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Public company info - Beautiful China Holdings Co. Ltd. , 00706.HK

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Beautiful China Holdings Co. Ltd., 00706.HK - Company Profile
Chairman Sze Wai Marco
Share Issued (share) 9,264,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Environmental Goods
Corporate Profile Business Summary: The Group is principally engaged in provision of Environmental Protection Treatment Service and Eco-environment Construction Services. Performance for the year: The Group’s total revenue decreased by approximately 13.1% from approximately HK$55.7 million in 2017 to approximately HK$48.4 million this year. Gross profit significantly decreased by approximately 37.7% from approximately HK$18.3 million in 2017 to approximately HK$11.4 million this year. Gross profit margin decreased to approximately 23.6% this year from approximately 32.8% in 2017. For the year ended 31 December 2018, loss attributable to owners of the Company was approximately HK$135.8 million, which recorded an increase as compared with approximately HK$72.3 million in 2017. Business Review 2018 represented an important milestone year in the development of China’s ecological civilization construction and ecological environmental protection. Government departments such as the State Council and the Ministry of Ecology and Environment introduced a number of favourable policies and guiding opinions in implementing the concept of “Building a ‘Beautiful China’ by Winning the Battle of Preventing and Controlling Environmental Pollution”. During the past year, in terms of pollution prevention and control, the national expenditure on pollution prevention and control and natural ecological protection expenditure increased by 29.6% and 17.5% year-on-year respectively. The central government’s funds for pollution prevention and control and ecological environment protection were approximately RMB255.5 billion, representing a year-on-year increase of 13.9%, of which the investments in atmospheric, water and soil pollution prevention and control were the largest in recent years. However, the PRC economy faced increased downward pressure due to the continuous impacts of negative factors such as the Sino-US trade war. The difficulties in capital chain emerged, the business conditions deteriorated and some local governments became more conservative about fiscal expenditures, which resulted in the suspension of certain projects. During the year, the Group continued to respond to the PRC’s environmental policies for boosting green development, the Group took the initiative in pro-actively carrying out strategic collaboration with leading enterprises in different fields to achieve resource complementarity, and push forward business strategy and project implementation. To capture the opportunity that the PRC government promotes the implementation of environment-related projects by public-private partnership (“PPP”), the Group worked closely with the governments of different provinces, cities and counties in the PRC to obtain relevant projects. (I)Ecological Environment Construction Business For the ecological seedlings business segment, the Group has approximately 1.1 million units of North American red maple tree seedlings planted in the nursery bases in Anhui and Jiangsu, the PRC, which represent the biological assets of the Group. The North American red maple tree seedlings are divided in two categories: Sunset Glow and October Glory. Of these, approximately 0.85 million units of North American red maple tree seedlings are cultivated and planted at the Group’s colour seedling nursery base which occupies an area of approximately 5,879 mu in aggregate in Bengbu, Anhui, the PRC. In autumn of the year, the tree seedlings products are sold to customers in Hebei Province, Shandong Province, and other areas of the PRC. While maintaining the previous scale of cultivation and planting, the Group plans to commence a new eco-planting project in Weifang, Shandong, so as to enlarge and strengthen the ecological seedlings business segment. In 2018, the Group sold a total of 70,000 (2017: 107,000) seedlings, generating sales revenue of approximately HK$34.7 million (2017: HK$55.2 million). With regard to the construction of ecological landscape projects, there were few opportunities for quality landscape projects as a result of reduction of the expenses by the governments at all levels in the PRC on the construction of municipal landscape facilities, coupled with intense market competition. As such, the Group did not undertake any new landscape construction projects during the period. Although the Group continued to follow up with the progress in the construction of the project involving the West Coast Wetland Park in Dianchi Lake, Kunming, since the Yunnan provincial government introduced new protection regulations for Dianchi Lake at the end of 2016, the Kunming municipal government has modified its planning design and construction plan for the project. As a result, the Group has not yet officially commenced the project construction since it was awarded with the tender for the project in the second half of 2016. As at the date of this report, the Group had yet to wait for the Kunming municipal government to clarify the new plan for carrying out the project construction. (II)Environmental Protection Treatment Service Business The Group focuses its environmental protection treatment service business by recycling solid waste into renewable resources, promoting the construction and operation of pyrolysis processing projects of waste rubber and plastics, and carrying out integrated domestic waste treatment, regeneration and capacity expansion of waste landfills, and third-party treatment services for industrial pollution to meet the needs for the establishment of a solid waste collection system. In December 2017, the Group entered into an agreement with Zouping Yuanrun Carbon Black Technology Limited*(鄒平元潤炭黑科技有限公司)in relation to capital injection, under which the Group injected a sum of RMB46,660,000 (equivalent to approximately HK$57,000,000) into Shandong Kaiyuan Runfeng Environmental Protection Technology Company Limited*(山東開元潤豐環保科技有限公司)(“Shandong Kaiyuan Runfeng”), whereby the Group owned a 70% interest in Shandong Kaiyuan Runfeng upon completion of such capital injection. The capital injection was completed in early 2018, enabling the Group to obtain a business license of operating pyrolysis processing of 100,000 tonnes of scrap tyres per year and renewable resources recycling business. In relation to Shandong Kaiyuan Runfeng’s expansion programme on a pyrolysis capacity of 40,000 tonnes of scrap tyres per year, the basic installation of equipment has been completed and the trial production has begun. Together with the existing capacity of 20,000 tonnes per year, the Group will have a pyrolysis capacity of 60,000 tonnes in aggregate of scrap tyres per year, making it one of the scrap rubber pyrolysis treatment enterprises with the largest capacity in the PRC. The expansion plan for a capacity of remaining 40,000 tonnes per year for the Kaiyuan Project (as defined in the circular of the Company dated 18 August 2017) will be scheduled to start separately in order to reach a capacity of 100,000 tonnes in aggregate per year. Based on its development strategy for both the environmental business segment and the treatment of “black and white pollutants” such as waste rubber and waste plastics, the Group continued to focus on exploring the environmental markets in Shandong and other key areas in the PRC. The Group has reached a strategic cooperation intention with an enterprise that engaged in research & development and manufacturing of waste rubber pyrolysis equipment as well as investment operations under Shuangxing Group Company Limited*(雙星集團有限責任公司)(“Shuangxing Group”). Both parties are willing to cooperate in the development of waste rubber pyrolysis equipment R&D and manufacturing, the investment and operation of waste rubber pyrolysis projects. At present, the two sides are promoting preliminary issues such as due diligence and preparation of contract negotiations. The Group entered into joint venture collaboration with Integrated Green Energy Singapore Pte. Ltd., a company incorporated in Singapore with limited liability and a wholly-owned subsidiary of Integrated Green Energy Solutions Ltd., a company incorporated in Australia and the shares of which are listed on the Australian Stock Exchange (ASX: IGE), pursuant to which the two parties plan to cooperate in the investment, construction and operation of the waste plastics pyrolysis and recycling business in mainland China. Specifically, the two parties will jointly invest in the construction and operation of a waste plastics pyrolysis project with a capacity of 66,000 tonnes per year. The project investment is estimated at approximately US$25 million, with preparations for project siting and project initiation underway. As to waste treatment project, the contract for a domestic waste landfill treatment project in Qiqihar was officially terminated in July 2018 after consultation with the counterparty of the project due to various factors such as restrictions on construction requirements and risks associated with project fund settlement and collection. The two parties completed the settlement and collection of project funds based on the amount of work measured by a third-party professional institution. The Group has withdrawn from the project construction site after transferring the management rights to the site to China National Environmental Protection Group. Prospects: In 2019, the Central Economic Work Conference continued to emphasize that the pollution prevention and control would be regarded as one of the “Three Critical Battles” to be achieved in order to complete the building of a moderately prosperous society in all respects in the next three years. The second round of environmental protection supervision will begin as scheduled this year and the high pressure on environmental protection will be normalized. The implementation of the Law on the Prevention and Control of Soil Pollution will comprehensively form a legal and regulatory system for the prevention, control and environmental protection treatment of the atmosphere, soil and water. With the strengthened downward trend of macroeconomic policies, ecoenvironmental protection is an important area for the PRC to promote infrastructure investment and drive sustainable economic development. Thus, environmental protection has become a long-term mechanism for social and economic development. The Group will follow the established business strategy. On the basis of “Eco-environmental Buildup + Environmental Treatment Service”, a dual-wheel driven business strategy of the Group, the Group will continue to focus on “eco-environmental protection” market and seize the opportunities arising from various policies and step up the development of the eco-environmental business. For the ecological environment construction business, by centering on such vertical industrial chain expansion and development strategies as “seedling nursery and project construction”, and based on the business development plan for colour seedlings, the Group will continue to consolidate and expand “ecological seedling” business and invest in the construction of the colour seedling base in Wuhe of Bengbu, Anhui, commit resources to the nursery and management of existing seedlings, enhance the breeding capacity of colour seedlings and accelerate the process for the sales of grownup seedlings, in an attempt to achieve its goal of becoming one of the largest colour seedling suppliers in Asia. Moreover, the Group will continue to follow up and promote the construction plan of ecological wetland landscape projects for Dianchi Lake West Coast in Kunming and actively communicate with local governments, with a view to formulating the project design and construction plan as soon as possible and promoting the construction preparation. The Group will look for opportunities to take on new ecological landscape investment and construction projects in a timely manner so as to expand the scale of the Company’s ecological landscape business. For the environmental protection treatment service business, the Group will continue to develop the integrated waste treatment and renewable resources recycling business, promote the continuous efficiency optimization and improvement of existing operational projects, accelerate the implementation of new construction projects, focus on the core business of pyrolysis processing of waste rubber and plastics, expand solid waste treatment services such as integrated waste treatment and third-party treatment services for industrial and agriculture pollution and promote the construction of waste raw material collection system. The Group will adopt the strategy that combines organic growth with mergers and acquisitions as well as cooperation. Based on the development orientation of investment and operation, the Group will gather and integrate resources and capabilities such as R&D and manufacturing of technological equipment and business investment operation management to quickly establish and implement businesses and achieve economies of scale. For the expansion of key markets, the Group’s businesses are primarily located in the Shandong region. Despite in the initial stage of the market, the Group are convinced that the “black and white pollutants” (scrap tyres and plastics) treatment business that the Group currently focus on will have huge market space in the future and will be able to support the rapid sustainable growth of the Company’s business. the Group will opportunely promote the development strategy of the industrial chain in upstream and downstream, develop the scrap tyres and scrap plastics raw material collection system, promote the extension of the pyrolysis product value chain, develop the business of renewable energies and deep processing of industrial raw material in order to improve product quality, expand market application space, extend the product value chain and further increase economic benefits.

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