Share This

Public company info - Shougang Concord International Enterprises Co. Ltd. , 00697.HK

Input the stock code or the company name     Search  
 Profile   Information   Data   Financial Ratios   Profit Loss   Cash Flow   Balance   Earnings   Dividend 

Shougang Concord International Enterprises Co. Ltd., 00697.HK - Company Profile
Chairman Zhao Tianyang
Share Issued (share) 4,294,967,295
Par Currency
Par Value -0.0
Industry Steel
Corporate Profile Business Summary: The Group is mainly engaged in Manufacture and sale of steel products; leasing of floating cranes; trading of steel products, iron ore, coal and coke; mining, processing and sale of iron ore; and management services business. Performance for the year: The Group recorded consolidated turnover from continuing operations of HK$1,036 million for this year, representing an increase of 148.9% when comparing to HK$416 million last year. For the year under review, earnings before interest, tax, depreciation, amortization, impairment loss and change in fair value of financial derivative of the Group for the continuing operations was HK$26 million (2015: loss HK$87 million). Business Review: Continuing operations Trading business Trading business involves trading of iron ore, steel and related products, principally focusing on the trading of iron ore imported by the PRC. Iron ore is a vital raw material for the manufacturing of steel, while steel is one of the important material widely applied in our daily life, including development of infrastructures, real estates, shipbuilding, railways, industrial machineries, automobiles and home appliances, etc. Currently, the steel production of the PRC accounts to approximately 50% of the world’s production, enabling the PRC to become the world’s leading steel manufacturer and iron ore consumer. With better quality, imported iron ore helps reducing substantial mining and processing costs for steel manufacturing, therefore, there is strong demand for imported iron ore in the PRC. The volume of iron ore imported by the PRC hit its first ever record of 1 billion tonnes throughout 2016, and a year-on-year upward trend has been sustained. Trading business recorded turnover before elimination of inter-company transactions of HK$1,128 million for the year ended 31 December 2016, representing an increase of 126.8% when comparing to that of last year. Ever since 2009, the trading business had mainly involved trading of iron ore pursuant to the offtake agreements entered into with Mt. Gibson. However, the amount of iron ore provided by Mt. Gibson to the Group dropped significantly following the suspension of the Koolan Island mine of Mt. Gibson due to the occurrence of seawall slump and flooding in late 2014. Since then, the Group started to generate more sources of procurement from other suppliers so as to increase the trading volume in this year. During the year, sales volume of approximately 2,400,000 tonnes of iron ore was achieved, representing a considerable rise of 93.5% when comparing to 1,240,000 tonnes in last year, and the selling price also ascended 35% to US$54 per ton (equivalent to HK$421). While turnover rose, gross profit margin dropped. The decrease in gross profit margin was due to more sale of the inventories of medium grade iron ore in last year provided by Mt. Gibson under the offtake agreements entered into with Mt. Gibson, and the agreements include rebate on marketing commission for purchase of the iron ore from Mt. Gibson. Besides, trading of medium grade iron ore brought higher gross profit margin than trading of mainstream minerals. This segment contributed net profit of HK$35 million for the year, while net profit of HK$48 million was recorded last year. In December 2016, the Group entered into another offtake agreement with Mt. Gibson for the purchase of about one fourth of the first year’s production volume of iron ore from Iron Hill, a new project of Mt. Gibson. The offtake agreement has a term of 12 months, with subscription price to be determined based on CFR after taking consideration of the market prevailing price with reference to Platts Iron Ore Index, plus general market premium on iron lump, and penalties in relation to the purity of the iron ore. Under the terms of the CFR, supplier needs to arrange shipment of the goods to the destination port of the buyer at the cost of the supplier. Without production restrictions, the Group is entitled to extend the term of the agreement to a maximum of 12 months. The agreement is still conditional upon approval from the regulatory bodies in Australia and completion of the project by 30 June 2017. Besides, as approval from shareholders of Mt. Gibson is also required, it is expected that Mt. Gibson will convene a general meeting in April 2017 for the approval of the agreement. Shougang Resources Exploration and sale of coking coal Shougang Resources is a 27.61% held associate of the Group listed in Hong Kong and is a major hard coking coal producer in China. Shougang Resources currently operates three premium coking coal mines in Shanxi province, the PRC namely Xingwu coal mine, Zhaiyadi coal mine and Jinjiazhuang coal mine. Its consolidated turnover for the year was HK$1,810 million, a drop of 9.4% over that of last year. After two years of impairment loss, as the coal price lingered at low level in the middle of the year, Shougang Resources still needed to make further impairment loss on its coal mines related assets of HK$195 million in the year. Yet the impairment loss reduced considerably over the last two years as the coking coal price showed significant rebound in the second half of the year. Profit attributable to shareholders of Shougang Resources in this year was HK$112 million while there was loss of HK$416 million in last year. Profit of Shougang Resources attributable to the Group was HK$5 million in this year. With excellent product and brand quality of Shougang Resources, we are still confident towards its future operations. Shougang Century Manufacture of steel cord for radial tyres and sawing wires; processing and trading of copper and brass products Shougang Century is a 35.71% associate of the Group listed in Hong Kong whose businesses are manufacture of steel cord for radial tyres and sawing wires; processing and trading of copper and brass products in Shandong and Zhejiang province, the PRC. The Group’s share of its net profit was HK$4 million, comparing to share of loss of HK$135 million in last year. It recorded a profit in this year because of the substantial improvement in the profit margin of its products. In addition, there were impairment losses of HK$93 million and HK$42 million made by Shougang Century on its property, plant and equipment and goodwill respectively in last year. The attributable amount of these impairment losses shared by the Group in last year was approximately HK$48 million. Further to the non-legally binding memorandum of understanding (“MOU”) dated 13 July 2014 and the supplemental MOUs dated 30 June 2015 and 30 June 2016 between Shougang Century and an independent third party in relation to the proposed capital injection into one of the wholly-owned major subsidiaries of Shougang Century, 滕州東方鋼簾線有限公司 (Tengzhou Eastern Steel Cord Co., Ltd#) (“TESC”) as well as the proposed strategic cooperation between Shougang Century and the independent third party. Upon completion of the proposal, Shougang Century and the independent third party will each own 50% interests in TESC. The proposed capital injection would enhance the capital base of TESC and provide additional financial resources to TESC, which will be utilised to fund the phase II construction of TESC’s steel cord production facilities with an annual production capacity of 100,000 tonnes. The completion of the proposal is subject to the fulfillment of certain conditions. Discontinued operations – Qinhuangdao business Disposal of the Qinhuangdao business was completed on 30 December 2016. Therefore, the steel manufacturing and mineral exploration and processing business in Qinhuangdao was classified as discontinued operations, and the results of which was only been accounted for up to 30 December 2016. Shouqin The Group held an effective interest of 76% in Shouqin before disposal of the Qinhuangdao business. Shouqin was a leading environmental-friendly integrated facility encompassing the entire process from iron, steel, slab to plate production. It had formulated a product mix covering major applications in petrochemical, shipping, pressure vessel, industrial machineries and constructions. Its proprietary production technologies in petrochemical, hydro-electrical and ultra-thick plates were among the most advanced in the PRC. Its annual production capacities of heavy plate had reached 1.8 million tonnes. For the period ended 30 December 2016, Shouqin reported a turnover of HK$6,116 million before inter-group elimination, recording a 3.4% drop on the comparative period. It sold approximately 1,650,000 tonnes of heavy plates during the period, an increase of 1.9% comparing to that of last year. The drop in turnover was mainly due to decrease in ASP of heavy plates and decrease in the exchange rate of RMB. The ASP (exclude VAT) of heavy plate was RMB2,474 (HK$2,885) per tonne, 1.9% lower than that of the last year. Production of slab was mainly used for Shouqin’s internal consumption while some sales were made towards Qinhuangdao Plate Mill and Processing Centre and were eliminated on consolidation. The ASP (exclude VAT) of slab was RMB1,867 (HK$2,177) per tonne, 6.1% higher than that of last year. It sold approximately 596,000 tonnes of slabs during the period, an increase of 3.8% comparing to that of last year. Its downstream processing centre, Qinhuangdao Shouqin Steels Machining and Delivery Co., Ltd. (“Processing Centre”) is mainly engaged in pre-treatment of ship plates, heavy machinery engineering and structural steel. For the period ended 30 December 2016, this entity recorded HK$539 million in turnover before inter-group elimination, which was 10.5% increase compared with that of last year. For the period ended 30 December 2016, the aggregate net loss of Shouqin and Processing Centre attributable to the Group was HK$802 million. The loss was decreased by HK$723 million comparing to the net loss of HK$1,525 million in last year due to increase in ASP of slab and the improvement of gross loss margin. Steel Manufacturing Qinhuangdao Plate Mill The Group held the 100% interest in Qinhuangdao Plate Mill before disposal of the Qinhuangdao business. Qinhuangdao Plate Mill recorded a turnover of HK$809 million before inter-group elimination for the period ended 30 December 2016, a drop of 46.8% comparing with that of last year. The drop was mainly due to the lower sales volume in the weak market. During the period, the sales volume of heavy plate was approximately 247,000 tonnes only, a drop of 42.7% compare to that of last year. ASP (exclude VAT) was RMB2,123 (HK$2,476) per tonne, 8.3% lower than that of last year. The Group’s share of net loss of Qinhuangdao Plate Mill during the period ended 30 December 2016 was HK$149 million while the net loss in last year was HK$210 million. Mineral exploration – production and processing of iron ore products The Group held an effective 67.84% interest in Qinhuangdao Shouqin Longhui Mining Co., Ltd (“Shouqin Longhui”) before disposal of the Qinhuangdao business. Shouqin Longhui was situated at Qinglong County, Qinhuangdao City, Hebei province, the PRC. Shouqin Longhui held two magnetite iron ore mines in addition to concentrating and pelletizing facilities. Due to the difficult operating environment of iron ore industry, Shouqin Longhui did not record any sales during the period under review. Loss of Shouqin Longhui attributable to the Group during the period ended 30 December 2016 was HK$194 million, the loss was increased by HK$25 million comparing to an attributable loss of HK$169 million in last year. Prospects: Upon disposal of the Qinhangdao business to Shougang Corporation by the end of 2016, the steel operations of the Group, which had been running for over two decades, has come to an end. The Group has changed its focus to the trading of iron ore, while at the same time still holding two Hong Kong-listed associates, Shougang Resources and Shougang Century. These associates are engaged in mining and sale of hard coking coal, and the manufacture and sale of steel cord for radial tyres and sawing wires; processing and trading of copper and brass products, respectively, in the Mainland. The financial status of the Group has been back on track after the reorganization, albeit years of severe loss. The current focus in the business of iron ore trading mainly targets on the iron ore imported by the PRC as there is strong demand on imported iron ore by the Mainland. The Group has maintained amiable relationship with suppliers and customers. In addition to our long-term partner Mt. Gibson from Australia, the Group has devoted much effort in joining force with other suppliers including Shougang Corporation. By inputting more resources in the development of the iron ore trading business, a further surge of the trading volume in the coming year is expected, thereby generating stable revenue to the Group. Following the changes in iron ore trading market, the Group will accommodate the actual situation by adjusting the strategies and modes of operation of its trading business. To cope with the potential risks that may be encountered by its trading business arising from the changes in the market, the Group will take proper measures, including the use of appropriate hedging instruments if necessary, to mitigate the risks that its trading business may face. Meanwhile, the results of the two listed associates have achieved significant improvement in the second half of 2016, the continuous advancement of which will bring certain extent of profit contribution to the Group in the future. Apart from paving solid foundation, the management will keep on exploring opportunities for new business development, in order to enable long-term and sustainable growth of the Group. Various events happened in 2016 have stroke heavy blows to the global economy, namely the Brexit after referendum, the unexpected result of the American Presidential Election, leading to volatile financial market around the world. Following the one-quarter point increase in interest rate by the US at the end of 2016, the US Federal Reserve Board has explicitly expressed the possibility to raise the interest rate for three times in 2017. Looking forward to 2017, a sophisticated and ever-changing situation still lies ahead of the global financial market and the operating environment may suffer from further shocks. In spite of the uncertainties, with strong support from Shougang Corporation, our major controlling shareholder, we are still confidence to the future development of the Company.

Information from the financial statements of listed companies

Mobile | Full
Forum rule | About Us | Contact Info | Terms & Conditions | Privacy Statment | Disclaimer | Site Map
Copyright (C) 2020Suntek Computer Systems Limited. All rights reserved
Disclaimer : In the preparation of this website, 88iv endeavours to offer the most current, correct and clearly expressed information to the public. Nevertheless, inadvertent errors in information and in software may occur. In particular but without limiting anything here, 88iv disclaims any responsibility and accepts no liability (whether in tort, contract or otherwise) for any direct or indirect loss or damage arising from any inaccuracies, omissions or typographical errors that may be contained in this website. 88iv also does not warrant the accuracy, completeness, timeliness or fitness for purpose of the information contained in this website.