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Public company info - EcoGreen International Group Ltd. , 02341.HK
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EcoGreen International Group Ltd., 02341.HK - Company Profile
Chairman YANG Yirong
Share Issued (share) 775,000,000
Par Currency Hong Kong Dollar
Par Value 0.1
Industry Chemical Products
Corporate Profile Business Summary: The principal activities of the Group are the research and development, production and sale of fine chemicals products from natural resources for use in aroma chemicals and pharmaceutical products, and the trading of fine chemicals products and natural materials. Performance for the year: For the year ended 31 December 2019, the Group’s revenue increased by 10% to approximately RMB2.42 billion. the Group’s gross profit decreased by 2% to RMB520 million. Reported profit attributable to shareholders in 2019 was RMB230 million, representing an increase of 7% as compared to a profit of RMB215 million in 2018. Basic earnings per share was approximately RMB29.67 cents (2018: RMB27.78 cents). Business Review On behalf of the board of directors (the “Board”), I would like to report the annual results of the Group for the year ended 31 December 2019 (the “Year”) to the shareholders. During the Year, the Group’s turnover rose by 10% to approximately RMB2,423 million. Reported profit for the year attributable to owners of the Company increased by 7% to RMB230 million. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) increased by 5% to RMB483 million. Basic earnings per share for the Year amounted to RMB29.67 cents (2018: RMB27.78 cents). In appreciation of the shareholders’ support, the Board resolved to declare a final dividend of HK4.8 cents per share for the Year, which is subject to the shareholders’ approval at the forthcoming annual general meeting (the “AGM”) of the Company. The proposed final dividend and the interim dividend of HK1.7 cents would bring the total dividend per share for the Year to HK6.5 cents (2018: HK5.6 cents). The year 2019 was a year of turmoil. In the first half of the year, with the continuing economic recovery in the US and Europe, the global consumption of necessity goods and related businesses maintained a growth momentum. China’s “supply-side structural reform” and new environmental policies have contributed to survival of the fittest in the supply chain and the thriving external demand, all of which drove the Group’s surging businesses. In the second half of the year, with the escalating international trade conflicts, rising transaction risks and costs, the global supply chain was faced with different degrees of challenges and disruptions. In the environment full of risks and opportunities, the Group faced with various challenges in its operation. Grasping the market opportunities, the Group positioned itself as a reliable supplier of “safe production, stable supply and superb quality” and continued to gain trust and recognition from both new and old clients. Sales quantity and product types considerably increased and all the three main businesses recorded growth. At the same time, the strategic development and construction of the new production bases in Gulei and Changtai have made concrete progresses. Entering the new year of 2020, although unfortunately China was impacted by the epidemic of the era, the novel coronavirus pneumonia (COVID-19), at the end of January and has been through a historic anti-epidemic spiral, the Group was fully supported by the local government and both joint hand-in-hand to triumph in the first phase of anti-epidemic work. The Group has implemented and executed stringent anti-epidemic measures regulated by the Chinese government, ensuring staff safety and normal production. In early February, the Group successfully commenced and completed on schedule the yearly maintenance and technological advancement project in Haicang, and full resumption of work has been commenced on 6 March 2020. The raw materials and finished products pre-stored for the yearly maintenance and technological advancement have guaranteed stable supply to clients during the suspension of production in the anti-epidemic work. While the epidemic is mitigated in mainland China, the Group has immediately and successfully resumed work, successfully providing a stable supply to its clients in China and worldwide. As a leading fine chemicals enterprise in the international market, even though the operation of its two main businesses, “Scent & Taste” and “Specialties” faced heightened challenges in China due to the new environmental policies, the Group continued to be the role model in green measures within the industry in mainland China resulting from its business advancements and strict operational standards over the years. The Group’s Haicang production base was honoured with “Green Factory” by the country’s Ministry of Industry and Information Technology and was the only green chemicals production enterprise in Fujian Province awarded with this certification. Meanwhile, the Group as a whole was awarded by Hong Kong’s Green Council for the “Corporate Green Governance Award” in 2019. All these honours commended the Group’s dedication and efforts on green and safety measures over the years, and recognized the Group’s corporate mission of “Ecogreen and Ecofriendly” and “Commitment to bringing health and well-being to the globe”. These achievements enhanced the strong vitality of the Group’s sustainable development and compliance to safety production, and at the same time offered new opportunities for the enterprise’s future expansion of green operation and financing. In its core business, the Group’s “Scent & Taste” business had an outstanding performance during the Year. The petroleumbased aroma chemical products recorded growth in both the price and sales volume. The sales volume of the naturals-based products also recorded growth despite its fluctuating price. The total sales revenue in “Scent & Taste” business increased by 12% year-on-year, mainly attributable to the growth in global demands, integrating global supply chain, and the continuous supply shortage of various aroma chemical products in the first half of 2019 due to serious safety incidents of overseas major peers in 2018. In such operation background, the Group effectively increased the composite production output through powerful measures such as timely increase in production capacity, expansion of outsourced production and technological advancements. The Group will continue to advance its “Scent & Taste” business with stringent quality control and guaranteed supply, striving to be the leading “Scent & Taste” total solutions supplier in the global market. In its “Naturals” business, the Group produces three major categories of products, namely natural food ingredients, natural essential oil, and natural extracts. During the Year, the three subbusiness segments as a whole recorded steady growth of 3% in revenue. Among them, the sales of seafood extract (fresh oysters) products recorded over 70% growth and the Group has become the largest supplier to China’s largest soy sauce manufacturing enterprise. Many of the products within the categories of natural food ingredients and natural extracts also fall into the “Taste” business, which can tailored-made clients’ various demand on “Taste” products with differentiated solutions, together with the “Taste” products in the Group’s synthetic scent product category. Upon completion of Phase II upgrade of Changtai production base in 2020, the “Naturals” business will be equipped with new production facilities and capacity. The Phase II Changtai production base will replace the existing Xinglin Plant and will be upgraded to be a new plant of larger scale to meet the food production standards of the “SC” certificate, and thus providing key ingredients of taste and nutrition to frozen food, fast food and pet nutrition food industries. During the Year, the upgrade project of Changtai has been successfully planned and has started to be implemented. The natural essential oil production line was officially put into operation on 5 March 2020, while the food ingredient production will commence operation in the third quarter of 2020. The sales of natural extracts will be multiplied in the next three years after putting the new production lines into operation. In its “Specialties” business, the Group has drawn a new blueprint for the business development in Gulei Chemical Industrial Park. Gulei, as the Group’s largest business project and value investment, will be constructed and put into operation in different phases. The Group has planned to invest RMB1.5 billion in Phase I Gulei. As at the end of 2019, construction of the storage tanks and main facilities have been completed and the essential equipment in the main units has been properly installed. Installation of all equipment is planned to be completed in the second quarter of 2020, and trial production is planned to start in the third quarter of the year. Hydrogenated hydrocarbon resin, which is highly favored in the market, will be produced in Phase I to provide key components to the newly emerging daily consumption necessities. The Group carried out its major strategic planning in Gulei Chemical Industrial Park to adapt itself to the upcoming changes in the global economy, and to meet China’s new environmental policies. The industrial park will also enable the Group to fully capitalize on the integrated supply chain for oil refinery and petrochemical business and the technological advancement, so that it can better meet the changes in the industries demand. It will do so by optimising the product mix of aroma chemicals and functional materials for international and domestic markets, thus achieving synergy between the supply chains for natural and petroleumbased resources. Among the different planned phases, Phase I Gulei will mainly focus on the production of the new functional materials product – hydrogenated hydrocarbon resin. Meanwhile, several production facilities will be built to produce new functional chemicals and new product portfolio under “Scent & Taste”. The Group will thereby achieve higher level of synergies in its business resources and technologies, for building and actualizing the multiindustries development in Gulei. Gulei production base will become the Group’s core production base that drives its future robust business development and rapid business expansion. Although Phase I Gulei will not be able to completely meet the planned progress to begin operation on 1 June 2020, with the sprint in the last quarter of 2019, it is with good foundation to be completed and put into operation for hydrogenated hydrocarbon resin in the third quarter of 2020. Prospects: 2020 is a year of grand challenges globally. Global economy and society are now facing huge disruptions. Apart from the escalating China-US trade conflicts and geopolitical frictions, the unexpected global outbreak of novel coronavirus pneumonia epidemic in the beginning of the year has caused immense setbacks for the lives and properties in many countries worldwide. It has paused global production and supply on a large scale, leading to a sharp devaluation in various assets and the financial market turmoil, making it a catastrophe to human. Due to the serious impact brought about by the epidemic, it is expected that the global operating environment in 2020 will be considerably harsh. For corporate and business owners, it will be a huge challenge for them to overcome the disruptions caused by the epidemic. Fortunately, governments of various countries has been proactively putting huge resources and financial support to combat the epidemic, help the people and stimulate the economy in order to prevent or mitigate economic depression globally. The Group has also been proactively dedicating itself to the anti-epidemic work and resumption of production, so as to overcome the difficulties and to realise the Group’s plans to resuming work and production and supplying to clients in the fastest and most precise way. The Group’s major production bases and operation are in Fujian Province, China. Currently, China is the fastest country overcoming the epidemic, and Fujian Province is a region with less severe impacts. Led by the management team and with the effort of all members, the Group has successfully commenced and completed on schedule the yearly maintenance and technological advancement for expanded production in Haicang Plant on 10 February 2020 and resumption of work has been commenced on 6 March 2020. Its production, construction and research and development have basically been resumed to the level before the epidemic. The Group’s products are mainly key components to daily necessities, including washing agents, disinfectants, deodorants, food and personal hygiene products, which are in the elementary industry of anti-epidemic work. Amid the epidemic, demands for products of washing agents and disinfectants indeed showed a rising trend, and thus all of the Group’s downstream clients of daily chemicals remained to have comprehensive production and operation as well as robust demands on raw materials. The Group will make the greatest effort to enhance its safety and green management as well as its production capacity and efficiency of core procedures, while integrating the anti-epidemic work. In a turbulent operating environment, the Group turning crisis into opportunity, by providing key support to the global anti-epidemic work, restoration of industry businesses and restructuring of supply chain with a safe, reliable and persistent production. With the support of banks and shareholders, the Group will prudently speed up the construction and operation schedule of Gulei and Changtai. The functional materials project of Phase I Gulei has been steadily developing and the construction work has been fully completed. Construction of plants and installation of equipment have been substantially completed at the end of 2019; and the electromechanical facilities are planned to be installed in the second quarter of 2020. Trial productions are expected to commence in the third quarter of 2020. It is planned to introduce the high-end hydrogenated hydrocarbon resin products that are greatly welcomed by the market. Prioritising the market in China, such products will offer solutions for replacing the foreign imports for industries in hygiene materials, medical protection, automotive parts, electronic products and housecare products as well as newly emerging industries like new energy and 5G new raw materials. The designed production capacity of functional materials in Phase I Gulei is 30,000 tonnes, with production automation and safety management systems to achieve large scale production. Meanwhile, Phase I plants have left development space for the expansion of production to 60,000 tonnes in the next stage. In second stage of Phase I in Gulei, the Group will build a national level engineering and technology centre, to greatly enhance the Group’s ability and speed in research and development on industrialization technologies. Meanwhile, the Group will build several sets of flexible multi-functional units in order to introduce more hot-selling functional chemicals and synthetic aroma chemicals to the market. Leveraging on the synergies of C5C9 resources and with the production of hydrogenated hydrocarbon resin products, they will together greatly facilitate the synergies and development of the Group’s synthetic aroma chemical products. Regarding the transformation and restructuring, and the technological advancements of Phase II in Changtai, the production lines for natural essential oil and oil extracts have been completed in late February 2020, and have commenced operation on 5 March. It is expected to complete the construction and installation of the three production lines in August 2020 that allows the Group to commence trial productions in the third quarter of the year. The completion of Phase II in Changtai will utterly upgrade the Group’s production setup in its food ingredients business, increasing the number of product portfolio of food products, enhancing the product quality and production capacity as a whole, so as to create the conditions for robust sales revenue growth. Facing the global spread of the epidemic and a turbulent market environment as well as the deeply-rooted restructural changes in the global industry, the Group will continue to implement and realise the Group’s strategy of “New EcoGreen” with perseverance, determination and confidence under prudent attitude and strenuous effort. The Group will facilitate global procurement of raw materials to ensure a stable supply and balanced price in its main naturals-based and petroleum-based raw materials. The Group will strengthen its presence in mainland China, accelerating the synergetic development of functional chemicals and functional materials. Leveraging on its new production capacity and innovative knowhow as well as proactive cost management, the Group will make effort to introduce more hot-selling products to the market and increase its main products market share. Meanwhile, with regard to the impacts brought about by the epidemic and the resulting liquidity condition of its clients, the Group will reassess the credit status of every client and tighten the clients’ credit management control, thereby strengthening the corporate financial liquidity in order to embrace the market challenges with a stable financial condition. The Group will continue to strengthen environmental and safety compliance in its operations, which will elevate the Group’s green chemical production and sustainable operation to a new level, further comprehensively enhancing the green content from green technology to green manufacturing and green financing. The Group will make effort to provide outstanding client services, highly efficient operation, persistent technological advancement, stringent cost management and strengthened application of information technologies, to overcome the difficulties brought about by the epidemic, and to explore opportunities and vigorously facilitate rapid business growth, enhancing EcoGreen’s core competitiveness and increasing both the return to shareholders and the return on capital. The Group will remain committed to the noble mission of “Commitment to bringing health and well-being to the globe” and continue to pursue the business vision of “Ecogreen and Ecofriendly”. “Quest for merits and Strives to excel.” This will also help the Group attain its goal and persistent growth in financial results and business performance.

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