Public company info - China Forestry Holdings Co. Ltd. , 00930.HK
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China Forestry Holdings Co. Ltd., 00930.HK - Company Profile
Chairman Li Kwok Cheong
Share Issued (share) 3,060,000,000
Par Currency U.S. Dollar
Par Value 0.001
Industry Forestry & Timber
Corporate Profile Business Summary: The principal activities of the Company are forestry management, trading of timber logs and lumbers and provision of wood processing and construction of wood-frame house services in the People’s Republic of China (the “PRC”). Performance for the year: For the year ended 31 December 2012, the Group’s revenue was approximately RMB143.9 million (2011 : RMB392.3 million), representing a decrease of 63.3% compared to last year. The decrease of foreign exchange loss from RMB37.4 million for the year ended 31 December 2011 to RMB3.1 million for the year ended 31 December 2012 mainly due to the stable exchange rate between RMB and USD during the period and the decrease in US Dollar denominated deposit, as part of the US Dollar denominated deposits has been converted to Renminbi deposits. Business Review: In 2012, China Forestry continued to rebuild its business while taking steps to achieve the strategic goal of becoming a vertically-integrated forestry company with operations spanning the entire industry value chain. The Group progressively expanded its business from harvesting to also cover wood trading and processing, forestry technology development and wood-frame house construction. During the year, China’s economic growth continued to be held back by uncertainties in the global economy. According to the National Bureau of Statistics, China’s GDP growth slowed to 7.8% in 2012, representing a 1.5-percentage point decline from the previous year. Demand for wood products was suppressed by a lackluster property sector. Revenue generated in the year was mainly derived from the Group’s harvesting and wood trading operations, as well as the wood processing business, which has already started to contribute revenue. The loss was mainly attributable to reduced levels of harvesting and wood trading activities, finance costs and higher operating expenses, including expenses related to the newly acquired wood processing business. To strengthen its internal controls for the sake of sustainable future growth, the Group is in discussions with the external professionals to plan for the Third Phase Internal Control Review after the completion of both an independent investigation and the Internal Control Review of the Group in April 2012. Wood Trading The Group’s wood trading business sold approximately 49,100 cubic metres of logs and generated RMB48.5 million in revenue for the year ended 31 December 2012, compared to approximately 340,000 cubic metres and RMB392.3 million, respectively, in the previous year. The significant decrease in revenue was mainly due to an anomaly in 2011 resulting from a total amount of RMB240 million realized on the liquidation of inventories authorized by former managements for the year ended 31 December 2011 . During the year, wood logs were mainly traded in Manzhouli, Yichun and Yunnan region. The Group’s wood trading business is starting to achieve synergies with its wood processing operations as it exploits rich forestry resources from Russia for its high-end wood log supply. Harvesting In 2012, the Group gradually resumed its harvesting activities in Sichuan and Yunnan provinces, selling a total of approximately 62,600 cubic meters of logs and generating revenue of RMB46.6 million. Continuous effort has been made in rebuilding an accurate record system and forest management team to support the Group’s harvesting activities. Forest land reserves remain the cornerstone of the sustainable development of the Group. During the year, China Forestry continued to work with the relevant government authorities on the recovery of Forestry Ownership Certificates (“FOC”) for its forest assets. As at 31 December 2012, the Group owned approximately 154,000 hectares of forest (of which 76,000 hectares with FOC and 45,000 hectares without FOC in Yunnan Province, and 33,000 hectares with FOC in Sichuan Province), with valued at approximately RMB2,033.9 million. The Group will continue to recover the FOC for the outstanding forests. Wood Processing In April 2012, the Group completed the acquisition of Manzhouli Triple Success Co. Ltd. (“Triple Success”), one of the largest high-end wood processing plants in Asia, located in Manzhouli in the Inner Mongolia Autonomous Region. The acquisition represents a major step downstream in the Group’s implementation of its vertically-integrated business strategy. For the first few months after the acquisition, the Group focused on reconstruction, training and enhancing the productivity of Triple Success. Efforts were made in resource integration, liaising with suppliers and developing PRC and international clientele, with a view to ramping up production in 2013. Triple Success had an annual production capacity of 450,000 cubic metres of high-end wood products by the end of 2012. The Group plans to gradually develop Triple Success into a bulk processer of high-end wood products in northeastern China. During 2012, Triple Success continued to export high-end wood products to Japan, where it enjoys strong brand recognition. The Group’s wood processing business recorded total revenue of RMB19.4 million for the eight months in 2012 after the acquisition of Triple Success, which is starting to make an initial financial contribution. Wood-frame House In the first half of 2012, China Forestry strategically launched its wood-frame house manufacturing and construction business with the aim of accelerating the Group’s downstream forestry operations. The Group secured a wood-frame house project in Tangshan, Hebei Province with a total construction area of approximately 13,000 square metres. Completion of the project was originally slated for the second half of 2012 but was subsequently rescheduled to 2013. In early 2012, China Forestry established an independent wood-frame house design and research center in Beijing that focuses on energy saving and environmentally friendly wood-frame house products. The Group has already secured intellectual property rights for several key technologies involving woodframe house construction. Prospects: China’s economy is expected to grow steadily in 2013 against a backdrop of a stabilizing global economy. Demand for wood and wood products is expected to be steady and to support the Group’s growth. Looking into 2013, the Group will continue to adopt a prudent approach to implementing its verticallyintegrated business strategy, which integrates the upstream, midstream, and downstream businesses in the forest industry chain. The Group expects to increase its harvesting activities by exploiting high-quality forest land in Sichuan, Yunnan and Guizhou provinces. Meanwhile, the expansion plan of Triple Success is on track to ramp up production in 2013, which will in turn support the growth of the Group’s wood trading business. With the further expansion of reforms in the national forestry sector and afforestation, forestry has experienced rapid growth in China over the past decade. Recently, there has also been increased emphasis on the environment by the central government. Mr. Hu Jintao, the former General Secretary of the Communist Party of China, said in his opening speech at the 18th CPC National Congress in November 2012 that the government should “reverse the trend of ecological deterioration and build a beautiful China.” This marked the first time that the concept of “Beautiful China” has been written into the keynote report at the five-yearly congress. The development of China’s forestry industry is expected to benefit from more favorable government policies going forward. Leveraging the Group’s vertically-integrated business model, China Forestry is optimistic about the future growth opportunities brought about by the rapidly developing forestry industry in China.

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