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Public company info - ArtGo Holdings Ltd. , 03313.HK
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ArtGo Holdings Ltd., 03313.HK - Company Profile
Chairman Wu Jing
Share Issued (share) 4,049,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Other Minerals
Corporate Profile Business Summary: The Group was principally engaged in mining, processing, trading and sales of marble stones, trading of commodities and cargo handling, warehousing and logistics. It also commenced its business of production and sales of calcium carbonate products following the acquisition of such business during the year. Performance for the year: In 2019, the Group recorded an operating revenue of approximately RMB274.5 million (2018: approximately RMB536.8 million) from both of its continuing and discontinued operations, representing a decrease of approximately RMB262.3 million (or 48.9%) compared to that of 2018, Revenue from continuing operations amounted to approximately RMB273.7 million, representing a decrease of approximately RMB261.9 million (or 48.9%) compared to that of 2018. The net loss from continuing operations amounted to approximately RMB86.7 million (2018: approximately RMB645.2 million) and the net loss from a discontinued operation amounted to approximately RMB4.1 million (2018: approximately RMB4.0 million). Business Review Marble and Mining Business Our new marble processing plant (“marble processing plant”) in Jiangxi Province, the PRC was designed to house a total of eighteen large-sized stone pull saw machines. The plant will become the largest marble processing facility in the province. As at 31 December 2019, twelve of these stone pull saw machines together with other slabs grinding and polishing machines have been installed. Some of these machines had finished their test-run adjustments and had been put into production. Products produced from the new stone saw machines and slabs grinding machines installed were proved to be of top qualities and with high precision. Besides the Jiangxi plant, the Group has been establishing another new processing facility in Guangxi Province, the PRC to cater for the marble processing demand in Guangxi and the nearby region. During the year ended 31 December 2019, all the twelve large-sized stone pull saw machines had been delivered to the Guangxi facility and the related installation work was ongoing. The new processing facilities in the two regions not only serve the regional needs with different types of marbles, they can also achieve an economy of scale from centralised technical support and maintenance procurement costs. In the past, the Group used third-party contractors for marble slab processing from marble blocks extracted from our own mines with quality control over slab processing by our own experienced quality control teams. With the establishment of the processing facilities and our quality control teams, our business model will be more flexible. Apart from the marble blocks from our own mines, we will be more selective in sourcing different types and better-quality marble blocks from other mine operators for processing into slabs to enrich our product lines. In the meantime, marble blocks from our own mines which were identified as unsuitable for own processing were sold directly in the market in order to ensure that the slabs products produced from our own processing plants are of top quality in long run. The aggregate revenue from sales of marble products dropped from RMB86.1 million in 2018 to RMB77.8 million in 2019 in which marble block sales soared from RMB14.8 million last year to RMB44.3 million this year as more marble blocks unsuitable for own processing were sold. On the other hand, the sales of marble slabs dropped from last year’s RMB71.3 million to RMB33.4 million this year as our own processing facilities were yet to operate in full capacity resulting in a drop in sales volume from approximately 454,000 sq. m to 278,000 sq. m. not to mention the negative market sentiment under the weakest annual GPD growth rate of 6.1% in China since 1990 was recorded. Our mine excavation activity remained sluggish. The mining rights over Yongfeng Mine, the Group’s largest mine located in Jiangxi Province, has been renewed from time to time with different length of period and can be extended to 5 February 2043 according to applicable laws and regulations. The current certificate of mining rights shall be expired on 5 June 2020. The Group has been actively negotiating with the local government authority in order to fulfill all the conditions in order to obtain a certificate of mining rights for a longer period of 5 years or beyond to facilitate the longer-term business planning. The major condition for issuing such certificate is that the mine’s relevant environmental protection constructions need to reach a certain level under the government authority’s requirements. The Group has commissioned contractors to improve the mine’s relevant layouts and facilities in order to meet such requirements. Mining activities in the Yongfeng Mine were halted during the year in order to speed up the environmental protection construction work. Based on the latest assessment, the Group expects that most of the work shall be completed by mid-2020 and wishes to renew the certificate of mining rights for a longer period thereafter. Since 2018, following President Xi Jinping’s speech on the National Ecological and Environmental Protection Conference, the ecological civilisation construction and promotion of environmental protection has been a major goal the PRC government is pursuing. The Green Mine concept was evolved and a detailed formal standard in relation to the Green Mine construction, “砂石行業綠色礦山建設規範” was issued by the PRC Ministry of Natural Resources. Different local government authorities have further raised their consciousness on the ecological and environmental perspectives. Managements of the Group’s other different mines have been working on the Green Mine governing plans and the related works in order to fulfill the required standard before renewed mining certificates can be officially issued or large-scale mining activities can be commenced. During the year, the Group acquired a group of companies (“Kalong Group”) which is principally engaged in the manufacturing and sale of calcium carbonate for industrial used. The products of Kalong Group are mainly produced from marble residues and hence is one of the downstream business of our marble business. It has three main series of calcium carbonate products which contributed a total of approximately RMB13.1 million to the Group’s revenue subsequent to its becoming a member of the Group and also recorded a post-acquisition profit of approximately RMB1.1 million. The acquisition further expanded the Group’s existing business segment by widening the spectrum from stone mining to the stone application. Commodities Trading Business Prior to the signing of the phase one China-US trade war deal in January 2020, the global trade market was shrouded in an atmosphere of uncertainty especially the mercurial negotiation between the world’s two largest national economies. During the year, the Group had taken an extra cautious approach in carrying out any commodities trading transactions in view of such market condition. Consequently, the Group’s annual commodity trading transactions for the year was reduced as compared to those for 2018 and recorded an aggregate revenue of approximately RMB182.9 million for the year as compared to that of approximately RMB449.4 million in 2018. Warehousing Logistics Business The Group had been engaged in the warehousing and logistics business since 2017 through its subsidiary, Shiny Goal Holdings Limited and its subsidiaries (“Shiny Goal Group”). The segment results were not encouraging since its kickoff. As customers of Shiny Goal Group are mainly local importers of raw materials and manufacturing companies for production of goods for export, the slowdown of the import/export business activities has a direct impact to the demand of the logistics services geographically where these customers situated. The business environment of this segment further deteriorated in the China-US trade war time these two years. In late December 2019, after reviewing the segment’s business environment, the Group decided to abandon this business segment by disposal of the Shiny Goal Group. The Group has since then been actively soliciting potential buyers and the feedbacks are positive. The disposal when realised would not have significant financial impact to the Group whereas the Group can better utilise the resources to its other business segments. Prospects: Notwithstanding the silver linings arising from the positive progress of the China-US trade war were around the corner when approaching the end of 2019, the sudden outbreak of COVID-19 wiped out the hope of the business sector. It created a huge turmoil and striked the global economy severely. Although China is the first country being affected by COVID-19, the determination and swift reaction of the PRC government by the implementation of various emergency measures are proved to be effective and impressive. The Group has confident that among the countries affected, China will be the first country to have its economy be recovered from the aftermath of COVID-19. The Group believes that the PRC government will continue introducing additional policies and mitigation measures to stimulate the internal demand and promote real estate and infrastructure investments in PRC in order to counter the negative effect created by the previous trade war and the aftermath of COVID-19. We believe the Group’s business will be benefited from the boosted up internal demand. Having said that, given that the effect of COVID-19 is still on-going, it is premature to assess its negative impact to the Group. The Group will continue its existing business and adjust its strategy from time to time in order to adapt to the changing financial environment. It will carry out its business plan and make its investment decisions cautiously based on the changing market situation and the conditions of the Group.

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