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Public company info - Baytacare Pharmaceutical Co. Ltd. - H Shares , 08197.HK
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Baytacare Pharmaceutical Co. Ltd. - H Shares, 08197.HK - Company Profile
Chairman Fang Yao
Share Issued (share) 248,000,000
Par Currency Renminbi
Par Value 0.1
Industry Medicine
Corporate Profile Business Summary: The Group’s business is classified into four main segments: A. Chinese Herbs Business; B. Medicines Business; C. Medicines Sourcing/Trading Business; and D. Big Data Business. Performance for the year: As at 31 December 2018, the turnover was approximately RMB31,925,000 (2017: RMB17,080,000). Business Review During the period under review, the lack of momentum in global economic growth continued. the Chinese economy growth will be stable but may change. The Chinese government has continued to promote supply-side reforms, including the introduction of a series of steady growth measures, which have gradually increased the positive factors in the economic structure. The Group’s business is classified into four main segments: A. Chinese Herbs Business; B. Medicines Business; C. Medicines Sourcing/Trading Business; and D. Big Data Business. A. Chinese Herbs Busines After thorough study and consideration of the Feasibility Study Report and the potential markets and costs of different Chinese herbs, the Company considered that in addition to ginseng, the plantation and harvesting of Sehisandra (五味子) would also be one of the key products of the Company under this segment. Sehisandrais a precious Chinese herb and considered as one of the 50 fundamental herbs which have multi-functions and wide application for health-related issue. Sehisandra can harvest and ready for sales one year after the plantation and can harvest over a period of 10 years while the third to fourth year after the plantation would be their rich harvesting period. According to market search of the Company, the Sehisandra is in strong demand and its market price has been on an upward trend, increased from RMB50/kg in 2015 to RMB150/kg to 2018. The Company has already employed two experienced plantation personnel who both have over 15 years of experience in the plantation of Sehisandra and have deep understanding in the local market for Sehisandra. The Company is currently working on the preparation work for the plantation of and has been liaising with the potential suppliers of the sapling of Sehisandra and potential customers of Sehisandra so as to formulate our plantation plan. The Company has entered into a sales contract with 尚志市北方中藥材種植專業合作社 (the “Co-Op”) on 28 July 2018 for a term of five years and three months, pursuant to which the Co-op would purchase 20,000 kg to 30,000 kg of Sinshandra each year from the Company at the prevailing market price. To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiry, each of Co-Op and its ultimate beneficial owners is independent of the Company and its connected persons. The Company has already received a deposit of RMB100,000 from the Co-Op pursuant to the sales contract. It is currently contemplated that the sowing and plantation of Sehisandra will commence in March 2019 as the sowing season for Sehisandra is in March and April only. The Company intends to procure Sehisandra locally to satisfy the obligation under the sales contract for the years ended 31 December 2018 and 2019 and expects to sell the harvested self-planting Sehisandra beginning from 2020. In respect of the sales of Ginseng, 安圖縣東北虎新興特產有限公司, a wholly-owned subsidiary of the Company, has entered into supply contract with the Co-Op on 6 August 2018, pursuant to which the Co-Op would purchase the ginseng planted in the Forest Land from the Group at a price taking into account the quality of ginseng and the prevailing market price, for a term of three years. The Company has already received a deposit of RMB100,000 from the Co-Op. B.Medicines Business There is strong correlation between the original medicine business of the Group and the distribution business under the Agency Agreement and Framework Agreement, with with Zhuhai Guangyuan Co., Ltd.* (珠海廣緣醫藥有限公司) (“Zhuhai Guangyuan”). The Group is originally a Chinese medicine manufacturer based in Jilin Province with extensive sales and distribution network covering various districts in Jilin Province, including Changchun, Jilin, Siping, Yanji and Jiutai, etc.. Although the Group has made a commercial decision to scale down its original manufacturing of Chinese medicine business in view of the high research and development costs and ever increasing raw materials and labor costs with no sign of slowing down, increasingly stringent government regulations on the medicines industry and large amount of capital required for medicine manufacturing, it still maintains good and close relationship with the downstream customers including Zhuhai Guangyuan, pharmacy stores and hospitals to distribute Chinese medicines or other relating products in Jilin Province. Zhuhai Guangyuan does possess extensive distribution network with nationwide chain stores but given their existing network is principally focused in Southern China and they do not maintain an extensive network in Jilin Province, they entered into the Agency Agreement with the Company so that the Product can be marketed in Jilin Province in a more cost-effective way. It is the intention between the Company and Zhuhai Guangyuan that the distribution of the Product would serve as a starting point for future and more extended cooperation between them. Should the distribution of the Product by the Group in Jilin Province be proved to be successful, Zhuhai Guangyuan would consider to engage the Company to act as the authorized Zhuhai Guangyuan for its other medicines or medical products, Moreover, the Company can also take this opportunity to demonstrate its distribution capability in Jilin Province to other medical Zhuhai Guangyuans or manufacturers that is interested in marketing or distributing their products in Jilin Province. As such, the Company expects to generate more revenue and profit from this business segment after the transformation from the role of a manufacturer to Zhuhai Guangyuan. C.Medicines Purchasing Management/Trading Business The Company has on 12 May 2016 established a joint venture company named as 天津中合盛國際貿易有限公司 (the “JV Company”) with Beijing Shangzheng Technology Co., Ltd.* (北京上正科技有限公司) (“Beijing Shangzheng Technology”) with are registered capital of RMB20,000,000 in which the Company holds 60% equity interest and Beijing Shangzheng Technology holds 40%equity interest respectively. The JV Company is a non-wholly owned subsidiary of the Group. As disclosed in the Company’s announcement dated 10 May 2016, Beijing Shangzheng Technology is principally engaged in the marketing operation, hardware and software application of navigation systems, and production and trading of commodities and has various business partners domestically and internationally and established extensive trading channels. The Company has been conducting its Medicines Business, Purchasing Management/Trading Business through the JV Company and Beijing Shangzheng Technology’s established trading channels and other long established trading channels. On one hand, the Board will consider selling the Product through the aforesaid established Purchasing Management/trading channels. One the other hand, the Board will also consider sourcing medicines from other medicines manufacturers and Zhuhai Guangyuans and distribute or sell related medicines and products through the aforesaid established trading networks. D.Big Data Business Among the seven software products development commissioned by the company, the Beidou Satellite Intelligent Terminal Control and Management System Software (the “Software”), which is compatible with a wide range of mobile devices, including smartphones, tablets, smart watches and student cards, and is designed for both iOS and Android operating system and comprises location-based service related functions including global positioning system providing precise global location and velocity data, location security assistance services (early warning, rescue, alarm, etc.) as well as remote control of connection device functions, has been completed in August 2018 and delivered to the Group. Reference is made to the voluntary announcement of the Company dated 17 August 2018 in respect of the entering of (1) Strategic Cooperation Agreement; (2) Technical Development Service Agreement;(3) Sale and Purchase Agreement and (4)Proposed Procurement Cooperation Agreement. (the “Agreements”) Pursuant to the Agreements, pursuant to which the Group begin to commercialize the Software through providing the Software to install to the smart phones procured from independent third parties and on-sold them to the purchaser. Reference is made to the announcement of the Company dated 17 August 2018, and the sale and purchase agreement entered into by Beijing Baytacare Management Consulting Co., Ltd.* (北京北斗嘉管理諮詢有限公司) (“Baytacare Management”), a wholly-owned subsidiary of the Company, with Xintuo Wanbang (Beijing) Communications Technology Co., Ltd.* (新拓萬邦(北京)通信科技有限公司) (“Xintuo Wanbang”) as referred to in such announcement. As of 20 December 2018, the monetary amount of sales of mobile devices made by Baytacare Management under such agreement is RMB14,332,758.67. In addition, Baytacare Trading Co., Ltd.* (北斗嘉貿易有限公司) (“Baytacare Trading”), a wholly-owned subsidiary of the Company, has on 13 October 2018 entered into an agreement for the sale and purchase of mobile devices with a new customer, Ulefone Technology (HK) Co., Limited. The total transactional monetary amount under the sale and purchase agreement is USD1,071,000, and as of 20 December 2018, Baytacare Trading has received a deposit of USD321,300. As at 31 December 2018, the monetary amount of sales of mobile devices made by Baytacare Management under such agreement is RMB21,077,586.26. Prospects: With the slow growth of the pharmaceutical industry, continuous introduction of various new medical regulations and the gradual implementation of the “two-invoices system” policy, the environment of China’s pharmaceutical market has experienced significant change. The Board will focus on existing business growth and also will continue to explore and evaluate new businesses and investment opportunities which could be of good potential and/or long-term benefit to the Group and the shareholders of the Company (the “Shareholders”). (a)the cultivation of the Chinese Herbs requires time, the Company will harvest existing matured underground wild ginsengs grown on the Forest Land for sale if the market price is considered favourable to the Company; (b)the Chinese Herbs harvested from the Forest Land may be utilized to produce Chinese medicines and distributed under the Strategic Cooperation with Zhuhai Guangyuan and other distribution channels; (c)established purchasing management/trading channels of the Trading Business and other medicines and related products’ distribution channels shall serve as a sourcing management or distribution outlet for the products from the Group’s Chinses Herbs Business and Medicines Business; and (d)the Company is also in negotiation with companies in the electricity industry and education industry regarding the application and sales of the Software. The Company will commercialize other six developed software products.

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