensured the continuing success at Hu An Cable.

Dai Zhi Xiang
CEO and Executive Chairman


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