Summary of Key Points
China Liansu, a leading plastic pipe company with a 40-year history, has become one of the rare examples in the Hong Kong stock market's manufacturing sector that has successfully navigated through multiple economic cycles (industrialization, urbanization, real estate fluctuations, and industry transformations) by focusing on its core business, expanding steadily, maintaining solid financial performance, and making long-term investments. Its development trajectory reflects the transformation of traditional Chinese manufacturing from scale expansion to systematic competition. It also demonstrates how these "steady-footed" companies are increasingly recognized by the capital market for their long-term value in an era of competitive markets.
Detailed Analysis
1. Why is a manufacturing company that has survived for 40 years so rare in the Hong Kong stock market?
While there are many manufacturing companies in the Hong Kong market, very few have managed to survive for more than 40 years and remain leaders through various economic cycles. China Liansu began operations in 1986 and has gone through several critical stages of China's economic development: the early phase of reform and opening up, the surge in infrastructure construction driven by urbanization, and the transition to a period of competitive markets. The company has consistently grown from a regional small factory into a global enterprise with over 30 intelligent production bases, operating both domestically and internationally (in North America, Southeast Asia, etc.). This ability to sustain operations over time is a valuable asset, as most companies either fail during economic downturns or deviate from their core strategies.
2. Why is focusing on pipes a more stable approach?
Liansu's strategy is very focused: it has always dedicated itself to the pipe manufacturing industry. As of 2025, the pipe business accounted for 85.5% of its total revenue, indicating a high concentration on its main business. While the company does expand gradually—entering new markets and developing special industrial pipes—it remains committed to its core product. This approach provides clarity in its strategic direction and reduces uncertainty for investors about its future prospects, unlike some companies that jump from one trend (such as renewable energy) to another without achieving significant success.
3. Strong financial fundamentals: funds and low debt
Financial stability is crucial for surviving economic cycles. In 2025, Liansu's debt-to-asset ratio was reduced to 41.8%, meaning it owes less than half of its total assets, and it held over 6.5 billion in cash and deposits. This financial strength allows the company to weather industry downturns (e.g., impacts on pipe demand due to real estate regulations). Additionally, it offers high returns to its shareholders, with a dividend payout rate of over 40%, showing that it not only generates profits but is also willing to share them, which is uncommon in the manufacturing sector.
4. How does Liansu maintain a leading position in a competitive market?
The plastic pipe industry has entered a phase of competitive markets, where growth rates have slowed down, and companies compete for existing市场份额. Liansu maintains a market share of over 20% due to its comprehensive strengths:
- Scale advantage: It has multiple production bases across the country, ensuring stable supply at low costs.
- Product diversity: Its products meet the needs of various sectors (construction, municipal, agriculture, gas, etc.), eliminating the need for customers to seek alternatives.
- Technological innovation: As a traditional industry, Liansu keeps up with emerging trends such as green building and new infrastructure by upgrading its products (e.g., using environmentally friendly materials and more durable pipes).
- Supply chain dominance: As a leader, it has significant influence over the supply chain and pricing power, making it difficult for smaller companies to compete.
5. The changing preferences of the capital market
In the past, the capital market favored emerging industries (such as technology and renewable energy) due to their rapid growth potential. However, as the economy enters a phase of high-quality development, investors are now seeking companies that can create long-term value. Traditional manufacturing companies like Liansu, with their 40 years of experience and resilience, have become increasingly attractive. Globally, many long-term successful stocks come from niche segments of the manufacturing industry; they may not grow the fastest but are capable of achieving sustainable success.
Conclusion
China Liansu's 40-year history demonstrates that in a fast-paced business world, focusing on one's core business and taking a steady approach can lead to greater longevity. This is the power of long-termism in traditional manufacturing industries.