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Public company info - Value Convergence Holdings Ltd. , 00821.HK

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Value Convergence Holdings Ltd., 00821.HK - Company Profile
Chairman FU Yiu-Man
Share Issued (share) 1,706,000,000
Par Currency
Par Value 0.0
Industry Securities
Corporate Profile Business Summary: The Group is principally engaged in the provision of financial services and proprietary trading. Performance for the year: The Group’s consolidated revenue for the year ended 31 December 2019 amounted to approximately HK$49.2 million, which decreased by about 2.5% as compared with the same period in 2018. The Group recorded a consolidated loss attributable to shareholders amounted to approximately HK$93.4 million for the year ended 31 December 2019 against a loss of approximately HK$486.3 million for the same period in 2018, representing a significant decrease of about 80.8%. Business Review: The HSI was moving up and down during 2019, gained more than 9% or up 2,344 points to close at 28,189 points at the end of 2019. Apart from the internal strife, external troubles also persisted. The unending US-China trade war can be the Achilles’ heel of the global economy. Notwithstanding over a year of negotiations, the two nations signed Phase 1 trade due in January 2020, however, both nations continue to lock horns over growing divisions, and comprehensive solution looks far off. Gross domestic product (“GDP”) dropped at a year-on-year rate of 1.2% in 2019, a decade low. GDP growth keep on slips into the negative zone, Hong Kong technically enter into recession. Therefore, prospects of the securities industry for the coming year do not look particularly good. In fact, the industry has started a natural selection process, in which a number of small-scale securities trading firms have been mercilessly eliminated during the year while only the fittest and the most competitive bigger firms survived. Although rumor has it that Hong Kong Exchanges and Clearing Limited (“HKEx”) might be overtaken by Shenzhen or Macau, Hong Kong remains a well-established international financial hub with core strengths such as high international rankings in terms of legal system, establishments, professional support, human resources and offshore Renminbi (“RMB”) trading over the years. Hong Kong has an excellent track record and topped the global chart of initial public offering (“IPO”) fund raising amount for 5 years in the past decade. The total amount of IPO proceeds for the whole year reached approximately HK$314.5 billion, making the city the top IPO markets in the world. HKEx also continues to improve its services and expand its global product portfolio during the year. Such initiatives include the introduction of inline warrants and weekly index options as well as the studies of simplifying IPO processes, shortening settlement time for IPO and other arrangements to further optimize the IPO system. On the other hand, the Securities and Futures Commission has strengthened its regulation on the financial industry, such as tightening the guidelines for margin lending and introducing the front-loaded regulation to eliminate the listing of shell and fraudulent companies. These measures will foster the long-term and healthy development of the financial market in Hong Kong. As a financial services provider, the business performance of the Group is inevitably impacted by both the macro environment and local market conditions. Nevertheless, the Group always thrived on its solid financial standing and its various investment services and products offered to the Group’s clients. All of these consolidated the Group as a competitive player in the financial industry. While the financial-oriented business makes the Group particularly sensitive to fluctuating economic conditions and investors’ sentiments, the Group’s fundamental strategy is firmly anchored and the Group’s core focus remains on developing and fortifying the Group’s core businesses in provision of financial services including (i) securities, futures and options brokering and dealing, and financing services (including local and overseas securities dealing, futures and options trading, derivatives and other structured products trading, placement and underwriting, margin financing and money lending, etc.); (ii) corporate finance and other advisory services (including mergers and acquisitions and company secretarial services to clients, etc.); (iii) asset management; and (iv) insurance brokerage; and proprietary trading. Indeed, the Group is committed to achieving long-term and balanced growth on the basis of solid financial capability and a pragmatic operating strategy, which help capitalizing on any growth opportunities and thereon enhance the Group’s shareholders’ value. Establishment of a joint venture securities company in Guangxi In July 2016, the Company announced that VC Brokerage Limited (“VC Brokerage”), an indirectly wholly owned subsidiary of the Company, entered into a joint venture agreement (the “Joint Venture Agreement”) with three independent third parties to establish a joint venture securities company in Guangxi, the PRC (the “PRC JV Company”). Subject to the approval by China Securities Regulatory Commission (the “CSRC”), the PRC JV Company is expected to be a full-licensed securities company permitted to provide securities brokerage, trading and investment advisory, underwriting, sponsorship and asset management services in the PRC. Pursuant to the Joint Venture Agreement, VC Brokerage will contribute RMB445 million (equivalent to approximately HK$496 million), representing 44.5% shareholding in the PRC JV Company. The Company intended to finance the investment in the PRC JV Company by placing of convertible bonds in the aggregate principal amount of up to HK$850 million (the “Convertible Bonds”) at an initial conversion price of HK$0.65 each pursuant to a placing agreement entered into at the same time. The aggregate net proceeds from placing of the Convertible Bonds will be approximately HK$829 million, which is intended to use for capital contribution to the PRC JV Company and the remaining balance is intended to use for expanding the Group’s existing businesses and other possible investments in the future, when opportunities arise. In June 2018, the Company was informed by Guangxi Financial Investment Group Company Limited (廣西金融投資集團有限公司) (“Guangxi Jintou”), who is responsible for liaising with CSRC for the formation of the PRC JV Company, partners of the PRC JV Company would be changed. Guangxi Railway Investment Group Co., Ltd. (廣西鐵 路投資集團有限公司) (“Guangxi Railway”) will replace Guangxi Hande Group Company Limited (廣西瀚德集團有限公司) and Beijing Heyuan Finance Equity Investment Centre (limited partnership) (北京合源融金股權投資中心(有限合夥)) as a new partner of the PRC JV Company. The amount of capital contribution and shareholding of VC Brokerage in the PRC JV Company remains unchanged. As further informed by Guangxi Jintou in September 2018, Guangxi Communications Investment Group Co., Ltd. (廣西交通投資集團有限公司) will replace Guangxi Railway become one of the joint venture partners of the PRC JV Company. The amount of capital contribution and shareholding of VC Brokerage in the PRC JV Company still remains unchanged. On 21 May 2019, being the expiry date of the extended placing period, the Company was unable to reach agreement with the placing agent to further extend the placing period, the placing agreement for the Convertible Bonds had lapsed on that date. As at the date hereof, the Company and VC Brokerage have not yet obtained the approval and authorisation from the CSRC for establishment of the PRC JV Company. Details of the transaction please refer to the Company’s announcements dated 24 July 2016, 20 September 2016, 26 October 2016, 18 November 2016, 17 January 2017, 29 March 2017, 28 June 2017, 20 September 2017, 12 October 2017, 12 January 2018, 27 March 2018, 27 June 2018, 20 July 2018, 28 August 2018, 6 September 2018, 28 November 2018 and 21 February 2019; and the Company’s circulars dated 26 September 2016, 27 February 2017, 22 September 2017, 23 February 2018, 3 August 2018 and 31 January 2019. Formation of joint venture company to act as a sponsor to a limited partnership fund On 22 September 2017, the Company entered into a legally binding memorandum of understanding (the “2017 MOU”) with an independent third party (the “Party”) in relation to the proposed formation of a joint venture company (the “JV Company”) to act as a sponsor to a limited partnership fund (the “Fund”) which will focus on infrastructure projects (the “Proposed Joint Venture”). The 2017 MOU is subject to the parties entering into formal agreements to set out the definitive terms of the Proposed Joint Venture. The Company shall have the right to acquire no less than 5% of the entire issued share capital of the JV Company. The initial cost required for the setting up of the JV Company and the Fund (the “Organisation Expenses”) shall be borne equally between the Company and the Party, provided that in any event, the Company’s provision of the initial cost shall be limited to HK$7.5 million. As at 30 June 2019, the Company paid an amount of HK$5 million for the Organisation Expenses. As the Company was unable to reach agreement with the Party to extend the 2017 MOU which was due on 30 June 2019, the 2017 MOU had lapsed on that date. Remaining funds after expenses would be returned to the company upon finalization of completion account. Details of the transaction had been disclosed in the Company’s announcements dated 22 September 2017, 5 January 2018, 27 June 2018, 28 December 2018 and 28 June 2019. Subscription of the increased registered capital in Beijing Shuntong Taida Aviation Ground Service Co., Ltd. On 27 February 2019, Massive Benefit (HK) Limited (“Massive Benefit”), an indirect wholly owned subsidiary of the Company, Beijing Sky Jingshi Investment Co., Ltd. Beijing Taihe Zhongcheng Management Technology Center and Beijing Shuntong Taida Aviation Ground Service Co., Ltd. (the “Target Company”) entered into an investment agreement (the “Investment Agreement”) pursuant to which the Target Company has agreed to conditionally increase its registered capital by RMB2,117,600, and Massive Benefit has agreed to conditionally make a capital investment of RMB15,000,000 in cash to subscribe for the increased registered capital in the Target Company with the premium to be accounted into capital reserve of the Target Company. Upon completion, Massive Benefit will directly hold 15% equity interest in the Target Company and accordingly, the Company will thereby indirectly hold 15% equity interest in the Target Company. On 28 June 2019, due to business plan adjustment, the parties to the Investment Agreement voluntarily entered into a termination agreement (the “Termination Agreement”), pursuant to which, the parties mutually agreed that the Investment Agreement shall terminate and cease to have any effect. Each party to the Termination Agreement has released and discharged other parties from all their legal liabilities under the Investment Agreement and shall have no claim against each other. Details of the transaction had been disclosed in the Company’s announcements dated 27 February 2019 and 28 June 2019. Establishment of insurance brokerage business On 27 March 2019, VC Financial Group Limited, a direct wholly owned subsidiary of the Company, entered into a memorandum of understanding with Mr. Lo Ping Hung Eric, an independent third party, to acquire the entire equity interest in Experts Management Limited, an insurance broker company. The formal sale and purchase agreement was made on 3 April 2019 and the acquisition was completed on the same date, with the cash consideration of approximately HK$2.3 million. Details of the Group’s business performance of each operating segment for the year ended 31 December 2019, together with the comparative figures of the corresponding period in 2018, are given in the section “FINANCIAL REVIEW” below. Prospects: Looking forward to 2020, the development of the novel Coronavirus epidemic will be critical. The globalised outbreak already hit the global economy in a very tough way. With respect to the ongoing US-China trade war, the fight between the US and China is becoming a routine. Any agreement between the two nations will probably be short-term. In particular, Donald Trump, the president of the US, will turn US-China relationship into his political leverage in the upcoming presidential election in order to hold sway over the public. As such, the trade war is going to intensify with more and more battlegrounds, thereby impacting the global stock market. As to Hong Kong itself, uncertainties are expected to linger for some while, and the city’s society, economy and competitiveness will suffer. Nevertheless, with the perseverance and concerted efforts of the people of Hong Kong, the city will tide over the difficulties. The Group’s business strategies continue to include enlarging the Group’s revenue base through fostering the Group’s core businesses, and tapping into new emerging markets with expanded business initiatives. While applying the Group’s excellent operational capabilities to serve the Group’s clients, the Group will devote increased resources to business diversification and acquisition when opportunities arise, with the view to strengthening the Group’s all-round business position in Hong Kong and beyond. The Group will continue to explore the business opportunities in the PRC market. At the same time, the Group also keeps a firm grasp on the business opportunities with comparably positive growth and return in the local financial market and more resources will then be devoted.

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