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Public company info - Huarong Investment Stock Corporation Limited , 02277.HK
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Huarong Investment Stock Corporation Limited, 02277.HK - Company Profile
Chairman Yang Rungui
Share Issued (share) 1,816,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Investments & Assets Management
Corporate Profile Business Summary: The Group and its subsidiaries are (i) direct investments; (ii) financial services and others; and (iii) foundation and substructure construction services. Performance for the year: During the Year, the Group’s revenue from continuing operations recorded a significant decrease to approximately HK$511 million, representing a decrease of approximately 44% as compared to approximately HK$911 million for the Corresponding Period. During the Year, the Group recorded loss of approximately HK$927 million (Corresponding Period: profit of HK$72 million). Business Review： Continue to strengthen the business foundation and maintain stable development In 2019, facing the fluctuation in the global financial market and the uncertainty of American policies on global economy, the Group strengthens its business foundation according to plans and maintains stable development, by way of enhancing the quality of its investment portfolios and paving the way for future development. During the Year, the Group’s revenue from continuing operations recorded a significant decrease to approximately HK$511 million, representing a decrease of approximately 44% as compared to approximately HK$911 million for the Corresponding Period. Direct investment business segment recorded a revenue of approximately HK$363 million, representing a decrease of approximately 40% as compared to approximately HK$608 million in the Corresponding Period. The revenue of financial services and other business segments was approximately HK$148 million during the Year, representing a decrease of approximately 51% as compared to approximately HK$303 million in the Corresponding Period. In addition, in order to put more emphasis on developing the Company’s direct investment and financial services segments, the Group sold the entire foundation and substructure construction services segment in 2019, which contributed approximately HK$284 million gains on disposal to the Group. During the Year, the Group recorded loss of approximately HK$927 million (Corresponding Period: profit of HK$72 million). Loss for the Year was mainly due to the increase in the impairment losses on the loan and debt instruments and finance lease receivables, and the net losses on fair value changes of financial investments during the Year. Based on the assessment for the overall conditions of market, customers and collaterals, the Group made provisions for the investment on loan and debt instruments and finance leases receivables, amounting to approximately HK$890 million. In addition, the losses arising from the changes in financial assets at fair value through profit or loss was approximately HK$216 million, representing an increase of 29% as compared to approximately HK$167 million in the Corresponding Period. The management of the Company are of the view that the Group has already made adequate provisions for impaired investments during the Year, and consider that they will not have further material adverse impact on the Group in the future. The Group believes the current impairment provision for investments and the effects of change in fair value of a few of individual investments will cause no material impact on the long-term development of the Group. Direct Investment Direct investment business mainly invested in equities, bonds, funds, derivative instruments and other financial products. As at 31 December 2019, the segment assets of direct investment business was approximately HK$4,070 million (31 December 2018: HK$6,511 million), representing a decrease of approximately 37% as compared with that of 31 December 2018. During the Year, segment revenues of approximately HK$363 million (the Corresponding Period: HK$608 million) and segment loss of approximately HK$894 million (the Corresponding Period: segment profit of approximately HK$81 million) were recorded. The direct investment business of the Group is divided into four major categories, namely fixed returns investments, fund investments, equity investments and proprietary trading and treasury. Fixed returns investments mainly represented investment in private bonds, loans, convertible bonds and fixed income funds, which accounted for approximately 46% of the total investment assets. Such investment provided the Company with stable income and cash flow. The fund investment mainly represented investment in various funds investing in equity, which accounted for approximately 18% of the total investment assets. Equity investments accounted for approximately 10% of the total investment assets, mainly comprising shares of listed companies and equity investment of unlisted companies with strong potential. The proprietary trading and treasury accounted for approximately 26% of the total investment assets, which mainly invested in global bonds and conducted liquidity management and foreign exchange risk management for the Group through bond market, financing arrangement with banks and other financial instruments. The Group believes that the stable income of the Company is guaranteed by fixed returns investment, fund and equity investments which may bring potential and remarkable profit to the Group. Financial Services and Others Financial services and other related services mainly include provision of finance lease services, business consulting services and other related services. The Group has set up a professional financial leasing company with relevant licences in the PRC. It is focusing on providing services to the basic industries which conform to the PRC’s industrial policy and economic development trend, by way of introducing financial leasing to those industries, including the logistics, automobile, aviation, solar energy and wind power generation and liquified natural gas, to obtain constant and stable rental income. In addition, based on the Group’s domestic and overseas business network and the experience of investing in various industries, the Group also provided consulting services on macro-economy, industry analysis, financial product design and other aspects for customers. As at 31 December 2019, the segment assets of the business of the financial services and others amounted to approximately HK$1,135 million (31 December 2018: HK$1,701 million), representing a decrease of approximately 33% as compared with that of 31 December 2018. During the Year, the segment revenue of approximately HK$148 million (the Corresponding Period: HK$303 million) and the segment loss of approximately HK$169 million (the Corresponding Period: segment profit of approximately HK$144 million) were recorded. Prospects: In 2020, it is expected that the overall national economic conditions in China will become steady and the overall economic policy will be positively executed, and this in turn offers time and room for the Company to reduce risks and go ahead with development transformation. The Group will keep on enhancing the quality of project investment and strengthening the core competence and sustainability while increasing control and management of risks. The Group will continue to squarely analyse circumstances, sharpen its advantages, explore diversified competitive modes, while strengthening its foundation and maintaining stable business development to intensify reform, optimise the structures of businesses, customers, and staff, as well as enhancing its ability to serve the real economy on a going basis. To achieve the development approach of revitalising its principal business and the overall operational strategy of developing “huge non-performing asset”, the Group will also focus on exploring the market segment of nonperforming asset as well as motivating relevant innovative financial service businesses to further enrich and optimise the product system of the Company. While engaging in business development, the Group will continue to promote the construction of quantitative analysis system for market risks to strengthen its ability to implement control and management measures for credit risks. Moreover, the Group will continue to strengthen its corporate governance and risk control mechanism to improve the overall system management and achieve the steady growth and development of the Group.

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