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Public company info - Silver Base Group Holdings Ltd. , 00886.HK
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Silver Base Group Holdings Ltd., 00886.HK - Company Profile
Chairman Liang Guoxing
Share Issued (share) 2,260,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Alcoholic Drinks & Tobacco
Corporate Profile Business Summary: The Group are principally engaged in the distribution of Wuliangye (五糧液) liquor series, National Cellar 1573 baijiu with 43% alcohol content, Kweichow Moutai Chiew products, Fen Wine with 55% alcohol content liquor series, Red Fen Shijia liquor series, Yaxi Classic liquor series and Old Vintage liquor series, wine, foreign liquor series, Chinese cigarettes and others. Performance for the year: For the Financial Year, the Group recorded a total revenue of approximately HK$938.1 million, representing a decrease of approximately 42.5% compared to a total revenue of HK$1,631.0 million for the year ended 31 March 2020. The loss attributable to ordinary equity holders of the Company for the Financial Year amounted to approximately HK$20.3 million, as compared to a loss attributable to ordinary equity holders of the Company of approximately HK$173.2 million in 2020. Business Review： Baijiu Business Since January 2020, the entire world fell into doldrums due to the spread of the COVID-19 pandemic, and supply chain and industry chain were severely disrupted by the sluggish market demand. During the Financial Year, the Group’s revenue and profit suffered declines, which were mainly due to the restrictions under the stringent precautionary measures. The major consumption scenarios for baijiu products, namely business meetings, banquets and family gatherings, together with the major sales venues of baijiu products, namely restaurants, supermarkets and tobacco and liquor stores, were subject to various controls, the Group’s baijiu sales business was thus seriously affected. However, with the pandemic has been effectively brought under control in the PRC in the second quarter, the major consumption venues for baijiu products have gradually re-opened, leading to rebound in market demand. The intrinsic value of liquor enterprises remains pristine in times of the pandemic, while the leading liquor enterprises have maintained their growth momentum beginning from the first quarter, and the profit declines experienced by the second high-end, mid-end and general liquor enterprises have substantially narrowed. In the third quarter, the satisfying sales performance of baijiu during the “Mid-Autumn & National Day” double festivals foretold a recovery in the upcoming peak season. In respect of sales channels, traditional offline retail stores have accelerated the development of online sales channels to adapt to the pandemic-related shift from offline to online consumption. New retail platforms and home-delivery services have emerged to complement each other through online and offline multichannel marketing approaches, thus realising the transformation and upgrade of consumption. On the other hand, online channels have become a key information source for baijiu consumers, with rich content, high interactivity and speed and convenience acting as major consumption stimulus. In the meantime, the number of consumers sharing their experiences and product reviews through social media platforms has been ever increasing, which has turned e-commerce into a “price indicator” and “quality indicator” for the channels and terminals of the liquor market. According to the China Alcoholic Drinks Association, in the five years from 2015 to 2019, the number of liquor enterprises above designated size decreased by 427, while the production and sales volume decreased by 16,863,000 kilolitres. In the meantime, the five-year cumulative increase in revenue per unit of product amounted to 31.3%^ , while the cumulative increase in profit amounted to 72.6%^ , and the increase in profit per unit of product reached as high as 132.0%^ . The above figures indicate a clear trend of increasing market concentration. In particular, the profitability of the leading enterprises continues to improve, and as a result of consumption upgrade, consumers have become more discerning about the quality of liquors and began to pursue healthy and rational consumption. E-commerce Business The PRC’s mobile e-commerce market in 2020 was expected to exceed RMB8 trillion in transaction volume, representing a growth of 19.7%+ compared to 2019. Mobile and desktop shoppers accounted for 69.3%* and 25.6%* of the total respectively. Mobile terminal has been a major sales channel for the development of e-commerce platforms, and benefiting from the use of hugely popular marketing tools in recent years, such as live streaming and video clips, the scale of mobile e-commerce transactions has continued to grow. Banqueting, gathering and gifting, which could be characterised by a high degree of social interaction, are the major consumption scenarios for Chinese baijiu. In an era revolutionised by the Internet and social media, online communities on WeChat, Weibo, brands’ own official websites or APPs facilitate consumer empowerment by providing product information and platform for sharing reviews and conducting transactions. Silver Base has capitalised on this market opportunity and established a more integrated online and offline sales network through combining “WEjiu”, a platform featuring mobile terminals and robust social functions, with “Wine Kingdom”, the Group’s existing traditional B2B platform. In April last year, the Group restructured the “WEjiu” platform from a technical perspective, by which the Group enhanced the function of product distribution, and fully optimised the distribution system by focusing on B2B and complemented by B2C. Leveraging video clips and live streaming for promotion, together with the social media sharing functions, more social interactive attributes are incorporated to enhance customers’ stickiness to both the products and the platform. Wine and Other Liquor Business The PRC market is currently one of the fastest-growing wine and spirits markets in the world. Although most of the restaurants and offline retail outlets in the PRC have suspended their operations due to the COVID-19 pandemic, neither banquet nor gathering is the major consumption scenario for wine and spirits, and thus there is no significant decline in consumer drinking frequency. The Group expects the wine and spirits market in the PRC to maintain a steady development, and the management will closely monitor the development and changes in the market and prepare and make appropriate plans and adjustments accordingly. Prospects: The Group considers that although the pandemic has affected the results of certain liquor enterprises and distributors in 2020, consumers have now become more accustomed to online shopping and the pandemic has in a sense become a catalyst for the PRC’s liquor industry to embrace a new retailing landscape featuring e-commerce, customisation and quality. As a national baijiu distributor in the PRC, it is of vital importance for us to fully capitalise on the industry trends, closely monitor changes in consumer demand, and make changes and adjustments whenever appropriate so as to navigate the challenges in this highly competitive liquor industry. In order to enhance its overall revenue, the Group will continue its efforts to optimise online and offline sales channels in the PRC and conduct in-depth integration of appropriate marketing tools and management concepts. As for overseas markets, Eastern European countries have been substantially affected, the management will pay close attention to the changes in the markets and make adjustments accordingly. In respect of operational management, the Group will continue to optimise its sales channels in line with market demand, strengthen internal controls and adopt more prudent financial management and cost control strategies in order to achieve long-term sustainability of the Group.

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