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Public company info - NewOcean Energy Holdings Ltd. , 00342.HK
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NewOcean Energy Holdings Ltd., 00342.HK - Company Profile
Chairman Shum Siu Hung
Share Issued (share) 1,468,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Petroleum & Gases
Corporate Profile Business Summary: The principal activities of the Group are the sales and distribution of liquefied petroleum gas (“LPG”) and natural gas (“NG”), oil/chemical products business and sales of electronic products. Performance for the year: Revenue for the year was decreased by around 30.99% to approximately HK$19,180 million Loss for the year amounted to approximately HK$2,366 million Business Review LPG business Throughout the year, the Group realized a sales volume of approximately 1,712,000 tonnes for LPG, representing a decrease of around 7.36% as compared with approximately 1,848,000 tonnes of last year. The sales volume contributed by wholesalers and industrial customers had shrunk due to COVID-19, whereas that of LPG for civilian usage had also fallen given the emergence of new energies such as electric power and LNG energy. During the year, the LPG business recorded a revenue of approximately HK$6.40 billion, representing a decline of approximately 14.89% as compared with that of nearly HK$7.52 billion of last year, which was mainly due to the drop in sales volume, as well as the diminishing average price of LPG as a result of the global oil crash. The Group had realized gross profits of approximately HK$746 million over the year, representing a dip of nearly 21.72% as compared with that of approximately HK$953 million of last year. Dragged by the oil price crash, LPG prices had seen a fall; however, no corresponding immediate downward adjustments in selling prices had been seen in end-user markets, for instance, the sales of bottled LPG. During the year, the average gross margin of LPG business was approximately 11.65%, representing a mild drop as compared to that of approximately 12.67% of last year. Impacted by COVID-19, the domestic demand had seen a downturn over the year, whereas the business of LPG for civilian usage and industrial customers had also correspondingly decreased, with the shrinkage in the volume of auto-gas refueling being relatively more prominent. In Guangzhou, the LPG auto-gas refueling market target buses and taxis as its core customers. Adhering to the government policies, all of the buses were required to switch to be running on liquefied natural gas or electric power, resulting into a drastic decrease in the number of LPG fueled buses, thus directly leading to a slash in LPG demand. On the other hand, the taxi industry was prone to serious underutilization as affected by the improper on-line car hiring services and COVID-19. In the circumstance that the demand for LPG from buses and taxies both declined due to different grounds, the ongoing shrinkage in the business volume of auto-gas refueling business had become unavoidable. During the year, there had been a number of refueling stations in Guangzhou being shut down, resulting into an allowance for impairment in respect of the goodwill and intangible assets having incurred at the acquisition of auto-gas refueling stations some years ago. Given the sluggish LPG sales in the Mainland China, the Group had devoted more wholesaling efforts in order to make up for the deficiency in sales to its end-users. It is part of the Group’s belief that the sales volume contributed by its end-users will rise again following the subsidence of COVID-19. Oil products business Throughout the year of 2020, the Group achieved a total sales volume of approximately 3,924,000 tonnes of oil products in Hong Kong, the Mainland China and Singapore, representing a decline of around 30.14% as compared with approximately 5,617,000 tonnes last year. Our oil products business recorded a revenue of approximately HK$11.002 billion throughout the year, representing a contraction of approximately 42.97% as compared to that of nearly HK$19.29 billion of last year, which was mainly due to the decreases in the average prices of oil products and sales volumes. The gross margins of oil products had narrowed to 2.04% (2019: 4.40%). A detailed analysis on the reasons for such is explained in the paragraph of “2.2 Gross profits”. The impact of COVID-19 on global shipping businesses, coupled with the disequilibrium between the supply and the demand for oil products, altogether contributed to the diminishing sales volume in the overseas markets; in addition, with the Group’s decision of its gradual withdrawal of resources invested in the oil products business since mid-year of last year, the sales volume of this business had entailed a corresponding reduction. Nonetheless, along with the recovery in oil products transactions amid the abatement of COVID-19 after March, the Group had reinforced its domestic trading of oil products to secure solid sales volume. Electronic business Throughout the year, the electronics business recorded a revenue amounting to approximately HK$1,652,947,000 in total, that was a surge as compared to around HK$982,736,000 of last year. To be in line with the Group’s expectation on the rise in domestic demand at the beginning of the year, The Group’s order quantities had been lifted; however, because of the unpredicted advent of COVID-19, demands for The Group’s products both in the Mainland China and Southeast Asia had seen a drawback. For mitigating the risks associated with inventories, the Group had launched price cuts in its inventory sell-off, resulting into the recorded negative gross profits of approximately HK$640 million. Other businesses Hydrogen and LNG auto-gas refueling station business — Despite the establishment of the hydrogen station in Guangzhou last year, the demand for hydrogen as an automobile power remained limited; however, with the vigorous efforts made by the government in promoting eco-friendly energies, the market demand for such is expected to soar in the future. In addition, the Group had also kick-started its plan to establish hydrogen refueling plants, whereas its LNG business is still under development at present. The Group have screened The Group’s existing projects, and undertaken initiatives to axe projects which only have a slim chance of making profits to The Group’s Group. The Group will instead focus on devoting resources to nurture other potential projects, for instance, shifting The Group’s attention from The Group’s current cooperative LNG projects with logistic companies, to the construction of refueling stations for striving for better investment returns. Real estate business — Since the third quarter of 2019, the Group had launched sales of Block A and B of the apartment property located in Zhuhai, where more than 30 apartments had been successfully sold. In early 2020, a potential buyer had made an offer to acquire the entire Block B and E (office building); nonetheless, the social movements in Hong Kong later, coupled with the advent of COVID-19, altogether had delayed the sales plan. Following the abatement of the pandemic, the Group will set for redeploying its marketing strategies and models in hope of maximizing the profits netted from the sale of such prime property. Prospects: Over the past years, the Southern China region has always been the major markets of the Group; nevertheless, the fierce domestic competitions, as well as the ongoing trade repression by the United States, had altogether casted a shadow across the Chinese market, which may possibly deteriorate The Group’s operating environment. While there may be practical difficulties in avoiding such market risks, setting footholds in much more diversified markets can be one of the effective solutions to the Group. In view of these, the Group laid out its development blueprint as early as in 2017, that was to expand its overseas businesses in a proactive manner. The Group will continue to adopt the same operating strategies to drive The Group’s developments with the use of The Group’s end-user markets, so as to ensure an exponential growth in The Group’s business volume. In the meantime, The Group are reviewing the Group’s industry structure and operating model for the continuous improvements in the coordination between The Group’s industry and logistics chains. It is expected that such measures will enhance The Group’s operating efficiency and further lower The Group’s operating costs. Given the global oil crash and a number of unfavorable factors for business operations during the first half of 2020, the future remains uncertain. At present, the Group is reviewing its development strategies, and in the meantime, it is committed to deploy its limited resources into its core businesses.

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