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Public company info - Tech Pro Technology Development Ltd. , 03823.HK
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Tech Pro Technology Development Ltd., 03823.HK - Company Profile
Chairman Dong Bo Frederic
Share Issued (share) 8,000,000,000
Par Currency Hong Kong Dollar
Par Value 0.0025
Industry Industrial Goods
Corporate Profile Business Summary: The Group is principally engaged in the manufacturing and sale of LED lighting products,professional football club,and property sub-leasing services. Performance for the year: For the year ended 31 December 2016, the Group recorded a turnover of approximately RMB233.0 million (2015: approximately RMB220.0 million), representing an increase of approximately 5.9%. The gross profit margin (excluding the service income) of the Group was approximately 10.4% (2015: approximately 13.0%) during the year ended 31 December 2016. The consolidated loss before income tax of the Group for the year ended 31 December 2016 was approximately RMB438.0 million (2015: approximately RMB282.0 million), representing an increase of approximately 55.3%. BUSINESS REVIEW: LED lighting segment Business Review LED lighting business experienced a difficult year in 2016. The turnover of the LED segmentdecreased by approximately 25.4% from approximately RMB184.8 million in 2015 to approximately RMB137.8 million in 2016. The reduced turnover of LED lighting segment was mainly attributed to the decreased turnover from the manufacture and sale of LED lighting products and accessories. It was mainly due to the keen competition among the LED lighting manufacturers and the unfavorable market environment which ultimately led to the decrease in prices of LED lighting products and accessories. The decrease in LED lighting segment’s turnover was narrowed by the increase in service income from energy efficiency projects. With the completion of the energy efficiency projects,the service incomes generated had increased about 115.6% to approximately RMB20.7million. The Group started to provide maintenance services by its own in one of the projects so that the Group can maximise all the income from the project. All those projects are 16-year contracts which will contribute stable income and cashflow to the Group. The Group is still working with other municipals to seek for the feasibility of energy efficiency projects. In 2016, the Company has entered into a strategic corporation framework agreement with Shenzhen City Poly Property Management Group Limited (深圳市保利物業管理集團有限公司) (“Shenzhen Poly”) in June 2016. The agreement aimed at forming a strategic alliance in relation to the cooperation regarding the expansion of the LED lighting business of the Group's brand “LEDUS” by leverage on the network of Shenzhen Poly in the People’s Republic of China(“PRC”). In order to promote the Group's brand, products, energy efficiency projects and exposure, the Group had participated various lighting exhibitions in Hong Kong and other countries such as the Germany, Belgium, Spain, Malaysia and South Africa. In addition, the Group also sponsored some local communities activities in order to alert the public awareness of energy saving and promote its brand “LEDUS”. It was the third year that the Company was awarded as the caring company in Hong Kong. Professional football club segment Business Review The Group owns a French Ligue 2 football club, Football Club Sochaux-Montbéliard(“FCSM”). FCSM experienced an extreme situation in 2016. In the first half of 2016, FCSM faced a risk of relegation to lower level competition for the 2015-2016 football season and the team struggled to retain in the competition in Ligue 2. Finally, FCSM was successfully positioned in 15 and could play in Ligue 2 for the 2016-2017 football season. In April 2016,FCSM also finished at the semi-final in the French Ligue Cup and finally played against Marseille, a Ligue 1 football club. During this summer, FCSM learnt the lessons from the last season and started its preparation work earlier. Experienced and better quality players were recruited. In 2016-2017 football season, FCSM had a good start and ranked at the highest position of 5th on the table. Currently, FCSM ranks 10th with 11 points behind the top of the table. In January 2017, FCSM also finished at the quarter-final in the French Ligue Cup and finally played against Monaco, a Ligue 1 football club. Pursuant to the sale and purchase agreement dated 18 May 2015 in relation to the acquisition of FCSM, the vendor undertakes to pay to the Company a maximum total amount of €3,000,000 (equivalent to approximately RMB14,908,000) in the event that FCSM achieves the cumulative conditions for each of the financial years ending 30 June 2016 and 30 June 2017 respectively. As at 30 June 2016, all the cumulative conditions had been fulfilled and the vendor had paid to the Company a contingent consideration receivable of €1,500,000. As the current position of FCSM is 10th on the Ligue 2 table, it is most likely that FCSM will retain in Ligue 2 for the coming 2017-2018 football season. The Company is confident to fulfill all the cumulative conditions for the year ending 30 June 2017 and it is expected the final contingent consideration receivable of €1,500,000 will be received. Provision of property sub-leasing services segment Business Review The Group started to operate the property sub-leasing and management business since the completion of the acquisition of 50% equity interest in 上海富朝物業管理有限公司 (Shanghai Fuchao Property Management Company Limited#) in March 2014, which is principally engaged in provision of sub-leasing a property located at 中國上海市靜安區萬航渡路3, 7, 9及11號環球世界大廈B座1–10樓 (1/F to 10/F, Block B, Universal Mansion, No. 3, 7, 9 and 11 Wanhuang Du Lu, Jing’an, Shanghai, the PRC), together with car parking spaces in the basement and LED signage on exterior wall, to tenants and provision of property management services for the property. The property sub-leasing services business has been generating a stable income and cashflow for the Group. Despite the economy growth in the PRC was not as rapid as few years ago, the stable retail sales growth underpinned the city’s retail property market in 2016, and the vacancy rate decreased while the average rent edged up. The Group expected that there will be a steady growth in the PRC property market in mid and long term. By the end of 2016, the Group had entered into a sale and purchase agreement with the vendor to acquire indirectly a property in Guangzhou, the PRC and the transaction was subsequently completed in February 2017.The Guangzhou property is with a total gross floor area of approximately 2,580 sq.m. and is situated in 富力盈信大廈 (R&F YingXin Building), a commercial building located in 珠江新城 (Zhujiang New Town), a prime location in Guangzhou, Guangdong Province, the PRC.The Guangzhou property is currently leased to an independent third party for the operation of a “Food City (美食城)” named “蔡瀾美食城 (Cai Lan Food City#)” comprising various restaurants. The Group expects it will bring a steady and stable income stream. In addition,the Group owns the legal titles of the Guangzhou property and this will enhance the quality of assets of the Group. The Group will also benefit if there is an appreciation in property value. Prospects: Despite rising LED lighting market demands, and large scale replacements of traditional luminaires, the oversupply situation in the market has caused average sales prices of LED lighting to plunge. Some of the LED lighting manufacturers in the PRC may leave the industry and some of them may seek to acquire oversea companies in order to transform its business model and explore new sales channels. Europe remains to be the major target market of the Group as the European customers are willing to pay for higher quality LED lighting products. New markets such as US and the countries with high electricity fee are also the Group's major targets. With the success of the projects the Group has completed in Spain, there are more municipal governments in Spain willing to work with us, looking for co-operation opportunities. The Group will make effort to promote the business collaboration in other countries in Europe such as France and Italy. The Group will also seek for opportunities to promote the energy efficiency projects to private enterprises. The Group will keep on putting resources into the products and technology development,particularly the LED luminaires for non-residential customers. The Group will develop technology in LED modules, using the IC power supply chips, for the LED luminaires fixtures. The Group will also consider to acquire its own production plant and new equipment in advance to enhance the productivity and effectiveness. As the LED lighting market competition is keen and most of the production cost increased cannot be shifted to the customers, the Group will use the Group's best endeavor to take cost control measures. With effective cost control systems, the Group's competitiveness can be enhanced and the Group's costs of production can also be lowered. The Group understands there are different challenges and economic uncertainty situations ahead, the Group will, as usual, take prudence and cautious steps to develop the Group's business. As a platform for “LEDUS” to enter into the LED lighting market in France, the Group will utilise the connections through the football club to look for business opportunities, not only with the regional governments, but also the French private enterprises. Energy efficiency projects will be introduced, together with the Group's successful cases in Spain, to the regional governments in France. Promotion back to Ligue 1 is always the Group's target to FCSM. In 2016, Ligue de Football Professionnel (“LFP”) has made a decision that starting from 2016–2017 football season, only the top two teams on the table can be promoted to Ligue 1 directly. The third best team will play two matches against the third lowest team of Ligue 1 in order to determine which team can play in Ligue 1 in the coming football season. Currently, FCSM ranks 10th with 8 points behind the team at third place. The Group and FCSM will use its best effort to get the best result as it can and will not let the chance of promotion be missed. FCSM has its own football academy and many of the players in the squad are trained from the youth football academy. Some of them have been trained since their childhood. They are young, talented and determined who may be the future football stars in France. They are the valuable assets of the football club and the Group will keep on scouting and training potential youth players for long term development of the football club. The Group expects the PRC central government has no intention to sharply devalue its currency and will use its vast resources to fight speculation. Also the PRC central government targets there will be about 6.5% economic growth in 2017. Retail property market will continue to see steady development in the coming year. The Group believe it may improve the level of rent in the prime area of the first tier cities such as Shanghai, Guangzhou, PRC to achieve a steady rental growth.

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