Business Model

CTL has two distinct aspects to its business

Steel manufacturing

It is a value adding manufacturing business in the steel industry. CTL buys raw material and produces 4 types of products using a number of sophisticated high-tech machines made in Japan, Germany and China, which it then sells as finished products to its customers.

The steel raw material is cleaned by a wholly owned subsidiary NTN before being processed by Citylong.

CTL completed the establishment of a new product line in Q1 2016 making parts for the automobile industry and now produces 9 different types of car parts which account for approximately 10% of overall revenue.

CTL have advantageous credit terms from a State Owned Enterprise (SOE) steel raw material supplier Hong Mao Tong which will assist with cash flow. This allows us to receive full payment from customers before having to pay 70% of the raw material costs. 

Currently CTL is producing around 40,000 tonnes a year of product and plans to increase that to 60,000 tonnes in 2017.

CTL plans to expand its production offering through upgrading elements of its plant capacity. The main equipment has the capacity to process around 15,000 tonnes per month or around 180,000 tonnes per year. The existing annealing furnaces however cause a bottleneck and restrict overall production to at most 80,000 tonnes a year using 3 production shifts. It is planned that in 2018, ten more annealing furnaces will be added resolving that bottleneck situation.

Car parts: By 2020 the aftermarket automotive parts business is forecast to be a AUD$ 280 Billion business annually.

Land development potential

The second aspect to the CTL business relates to the potential for development of our land.

CTL intends to lodge an application for an increase in the wharf capacity from 5,000dwt to 10,000dwt in 2017 which if successful will result in a significant uplift in value of the site.

CTL intends to apply to rezone the Citylong site from industrial use to commercial use which will result in a significant uplift in valuation and an increased range of uses.

If successful in having the land rezoned it is intended to enter into a Joint Venture arrangement with a listed public property development company to develop the Citylong site.

In the longer term plans are to develop the NTN site by the addition of a large scale wharf and logistics centre. CTL intends to make a payment of an approval fee to the local Ninghai Government by 30 December 2017 which if paid will also result in a significant uplift in site value.