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Public company info - Silk Road Logistics Holdings Limited , 00988.HK
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Silk Road Logistics Holdings Limited, 00988.HK - Company Profile
Chairman -
Share Issued (share) 5,989,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Warehousing & Logistic Services
Corporate Profile Business Summary: The principal activities of the Group are trading of commodities, exploration and production of oil and provision of oil well services, and provision of logistics and warehousing services. Performance for the year: For the year ended 31 December 2019, the Group recorded revenue from operations of approximately HK$5,522,721,000 (2018: approximately HK$11,536,943,000), representing a decrease of 52.1% from prior year. The Company recorded a loss attributable to the owners of the Company from the operations for the year ended 31 December 2019 to approximately HK$382,988,000 from that of about HK$453,358,000 recorded in the preceding year. Business Review: The year of 2019 was the hardest time in recent years. The China-U.S. trade dispute captured global attention with the effect of unnerving the markets at times. The ensuing business uncertainty seriously eroded the economy as the Groupll as the profitability of the Group. In order to tackle the challenges, in 2019, the Group focused the Group’s management effort on the realignment of the Group’s business units in light of the Group’s strategic direction. The Group continued to emphasise on the trading business segment through the Group’s core subsidiary Silk Road Logistics (Qian’an) Company Limited (“Qian’an Logistics”), which is the primary sthe Group’sce of revenue of the Group’s operation. Revenue from trading segment amounted to approximately HK$5,518,313,000 in 2019, decreasing 52.1% from HK$11,522,950,000 in 2018, due to the operating constraints on the trading volume emerging in the second half of the year. The emphasis of Chinese government on environmental protection and industry overcapacity reduction remains to affect the commodity trading and also the growth of the midstream logistics industry. In addition to these concerns, the Group’s strategic investments in associates the Groupre not in full operation. The COVID-19 outbreak, these factors inevitably affected these investments and leds to further impairment was made in this year. Hothe Groupver, in view of the ability of the Chinese government to address the current pandemic issues, the economic growth in China is expected to gain momentum imminently and continue to be the driving force for the future of the Group’s business. The Group will continue to proactively adopt technologies in compliance with the environmental protection regulations to enhance the Group’s competitive advantages. In alignment with the Belt and Road Initiative of the Chinese government, the Group’s investment strategy is to establish a business network of commodity trading, warehousing and logistics at strategic locations. At present, the two associates in Inner Mongolia and Qian’an Logistics serve the strategic objective and offer room for future growth. In 2019, the WTI crude oil price averaged around US$57 and returned to stability after the fluctuating movements toward the end of 2018. RockEast Energy Corporation (“RockEast”) of which the Group owns about 28.19% equity interest exercised effective cost control, resulting in a profit of approximately HK$25,829,000. Hothe Groupver, due to the high operational cost of the aged crude oil the Grouplls, the Group’s US oil operation reported a loss of HK$71,296,000 in 2019. To rectify the issue, those unproductive and aged the Grouplls the Groupre disposed during the year to scale down the operation and to reduce future maintenance costs. The Group will keep closely monitoring the profitability of these oil assets and act accordingly. The debtor’s turnover day of the Group in 2019 was 20 days compared with 13 days in 2018. It is in line with the credit period of the Group assign to the customers. In future, the Group will maintain its strict credit policy to customers with more emphasis on repayment quality. If there are any irregularities in repayment, credit terms granted to debtors will be adjusted accordingly. For the adoption of new HKFRS 9, the Group has measured the expected credit losses, receivables relating to customers with known financial difficulties or significant doubt on collection of receivables are assessed individually for provision for impairment allowance. The management will continue to closely monitor the credit qualities and the collectability of the trade receivables. Prospects: Like the previous year, 2020 presents both challenges and opportunities for the Group’s businesses and investments. While, on the positive side, phase one trade deal betthe Groupen China and the U.S. has lifted part of the uncertainty in the market, the economic environment is clouded by the disruption caused by the COVID-19 outbreak. In China, the disease has put to halt a substantial portion of production and consumption activities across the country in the first quarter of 2020. In other countries, the severity of the impact surfaced and is being dealt with. The Chinese government has been providing economic stimulus to meet the evolving situation. In order to buttress the economy, it has adopted monetary easing directed towards small and medium-sized enterprises which are most vulnerable financially. The Chinese government has also signaled its readiness to top up fiscal spending with the possibility of accelerating the delivery of major infrastructure projects. Likewise, foreign governments and central banks have stepped in for damage control. In the U.S., the Federal Reserve has cut interest rates to provide accommodative financial conditions to boost household and business confidence. These measures aim to soften the economic fallout of the pandemic and return the respective economies back to their natural growth paths. The disease has created both demand and supply shocks to the economy. Across China, the supply chain disruptions are being resolved with the phased reopening of factories, resuming the flow of raw materials. From this point on, this will allow the Group’s commodities trading and logistics segments to recover gradually over the cthe Group’sse of this year, when the availability of migrant labor and transportation capacity are returning to normal. The pace of economic recovery will hinge on how deep consumption demand is dented by the COVID-19 outbreak in China as the Groupll as the advanced economies. For long-term business development, the Group will build on the foundation already laid with the valuable investments and infrastructure located in Hebei and Inner Mongolia. In order to achieve the Group’s goal of becoming a prominent player in commodities and resthe Group’sces sectors, the Group explores the best way forward which can utilize the Group’s expertise accumulated in these sectors. In March 2020, the Group made the announcement of its intention to acquire a mining and coal sales company based in Baotou City, Inner Mongolia. The proposed acquisition, if materialised, would broaden the revenue base in Northern China given the synergies with the existing business of the Group. Looking forward, the Group will keep reviewing various options of collaboration with existing and new strategic investors to maximize return to the Group’s shareholders.

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