CFHI Preliminary Offer Document for Initial Public Offering

China First Heavy Industries 601106 announced the preliminary offer document for initial public offering today, it plans to issue not more than 2 billion shares. This marks that the leading heavy machinery enterprise of our country lands A shares formally, another blue chip will be added into the domestic stock market.

CFHI is the largest heavy machinery manufacturing enterprise in China. It mainly engages in the manufacturing of heavy machinery, it provides complete sets of heavy technical equipments, hi-tech products and technical service for industries such as metallurgy, petrochemical, energy sources, transportation, mine etc., and modernization of national defence. In China, it is the largest and most complete manufacturer of complete sets of metallurgical equipments, manufacturer of nuclear power equipments and nuclear power forgings, manufacturer of heavy pressure vessel equipments and manufacturing base of large-scale castings and forgings.
CFHI takes the leading position among many subdivisions of heavy machinery industry. It manufactures complete sets of metallurgical equipments, incl. smelting equipments, rolling equipments, continuous casting equipments etc., its products equip all the domestic steel enterprises above 5 million tonnage, in which the manufacturing field of large-scale rolling equipments, CFHI occupies 70% of market share. In the manufacturing field of nuclear energy equipments and nuclear power forgings, it is the earliest domestic enterprise that developed and produced nuclear power equipments, also the largest domestic supplier of nuclear power equipments and nuclear power forgings, it occupies over 90% of market share for domestic nuclear power castings and forgings and over 80% of market share for domestic nuclear reactor vessels. All the forgings of Generation II Plus , Generation III nuclear island main equipments have already realized batch production. In the field of heavy pressure vessel equipments, its products cover all the domestic oil refining bases, and it owns 90% of market share it has already manufactured the world largest 2044 ton coal liquidation reactor and 1600 ton hydrogenation cracking reactor successfully. In the manufacturing field of large-scale castings and forgings CFHI reaches 7654 world extreme manufacturing capacity level, i.e. providing liquid steel over 700 ton by one time, max. steel ingot 600 ton, max. casting 500 ton, max. forging 400 ton it owns a world-class comprehensive manufacturing capacity. CFHI is also one of the largest domestic roller manufacturing bases, it occupies up to 80% of market share for domestic large-scale forged steel BUR. The company also possesses strong capacity in aspects of forging equipments, heavy mine equipments etc.

From 2000 to 2008 the compound annual growth rate of CFHI s output value is up to 50.24% far greater than the compound annual growth rate 33.13% of synchronous heavy machinery industry s gross output value the speedup ranks the head of Top Seven Heavy Machineries it is a domestic heavy machinery manufacturing enterprise with the fastest growing speed and the strongest profit-making capacity.

In 2008,its total profit occupies 13.47% of revenue, far greater than the 6.28% of total heavy machinery industry its profit-making capacity is obviously stronger than the industry average level. CFHI expresses it will continuously keep the leading position in heavy machinery industry, and make great efforts to develop into a supplier of large-scale international heavy technical equipments with world famous brand and core manufacturing capacity.