Sector: MINING
Revenue 2006: $571 MILLION
Profit 2006: $136 MILLION
Average Rev. Growth 2004-2006: 153%
The phrase "growth company" typically conjures up images of white-collar cubicle cattle working themselves to exhaustion in pursuit of stock options in some high-tech ghetto. That's definitely not Yunnan Chihong Zinc. The company is involved in mining and smelting base metals (mainly zinc) that go into products like steel and automobile batteries. Yet while its business may be old school, its top line has some new-economy flair: from 2003 to 2006, sales surged sevenfold from $81.4 million to $571 million. For 2007 analysts expect revenues to jump an additional 40%.
Yunnan Chihong Zinc has benefited mightily from the global economic boom and soaring commodities prices. The company was hived out of a bigger state-owned firm in 2000, and "for the first part of this decade we were a relatively small company struggling to make it," says CEO Chen Jin. When zinc prices firmed, the company was well positioned. Yunnan had discovered a major new deposit — 3.14 million tons of reserves — in its home province in 2000, and because of that decided to invest in a new smelter that went online in 2005 with 100,000 tons of new capacity, just as China's industrial output really began to percolate. In 2006, the company, which had listed in Shanghai in 2004, posted the strongest per-share profit growth — 550% — of any company on the exchange.
Chen, 42, says Yunnan Chihong has three major goals: expand its base of zinc reserves, slowly increase smelting capacity, and generate more sales abroad, in particular to India, where Chen expects industrial growth to contribute more to that country's vibrant economy. Still, Yunnan's fate remains bound to China's, which doesn't bother Chen a bit. "As long as the middle class is expanding and its consuming power grows, we'll be O.K.," he says. With annual growth rates averaging in triple digits, this is one old-economy company that may be more than just O.K.