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Public company info - BaWang International (Group) Holding Ltd. , 01338.HK
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BaWang International (Group) Holding Ltd., 01338.HK - Company Profile
Chairman Chen Qiyuan
Share Issued (share) 3,162,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Cosmetics & Personal Care
Corporate Profile Business Summary: The principal activities of the Group are the manufacturing and sales of the household and personal care products. Performance for the year: Total revenue of the Group was approximately RMB258.2 million, representing a decrease of approximately 12.1% from approximately RMB293.9 million for 2018. Operating loss of the Group was approximately RMB12.9 million, as compared with an operating loss of approximately RMB0.8 million for 2018. Net loss was approximately RMB6.1 million, as compared with a net loss of approximately RMB1.2 million for 2018. Loss attributable to owners of the Company was approximately RMB6.1 million, as compared with the loss attributable to owners of the Company of approximately RMB1.2 million for 2018. Loss per share (Basic and diluted) was approximately RMB0.1929 cents and RMB0.1929 cents, respectively. Business Review During the year under review, the Group continued to operate under the value-chainoriented business model, which enabled the Group to control the cost of sales and operating costs at a sustainable level. During the year under review, to enhance the sales of Bawang branded products, the Group successfully upgraded the packaging of two Bawang branded hair-care product series for the conventional sales channels, and new packagings were designed with trendy and professional image together with the introduction of a couple of social media celebrity versions of Bawang hair-care products that were created for sales through the conventional channels. In April 2019, the Group selected a popular Chinese style singer, Mr. Huo Zun (霍尊), as the Group's short-term image and brand ambassador for Bawang branded shampoo and haircare products. T he Group made full use of the image of the new brand ambassador to attract consumers’ attention via social media platforms such as Weibo and WeChat, publicity advertisements posted in city metros and at the points of sales with the slogan ‘‘Exclusive enjoyment of the strength of natural products, choose Bawang anti-hair fall products’’, which aimed to promote Bawang’s anti-hair fall shampoos to catch the attention of consumers. T he Group rolled out bundled products that were named after Huo Zun for the purpose of enhancing the Bawang brand image as national and trendy products for young consumers. During the year under review, the Group cooperated with an e-commerce platform, Pinduoduo, and rolled out a dedicated herbal essence ginger shampoo for promotion of the Bawang brand name on this platform. T hrough this cross-industry cooperation, the Group successfully rolled out dedicated bundled product series during the festive times and seasons, which drew the attention of the consumers and were well-received by them. In the second half of the year, the Group rolled out amino acid shampoo product series to capture the market share in the traditional channel. During the year under review, the Group gave away some free Bawang shampoo product testers through dispensing machines in public areas. Advertisements of Bawang branded products were showcased in lifts of buildings in Guangzhou, Shenzhen and other first-tier cities as well as the cross-border coaches among Guangdong, Hong Kong, and Macau. Additionally, the Group successfully developed a sales channel for college students. Leveraging on the ‘‘College Students Advertising Festival’’ (大學生廣告藝術節) and cooperating with some colleges, the Group introduced Bawang branded products to the campuses which publicized and educated young people to understand the concept of hair-care by using herbal shampoo products. Through the ‘‘China International Comics Festival Expo’’ (中國國際漫畫節博覽會), the Group has engaged in intensive cooperation with some major animation companies. A comic book known as ‘‘Herbal Fairytale’’ (藥精奇緣) has been released and a revamped comic App has been launched for promoting the Bawang brand in the form of comics and animation, which enhanced and reinforced the consumers’ understanding of the concept of hair-care through traditional Chinese medicine shampoos and the different functionalities of various Bawang branded products. To further motivate the Group’s distributors and sales team, incentive leisure travel scheme for the participating distributors and internal staff members was offered for free to those who completed the predetermined sales target for a specified period. During the year under review, eligible staff members and distributors who participated in the scheme travelled to five selected destinations. As at 31 December 2019, the Bawang brand distribution network comprised approximately 810 distributors and six KA retailers, covering 26 provinces and four municipalities in China. Furthermore, the Bawang branded products were also sold in Hong Kong, Thailand and Malaysia. During the year under review, the Group continued to adopt the marketing theme ‘‘Let’s chase for the wind rather than wait for the wind’’ to promote new Royal Wind branded shampoo products primarily for the online sales channel. As at 31 December 2019, the Royal Wind brand distribution network comprised approximately 125 distributors and six KA retailers, covering 26 provinces and four municipalities in China. The Litao products mainly comprise shower gels and laundry detergents, which target consumers living in the second-tier or third-tier cities in China. T he Group’s goal is to maintain the market coverage in the traditional channel. As at 31 December 2019, the Litao products distribution network comprised approximately 44 distributors, covering 26 provinces and four municipalities in China. The Herborn Chinese herbal skin-care product series targets white-collar ladies in the age range from 25 to 45 who have relatively high net incomes and who are dedicated to pursue a healthy and natural lifestyle. T he Group sold the products through the Group's online sales channel and staff or group purchase. The Group has established 18 online retailing platforms for the Group's Bawang, Royal Wind and Herborn branded products. Of which, two were established during the year. For the year under review, the Group obtained and/or renewed and/or possessed the certificates and/or recognitions as follows: 10 Bawang branded Chinese herbal shampoos and hair-care series products have been recognized as ‘‘The 2019 New High-Tech Products in Guangdong Province (廣東省高新技術產品)’’ by the Guangdong Provincial New Hi-tech Enterprise Association (廣東省高薪技術企業協會) in December 2019 for a period of three years until the end of 2022; The permit for production of cosmetic products, which was issued by Guangdong Provincial Food and Drug Administration, remains valid until May 2021; The Group's production process for hair-care and skin-care products has been certified by SGS with a validity period until July 2022 as to meet the requirements of US FDA CFSAN by reference to Cosmetic Good Manufacturing Practices (GMP) Guidelines 2008; The Group's production process for hair-care and skin-care products has been certified by SGS with a validity period until July 2022 as to meet the requirements of ISO22716 by reference to Cosmetic Good Manufacturing Practices (GMP) Guidelines 2007; The Group was awarded the ‘‘T-Mall Golden Award 2019 (天貓金妝獎)’’ certificate by TMALL (天貓) recognizing the Group's outstanding logistics services in March 2019; Bawang (Guangzhou) Co., Ltd was awarded ‘‘Excellent Cooperation Company’’ (優秀合作單位) and ‘‘Charity Award’’ (愛心公益獎) by Guangzhou Dade Public Welfare (廣州大德公益) in July 2019; The Group's Bawang and Royal Wind brands were awarded ‘‘Guangdong Daily Chemical — China Power (廣東日化—中國力量)’’ for the most influential brand award by the Guangdong Daily Chemical Chamber of Commerce (廣東省日化商會) in September 2019; The Group was awarded the 4th China brand i berry award (中國品牌i莓獎) of the ‘‘Most Favourable Consumer Brands of the Year’’ (年度最受消費者喜愛日化品牌) by Blueberry Society (藍莓會) in November 2019; The Group was awarded the ‘‘8th Social Marketing Forum and Golden Bee Integrated Marketing Golden Award’’ (第八屆社會化營銷論壇暨金蜜蜂整合營銷類金獎) by the Advertiser Forum (廣告主論壇) in November 2019; The Group was awarded the ‘‘Most Favorable Consumers Brand of 2019’’ (最受消費者青睞品牌獎) in the China trendy industry by Xinxi News (信息時報) in December 2019; and The Group won the honour as the ‘‘Top 10 China Daily Chemical Brands (中國日化用品十大品牌企業) in 2019’’ in the iiMedia Ranking (艾媒金榜). T he award was based on assessment of the company’s strength index, media attention index, public praise index, and analyst evaluation index, which was carried out by iiMedia Daily Chemical Industry Research Centre (艾媒日化品牌行業研究中心). Prospects: In late January 2020, the International Monetary Fund (‘‘IMF’’) revised China’s gross domestic product (‘‘GDP’’) growth prediction for 2020 from 5.8% per cent in October 2019 to 6.0% after the phase one of the Economic and Trade Agreement between China and the United States was signed in mid-January 2020. T he actual China’s yearon-year GDP growth reached 6.1% in 2019. The IMF said that the economic growth projection for 2020, which depends on avoiding further escalation in the US-China trade tensions, averting a no-deal Brexit, and the economic ramifications of social unrest and geopolitical tensions remaining contained. Regarding the impact of the outbreak of the disease caused by the COVID-19 virus on the economic activities and growth, the IMF said in late January 2020 that it was ‘‘too early’’ to assess the full impact of the epidemic but acknowledged that it had already affected sectors such as tourism and transportation. T he IMF went on to indicate that the epidemic could damage, not limited to China, the global economic growth in 2020, but a sharp and rapid economic rebound could follow in 2021, if the disease is ‘‘contained rapidly, in what is known as the V-shaped impact.’’ In the midst of novel coronavirus outbreak in mid-February 2020, a poll of 40 economists, which was commissioned by Reuters, predicted China’s annual economic growth in the first quarter of 2020 to slump to 4.5% from 6.0% in the previous quarter. T hat drop was expected to drag down the full-year growth rate in 2020 to 5.5% from 6.1% in 2019, its weakest since at least 1990 when comparable records began. However, economists were optimistic the economy would bounce back as soon as the second quarter, with growth then forecast to recover to a median 5.7%, according to the poll. In early March 2020, the IMF slashed its 2020 economic growth outlook for China to below 5.6 per cent because of the ‘‘sheer geographic spread’’ of the coronavirus epidemic globally. With the ever-increasing number of confirmed novel coronavirus cases and casualties from mid-March 2020, the economic growth prospect of 2020 is expected to be bleak. Owing to the uncertainties as mentioned in the above paragraphs, the Directors tend not to be optimistic about the Chinese economy in 2020. Having said that, the Group believes that people will pay more attention to their health care after this epidemic. Hence, business opportunities may be available to the Group. T he Group is confident about the Group’s development in the long run. The corporate theme for 2020 is ‘‘Without fear of difficulty, re-launch again’’. For Bawang branded products, the Group will make use of: (1) the popularity of Internet celebrities to increase the exposure of the brand and to cooperate with the Internet celebrities for driving up the sales revenue; (2) the impact arising from the ‘‘College Students Advertising Festival’’ (大學生廣告藝術節) in spring to continue to explore and expand the market shares in the young generation segment, to deepen the recognition and association of the post-95 and the post-00 generations with anti-hair fall concept with emphasis on the core philosophy of Bawang brand in anti-hair fall and hair-care and receptive attitude towards the rejuvenated Bawang brand so as to achieve the purposes of advertising and promoting the brand; (3) the publicity and promotion of Bawang branded products through new media, internal media and wordof-mouth of key opinion leaders; and (4) further focus of promotion in Bawang antihair fall, natural herbal and amino acid as well as Bawang antiseptic product series to enhance the Group’s sales revenue. For Royal Wind branded product series, the Group will continue to make good efforts to promote its brand image to cater for the trendy lifestyle of young customers. T he Group mainly promote the fragrance products series of this brand in 2020, and will sell the Group's branded products through traditional sales channels, the exclusive zones inside the contracted supermarkets and the online flagship stores. For Litao branded product series, the Group mainly promotes the Group's antiseptic laundry detergents and shower gel in order to execute the plan to satisfy the market needs in the midst of the epidemic and to enhance the Group’s revenue. For conventional channels, the Group will continue to deepen cooperation and interaction with distributors by: (1) regularly updating the Group's stimulating sales policies and reinforcement of supports to key customers for the purpose of stabilizing the sales from the distributor channel; (2) launching of antiseptic products for developing unexplored market in the traditional channel; (3) providing substantial supports to exclusive zone channel through heavy promotion of anti-hair fall, amino acid and antiseptic new product series so as to enhance the sales revenue through this channel; and (4) endeavoring to develop new sales channel, to obtain more OEM orders and to encourage staff members to seek to expand group sales customers. As to the online sales channel, the Group hopes to achieve stable sales growth in the future. For the Group's own online flagship stores, the Group will continue to create signature anti-hair fall and hair-care product series. In its marketing and promotion plans, the Group will broadcast commercial videos featuring the Group's product range in different social media such as Tik Tok, Kwai and Taobao live. For the online distributors, the Group will select some quality and potential online platforms and distributors and to provide them with higher sales and marketing expenses as so to enhance sales revenue and rate of return. Apart from this, the Group intends to further tap into the potential of social media e-commerce. T he Group will continue to develop the social media platforms such as WeChat Small App to enhance sales revenue. T he Group will make use of potential user-group networks and user-to-user connections in other platforms for increase of sales revenue. For production management, the Group strives to keep the Group's customer satisfied with the quality of the Group's products. While the Group upholds quality of products, the Group will at the same time continue to reduce spoilage, lower the production costs, increase the turnover of production materials and minimize the inventory level. T he Group will continue to make good use of the Group's management skills, advanced production equipment and spare production facilities and capacities for expanding an original equipment manufacturer (OEM) business. Additionally, having considered the production requirements, the Group will seek to enhance the utilization rate of the production floor area and optimize the storage space. T he Group believes that through the integration of production resources to achieve greater value enhancement, the Group can create more revenue for the Group's shareholders. As part of the business expansion plan, the Group will continue to explore the possibility of engaging with potential distributors for launching the Group's branded products to other countries. T he Group is open to explore further business opportunities with potential overseas distributors. As of the date of this announcement, the Group does not have any outstanding acquisition opportunity on hand, nor is actively exploring business opportunities that may involve potential acquisition. However, the Group is open to potential investment opportunities. Looking forward, the Group plans to focus on two areas to drive the strategic directions to sustain and develop the Group's business in the volatile economic environment. In the short run, the Group intends to continue building up a management team with strong experience in both domestic and global HPC sectors, to regain the sales growth momentum and profitability, and to improve investors’ confidence in the Group. In the long run, the Group will continue to focus on strengthening the business model and positioning to acquire market shares from domestic and international competitors, maintaining a multi-brand and multi-product strategy in HPC sectors, and becoming a leader in the branded Chinese herbal HPC products.

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