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Public company info - Huisheng International Holdings Ltd. , 01340.HK
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Huisheng International Holdings Ltd., 01340.HK - Company Profile
Chairman -
Share Issued (share) 881,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Agricultural, Poultry & Fishing Production
Corporate Profile Business Summary: The Group is principally engaged in the production and sale of daily consumption pork and related meat food products for domestic market in the People’s Republic of China (the “PRC”), selling and distributing of pipe system products, and conducting in the provision of technical advisory services on the design, application, implementation and installation. Performance for the year: For the year ended 31 December 2020, the Group recorded revenue of approximately RMB29.7 million, representing an increase of approximately 425% or RMB24.0 million as compared with the same period of last year. The loss attributable to owners of the Company in 2020 was approximately RMB36.6 million, while it was a loss of approximately RMB191.5 million in 2019. Business Review During the year under review, the Group is engaged in the production and sale of daily consumption pork and related meat food products for domestic market as well as hog breeding and hog farming in Changde, Hunan Province, the People’s Republic of China (the “PRC”). Moreover, the Group is also engaged in selling and distributing of pipe system products, and conducting in the provision of technical advisory services on the design, application, implementation and installation. Last year, the African Swine Fever (“ASF”) was exploded throughout the PRC and still out of control in 2020 and it had severely affected the pork market in the PRC. According to the notice of Ministry of Agriculture and Rural Affairs of the People’s Republic of China（中華人民共和國農業農村部）, a total of 15 ASF outbreaks have been reported in 9 provinces, municipalities and autonomous regions including Hubei, Sichuan, Henan, Inner Mongolia, Gansu, Chongqing, Shaanxi, Jiangsu, and Yunnan since March of 2020. For the latest research of Chinese Academy of Agricultural Sciences（中國農業科學院）, some provinces in the PRC have new variants of ASF and it has a strong transmission ability and difficult to discover the symptoms in early stage. For the recent notice of Ministry of Agriculture and Rural Affairs of the People’s Republic of China（中華人民共和國農業農村部）, the PRC had made an investment in supporting the research and development of ASF vaccine in order to further control of ASF. The first stage of research has been completed and expected that it will enter into production trial in the near future. Meanwhile, the PRC government authorities has strengthened the existing emergency system for controlling of ASF including implement the national animal disease monitoring on relevant provinces and support to carry out sampling and monitoring of key areas and places, promptly and effectively deal with new epidemics. The improvement of quarantine equipment helps to support relevant provinces to improve their early warning and traceability capabilities. The strengthen of risk management and control of ASF, including standardise the emergency response to the epidemic and improve risk traceability, minimise the occurrence of epidemic. The outbreak of ASF has reduced the number of live hogs in the PRC and it would affect the pork prices due to the imbalance of supply and demand of live hogs between provinces. Due to the outbreak of ASF, on 24 October 2018, the Group's PRC subsidiaries received the quarantine order from the Agriculture Committee of Changde City（常德市農業委員會） which ordered to kill all hogs and suspended of the Group's operations in Hunan Province, the Group's operations were eventually affected in such circumstances. Despite of this, the Group has never been encountered such difficult challenging and catastrophic environment. Following on the suspension, the Group was under scrutiny by the PRC government authorities, which led to the implementation of stringent requirements on its breeding farms and slaughterhouse before they could be allowed to re-commence operations under the name of the Group. The Group’s Pork Business was therefore on halt, pending the implementation of appropriate precautionary measures to the satisfaction of the PRC government authorities. During the year of 2020, the Group is taking cautious manner to resume its business, the Group had applied to the relevant authorities for granting an approval in the operations of the Group's breeding farms and slaughterhouse, which had undergone reformations, including but not limited to (i) the refurbishment of the hog farms; and (ii) the setting up of a testing laboratory and the redesigning of the inspection and production procedures for the slaughterhouse. In order to minimise of the Group's risks during a sudden temporary downturn of the Pork Business and to sustain the Group's routine operating cost, the Group had been cautiously adopting an interim business model in resuming part of its operations, such as (1) fattening of piglets; and (2) sales of pork products that already recommenced by the end of year 2020. Under the interim business model, the Group required to acquire piglets from independent third parties for fattening purpose until it fattened into hogs of approximately 110kg and will be sent off for slaughtering and sold as pork products. The Group had been entered into a master contract with supplier for the provision of piglets for fattening which would take effect upon obtaining all relevant licences from the PRC government authorities for the operation of hog farm. Besides, the Group will be required to outsource the hog slaughtering procedures to independent slaughterhouse, hogs will be sent to the slaughterhouse for slaughtering. Thereafter, the pork products would then be sold directly or further processed as per the customers’ requirements. Since mid of October 2020, the Group has obtained Food Processing Operation Permit（食品經營許可證）for pork processing and packing, the Group would be able to process and package the pork, and sell them as chilled or frozen pork products in order to broaden its product range and to maximise its profit return. From mid of December 2020, the Group has obtained a trial operation permit from the People’s Government of Xiejiapu Town, Dingcheng District in Changde City（常德市鼎城區謝家鋪鎮人民政府）and stated that the Group's PRC subsidiaries would be able to re-commence the operation of breeding farms at the operation base in Bianshanpu（邊山鋪）and fattening of piglets in order to bring back the hogs breeding to normal business operations. On the other hand, the Group had applied Certificate of Designated Location for Livestock Slaughtering（畜禽定點屠宰證）for approval for the hog slaughtering procedure in the Group’s slaughterhouse and expected that the Group would obtain the licence/permit at the end of 2021 and subject to the actual regulatory. Furthermore, the Group had leased out a breeding farm to an independent third party for rental income to maximise its return from assets, while retaining a breeding farm and part of the slaughterhouse for its business resumption plan in order to strike a balance between the risk and return.In order to minimise the operation risk caused by ASF and the COVID-19, the Group keeps its effort for seeking different business opportunity for strengthen the financial position of the Company and downplay the effect of the suspension of hog breeding business, which is the single revenue stream of the Group. Since the late of 2019, the Group commenced a new business through its indirect non-wholly owned subsidiary, Deson Japan Limited (“Deson Japan”) which the Group acquired 70% equity interest, in selling and distributing of pipe system products and conducting in the provision of technical advisory services on the design, application, implementation, and installation. After one year of tapping into market, Deson Japan is able to capture certain reputation in the industry of selling pipe system products and received a steady increase on revenue with an approximately of 10% to 20% gross profits. Up to the date of this announcement, Deson Japan obtained secured contracts/orders amounted to approximately HK$20 million and the amount of the potential orders but yet to be completed reached approximately HK$21 million in the coming 12 months in future. The management expects to have further expanding of the business when the Group obtains more secured contracts or new fund with more and stable capital stream. The Group will continue to strive for various channels for funding raising and other business opportunities for the expansion of pipelines business. The management is in a view that the pipelines business will provide an opportunity to the Group to diversify its business and broaden the Group’s revenue base as well as generate a stable gross profit, which are beneficial to the Group and the shareholders as a whole. Last but not least, the Group will from time to time review the market situation and the business prospects of pipelines business and strike a balance between the Pork Business and the pipelines business, in order to better allocate the resources of the Group while maximizing the return to shareholders of the Company. The management will continue to seek any potential investment, which would be in order to further diversify of the Group's business risks and maximize the Group profit during the difficult time caused by the ASF and COVID-19. Prospects: In 2020, the swing of the “COVID-19” and the ASF remains uncertain, continuation of ASF and COVID-19 will bring us unprecedented challenges and make it difficult to gauge on the industry recovery pace. For the Group's core business, the Group are taking cautious manner in performing disinfection and harmless treatment in order to prevent the ASF infection among the Group's slaughterhouse and breeding farms. The Company commenced the business for the production and sale of meat food since the fourth quarter of 2020 as well as hog breeding is gradually re-commence the business at the end of 2020. The Group will closely monitor the news of ASF vaccine and the procedures of the application of related licence/permit. Also, the Group is looking for different ways to bring back the slaughtering operation into the original business model, such as working hard to cope with the requirements from relevant authorities to get back the slaughtering license, seeking for any other potential investment opportunities in order to acquire or cooperate with other slaughterhouse to strengthen the production capacities. The outbreak of COVID-19 gives rise to a challenging and uncertain economic environment to the global market. Following the launch of the vaccine of COVID-19, the management of the Company believes that the economy of the globe market will become stable and the construction of infrastructure will restart gradually, the Group expect that the Group's pipelines business will have steady grow on profit in the future with the support of stable capital stream. The Company will continue to strive for various channels for raising funds and other potential business opportunity to open a new capital source in order to have long term healthy and sustainable development of the pipelines business. On the other hand, the Company will take a serious measure on the effect of the COVID-19 for its expansion of pipelines business in order to minimise the risk of operation. To conclude, the Group expects that the development of ASF vaccine and vaccination of COVID-19 would have positive effect for the Group's business and the Group believes that the Group's core business will recommence the business in nearly future and the Group's pipelines business will have a steady increase in future and strengthen the Group's new income source to the Group. the Group will provide the latest updates for the Group's business to all shareholders and potential investors of the Company.

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