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Public company info - Daido Group Ltd. , 00544.HK
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Daido Group Ltd., 00544.HK - Company Profile
Chairman -
Share Issued (share) 2,901,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Warehousing & Logistic Services
Corporate Profile Business Summary: The principal activities of the Group are provision of cold storage and related services, trading of food and beverage in the People’s Republic of China (the “PRC”), money lending services and investment holding. Performance for the year: For the financial year ended 31st December, 2019, the Group’s total revenue amounted to approximately HK$290 million as compared to approximately HK$309 million from the preceding year. Business Review The Group is mainly engaged in cold storage and related business in Hong Kong; trading of food and beverage business in the PRC; and provision of money lending services in Hong Kong Cold storage and related business The Group derives its principal source of income from operating a cold storage business and its related activities. To support customers of this core segment more comprehensively, it also offers transportation and distribution, container hauling and devanning, packaging and logistics services. Though operating initially at a loss in 2019, the new bonded warehouse run by the Group in Kwai Chung Container Terminal has seen its performance improving in 2020. This facility is used to store primarily alcohol and tobacco before full duty payment. As the cold-storage warehouses in the neighborhood were fully occupied, the Group started to operate another warehouse in the Tsing Yi District, through a Joint Venture (“JV”) Agreement and Management Service Agreement, with effect from April 2019. The fullystaffed warehouse is still operating at an infancy stage. Under the new account reporting standard, the facility’s depreciation is counted as an operating expense. Considering the lease’s tenure of 25 years, this will dampen the Group’s operation balance with a higher depreciation impact and may affect the segment’s performance in this initial stage. However, the Group is optimistic that the JV is capable of growing the business continually and improving its operational efficiency to bring in promising returns. The Group’s logistics arm, established to serve customers of its cold storage segment, experienced a stable business performance during the period under review. But the services rendered by this setup are only minimal due to the high operation cost of delivering goods to scattered locations across Hong Kong Trading and related business The Group distributes a growing range of food products, snacks and beverages to supermarkets and convenient stores in the PRC. In 2019, it completed an internal restructuring exercise to improve operation efficiency and profitability across its distribution network. The Group mainly distributed imported dairy products but with the revamp, its product spread, which includes popular Australianmade fresh milk and locally branded juice beverages, has been broadened to capture changing consumer preferences in the PRC. This move has improved the segment’s profit margin. Money lending business The Group established a money lending segment years ago in support of its cold storage customers who may require credit facilities from time to time. Though still available, the service has been slowed down to focus more resources on expanding the Group’s coldstorage and trading and related operations. Prospects: The Group takes a bleak view of the economic situation in Hong Kong. Weakened by months of the coronavirus outbreak and extensive street protests, the city’s economy is forecast to contract more than 1% in 2020, following a 1.2% decline last year. GDP tumbled 2.9% in year-on-year terms in the fourth quarter, following Q3’s revised 2.8% decline. Moreover, business sentiment nosedived. According to Financial Secretary Paul Chan, Hong Kong’s unemployment rate, which has already risen to 3.5% (the highest level since 2016), may deteriorate rapidly. Average visitor arrivals have also fallen to fewer than 3,000 a day in early 2020. China’s economic growth may drop to 5% or even lower due to coronavirus outbreak, as a government economist suggested. Industries like tourism, transportation, offline retail, and entertainment sectors face the biggest slowdown. Even though the macroeconomic developments are likely to affect the Group in the immediate period, the management remains cautiously optimistic about its long-term performance. The efforts made to streamline its business model by focusing on the core segments of cold warehousing and trading will position the Group for rapid growth upon economic recovery. Cold storage and related business Hong Kong’s cold-storage business is considered recession-proof. Over 90% of its total food supplies are imported with the need for fresh foodstuff to be kept in refrigerated conditions before being distributed for retail. The Group remains confident in the longterm outlook of this segment as most products stored in its temperature-controlled warehouses are daily edibles. However, the current coronavirus pandemic has caused a number of local restaurants and eateries to close down, to the detriment of the cold-storage industry. Because of the weak market conditions, the Group is unable to increase its service and rental fees to make up for the losses from its facilities and expects a decline in revenue. Despite the gloomy economic environment, the new bonded warehouse that the Group has been operating since 2019 caters to the luxury market for alcohol and tobacco, which is affected by the slowdown to a lesser extent. In fact, its bonded warehouse business has improved after its operational structure was overhauled last year. Trading and related business The Group’s strategy to enhance value and profitability in this segment focuses on expanding its portfolio and diversifying product mix. In addition to milk beverage items from South Korea and Australia, it is proactively sourcing snacks and drinks from other parts of the Asia along with popular brands in the PRC. With the successful completion of the segment’s restructuring last year, the Group plans to put a more pronounced focus on sales development while studying the feasibility of extending its wholesale distribution network to Hong Kong.

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