Operating in a market that is established and producing near capacity can make a manager’s job difficult. The company is running at a solid pace, but more is needed to keep the company growing and performing to expectation. A company that can plan for growth and initiate that plan is the one that will profit by it.
Puda Coal Inc., a leading provincial provider of coking coal to China’s steel industry, works to clean and sell high-grade washed coal to steel manufacturers. The company can provide a full spectrum of coal qualities but finds a majority of demand for its higher margin quality coking coal. Generally, this demand is required to fuel China’s domestic growth, although it does have an international sales component of approximately 12%.
The company is currently experiencing growth at the hands of the Chinese economy, but also as a result of cleaning capacity upgrades at its ongoing operations. Organic growth has been a leading goal of the company as witnessed by its first quarter through-put growth of 23%. This organic growth is further fueled by the company’s location, ownership and customer base. Located in China’s premier coal producing region, Puda is considered the leading producer within that region. Following this strategy, the company does not actually own its coal producing mines but rather sources from them through their primary owner, who just happens to be directly associated with the company. As one might suspect, this relationship gives the company access to high quality reasonably priced coal.
As China continues its exponential growth, the need for quality steel in its railroads, buildings, bridges and other infrastructure projects is very likely to continue. The country’s response to recent earthquake rebuilding issues will also play a role in the company’s future profit potential.
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