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Public company info - China Finance Investment Holdings Ltd. , 00875.HK
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China Finance Investment Holdings Ltd., 00875.HK - Company Profile
Chairman LIN Yuhao
Share Issued (share) 379,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Agricultural, Poultry & Fishing Production
Corporate Profile Business Summary: The principal activities of the Group are assets and investment holding; growing, processing and trading of agricultural produce and trading of meat produce; money lending and securities brokerage businesses respectively. Performance for the year: During the Reporting Period, the Group recorded a turnover of approximately HK$328.7 million, representing an increase of approximately 5.6% from approximately HK$311.4 million for the Corresponding Period. Business Review： The Group is principally engaged in (i) growing and trading of agricultural and meat produce (“Agricultural and Meat Business”); (ii) provision of money lending services (“Money Lending Business”); and (iii) securities trading and brokerage services (“Securities Brokerage Business”) during the Reporting Period. Agricultural and Meat Business Due to the COVID-19 outbreak, the Group’s Agricultural and Meat Business was adversely affected thus preventing the Group from operating as usual during the first half of year 2020. As a result, during the first half of year 2020, the turnover of the Agricultural and Meat Business segment decreased by approximately 57.1%, from approximately HK$167.8 million for the six months ended 30 June 2019 to approximately HK$71.9 million for the six months ended 30 June 2020. Nevertheless, the Group has started to pick up gradually since the second half of year 2020 by trading of meat products, the turnover during the Reporting Period was slightly higher than that of the Corresponding Period. As a result, during the Reporting Period, the turnover of the Agricultural and Meat Business segment increased by approximately 6.3% to approximately HK$302.0 million from approximately HK$284.2 million for the Corresponding Period. There was a rise in gross profit margin mainly attributable to sales of products with higher profit margin. During the Reporting Period, the Agricultural and Meat Business recorded a gross profit of approximately HK$20.1 million (31 December 2019: gross loss HK$14.2 million). The Group is currently conducting research and development for the growing of medicinal value crops i.e. Kimura et Migo* (鐵皮石斛) together with Guangdong Academy of Agricultural Sciences* (廣東省農業科學院作物研究所). The cultivation of Kimura et Migo is still under experimental stage within the Group’s test plots located in Conghua* (從化) of Guangdong Province. Based on the research conducted by the Company, the normal growing cycle of Kimura et Migo requires approximately three to five years of growth to reach maturity, before it can be effectively harvested and used. Due to its rarity, the economic value of Kimura et Migo will become higher when it grows older. In order to achieve its highest economic value, the Group does not plan to crop the experimental Kimura et Migo at this stage. The Group has to first understand its growth pattern before the Group can decide to promote mass cultivation of Kimura et Migo and the agricultural experiment normally takes time. In addition, the Group needs to evaluate cultivation costs associated and harvest yield, and whether it will provide satisfactory return on investment after taking into account of market demand and competition for similar products. After years of cultivation, soil quality of the Group’s farmlands in Ningxia Hui Autonomous Region has been in serious decline because of the previous cultivation methods and the use of chemical fertilisers, which prevents the lands from regenerating. The restoration of the soil condition could not be easily achieved by human intervention and it normally takes years for the soil condition to recover. Although the production capacity of leased farmlands in Ningxia Hui Autonomous Region is in a declining trend which is demonstrated by the declining procurement (equivalent to total production minus wastage) from those leased farmlands in the three previous financial years, the declining cultivation condition did not bring material adverse impact on the Group’s operation and financial performance because the Group decisively adjusted its strategies by minimising agricultural produce inventory level, promoting sales at competitive prices and increasing liquidity. The Group has been planning to expand the production base in Guangdong Province, a desirable location as the climate is comparatively moderate, which allows for year-round cultivation of agricultural produce. The Group has entered into lease agreement for the lease of two farmlands (the “Shanwei Farmlands”) of approximately 67 hectares in total both located in Shanwei* (汕尾) of Guangdong Province. The Shanwei Farmlands have already been equipped with infrastructures of water and sewage system, plastic greenhouse and warehouse and other fundamental facilities such as building office and staff quarter. The Group started consolidating agricultural products from various labourhood farms and agricultural companies to process, package and sell to customers. In 2019, the Group entered into long term co-operation agreements with certain agricultural companies in other provinces of the PRC to broaden its agricultural bases and source/subcontract the agricultural produce of the Group. The Group is going to maintain this strategy to stay competitive. Looking ahead, the Group will continue to control its costs, utilise its existing resources and collaborate with research institutes in the PRC to further strengthen the cultivation and trading of agricultural and meat products with high potential for development, or pursue acquisitions when opportunities arise. Money Lending Business Following the completion of the acquisition of Shenzhen Taihengfeng Technology Company Limited* (深圳市泰恒豐科技有限公司) and its subsidiaries in November 2016, the Group expanded into the micro finance business sector in Shenzhen, the PRC, through provision of personal loans and corporate loans services. On 1 March 2019, Shenzhen Internet Finance Association issued a notice for the consultation of guidelines for the exit of the internet finance industry under the category of Peer to Peer (“P2P”) internet lending companies which drove P2P platforms to shrink dramatically after such regulatory and industry reform. Apparently, such crackdown of the P2P platforms means a reduction in financing channels for small and medium-sized enterprises (SMEs), which led to a restructuring of the money lending industry in the PRC. The Group has responded by narrowing its target customers to borrowers with better risk profiles. The Company has thus been able to lower its interest rates with a view to establish long-term business relationships with customers since 2018. As a result, average interest rate charged to the borrowers declined to 11.3% during the Reporting Period, as compared to that of 12.5% in the Corresponding Period. During the Reporting Period, loan interest income and gross profit under Money Lending Business amounted to approximately HK$20.6 million (2019: HK$25.7 million) and HK$20.6 million (2019: HK$25.7 million) respectively. Such decrease in loan interest income and gross profit was attributable to the tightening of policy in the PRC and deterioration of economic environment. Outstanding loan principal and interest receivables amounted to approximately HK$272.6 million (2019: HK$225.3 million). No material default event occurred as at 31 December 2020, an impairment loss provision of approximately HK$30.2 million on loan receivables was considered by the Group at the end of the Reporting Period (2019: HK$3.3 million). In the coming year, it is projected that the performance of Money Lending Business segment in both the PRC and Hong Kong will worsen due to the uncertain economic environment and policy in the PRC. Securities Brokerage Business In 2017, having considered that there is no clear potential for material improvement on the performance of the securities brokerage services under the existing operation scale, the Group believed that the disposal of the Securities Brokerage Business represented a good opportunity for the Group to improve its overall returns and provide greater value to the Shareholders by focusing its resources on other business segments. As such, on 25 May 2017, the Group entered into a sale and purchase agreement (the “Agreement”) with an independent third party, pursuant to which the Group has conditionally agreed to sell the Securities Brokerage Business at the consideration of net asset value of the Securities Brokerage Business as at the date of the Agreement plus HK$12.0 million (the “Disposal”). Subsequently, the Group entered into supplemental deeds, whereby the parties have agreed to extend the date of fulfillment of the conditions precedent as set out in the Agreement. The latest supplemental deed was entered into on 24 February 2021, which further extends the date of fulfillment on the expiration of 51 months from the date of the Agreement. During the Reporting Period, the Securities Brokerage Business generated revenue of approximately HK$6.1 million (2019: HK$1.4 million) and loss before taxation of approximately HK$3.6 million (2019: HK$11.0 million) respectively. The increase in revenue was mainly due to commission earned from placing exercises conducted by the Group during the Reporting Period. The Disposal is still in process, and the delay in completion is mainly due to the fact that additional time is required by the purchaser to prepare necessary information for effecting the Disposal to comply with relevant regulatory requirements in Hong Kong. The Group and purchaser will continue to use their best endeavours to complete the Disposal as soon as practicable. As at the end of the Reporting Period, the Company is expected to record a gain on the Disposal in the amount of approximately HK$8.0 million. Investment in Internet Finance Business in Mainland China The Group owns 25% equity interest in Shenzhen Qianhai Jinlin Technology Services Company Limited (formerly known as Shenzhen Qianhai Gelin Internet Financial Services Company Limited)* (深圳市前海錦林科技服務有限公司), which is engaged in internet finance business in the PRC. During the Reporting Period, such internet finance business recorded revenue of approximately HK$200 (2019: HK$60,000) and a net loss of approximately HK$0.4 million (2019: HK$2.5 million), respectively. It is evident that the Group’s internet finance business was impacted by the relevant online lending regulations in the PRC (which became effective on 18 December 2018) and has since become trivial. Prospects: The Group will seek suitable investment opportunities from time to time to develop its existing business portfolio and engage in new lines of business with growth potential. The Group will pursue to diversify its business and income streams by exploring opportunities with exciting prospects which could complement or create potential synergies to its existing core operations. To diversify its income streams and counter balance the cyclical nature of the Group’s Agricultural and Meat Business, the Company has been actively developing its trading of meat business since 2020. In order to expand the Agricultural and Meat Business, in late 2018, the Group started consolidating agricultural products from various labourhood farms and agricultural companies to process, package and sell to customers. In 2019, the Group entered into long term cooperation agreements with certain agricultural companies in other provinces in the PRC to broaden its agricultural bases and source/subcontract the agricultural produce of the Group. After the Reporting Period and up to the date of this announcement, the Group has entered into lease agreements for the lease of Shanwei Farmlands in order to expand the production base in Guangdong Province, which is a desirable location for expansion of its production base as the climate is comparatively moderate and it allows year-round cultivation for agricultural produces. As the precautionary and lockdown measures implemented across the PRC have been uplifted, business of the Group and Group’s customers have started to pick up gradually since the second half of year 2020. The management will keep actively monitoring the performance of the Group and implement fitting strategy in a timely manner. On 12 June 2020, the Group entered into an agreement with third parties for the acquisition of 100% interests of Shenzhen Cypress Jade Cross-border E-commerce Co. Ltd* (深圳市從玉跨境電商有限公司) (formerly known as Shenzhen Mckrypton Technology Company Limited* (深圳市麥氪科技有限公司) (“Mckrypton Technology”)). Mckrypton Technology was established in the PRC and principally engaged in online sale business in Shenzhen, PRC. As a result of the acquisition, the Group is expected to have a prime opportunity to enter into online sale business in Shenzhen, PRC, and thus diversify the revenue stream of the Group. Apart from the aforesaid investments, the Group will also consider other potential profitable businesses which could boost profitability in the future, including but not limited to, the financial and agricultural and meat sectors in the PRC and Hong Kong.

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