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Bright World's stamping machines, pictured here at their Jiangsu Province plant, churn out key metal parts for everything from washing machines and tractors to high-speed railway cars.
Photo: Andrew Vanburen


BRIGHT WORLD Precision Machinery (SGX: BMPM) is looking to catch the fast train – quite literally – in its PRC growth story, as NextInsight and several Singapore-based analysts learned from its CEO during a site visit to their Jiangsu Province plant.

The Singapore-listed maker of stamping machines and finished parts for the railway sector, auto industry and a wide range of appliances, white goods and consumer products is confident that orders will keep rolling along with the country’s spectacular economic growth.

Bright World CEO Shao Jianjun, with over 35 years in the stamping machine industry, told us that he puts tremendous stock in the value of factory tours by analysts, investors, fund managers and media alike.

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Bright World CEO Shao Jianjun (far left) says the metal stamping firm is well positioned to benefit from explosive growth of transportation industries in China. Photo: Bright World website

“I constantly meet with investors in person and via teleconferencing, but they still have questions that are best answered via site visits,” he said.

As we drove past the rows upon rows of newly painted agricultural vehicles and other finished machinery, he pointed out to us that what we were looking at was a common sight on farms across the PRC, and back lawns in Australia.

“We are very proud of the fact that one-fourth of a major class of tractors in China are produced by Bright World's parent as well as one-tenth of lawn mowers in Australia,” he said.

But Bright World’s bread and butter was not finished threshing machines or lawnmowers, though it was also quite sanguine on prospects for such products.

And a quick turn into the main gate of the facility and into the factory proper confirmed as much, as the sprawling manufacturing complex in Danyang, Jiangsu – about a two-hour drive north of Shanghai – revealed wall-to-wall and floor-to-ceiling stamping machines in various stages of completion.

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The company sells stamping machines and parts to a very wide assortment of manufacturers, including "both producers of trains and equipment for the country’s fast-growing high-speed rail network and the auto sector, both of which we fully believe can grow simultaneously.

"They don’t necessarily crowd each other out as you must remember that Chinese consider car ownership very important, a new status symbol of sorts, and we see no slowdown from HSR train passenger volume or car ownership anytime soon,” Mr. Shao said.

This was certainly exciting news for Bright World, a major supplier of stamping machines and finished parts to both sectors.

Our site visit coincided with a major coup for the company in the form of the largest order ever granted in a single day for the Singapore-listed firm.

Last week, Bright World secured contracts worth 48.0 mln yuan, an all time record for sales orders won in a single day, for its metal stamping equipment.

Of note is the contract win from Dalian Locomotive And Rolling Stock Co Ltd, a unit of China CNR Corporation Limited, a Chinese state owned producer of locomotives, passenger coaches and freight wagons.

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Bright World management meeting with analysts and the media in Jiangsu Province last week. Photo: Bright World

Bright World will provide Dalian Locomotive with a 1,250 ton high performance stamping machine, 2-storey high, to produce its latest range of locomotive and high speed trains.

This hefty order and others like it put Bright World in a pole position to ride the transportation boom in China for even more orders down the track... and road.

“Going forward, we intend to intensify its efforts to secure more customers from the railway sector. Demand for railway equipment is set to rise sharply in the next few years as China looks to add more than 16,000 km of high speed rail track. Indeed, the Chinese Ministry of Railway has already allocated 700 bln yuan for railway investments in 2011 alone,” Mr. Shao said.

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It may have been frigid during our visit, but Bright World's Jiangsu factory is seeing hot business from a myriad of sectors. Photo: Andrew Vanburen

Part and parcel of Bright World’s success is the rapid trajectory of the railway and auto sectors and the company’s core strength in production of key parts and components supplying these key industries.

And having strength up and down the production line as well as highly competitive pricing power and cost controls is making Bright World an engineering counter to watch.

“Our production costs are one third those of those in the EU, North America and Japan. We are one of the lowest cost producers in our industry, and we enjoy modern, cutting-edge technology and a lot of production integration and synergy.”

Was Bright World satisfied for now with its level of technical savvy and efficiency?

“We definitely expect more efficient operations in 2011 and are very upbeat on this year’s performance,” Mr. Shao said.

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Recent stock price: 58 cts

Raw material costs make up nearly three quarters of Bright World’s total expenses, and steel comprises the lion’s share.

With such a predominant amount of total costs consumed by steel, Bright World fully realizes the importance of getting ultimate value from upstream suppliers to maximize bottom line returns.

“The majority of our raw material costs are from steel, but also include some copper. But thanks to the relationships we have nurtured with suppliers as well as our parents' strength in the upstream raw material supply chain, our bulk purchases of steel are around 10% cheaper than market prices. And if prices fluctuate wildly, we can pass on increases downstream. And logistically, Jiangsu is a major steel producing province, so steel delivery prices are relatively cheaper,” Mr. Shao said.

“We are a leader in our sector in profitability. We can offer partial or full assembly line solutions, and this is our core strength.”


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