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Public company info - Theme International Holdings Ltd. , 00990.HK

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Theme International Holdings Ltd., 00990.HK - Company Profile
Chairman -
Share Issued (share) 12,656,000,000
Par Currency Hong Kong Dollar
Par Value 0.0025
Industry Steel
Corporate Profile Business Summary: The Group is principally engaged in (i) trading of bulk commodities and related products in Hong Kong, Singapore and the PRC; and (ii) provision of loan financing services, securities and derivatives financial services and provision of margin financing in Hong Kong and Singapore. Performance for the year: The Group recorded a total revenue of approximately HK$11,280,616,000 (2018: approximately HK$4,330,171,000) for the Year, representing an increase of approximately 161% over the Corresponding Year. Gross profit of the Group also increased to approximately HK$509,904,000 in the Year from approximately HK$188,862,000 in the Corresponding year. The profit for the Year attributable to owners of the Company increased from approximately HK$61,893,000 in the Corresponding Year to approximately HK$145,745,000 in the Year. The Group recorded a basic earnings per share of approximately HK1.43 cents in the Year as compared to a basic earnings per share of approximately HK0.76 cents (restated) in the Corresponding Year. Business Review The distribution and trading business contributed to the majority of the Group’s revenue in the Year. Iron ore trading represented the majority of the distribution and trading business. Volume of iron ore traded in the Year increased from approximately 8,173,000 tonnes in the Corresponding Year to approximately 14,718,000 tonnes in the Year, together with the increase in the average price of iron ore, revenue from the distribution and trading business increased from approximately HK$4,271,693,000 in the Corresponding Year to approximately HK$11,083,814,000 in the Year. During the Year, the Group recorded revenues from the provision of financial services totalling HK$196,802,000 (2018: approximately HK$58,478,000), mainly attributable to the market making of iron ore derivative market and provision of other financial services such as clearing and inter-dealer broking services. The increase in revenue during the Year was due to the continuous expansion and development of the financial services segment, which was still in the development stage in the Corresponding Year. Gross profit of the Group also increased to approximately HK$509,904,000 in the Year from approximately HK$188,862,000 in the Corresponding year. The increases in gross profit was attributable to: (i) the Group was able to source iron ore from several new suppliers in 2019, which are able to provide the Group with iron ore at competitive prices; (ii) the sharp increase in iron ore prices during first half of 2019, due to the disruptions of iron ore supplies in places like Australia and Brazil. For example, in January 2019, a fatal dam spill accident happened in Vale’s mines in Brazil. Vale is the largest iron ore producer in the world and this accident significantly affected its iron ore productions; (iii) the stable economic development in China drove the strong demand for iron ore; and (iv) the impressive performance of the growing financial services segment, due to increased market volatility. Other loss of approximately HK$80,885,000 (2018: approximately HK$22,995,000) was incurred during the Year, mainly due to (i) impairment loss on inventories of approximately HK$85,922,000. Iron ore prices had big fluctuations during the Year. Impairment losses mainly arose from the cargoes purchased at higher prices during the Year but remained unsold at the Year end; (ii) the exchange loss of approximately HK$55,914,000 arising from the depreciation of Renminbi (“RMB”). Cargoes sold by Shanghai trading desk were denominated in RMB; and (iii) partially offset by the hedging gains on future contracts of approximately HK$50,266,000 to hedge contracts in the distribution and trading business. Selling and distribution expenses of approximately HK$92,554,000 (2018: approximately HK$20,204,000) were incurred during the Year, mainly attributable to the freight charges, port charges and agent fees paid when importing cargoes into China. The increase was mainly attributable to more freight charges being paid to shipping companies for cargoes under the term of Free on Board (“FOB”) in the Year than in the Corresponding Year. Administrative expenses have increased from approximately HK$58,242,000 in the Corresponding Year to approximately HK$90,977,000 in the Year. It was mainly attributable to the increased staff cost, arising from the expansion of the Group’s both commodities trading business and financial service segments. Finance costs of approximately HK$22,294,000 (2018: approximately HK$4,774,000) were incurred during the Year for the factoring of the Group’s trade receivables and for the settlement of interests arising from outstanding trust receipt loans. The group considered that the slight adjustment the Group’s leverage enabled the Group to further expand its distribution and trading business and maximize return on shareholders’ capital. Income tax expense increased from approximately HK$16,997,000 in the Corresponding Year to approximately HK$40,284,000 in the Year, which was in line with the improved performance of the Group’s businesses. Prospects: The Group will focus on the continuing development of the financial services business and the distribution and trading business in 2020 (i) Financial services business The Company is extending the scope of its principal activities to include the provision of a wide range of financial services, including securities and derivatives financial services (including access to global market), provision of futures and derivatives products, provision of market making services for global exchanges, provision of margin financing and money lending business in Hong Kong and Singapore. — Money Lending The Group carried out money lending business in Hong Kong through Asia Develop Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the Company, which has a money lenders licence in Hong Kong under the Money Lenders Ordinance (Chapter 163 of the Laws of Hong Kong). Target customers include corporate customers in Hong Kong, with target loans denominated in Hong Kong dollars and for a period of one year in general but could be extended to mutual agreement. The loans are usually secured by collaterals or backed by guarantee. — Securities, Futures Contracts and Derivatives Dealing As announced in the Company’s announcement on 24 July 2017, the Securities and Futures Commission of Hong Kong has granted to the Group licences to carry out Type 1 (dealing in securities) and Type 2 (dealing in futures contracts) regulated activity under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). The derivatives arm of the Group has commenced its operations to establish a financial services platform in derivatives facilitating international trade in commodities with combined access to both physical and derivatives market. Besides the Type 2 licence, the Group has exemption from Monetary Authority of Singapore licensing in Singapore to offer inter-dealer broking services in Singapore and global markets. Over the last decade, the financial services space has changed structurally creating opportunities for both existing participants and new entrants. Capitalising on the opportunities and filling the void created as a result of receding participation from traditional financial market participants, the Group aims to deliver a range of products and services to better serve commodity market participants. Combining the strengths stemming from powerful suite of products and services and experienced and proven management team, the Group is positioned to deliver strong financial results and return to its stakeholders. The Group’s product and service portfolio is deliberately designed to be broad and diversified. This benefits the Group in two key ways — (i) to offer an end to end coverage to its global clientele and (ii) to weather proof the business and manage varying seasonal cycles which strengthens its revenue streams and therefore the firm’s financials over the long run. Its business lines comprise of (1) global clearing services, (2) inter-dealer broking in over-the-counter markets, (3) structured trade finance and (4) China access products. The Group’s aspiration is to extend its four pillars of business across all key asset classes comprising of commodities, foreign exchange and interest rates as part of its product roadmap. The Board considers that entering into the new businesses will provide good business opportunities to the Group and will diversify its business scope with a view to achieve better returns to the Company and its shareholders. (ii) Distribution and Trading In the past several years, the PRC government has placed more emphasis on the structural reform of the supply side of the steel industry, to increase the quality and efficiency of the supply system. This led to higher profitability of the steel mills in China. In order to maximise their production output, they demand for more higher quality iron ore imports from overseas. In addition, the property sector in the PRC is growing and the demand for construction materials has increased continuously in the PRC. According to the PRC Custom statistics, imports of Iron ore reached 1,070 million tonnes in 2019, surpassing 1,000 million tonnes for the fourth consecutive year. The Group believes that there will still be strong demand for iron ores in 2020 and there is a huge potential for iron ore trading in the PRC, which provides a good opportunity for the Group to further expand in this aspect. Novel Coronavirus (“COVID-19”) that ravaged China and other parts of the world in early 2020 has brought and is likely to continue to bring uncertainty to China’s national economic growth and the global economy. Despite the challenge ahead, the Group remains confident in the market potential and will be committed to exploring more development opportunities.

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