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Public company info - CPM Group Limited , 01932.HK
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CPM Group Limited, 01932.HK - Company Profile
Chairman LAM Ting Ball, Paul
Share Issued (share) 1,000,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Industrial Goods
Corporate Profile Business Summary: The group was engaged in the manufacture and sale of paint products, and investment holding. Performance for the year: The Group’s revenue in 2019 amounted to approximately HK$713.33 million, representing an increase of 15.6%, as compared to the amount of revenue of approximately HK$617.25 million in 2018. The amount of gross profit in 2019 increased to HK$196.82 million, representing a significant increase of 30.4%, as compared to the amount of gross profit of approximately HK$150.94 million in 2018. The Group’s loss attributable to its owners of the parent company reduced accordingly to approximately HK$28.04 million in 2019, as compared to the same of approximately HK$139.26 million in 2018. Business Review: The Group’s products can be broadly divided into industrial paint and coating products, architectural paint and coating products, and general paint and coating and ancillary products. Industrial paint and coating products are used in a wide range of applications, such as furniture painting, manufacturing and surface finishing for different kinds of materials, and are used by manufacturers, renovation contractors for property and infrastructure projects and household users. Architectural paint and coating products are used for wall, floor and exterior parts of buildings. The Group’s architectural paint and coating products focus primarily on the construction and maintenance markets of the commercial and residential properties. General paint and coating and ancillary products, such as thinner, enamels and anti-mold agents and solvent agents can be used for both architectural and industrial purposes. Increase in Revenue The increase in the amount of revenue generated from the sales of industrial paint and coating products, architectural paint and coating products, and general paint and coating and ancillary products for the year ended 31 December 2019 were 2.5%, 43.5%, and 1.5% respectively. The significant increase in revenue from the sales of architectural paint and coating products during the year was primarily due to the increase in sales to renowned property developers in the PRC and therefore the Group had boosted its sales of architectural paint and coating products. In addition, the Group has recorded an increase in sales of industrial paint and coating products to industrial manufacturers. Despite the depreciation of Renminbi, the revenue of the Group for the year ended 31 December 2019, in terms of Hong Kong dollars, increased by 15.6%. It was worth noting that, in terms of the original currencies (Renminbi and Hong Kong dollars), the overall revenue of the Group for the year ended 31 December 2019 increased by 20.2%. Expansion of the Customer Base During the year, the Group expanded the sales to property developers and industrial manufacturers. The Group succeeded in increasing the percentage of revenue generated from these customers, rather than relying on the sales through wholesalers and retail dealers. On the other hand, the revenue from water-based paint and coating products increased by 45.3% to approximately HK$283.02 million, as compared to the previous year. There were two major water-based paint and coating products, namely emulsion paint products and water-based wood coating products, which had recorded a double-digit growth. Geographical Analysis of the Amount of Revenue Geographically, a majority of the Group’s revenue was generated from the Southern China, the Central China and the Eastern China. Revenue generated from these regions amounted to approximately HK$592.49 million for the year ended 31 December 2019, as compared to approximately HK$544.39 million for the year ended 31 December 2018. Sales Breakthrough in the Central China The sales to customers in the Central China increased by 38.6% for the year ended 31 December 2019, which was primarily due to the fact that the Group became one of the registered suppliers of the property developers. Accordingly, the Group boosted its sales of architectural paint and coating products by selling these products to the property developers in the Central China during the year. Regain the Market Share in Hong Kong In addition, the sales to customers in Hong Kong increased significantly by 60.4% for the year ended 31 December 2019, which was primarily due to the enhancement in product mix and the increase in distribution networks in order to promote the sales of the branded water-based architectural paint and coating products and the supply of water-based architectural paint and coating products to contractors for government projects in Hong Kong as well as contractors in the private sector. Increase in the Revenue Contribution from New Customers in the Southern China and the Eastern China For the year ended 31 December 2019, the Group recorded an increase in the amount of sales to the industrial manufacturers in furniture, automotive, wind power, electric automobile and electric adaptor industries in the Southern China and the Eastern China, as compared to the year ended 31 December 2018. In addition, the Group adjusted its sales strategy to customers in the Southern China and the Eastern China by promoting direct sales, rather than relying on the wholesalers and retail dealers. Prospects: The Group recognises that continuous improvements in its business operations and profitability are required even though the amount of loss for the year ended 31 December 2019 was considerably less than the same in 2018. The Directors believe that the fundamentals of the business initiatives, including boosting its business performance by increasing the selling prices of the paint and coating products, improving the procurement and sourcing process, optimising the product mix and production distribution channels of the Group, and integrating the production facilities of the Group in the PRC, remain effective and necessary. The Group discontinued the expansion plan of the production plant in Xinfeng and is strengthening the production activities at the Zhongshan Production Plant. In addition, in order to increase the Group’s market share in the PRC, extend the geographical sales in the PRC and expand the customers base, the Group will continue to explore production cooperation with those selected paint and coating manufacturers on an original equipment manufacturer (OEM) basis. The Group will evaluate new opportunities and challenges in the PRC market, amid the emerging threat arising from the outbreak of the COVID-19 and the challenging business environment. The Group has implemented the business continuity plans during the epidemic immediately and has implemented other business revamp measures as follows: Business Continuity Plans during the COVID-19 Outbreak In response to the COVID-19 outbreak, the PRC government has stepped up the efforts and adopted measures to stop the spread of the COVID-19 by strengthening the community-based prevention and controlling work across the provinces in the PRC, suspending the public transport within some PRC cities as well as cutting airport and railway stations services to outgoing travellers. The PRC government has actively coordinated resources under a joint prevention and control mechanism to address the shortage of masks, amid the outbreak of the COVID-19, in order to increase the mask production capacity and supply; and the local governments have introduced measures to partially close off communities and tighten entry restrictions, in order to support commercial enterprises with epidemic control and prevention conditions and to resume operation in February 2020 in most areas in the PRC. The Group has been following the development of the COVID-19 epidemic closely and has implemented business continuity plans to minimise the disruption to the Group’s operations and business and ensure that the Group’s business remain viable during the epidemic. The COVID-19 outbreak is a non-adjusting event after financial year end and does not result in any adjustments to the consolidated financial statements for the year ended 31 December 2019. The Group has taken the following steps to ensure adequate preparation for business continuity: Holistic approach in monitoring the impact of the COVID-19 outbreak on production plants The Group does not only focus on employees’ well-being but also on the effective risk management in all different aspects. Securing operations, supply and distribution channels, and managing relationship with employees, customers and suppliers are to the core components of the Group’s approach. In addition, the Group’s plans for frequent communications with employees, customers and suppliers could help reducing the risk of harmful over-reaction that could reduce the Group’s economic loss that may be arisen from the COVID-19 outbreak. In addition, the Group had engaged in a number of information sharing with the relevant government authorities to ensure the implementation of the latest epidemic prevention measures to be implemented across the Group’s operations in the PRC. These actions helped to reduce the Group’s exposure to the COVID-19 outbreak and prevent the Group from any material adverse impact or disruption. To be most effective, such actions had been incorporated into the Group’s routine risk management practices. Resuming production since the middle of February 2020 Since the outbreak of the COVID-19, a number of provinces and municipalities in the PRC have taken emergency public health measures and various actions to prevent the spread of the COVID-19 in the community, including imposing restriction on the resumption date of production after the Chinese New Year holidays. The operation of the Group’s production plants in the PRC has been suspended after the statutory Chinese New Year holidays as part of the PRC government’s measures in containing the spread of the COVID-19. After inspection being done at the production plants in Shaijing, Zhongshan and Xinfeng by the relevant government authorities, the Group received official endorsements on production resumption on 15 February 2020 for these production plants. As such, these production plants have resumed production on 17 February 2020. As there are tighter restrictions in Hubei province in containing the spread of the COVID-19, the operation of the Group’s production plant in Hubei has been suspended longer than other production plants of the Group since the statutory Chinese New Year holidays. Hubei province had taken various emergency public health measures and actions to control the epidemic, including travel and trade restrictions and epidemiological surveillance. Finally the production plant in Hubei has been given the green light to resume production on 23 March 2020. Preventing the spread of the COVID-19 within the production facilities The most direct effect of the COVID-19 on the Group’s activities is the potential health threat to employees. The Group has taken various measures and precautions to provide a safe and healthy work environment and reduce the risk of spreading the COVID-19 in workplace. The Group has reduced business travels and requested that meetings and communications with customers or suppliers should be conducted by electronic means. Employees who are suspected contagious patients or who have been to any overseas countries or areas in the past 14 days are required to report to their supervisors and subject to the compulsory quarantine and self-monitoring to comply with the measures of the Hong Kong government. The Group tried to mitigate the potential risks which will cause threats to employees and proactively create a safe and healthy work environment. Increasing marketing efforts The expanded customer base led to the increase in sales for the year ended 31 December 2019. In order to further promote paint and coating products to the expanded customer base, except for the active communications with customers and advertising in new media for paint and coating industry materials, the Group’s sales and marketing team will continue to devote its effort in different marketing initiatives, such as participating in local exhibition shows and seminars and workshop organised by intra-industry players and associations of the construction industry in the PRC and Hong Kong, and enhancing the Group’s social networking website and increasing the visibility of the website to existing or potential customers. The Group believes that the strengthened marketing efforts will further increase the intra-industry players’ awareness of the Group and further strengthen the Group’s business presence and visibility in the paint and coating industry. Integrating the production facilities and complex in Mainland China Most of the revenue of the Group is generated from sales to customers in the Southern China. In this connection, the Group decides to further strengthen its production activities in Shenzhen and Zhongshan. The Directors believe that through the increased production activities at these production facilities, the production cost and the lead-time for production will decrease, which will be able to meet the demand from the newly targeted customers in the construction and manufacturing industries in Guangdong province, the PRC. In particular, the Group will continue to enhance the production activities at the production facilities in Shenzhen, so that such production facilities will become the principal production hub and the product research and development base of the Group. Save as mentioned above, the Group has planned to construct a new production plant for the production of water-based paint and coating products in Zhongshan, Guangdong province, the PRC Through the above integration of production facilities, the Group continues to assess how to further improve the productivity and utilisation in the Group’s production facilities and complex, including the lease out of production facilities and complex (with low utilisation rates) to align with the Group’s production facilities expansion plan in the Southern China, which can maximise the use of spare space in these facilities and complex to enhance operational efficiency of the Group.

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