Youfa Group: Continuing to refine the domestic production area layout
Recently, Youfa Group stated during an investor relations event that the company's core business focuses on welding across various product categories. Steel pipe , it has ranked first in China's production and sales for 19 consecutive years and has been listed among China's Top 500 Enterprises for 20 consecutive years. The company produces over 20 million tons of steel pipe annually through its manufacturing processes, with net external sales exceeding 13 million tons. It proudly holds two renowned trademarks—“Youfa” and “Zhengjinyuan”—and its flagship product is hot-dip galvanized steel. Galvanized The market share of round pipes exceeds 35%. Youfa products are primarily used in two major areas: fluid transportation and structural support, serving industries such as water supply, drainage, gas supply, heating systems, fire protection engineering, steel structures, construction projects, equipment manufacturing, as well as agriculture, animal husbandry, machinery, real estate, municipal infrastructure, light industry, and oil & gas transportation. Moreover, Youfa’s steel pipe products are widely adopted in many large-scale infrastructure projects, including water conservancy and hydropower initiatives.
In the third quarter of this year, the company achieved operating revenue of RMB 13.104 billion and net profit of RMB 215 million, representing a year-on-year increase of 2,320.53%. For the first three quarters combined, the company recorded operating revenue of RMB 37.992 billion and net profit of RMB 502 million, a remarkable surge of 399.25% compared to the same period last year. Additionally, the company’s non-recurring net profit reached RMB 415 million, up 1,309.9% year-on-year.
As of the end of the third quarter this year, the company’s total assets stood at RMB 26.743 billion, with net assets amounting to RMB 7.637 billion. The company boasts robust cash flow and a solid financial position, reflecting strong operational momentum.
The significant growth in the company’s performance can be attributed primarily to the year-on-year increase in both production and sales volumes during the first three quarters, coupled with the company’s ability to leverage its brand scale advantages and improve product gross margins. In day-to-day operations, the company has consistently strengthened cost control and operational efficiency by optimizing supply chain collaboration, reducing costs while boosting productivity, maintaining lean inventory management, and implementing prudent risk controls. These measures have not only accelerated product development but also expanded the company’s market presence, further enhancing its profitability.
This impressive business outcome is a direct result of the company’s deep-rooted expertise accumulated over years of successfully producing welded steel pipes, as well as its keen understanding and adaptability to evolving market conditions and industry trends. By firmly executing a more precise and effective corporate strategy and operational approach, the company is now poised for even greater confidence in its future growth trajectory.
Domestically, the primary focus is on accelerating the optimization and refinement of production capacity deployment, aiming to locate closer to raw material supply sources and better meet local market demands. Currently, 10 production bases have been established in Tianjin, Tangshan, Handan, Hancheng in Shaanxi, Liyang in Jiangsu, Huludao in Liaoning, Yuxi in Yunnan, Linquan in Anhui, Cangzhou in Hebei, and Panshi in Jilin. Meanwhile, construction is underway on additional production facilities in Chengdu, Sichuan, and active discussions are ongoing to advance the selection of sites for other related projects, as well as explore opportunities for industry collaboration and acquisition integrations. The company is committed to swiftly filling gaps in its regional production capacity and expanding into more diverse product categories in the near future.
The domestic welded steel pipe industry faces intense competition. The company's core competitive strengths lie primarily in its brand advantages, economies of scale, superior product quality, advanced technology and equipment, robust innovation and R&D capabilities, effective marketing channels, strategic national market positioning, as well as advantageous collaboration mechanisms and corporate culture. These factors have consistently enabled the company to maintain its industry-leading position as the nation's top producer and seller of welded steel pipes for many consecutive years, firmly establishing it as a dominant player in key markets. Steel pipe prices — A "barometer" of quality. The company actively promotes industrial collaboration and the concept of green development, leading the industry toward healthy, sustainable growth while steering clear of cutthroat, low-quality, and price-driven competition. By fostering positive competition, we elevate the overall quality of industry development, delivering more premium products and services to our users. Through continuous commitment to high-quality growth, the company leverages its established strengths, proactively exploring new products, innovative business models, and emerging fields. This relentless pursuit enables us to steadily increase market share and brand influence, showcasing distinct competitive advantages in both domestic and international markets.
The company's new ten-year strategic development goals can be summarized as “ From tens of millions of tons to hundreds of billions of yuan, becoming the world's No. 1 leader in the pipe industry. “The company aims to further refine its domestic production capacity layout, expand its production and sales scale, and increase its market share. At the same time, it is actively pursuing overseas expansion and tapping into international markets, striving to achieve the globalization of Youfa Steel Pipe.”
Domestic M&A direction: First, Continue to refine the domestic production area layout. Currently, the company is accelerating the implementation of its "Three-Year Action" plan and is actively advancing related project construction and collaborations. It has already completed the acquisition of a 70.96% stake in Jilin Huaming Pipe Industry Co., Ltd., along with an additional capital injection, swiftly establishing a presence in the Northeast China market. Moving forward, the company also plans to expand production capacity in regions such as South China and Xinjiang. Expanding into New Product Categories The company has successfully acquired Hebei Haiqianwei Steel Pipe Co., Ltd., adding JCOE-processed welded steel pipes for oil and gas transportation to its product portfolio, thereby laying the foundation for introducing new high-value-added steel pipe categories. Currently, the company is evaluating and discussing several projects, including those involving high-end precision… Steel profiles Pipe, Stainless steel Pipes, composite steel pipes, and more. The company has consistently been guided by the principles of green development, innovative growth, and high-quality development, adopting diverse approaches such as new construction, acquisitions, leasing, and partnerships to collaboratively grow with our partners, achieve mutual benefits, and attract more talented individuals to join Youfa. We are committed to refining our production capacity layout and expanding our portfolio to include an even wider range of high-tech product offerings.
Overseas Expansion Strategy: The company is focusing its research on the welded steel pipe industry in Southeast Asia, the Middle East, Central Asia, and other regions. In line with the company’s new 10-year strategic plan and its global "Going Global" initiative, we have established Tianjin Youfa International Pipe Industry Co., Ltd., a wholly-owned subsidiary. This move is designed to lay the "top-level design" for tapping into promising overseas "blue ocean" markets, paving the way for the company’s second growth curve. We’ve already begun building an overseas investment framework, aiming to swiftly launch our first international project.
Preliminary research indicates that several developing countries boast robust growth potential in the welded steel pipe market. Previously, the company has successfully exported related products through international traders. If we can successfully establish local production capacity, it will significantly accelerate the expansion of our overseas business, further supporting Youfa Group’s long-term sustainability goals.
After completing the acquisitions of Jilin Huaming Pipe Industry and Haiqianwei Steel Pipe, the company promptly implemented a series of integration measures and leveraged the listed company’s superior resources to empower these businesses. This approach has yielded impressive integration and operational results—both companies achieved profitability in September, following the consolidation of their financial statements into the group’s reporting framework, thereby contributing significantly to the company’s strong third-quarter performance.
The key measures taken by the company during the acquisition and integration process, as well as resource empowerment initiatives, include:
1. Deploying a dedicated professional management team to strengthen and optimize internal operations across production, sales, supply chain, and finance, working alongside existing team members to elevate overall management standards.
2. Implementing equity incentives, strategic guidance, and technological upgrades to boost employee morale, unlock hidden efficiencies, enhance productivity, and expand product offerings.
3. Replacing high-cost financing with lower-cost capital sources, resulting in a substantial reduction of financial expenses.
4. Positioning these subsidiaries—now part of the listed company as industry leaders—as holding entities under the parent company, further enhancing their market credibility, sales convenience, and brand influence.
5. Integrating them into Youfa’s comprehensive marketing system, enabling optimized marketing strategies, improved sales capabilities, and reduced marketing costs.
The company remains highly confident in the growth prospects of Jilin Huaming Pipe Industry and Haiqianwei Steel Pipe. Moving forward, it will continue to provide robust support for their sustainable development and pursue scientific innovation. Additionally, the company plans to explore and execute strategic mergers and acquisitions of more promising steel pipe enterprises through various appropriate channels, ensuring continued improvement in profitability while driving the company toward sustained, high-quality, and long-term growth.
