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Public company info - Momentum Financial Holdings Limited , 01152.HK
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Momentum Financial Holdings Limited, 01152.HK - Company Profile
Chairman -
Share Issued (share) 982,000,000
Par Currency Hong Kong Dollar
Par Value 0.005
Industry Packaged Foods
Corporate Profile Business Summary: The principal activities of the Group are the provision of finance leasing and consultancy services and cross-border trading business — nutrition food and health care products. Performance for the year: The Group recorded a profit for the year of approximately HK$4.9 million for the Reporting Period (2019: loss for the year of approximately HK$18.7 million). Business Review 1. Cross-border trading business — nutrition food and health care products In view of the market growth in nutritional food products and health care products, the Group advanced its cross-border trading business related to nutritional food products and health care products through various co-operation and acquisition during this financial year. As Covid-19 continues to rampage around the world unchecked and the global economy goes into recession, the Chinese central government has put forward the “dual circulation” strategy to boost the country’s development. China will take the domestic markets and consumption as the mainstay while letting internal and external markets boost each other. Against this backdrop, it is expected that expansion and upgrading of the mainland consumer market will be a major force driving the “dual circulation” model, with crossborder e-commerce (CBEC) retail imports serving as an important link connecting the domestic consumer market with the international supply chain. In early 2020 when the coronavirus swept through China, CBEC imports, providing mainland consumers with a fast, convenient and safe source of quality products from all over the world, were extremely popular. Imports and exports of China’s cross-border e-commerce totalled 1.69 trillion yuan ($261.5 billion) in 2020, up 31.1% year-on-year, while the annual growth rate of foreign trade was far behind at 1.9%, according to the data released by the General Administration of Customs (GAC) of China. As China has experienced the Covid-19 upheavals, e-commerce has played a key role in supplying daily necessities as well as keeping the global supply chains going. Crossborder trading business have become an important channel for mainland consumers to acquire imported goods, and can be expected to play an even more significant role in China’s supply chains in the post pandemic era. This channel also offers businesses an alternative to general import for selling imported goods to the mainland. Businesses should adapt to digitalised supply chains as early as possible in order to stay afloat and thrive. Although big brands are prominent in the mainland CBEC retail imports market, consumer demand for products is becoming more diversified. They can also consider working with CBTB platforms and using government funding to propel growth. Hong Kong performs important functions and plays a significant role in the mainland CBEC/CBTB retail imports market. Thanks to its geographical proximity to the mainland and duty free policy on most imported goods, Hong Kong is an ideal location for the storage of these goods before they enter the mainland. Hong Kong’s favourable business environment facilitates frequent international trade and goods flows and has made the SAR a leading centre in south China for purchasing imported goods. Under the “dual circulation” economic growth model, the mainland consumer market for imported goods will continue to develop. As the mainland expands and liberalises its markets, Hong Kong is bound to share the benefits of the growing CBTB/CBEC retail imports trade. As such, the Board is of the view that it is a good time to capture the opportunity to enter into the PRC market directly through cross-border trading business/cross-border e-commerce. In order to tap into the fast-growing cross-border e-commerce., the Group has entered into a cooperation service agreement (the “Cooperation Service Agreement”) with 深圳七號洋行電子商務有限公司* (Shenzhen No. 7 Yanghang E-commerce Company Limited, the “No. 7”) on 2 July 2019 and became a merchant client to have its products listed on No. 7’s platform for sale. No. 7 is a shopping platform dedicated to provide a fast and worry-free shopping experience for overseas products. In addition, No. 7 is a cross-border e-commerce company integrating overseas direct procurement, import and export supply chain management, commodities promotion and distribution, (B2B) Integrated service provider. Pursuant to the Cooperation Service Agreement, the online platform will promote and publish information and retail prices of the products specified by the Group on No. 7’s website or other channels provided by No. 7 and provide customer service and accept orders from customers on behalf of the Group. When an order for the Group’s products has been placed, the online platform will collect the sales proceeds from the customers, deduct the corresponding service fee and other related expenses and remit the balance to a designated bank account of the Group. The Group will then, through the services provided by Shenzhen Yueyang (as defined below) under the Supply Chain Agreement (as defined below), arrange for delivery of the ordered products to the customer in accordance with the information provided by the online platform. Given the nutritional food products will be sold directly to end customers, the profit margin derived from the trading business is expected to increase. In order to tap into the fast-growing cross-border trading business, the Group has already entered into a supply chain agreement with 深圳越洋供應鏈管理有限公司* (Shenzhen Yueyang Supply Chain Management Company Limited, “Shenzhen Yueyang”) on 13 June 2019 (the “Supply Chain Agreement”), pursuant to which Shenzhen Yueyang has agreed to provide the Group with one-stop service for import of bonded goods, including but not limited to overseas pick-up and customs clearance, transport between PRC and Hong Kong, bonded customs declaration and inspection, bonded warehousing, order sorting, customs clearance for goods entering into the PRC border and delivery of goods in PRC. With this supply chain network in place, the Group will be able to sell its nutritional food products to customers in the PRC via various import agency companies. The entering of the Supply Chain Agreement is mainly for the logistic purpose, inter alia, the custom clearance for goods in the e-commerce business. The entering of the Cooperation Service Agreement is for launching the online sales distribution platform of the goods for the Group which helps expand the sales channel of the Group and tap into the PRC market. The Group furthered its cooperation with Shenzhen Yueyang by acquiring its entire equity interest in October 2020 (the “Acquisition”).Details of the Acquisition were mentioned in the paragraph “Material Acquisitions and Disposals of Subsidiaries and Affiliated Companies”. The Group thus possesses a system which is automatic and linked directly to the PRC Custom and Exercise Department for conducting clearance and delivery of shipments enabling the Group to provide considerable full customs clearance. While the customer base is not broad, the customers are substantial customers with a considerable number of online and offline customers in the PRC. In addition to the Acquisition and the Group’s existing warehouse in Shenzhen Nanshan, the Company had set up two warehouses: a tax-free warehouse in Yiwu with an area of 1,383 square meters and a logistics warehouse in Nanchang, with an area of 1,329 square meters. The Company altogether had three large tax-bonded warehouses in the PRC. With the cross-border infrastructure in place, the Company had decided it would focus attention on expanding its customer base. This would have a global emphasis with overseas products being brought into the PRC market and developing global markets including Australia, US and Japan. 2. Provision of finance leasing and consultancy service The finance leasing business has been one of the principal businesses of the Group since 2014. The Group is from time to time looking for suitable opportunities to expand its finance leasing business. On 24 September 2020, Shenzhen Zhengyuan Supply Chain Co., Ltd (“Shenzhen Zhengyuan”), an indirect wholly owned subsidiary of the Company, entered into a cooperation agreement with Shenzhen Rongda Automobile Services Co., Ltd (“Shenzhen Rongda”) to form a joint venture (the “JV”) which was owned as to 51% by Shenzhen Zhengyuan and would operate the second-hand automobiles finance leasing services business in China (the “Cooperation”). Shenzhen Rongda shall be responsible for arranging a financing credit of no less than RMB20 million (equivalent to approximately HK$23 million). With the JV, the Group was tapping into the vehicle financing business. Further details are set out in paragraph “Significant Investment Held”. As at the date of this announcement, Shenzhen Rongda had entered into a financing agreement with a PRC company and had been guaranteed RMB10 million for financing which could be increased to RMB30 million in accordance with the growth of the business of the Group. For the medical equipment finance leasing business, the Group would also be expanding its medical equipment finance leasing with further financing from banks. The Group’s finance leasing and consultancy service is mainly conducted in the following ways: (i) Direct finance leasing Direct finance leasing generally involves the Group acquiring machinery or equipment directly from the supplier at the instruction of the Group’s customer, which is then leased to the customer of the Group. The customer will then repay the financing amount, interest and handling fee to the Group in monthly installments. The financing amount granted by the Group will usually be determined based on the purchase price of the machinery or equipment and the customer’s creditworthiness and ability to repay. Upon the expiry of the lease term and full repayment of the lease payment, the ownership of the machinery or equipment will be transferred to the customer at a nominal price. In direct finance leasing, although the Group has legal ownership to the machinery or equipment underlying the lease during the lease term, substantially all the risks and rewards of the ownership are transferred to the customer through contractual relationship between the Group and the customer. (ii) Sale and leaseback Sale and leaseback typically involves a customer selling its owned machinery or equipment to the Group and the Group then lease back such machinery or equipment to this customer. This form of finance leasing is primarily used by customers who need working capital to fund their business operation. The customer will then repay the financing amount, interest and handling fee to the Group in monthly installments. The financing amount granted by the Group will usually be determined based on the purchase price and depreciation of the machinery or equipment and the customer’s creditworthiness and ability to repay. Upon the expiry of the lease term and full repayment of the lease payment, the ownership of the machinery or equipment will be transferred back to the customer at a nominal price. In sale and leaseback transaction, although the Group has legal ownership to the machinery or equipment underlying the lease during the lease term, substantially all the risks and rewards of the ownership are transferred to the customer through contractual relationship between the Group and the customer. In summary, during the year ended 31 December 2020, the Group had made strategic tailormade arrangements to support the Group’s position, including (i) introduced new customers and suppliers; (ii) strengthened product lines and platform for products; (iii) improved operations and reducing operating costs; and (iv) solicited new financing facilities in the market to support and strengthen the businesses and operations of the Group. Prospects: The Company had achieved a turnaround and had managed to achieve a net profit. Without COVID-19, the financial performance of the Group would have also been much better so there was scope for further growth and improvements. The Group is very optimistic for 2021 as it is expected that expansion and upgrading of the mainland consumer market will be a major force driving the “dual circulation” model, with cross-border trading business and retail imports serving as an important link connecting the domestic consumer market with the international supply chain. These provide ample opportunities to the Group. As the consumer demand for products is becoming more diversified, the Group is still constantly looking for opportunity to diversify the products and spectrum of trading business including but not limited to the business collaboration opportunities with global distributors and suppliers of other products such as skin care, body care, food and beverage, cosmetic products and fragrances with the aim to diversify and strengthen its existing product mix and portfolio, offering a wider variety of products to its customers and thereby increasing the revenue of the Group. With Shenzhen Rongzheng, the joint venture established in October 2020 whose equity is owned as to 51% by the Group, and the Entering of Master Cooperation Agreement as above mentioned, and financing facilities explored, the provision of finance leasing and consultancy service business will be positively affected.

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