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Public company info - HUAYU Expressway Group Ltd. , 01823.HK
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HUAYU Expressway Group Ltd., 01823.HK - Company Profile
Chairman Chan Yeung Nam
Share Issued (share) 413,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Road and Railway
Corporate Profile Business Summary: The Group is principally engaged in the construction, operation and management of an expressway and the trading of liquor and spirits in the People’s Republic of China (“PRC”). Performance for the year: For the year ended 31 December 2019, the Group recorded a turnover of approximately HK$457.0 million, increased by 123.5% from that for the year ended 31 December 2018 of approximately HK$204.5 million. The Group had a gross profit of about HK$219.2 million for the year ended 31 December 2019, increased by 70.0% from about HK$129.0 million for the year ended 31 December 2018. The gross profit ratio was about 48.0% for the year ended 31 December 2019, decreased by 23.8% from about 63.1% for the year ended 31 December 2018. The Group recorded a profit for the year of approximately HK$68.6 million for the year ended 31 December 2019 compared to approximately HK$86.7million for the year ended 31 December 2018. Business Review： Sui-Yue Expressway (Hunan Section) Due to the improvement in the highway network system in the districts surrounding the Expressway, there was a significant increase in the traffic flow in the Expressway during the year ended 31 December 2019, from about 774,000 vehicles per month for year ended 31 December 2018 to about 930,000 vehicles per month. The newly completed highways in the past few years, such as Hang-Rui Expressway (Hunan Section) “ 杭瑞高速（湖南段）”and Yue-Wang Expressway “岳望高速”significantly induced new traffic volume to the Expressway for the year. Yet, because of the completion of the maintenance work of the Wuhan Junshan Bridge “武漢軍山 大橋” in December 2018, trucks were resumed to use it to cross the Yangtze River, the proportion of trucks traffic flow decreased from about 44.3% for the year ended 31 December 2018 to about 39.6% for the year ended 31 December 2019. In addition, with the implementation of tightened control measure on overloaded trucks in the Expressway, the average toll per vehicle for the year ended 31 December 2019 was about HK$17.3, decreased by 20.6% from the year ended 31 December 2018 of about HK$21.8. As a result, the total toll revenue decreased by about 4.8% to approximately HK$192.4 million for the year ended 31 December 2019. Disposal of 30% of the interest in the Expressway On 18 October 2018, the Group entered into an agreement with Guangdong Xin Chuan Co., Ltd., a subsidiary of NWS Holdings Limited (“NWS”), a company listed on the Main Board of the Stock Exchange to dispose of 30% interest in the Expressway for a consideration of about RMB352.5 million. All the conditions precedent under the agreement had been fulfilled and completion took place on 17 December 2018. On 8 January 2019 and 16 May 2019, about RMB335.1 million and RMB5.2 million, after the deduction of the PRC income tax and other related tax, were received respectively. Trading of Liquor and Spirits Given the Group’s good relationship with the Kweichow Moutai Group, both parties entered into a sole distributorship agreement for the distribution and sales of Huamaojiu in the PRC in 2018 and commenced its liquor and spirits trading business from the last quarter of 2018. Huamaojiu is one of the famous liquor brands produced by Kweichow Moutai Group with retail price about RMB500 to RMB1,000 per standard 500ml bottle. According to the sole distributorship agreement, the Group will be responsible for the sales and distribution, brand building and the establishment of distribution network of the Huamaojiu throughout the PRC. For the year ended 31 December 2019, the Group appointed about 70 distributors throughout the country and the achieved sales were about HK$264.6million. Prospects: With the outbreak of the novel coronavirus infection, the Group is now facing a historical challenge in the Group’s business. From 17 February 2020, the entire toll fee was exempted for the Expressway and subject to the period of the implementation of the Policy, it will adversely affect the Group’s revenue in 2020. For the liquor and spirits trading business, the control and prevention measures slowed down the Group’s sales since the outbreak of COVID-19. The management of the Group strongly believed that with the effective control and preventive measures done by PRC Government, the difficult period will be over and the business will back to normal in the coming future. The Expressway is one of the expressways with high economic potential in the PRC. It is strategically located in Hunan Province, which is one of the high economic growth provinces in the PRC. According to the Statistical Yearbook of Hunan Province and China (2014-2018), the average Real GDP Growth of Hunan Province for the years from 2014 to 2018 was about 8.4%, which was higher than the country average of about 6.8%. Since the adjacent expressway network system was completed in the past few years, the economic growth of the regions around the Expressway will be the most significant factor for the growth of traffic flow. With the outperformed economic growth in the region, the management of the Group are full of confidence about the prospect of the Expressway. About the trading of liquor and spirits, the Group has been working on the brand building and the development of sales and distribution network. With the excellent quality and brand position of Huamaojiu in the PRC market, it becomes one of the most profitable segments in the Group.

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