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Public company info - HKC (Holdings) Ltd. , 00190.HK
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HKC (Holdings) Ltd., 00190.HK - Company Profile
Chairman OEI Kang, Eric
Share Issued (share) 511,000,000
Par Currency Hong Kong Dollar
Par Value 0.25
Industry Property Development
Corporate Profile Business Summary: The Group is principally engaged in the business of property development and investment and renewable energy investment and operation. Performance for the year: During the year ended 31 December 2020, turnover amounted to HK$1,184.0 million, an increase of 14% over turnover of HK$1,036.9 million for the same period in 2019.Net profit for 2020 declined 36% to HK$241.6 million. Basic earnings per share for the period amounted to HK39.5 cents, while basic earnings per share for the same period in 2019 was HK52.8 cents. Book value per share was HK$26.8. Business Review The overall market environment for the property sector during the year was poor because of COVID-19 and Sino-U.S. tensions. Contracted sales were extremely sluggish during the first quarter of the year because of the impact of COVID-19, with sales offices closed and local governments encouraging people to remain at home. China GDP growth contracted by 6.8% during the first quarter. However, since then, as COVID-19 infections have been contained, GDP has returned to growth. For the full year, GDP rose 2.3%. The government allowed the reopening of property sales offices and provided support for the property markets. Among these measures: a 50 basis point cut to the Reserve Requirement Rate; a circular by the China Banking and Insurance Regulatory Commission requiring banks to extend credit support to enterprises and individuals affected by the epidemic; delaying tax and land premium payments; and lowering the required size of land transfer fees. As a result, market conditions for residential properties started improving in the second quarter. For the second half of the year, contracted sales reached RMB320.2 million, an increase of 82% compared to the first half of the year, although still down 5% compared to the same period in 2019. Jiangmen has now completely sold out its entire inventory of villas and apartments. However, there has not been much improvement in leasing revenues. Revenues from property leasing declined as the COVID-19 epidemic resulted in reduced demand for office and retail properties. Demand for office properties dropped given reduced business activity, the government’s encouragement of office workers to work from home, and oversupply of office properties. In addition, the government’s discouragement of people from leaving their homes and from group gatherings reduced foot traffic in retail malls. As a result, instead of an expected increase in leasing revenues as the Group has recently completed two major office buildings, leasing revenues during the 2020 year declined 7% to HK$333.4 million. Renewable Energy All of the Group’s renewable energy projects are under its subsidiary, China Renewable Energy Investment Limited (“CRE”). During the year, CRE recorded HK$206.1 million in turnover. Poor wind conditions in the Heilongjiang region affected the performance of CRE’s Mudanjiang and Muling wind farms. However, new contributions from the full operation of the Group’s Henan Songxian 74 Mega-Watt (“MW”) wind project led to a 14% increase in revenue as compared to last year’s HK$181.2 million. Gross profit for the year was HK$77.1 million (2019: HK$68.6 million). For the wind farms of the associates, operational performance improved and net profit from the associates increased 11% to HK$54.3 million as compared to last year’s HK$48.9 million. The appreciation of Renminbi during 2020 resulted in a HK$17.6 million exchange gain. Combined with the improved operational performance, CRE’s net profit after tax attributable to the equity holders of CRE for the year ended 31 December 2020 increased 50% to HK$86.2 million. Please refer to CRE’s annual results announcement for more details. Prospects: Property The continuing impact of COVID-19 around the world, resulting in negative worldwide growth and recession, as well as trade tension with the United States, will continue to adversely impact the Chinese economy and the property markets. The PRC government’s plans to reduce risks in the property industry by limiting leverage will have an additional impact on the industry. However, the economy is expected to continue improving in 2021, particularly given China has been able to control COVID-19 and the expectation that vaccine rollouts will immunize much of the population from the disease. As a result, the Group still expect moderate growth for residential sales. With regard to existing residential properties, the Group will continue focusing on sales of its residential properties in Tianjin and Shenyang. In Jiangmen, only car parks and some commercial space are still available. COVID-19, the reduced demand for office and retail space, and the oversupply of commercial property in Shanghai will continue to put pressure on the Group’s Landmark Center and Sinar Mas Plaza. However, as business activity recovers, the Group hope some improvement in leasing over the upcoming year. Renewable Energy Looking forwards, with the election of Joe Biden as President of the United States and the country’s re-entry into the Paris Agreement, the emphasis on renewable energy around the world will accelerate. The importance of reducing global warming is one of the few areas that China and the United States commonly agree on, so the Group expect China to continue in its efforts to increase the role of renewable energy in its economy and CRE should benefit. For 2021, CRE will benefit from the full year operations of Songxian which was completed in May. Curtailment is expected to continue declining in 2021 as new transmission lines are completed and given the government has implemented a new quota system in which each region is now required to purchase a minimum amount of renewable energy. Please refer to CRE’s annual results announcement for more information.

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