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Public company info - Hsin Chong Group Holdings Ltd. , 00404.HK

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Hsin Chong Group Holdings Ltd., 00404.HK - Company Profile
Chairman LIN Zhuo Yan
Share Issued (share) 5,707,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Construction & Decoration
Corporate Profile Business Summary: The principal activities of the Group are building construction, civil engineering, electrical and mechanical installation, interiors and special projects, property development and investment. Performance for the year: The Group recorded a turnover of approximately HK$6,302 million for the year ended 31 December 2017, representing a decrease of 36% comparing to the turnover of approximately HK$9,823 million in the year ended 31 December 2016. The Group also recorded a loss of approximately HK$571 million in the current year comparing to a loss of approximately HK$2,712 million in the last year. Business review Hsin Chong is an integrated construction and property group in the region, which pursues a strategic transformation in its business portfolio by establishing a dynamic property company. While we await the property business to deliver significant revenue contribution to the Group, our Group’s construction business remained profitable. Construction Business Review During the year of 2017, the Construction Division received total new orders of HK$619 million (2016: HK$5,782 million), including the following major contracts: (i) P4002 direct contract for PPC Pile Works for Galaxy Resort & Casino Phase 4, Lot 4 New Integrated Resort Development at Cotai City, Macau; (ii) Contract No. CV/2016/10 Site Formation and Associated Infrastructural Works for Development of Columbarium at Sandy Ridge Cemetery; (iii) a sub-contract for air-conditioning installation for construction of Sports Center, Community Hall and Football Pitches in Area 1, Tai Po; and (iv) a sub-contract for air-conditioning and mechanical ventilation installation for construction of Public Rental Housing Redevelopment at Pak Tin Estate Phases 7 and 8. As of 31 December 2017, the outstanding workload (excluding NSC) reported HK$6.8 billion. Among all the contracts on hand, 79% were from the public sector and MTR, including: (i) Government & Public Institutions: M+ Museum Main Works Contract at West Kowloon Cultural District, Design & Construction of Kowloon East Regional Headquarters and Operational Base cum Ngau Tau Kok Divisional Police Station and Civil Engineering and Development Department; and (ii) MTR Corporation: Elevated Road along LOHAS Park Road and the Pedestrian Footbridge FBI, Express Rail Link contract for West Kowloon Terminus Station South and Shatin to Central Link contract for Sung Wong Toi and To Kwa Wan Stations and Tunnels. Another 21% were from private clients, mainly include New World Development, Lai Sun Development and Galaxy Entertainment Group. During the year, the Group’s core Construction Business recorded revenue (excluding NSC) of HK$6.1 billion (2016: HK$9.3 billion) and gross profit of HK$139 million (2016: HK$436 million). The revenue for the year decreased by 35% comparing to that of last year and the gross profit decreased by 68%, our gross margin then decreased by 2.4 percentage point to 2.3%. Property Development and Investment Business Review Over the course of last few years, Hsin Chong has pursued a strategic transformation in its property business portfolio. Currently, the Group has two completed properties in the first-tier cities of Beijing and Guangzhou and four properties under development in Foshan, Tai’an, Tianjin and Tieling. During the year, this division delivered a revenue of HK$66 million and a gross profit of HK$26 million. Property Portfolio Completed properties for investment and/or sale (i) New Times Plaza, Beijing At present, New Times Plaza is a famous commercial landmark and top representative of consumption model in Xicheng District. The property is a commercial development, comprising 15 storeys aboveground and 3 storeys of basement. The shopping mall and car park occupy 9 floors of the property (from 3rd floor of the basement to 6th floor) with a total gross floor area (“GFA”) of approximately 55,798 square metres (“sqm”). The apartments are located on the 7th to 15th floors of the property. As at 31 December 2017, the apartments with an area of approximately 11,962 sqm are available for sale or lease. As of 31 December 2017, the occupancy rate of the shopping mall was more than 95%. The New Times Plaza has generated stable rental and related income for the year and contribution from the property has been stably growing since acquisition. (ii) Xiyang Computer City (Commercial Portion of Tian Cheng Ming Yuan) The property with total GFA of 26,306 sqm, consists of commercial property and car park with 325 car parking space, is situated at strategic location of Shipai Xi Road, Tianhe District, Guangzhou City. Property under development (i) La Viva, Foshan La Viva, Foshan project is located at the “Ninety-Ninth Hill” of Dushugang Village, Lubao Town, Sanshui District of Foshan City. The project is 40 kilometers east to the downtown of Guangzhou and close to Hong Kong and Macau in the south. With the established three-dimensional transportation network in the surrounding area, it only takes one hour to get to main cities in the Pearl River Delta Economic Zone, including Guangzhou, Shenzhen, Zhuhai, Dongguan, Zhongshan, Yunfu, Zhaoqing, Huizhou, Qingyuan and Jiangmen, directly covering more than 100 million consumers in Greater Bay Area. The planned core layout includes Venice water town, super fivestar resort hotel, featured shopping center, children’s playground, experience education base, wedding celebration square, hot spring, golf course, regional commercial facilities, service apartment, high-end residential area, egret nature reserve, etc. The project is positioned as a fashion shopping center and tourist destinations of short vacations in the Pearl River Delta targeted at Guangzhou and Foshan in the short term, and the health preservation resort targeted at Guangdong and the whole country in the medium and long-term (the second residence for improved living conditions in Guangdong, and suitable for health preservation of northern tourists in winter). The retail outlets with an area of approximately 98,588 sqm was put into trial operation on 28 April 2017, and formally opened for business on 29 May 2017, attracting more than 500,000 customers in the first three days. The wedding plaza and the pet paradise were completed in 2017, and are currently in normal operation. The club, the Phase I of container hotel, and the serviced apartments all have been completed and put into operation. The initial construction of water park has been finished, and water entertainment facilities such as sightseeing boat and fishing have been put into use. The pile foundation construction and municipal supporting project of the commercial residence project with an area of 82,000 sqm have been completed, and the construction engineering planning license and construction license have been obtained. The project has been initially positioned as the first recreation and shopping resort town in Guangzhou-Foshan area. (ii) Commercial development project, Tai’an The project is located in the new town in the south of Tai’an city, Shandong Province –Tai’an New and High Tech Industrial Development Zone. It is 70 kilometers from Ji’nan city in its north, approximately 12 kilometers from Dongyue Street in the downtown area of Tai’an city, and 14 kilometers from the trailhead of Mountain Taishan. The project includes commercial properties with a total GFA of approximately 274,977 sqm. The project aims at building an integrated commercial complex featured with tourism and leisure element by integrating traditional business and tourism industry. Based on this comprehensive development framework, the tourism and leisure-oriented project will develop a variety of ancillary facilities integrating various functions such as recreation, leisure, sports, health preservation, catering, and retail, etc. As at the date of this report, a total of 34 blocks of twostorey commercial retail outlet mall with a total GFA of over 100,000 sqm are under construction. (iii) Commercial development project, Tianjin The project is located in the core area of Tianjin Binhai Free Trade Zone, adjacent to Haihe River on three fronts. The project is planned to have two core themes: the first theme is to build a worldfamous cultural relics industry service zone centered on cultural relics exhibition, identification, transaction and supporting finance; the second theme is to build a children’s education and entertainment industry base centered on research and development, application, experiment and promotion of augmented reality and virtual reality technology. There are supporting functions such as office, catering, entertainment and business for core themes, all of which are still in the planning stage. (iv) La Viva, Tieling La Viva, Tieling is located alongside the south bank of Fanhe River in the Tieling New Town, 8 kilometres north to the old town and over 30 kilometres south to the downtown of Shenyang city. The project includes numerous facilities such as retail, entertainment, tourist attractions, hotel, international school, water park, residence, office buildings and conference and exhibition facilities. It covers an area of 180 hectares and a total GFA of approximately 3 million sqm. Residential development Phase 1 owns a total saleable area of approximately 225,000 sqm. Upon completion, there will be a total of 2,100 units available for sale, with average size per unit of 107 sqm. The residential sales will be tied with the phased opening of the retail outlets and water park. Phase 1 of the commercial development of La Viva comprises exhibition centre, banquet hall, club house, outlet mall and a water park which is one of the key components of the unparalleled La Viva experience. It will be the first round-the-year water recreation facility in the northeast region of PRC. The total GFA of the Phase 1 commercial development approximates to 214,743 sqm. Prospects: Construction business With Hsin Chong’s leading construction industry position and remarkable track record in Hong Kong, we strive our best to take part in the city’s infrastructure and building plans. The Group, in joint venture basis with Build King Holdings Limited, secured the Hong Kong Police Force Kowloon East Regional Headquarters Project contract in the second quarter of last year. Involving both design and construction works, the significant project for Hsin Chong also includes electrical and mechanical engineering works. In the coming five years from 2019-20 to 2023-24, Hong Kong is expected to have 25 sites available for production of more than 60,000 flats of which more than 80% are for public housing. The Group’s financial situation has been restraining its ability to obtain new projects since the beginning of the year, which resulted in decrease of the Construction Business’ turnover. This in turn cause reduction in the Group’s cashflow and increase the financing cost. Hsin Chong has pursued strategic measures include but not limited to disposal of assets and refinance the current facilities to restore the Group’s cashflow and liquidity. During such restoration period, the management notice and foresee that (i) the operating progress of various projects may be affected; (ii) short term financing cost may increase; (iii) new tenders will be restricted until the cashflow and liquidity of the Group restored; and (iv) key staffs turnover may increase. After the Group manages to sort out its current financial issues, Hsin Chong, as one of Asia’s longest-standing construction groups with its firm foundation in the industry, will continue to strengthen our solid position to sustain further successes in Hong Kong. Apart from the public sector, we will also pay our attention to high-end private sector customers with our professionalism and corporate tradition. We have been a major player in Hong Kong’s infrastructural development, and will continue to focus our efforts on soliciting new opportunities in the competitive construction market. PRC Property business Hsin Chong is experiencing a strategic transformation in diversifying our business segment with the expansion in PRC property development. We hope to grasp the new opportunities in the Mainland China’s fast developing property market to form new profit-making points. (i) New Times Plaza, Beijing and Xiyang Computer City (Commercial Portion of Tian Cheng Ming Yuan) The Group is actively seeking opportunities to dispose the two projects entirely in 2018 to realise value to stakeholders and improve the Group’s cashflow position. (ii) La Viva, Foshan The Company is applying for pre-sales license for the low density residence with an area of approximately 24,000 sqm, which is expected to be completely sold in 2018. The commercial residence projects with an area of 82,000 sqm will be available for sales upon satisfaction with pre-sales conditions. It is planned that the construction of the commercial residence project for sales with an area of 300,000 sqm will be commenced in 2018, which will realize considerable cash flow upon satisfaction with pre-sales conditions. The supporting facilities for Outlets Business will be further improved in 2018 to attract more customers and increase revenue. Meanwhile, the Company will continue with the application for “Featured Town” in 2018, in order to obtain the special support from the State in terms of policies and financing. (iii) Commercial development project, Tai’an The Company plans to launch the commercial operation for the project under construction with an area of over 100,000 sqm in 2018 and commences the construction of saleable residence with an area of 175,000 sqm so as to partially realize the fund withdrawal. (iv) Commercial development project, Tianjin A cooperation arrangement has been concluded whereby our partner will contribute funds for development and construction. The arrangement is considered to be beneficial to our cashflow position and should deliver reasonable return. (v) La Viva, Tieling The Phase I residence with an area of 225,000 sqm will be available for sale and the commercial water world will be opened for business in 2018. The Company plans to cooperate with powerful institutions to increase the capital investment in projects, liquidize assets and optimize the model of operation in 2018. Meanwhile, the Company will continue with the application for “Featured Town” in 2018 with an aim to obtain the special support from the State in terms of policies and financing. International Infrastructure Business – Belt and Road Initiative Riding on the success in establishing regular business relationships, connections and communications with key ministers and representatives from various countries, such as: Chad in Africa, Cambodia and Nepal, the International Infrastructure Business Division continues to explore and pursue opportunities in Asia, Africa, Europe, Middle East and South America. In Asia, the Company focuses on Cambodia, Malaysia, Myanmar and Nepal which are relatively close to Hong Kong compared with other continents. In Cambodia, the Company is negotiating several contracts to develop the peripheral establishments of a sporting competition event between Asian countries to be held in 2023. In Malaysia, the Company continues discussions with a major Malaysian-based multinational conglomerate for the construction of infrastructure and building developments. In Myanmar, the Group signed a MOU in early 2017 with an international developer to provide project and construction management services for a 1,800 acre largescale integrated resort project in Ngwe Saung. In Nepal, the Company is in critical discussions with the project developer on the construction of a 25MW hydroelectric power plant in the district of Darbang. The Company will also be invited to submit tenders for tunnels and bridges for a significant highway project from Kathmandu to Terai towards the third quarter of 2018. In Africa, the Company has extended the validity of its MOU with Chad for one year. Chad’s National Assembly President, together with some of his ministers, are planning to visit Hong Kong again in mid-2018. Concurrently, the Company is considering other infrastructure projects, such as: solar energy, railway, civil engineering and mining projects etc, in other African countries, e.g. Morocco, Republic of Côte d’Ivoire, Zimbabwe and Ghana. In Europe, the Company has commissioned an international property valuation group to prepare a feasibility study on the redevelopment of a major shopping centre and the associated commercial facilities in Istanbul, Turkey. Critical discussions with the project developer are on-going. The Company also focuses on potential infrastructure projects along the Silk Road Economic Belt in Central and Eastern European countries, such as: Hungary and the Republic of Czech. In the Middle East, the Company is exploring potentials in certain significant construction works in the Kingdom of Bahrain and in the Gulf Railway which connects all six Gulf Cooperation Council member countries. Leveraging the competitive advantages of Hong Kong and to support its contribution and participation to the Belt and Road Initiative, Hsin Chong continues to perform its role as a Super-Connector and expands its construction expertise by promoting connectivity, integrating and creating a regional economic cooperation framework. Health Living Concept The Chinese government has placed high priority on improving the lives of its senior citizens. Based on the statistics released in the Mainland of China, as of end of 2016, senior citizens aged above 60 was over 230 million, representing over 16% of the total population. It is forecast that the elderly population will reach 300 million by 2025. Given the growing needs of aged care services in the Mainland of China, Hsin Chong is actively looking into opportunities to develop quality aged care and healthcare services with focus in Greater Bay Area. The Group is also in advanced stages of discussion in the formation of another joint venture with renowned brand in co-developing on the La Viva Foshan site. In anticipation of the potential synergy with our senior care premises on site, a high end spa resort hotel as well as a rehabilitation and spa centre with resort and senior living are now being planned. Green Building and Sustainability Concept Green building, which is designing and constructing buildings using energy saving materials and techniques, will continue to influence the global construction industry in 2018. The social trends such as sustainable and healthy living are set to shape in future years. As an influential construction industry leader in Hong Kong, we hope to act as a pioneer on sustainable development to maintain our superior position.

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