TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH RONGTAI INTERNATIONAL
(ASX:RIG), EXECUTIVE CHAIRMAN AND MANAGING DIRECTOR AND FOUNDER, LIN JIE
Clive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me today from Chinese steel trading company Rongtai International, is Executive Chairman and Managing Director and founder, Lin Jie. Lin welcome to FNN.
Can you start with some background? How long has the company been going and how many staff do you employ?
Lin Jie: Rongtai International was started in 2003 and is one of the top 100 Chinese steel logistics and trading enterprises, with over 300 employees.
Clive Tompkins: OK so how big the market for steel products in China and what percentage of the market do you control?
Lin Jie: The current annual steel production capacity in China is about 750 million tons. Output is about 660 million tons; with demand running at about 620 million tons. The annual transaction volume of Rongtai’s e-commerce trading platform is in the vicinity of 30 million tons, representing turnover of $15b, and accounting for about 5% of the market.
Clive Tompkins: So how many trades did you do last year and what are you forecasting for the next 12 months?
Lin Jie: Last year Rongtai did about $140m in turnover and is expecting to grow this to around $160m this year or approximately 10,000 tons per day. This figure is expected to almost double to 20,000 tons per day in 2011.
Clive Tompkins: Lin, so how are trades facilitated – is it online, through agents at steel yards throughout China or a combination of all three?
Lin Jie: Rongtai's B2B e-logistics is implemented via its CuSteel trading platform consisting of three parts: it provides pricing information services, trading services and logistics services which forms Rongtai's B2B e-logistics business. By providing online information about commodities and resources plus information services, trading services, finance and settlement services for the B2B e-logistics business model.Our Custeel B2B e-commerce trading platform currently has around 300,000 users, delivering 3,000 dynamic messages per day. The platform is used by 15 large steel companies in China; and supported by over 100 corporative alliances providing warehousing and distribution services.
Clive Tompkins: Ok, so what are your fees?
Lin Jie: Our B2B e-logistics platform has two major revenue streams; one of them is a $750 annual registration fee, the other is a transaction fee of around 30 cents collected from both the buyer and seller.
Clive Tompkins: Lin, now to the IPO. When and how much are you looking to raise?
Lin Jie: We are seeking to raise a maximum of $10 million by the end of November.
Clive Tompkins: And why have you chosen to list in Australia and will you set up an office here?
Lin Jie: The Australian resources industry is highly regarded, abundant with natural resources and has a good reputation. China is one of the biggest steel consumers in the world with huge demand. We are going to establish the business model in Australia and provide online steel resources and commodities; therefore we will be setting up our Australian office which will allow us to provide a value added service within Australia.
Clive Tompkins: Could you tell us who is supporting the issue?
Lin Jie: Novus Capital is the sponsoring broker for the listing.
Clive Tompkins: So how many shares are being issued and what price?
Lin Jie: A maximum of 50 million ordinary shares at 20 cents per share, to raise $10 million.
Clive Tompkins: Lin, so who are your customers; who are you currently working with?
Lin Jie: Rongtai International is currently working with two major alliances. We have been working with China Steel and Iron Association, Bao Steel, Shou Steel, An Steel, Wu Steel providing online steel trading services and we also have supporting warehousing, logistics and distribution service across Shanghai, Tianjin which is Beijing’s port, and the Haixi new economic zone. Both alliances are vertically integrated within Rongtai’s business model.
Clive Tompkins: Last question. Where do you see Rongtai International in the next 12-18 months?
Lin Jie: This year Rongtai's turnover is expected to be over $145 million. With the growth for next year is forecast to increase 30% to between $160 million and $200 million.
Clive Tompkins: Lin Jie, thank you for introducing Rongtai International and good luck with the IPO.
Lin Jie: Thank you.
