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Public company info - RRENHENG Enterprise Holdings Limited , 03628.HK
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RRENHENG Enterprise Holdings Limited, 03628.HK - Company Profile
Chairman Liu Li
Share Issued (share) 804,000,000
Par Currency Hong Kong Dollar
Par Value 0.0025
Industry Machinery & Equipment
Corporate Profile Business Summary: The Group is principally engaged in the manufacture and sale of tobacco machinery products in the People’s Republic of China (the “PRC”). Performance for the year: For the year ended 31 December 2019, the Group recorded a profit for the year of HK$703,000, representing a drastic decrement by HK$8,520,000, or 92.4% in comparison to HK$9,223,000 for the year ended 31 December 2018. In both years. Looking at the Group’s results for the full year, the revenue was down by HK$29,536,000 or 29.2% from HK$101,043,000 for the year ended 31 December 2018 to HK$71,507,000 for the year ended 31 December 2019. Business Review： During challenging times like what the Group are facing today, the Group maintain a constant focus on building a long-term sustainable business and quality control. The Group retain a conservative capital structure to help insulate the Group’s business against volatility. The Group continue to invest in research and development, along with developing the Group’s people with training, learning and development opportunities, as well as enhancing marketing efforts Benefiting from operating leverage, the Group are able to have significant improvement in the Group’s gross profit margin but revenue has remained a continuing challenge for the Company. The sale of catalogued special-purpose tobacco machinery products continued to contribute the majority of the revenue of the Group, amounting to HK$62,945,000 or 88.0% of total revenue for the current year (2018: HK$99,249,000 or 98.2% of total revenue). During the reporting period, the outcome from manufacturing of water treatment system and retooling and repair services (included in sales of other goods) starts to gain more weight among the revenue yet these new businesses are still in a growing stage and the Group anticipated that these new business will only be predominated gradually. The Group regards this as a positive step forward as it will help enhance the Group’s product diversity, as well as widen the Group’s customer bases. As at year end of 2019, the Group was working on a few construction contracts of casing and flavouring systems and prepressing packing machines which are expected to deliver to the customers during the first half in 2020. The duration to complete the manufacturing and installation of the systems and machineries vary by the design and complexity of the products, as well as the supporting facilities owned by the cigarette manufacturers and tobacco redrying factories. As at 31 December 2019, the Group has over HK$80 million committed sales contacts and expected to finish in the coming two years. The strategy on focusing quality control and cost effective measure has been reinforced during the 2019 National Tobacco Work Conference (2019年全國煙草工作會議) and the cigarette manufacturers and tobacco redrying factories would constantly improve the level of scientific research and technology innovation. Meanwhile, keen competition among the cigarette manufacturers and tobacco redrying factories are expected. The market participants are expected to decrease and the financial performance and budget available would be adversely affected by the new tobacco policy. Under the “Healthy China 2030 Plan” (健 康中國2030規劃), the government has clearly puts forward specific development goals in terms of smoking bans and tobacco control which requires that by year 2030, the current 27% of smokers in China has to be reduced to 20%. This will have a longterm impact on the development of China’s tobacco industry. Heat-not-burn tobacco products, which use the system where tobacco leaves are not being burnt but instead tobacco constituents are heated and aerosolized, are gaining popularity among smokers in recent years. In November 2019, the State Tobacco Monopoly Administration of the PRC has announced that in order to protect the youngsters, it is forbidden to sell and promote heat-not-burn tobacco products to people under 18 years old. Prospects: Since the 2019 Novel Coronavirus outbreak, authorities in the PRC have taken emergency public health measures including extending Chinese New Year holidays, and imposing travel and other work-related restrictions. Since mid of February 2020, a majority of the Group’s manufacturing facilities have obtained government approvals and gradually resumed operation. The economic performance of the PRC may be impacted in the short run but the Group expect that the virus will not affect the trend of economic stability and transformation of the PRC in the long run.

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