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Public company info - Agritrade Resources Ltd. , 01131.HK
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Agritrade Resources Ltd., 01131.HK - Company Profile
Chairman -
Share Issued (share) 6,374,000,000
Par Currency Hong Kong Dollar
Par Value 0.025
Industry Coal
Corporate Profile Business Summary: The principal activities of the Group are mining, exploration, logistics, sales of coal and other mining-related activities and the freight management service from time chartering, and the provision of floating storage and relevant logistics services for crude oil and petrochemical products. Performance for the year: The Group’s turnover and gross profit have shown a decline as compared to FY2018, to HK$1,904.7 million (2018: HK$2,237.3 million) and HK$618.9 million (2018: HK$876.4 million) respectively, and the gross profit margin also decreased to 32.5% (2018: 39.2%). The Group’s consolidated profit attributable to owners of the Company increased significantly to HK$1,068.1 million (2018: HK$424.5 million), representing an increase by 1.5 times as compared to last financial year. Business Review： Mining business The Group’s mining business is principally engaged in the production, processing, transportation, sales, marketing and trading of coal products. During FY2019, the Group owned two Indonesian coal mines, namely PT Senamas Energindo Mineral (“SEM”) mine (the “SEM Mine”) and Rantau Nangka underground coal mine (the “Merge Mine”). The Group primarily sells and markets its coal products to Asian countries, including China and Indonesia. SEM mining and coal trading activities SEM coal is a sub-bituminous, low-sulphur, low-pollutant thermal coal produced from the SEM Mine, a mining concession located in Central Kalimantan, Indonesia. The Group’s SEM coal has a gross calorific value (“CV”) of approximately 3,800 kcal/kg on as received basis and the target customers are traders and power generation plants in major international markets such as China and India and in Indonesia locally. Merge mining operation The Merge Mine is located in South Kalimantan, Indonesia and has significant initial JORC compliant proved and probable coal reserves of 97.1 million tonnes and produces run-of-mine coal with low inherent moisture, low sulphur content and high CV of approximately 6,426 kcal/kg on air-dried basis, which is similar in quality to benchmark Newcastle coal of 6,300 kcal/kg. The Merge Mine is the only large-scale, mechanised longwall underground coal mine in Indonesia, which enables the Group to tap into the underground coal mining opportunities present in Indonesia. The fully retreating mechanised longwall mining is a proven and accepted mining method that reduces operating cost. The longwall operations also allow the Group to economically extract high CV coal with low inherent moisture and sulphur as compared to typical Indonesian coal. During the year, the Merge Mine was operated with one set of longwall system. The Group has further acquired another set of longwall system from a leading Chinese mining equipment manufacturer, of which the installation was completed in May 2019. The Company believes that the production capacity of the Merge Mine will be further enhanced upon full operation of the two longwall systems. Other mining activities In the early of the year, the Group was also engaged in the coal mining business under the contract mining arrangement for a coal mine located in Central Kalimantan, Indonesia, namely Bunda Kandung mine (the “Bunda Kandung Mine”). Under such contract mining arrangement, the Group made royalty payments to the Indonesian mine owner in return for the production and extraction of coal without any ownership of the mine. The Group applied its own mining equipment and labour force throughout the process of coal production and extraction. During the year, 178,000 tonnes (2018: 461,000 tonnes) of coal was produced from the Bunda Kandung Mine, which contributed a turnover of HK$68.0 million (2018: HK$110.1 million) to the Group’s mining business. In the coming years, the contract mining operation will be scaled down and the Group will focus on the operation of its owned mines, including the SEM Mine and the Merge Mine. Shipping business The Group’s shipping business segment comprises the provision of shipping transportation, vessel storage and relevant logistics services for crude oil and petrochemical products under time chartering or long-term contracts. During the year, the shipping transportation and storage services were provided by the Group’s own fleet, which includes three sets of very large crude carrier grade vessels (the “VLCC(s)”), one set of panamax-grade vessel (the “Panamax Vessel”) and six sets of tug boats and barges. Energy business The Group’s energy business is principally engaged in the operation of a coal-fired thermal power plant in India and a biodiesel plant in the USA. Thermal power plant operation in India On 18 March 2019, the Group successfully completed the acquisition of the entire interest in SKSPGL, which is engaged in the operation of a 600 megawatt (“MW”) coal-fired thermal power plant (the “SKS Power Plant”) located at the State of Chhattisgarh in India. The total consideration for the acquisition was INR21.7 billion (equivalent to approximately HK$2,485.4 million). Upon completion of the acquisition, a one-off gain on bargain purchase of HK$1,003.9 million was recognised for the Group’s energy business segment. Biodiesel plant operation in the USA The Group owns 51% interest in a biodiesel plant (the “Biodiesel Plant”) located in Arkansas, the USA. The maximum production capacity of the Biodiesel Plant is expected to be 40 million gallons annually. The Biodiesel Plant has been retrofitted to accommodate multifeedstock, including yellow grease, rendered animal fats, inedible corn oil and refined vegetable oil, to decrease cost of production. Prospects: Prospect on the mining business The Group mainly sells and markets its coal products to major markets in China, India and Indonesia which are all developing economies with strong demand for coal as most of their power plants are fueled by coal. However, since the second half of 2018, the Indonesian and international coal pricing has continuously slipped back mainly due to shrinking market demand from Asia countries like China and India, which were currently limiting their Indonesian coal imports. In light of the weakening market conditions, the Group, as a sizeable multi-mine and multi-product integrated coal producer, will continue to adopt a cautious approach in operating its mining business. In the year ahead, it is expected that the SEM Mine will continue to be the key contributor to the Group’s mining business, of which the annual production has been maintained at the sustainable and stable level of approximately 5 million tonnes per year. The Group will optimise the annual coal production of the SEM Mine with caution in response to the fast-changing market demand and conditions. As for the Merge Mine, the Group will continue to develop and invest in its production and operation in accordance with the established business plan and budget. Recently, the Merge Mine has completed the installation of its second longwall system at the Merge Mine site and the Merge Mine operation will be fully equipped with two longwall systems from FY2020 onwards, of which the production capacity is expected to increase by approximately 2.5 million tonnes annually reaching an expected total annual production capacity of approximate 3.5 million tonnes. The Group expects that it can finally achieve an aggregate annual coal production of 6 million tonnes for its mining business in the SEM Mine and the Merge Mine. Prospect on the shipping business The Group disposed of majority of its shipping business assets during FY2019 and in FY2020. As at the date of this announcement, the Group’s shipping business comprised only one set of Panamax Vessel. The Board expects that the shipping business will have minimal contribution to the Group in the future years. Recently, the freight rates of panamax vessels were under pressure due to an oversupply of vessels. Indonesian coal miners were reducing their ballooning stockpiles and purchases from India and China were weak and not enough to support freight rates. The Board expects the freight rates of panamax vessels will keep the level or better will slowly pick up in the near term. Prospect on the energy business Prospect on the SKS Power Plant business in India The Group operates the SKS Power Plant in two phases of 600 MW capacity each. The construction of Phase I has completed and has already commenced its commercial operation. The Group does not intend to significantly develop or construct the Phase II of the SKS Power Plant in the next two years in order to focus on the smooth running of the Phase I operation. The Board considers that only after such two-year operation period, the Group will consider again the feasibility on further expansion, development and construction of the Phase II project. Prospect on the Biodiesel Plant business in the USA The commercial operation of the Group’s Biodiesel Plant has commenced since September 2017, which includes the processing, production and sale of biodiesel to sizeable companies located in the USA. The Biodiesel Plant has an expected maximum production capacity of 40 million gallons annually, and it is still undergoing the ramp-up process on its production capacity towards such target. As the biodiesel business is still in its early stage and is currently operating below its expected full capacity, the Group expects that operating losses will be recorded for the biodiesel business in the near future reflecting such transitional stage.

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