Building a stronger value chain
One of the Company’s key growth strategies is to create a stronger value chain. To do this, it intends to maximise production capability throughout its manufacturing processes of undercarriage parts and components, which would significantly increase the Company’s supply capability and product price competitiveness.
The Company intends to construct a forging factory which would reduce the procurement costs of steel blanks. It also intends to invest in a casting factory which can recycle production waste and use it as raw materials for the production of new parts.
Developing a new brand
Aftermarket parts, especially those that are Chinese-made, often suffer from low perception amongst customers, although the quality of these products can be highly competitive. In response to this market condition, the Company is planning to adopt fresh new branding under 'China Track' and to implement effective marketing and branding strategies in order to build product visibility and a positive image of the brand. Listing on the ASX also allows the new brand to receive global recognition.
Launching and conducting R&D on new ranges of products
With increased forging and casting capabilities, the Company is planning to expand its product range into automotive parts and railway vehicle products by 2019.
The Company is planning to launch automotive parts such as brake discs, brake callipers, flywheel shells and forklift spare parts. These products are expected to be launched in 2018.
As high-speed trains have become popular in China and around the world, the Company is also planning to move into the rail transportation industry by investing in R&D of railway products. Potential products include brake discs and undercarriage parts for bullet train compartments.
Increasing working capital
The Company is looking to increase its working capital to ensure its proper operation and administration as a listed company on the ASX. It also plans to use the working capital to achieve shorter stock turnover in order to offset the impact of high price volatility of raw materials.
Access to the Australian market
Australia has large mining and agricultural sectors, in which the Group's products are widely used. Currently, China Track is only selling 1% of its total exported products to Australia. It plans to expand its market share in Australia by acquiring an Australian distributor with a strong reputation and established distribution channels.
The Company also intends to acquire or invest in Australian businesses in industries related to construction equipment, which will add value to the Group's business.