Public company info - CN Logistics International Holdings Limited , 02130.HK
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CN Logistics International Holdings Limited, 02130.HK - Company Profile
Chairman Lau Shek Yau
Share Issued (share) 250,000,000
Par Currency U.S. Dollar
Par Value 0.001
Industry Warehousing & Logistic Services
Corporate Profile Business Summary: The Group is a well-established international logistics solutions provider with core business of providing air freight forwarding services and distribution and logistics services in relation to fashion products and fine wine, primarily focusing on high-end fashion (including luxury and affordable luxury) products. Performance for the year: For FY2017, FY2018, FY2019 and 3M2020, the Group's revenue was HK$1,523.9 million, HK$1,538.7 million, HK$1,483.8 million and HK$362.2 million, respectively, whilst the Group's total net profit for the same periods amounted to HK$47.9 million, HK$41.1 million, HK$44.6 million and HK$385,000, respectively. The Group’s overall gross profit was HK$261.2 million, HK$298.4 million, HK$306.8 million and HK$72.5 million for FY2017, FY2018, FY2019 and 3M2020, respectively. The Group’s overall gross profit margin was 17.1%, 19.4%, 20.7% and 20.0%, for FY2017, FY2018, FY2019 and 3M2020, respectively. Business Review Air freight forwarding services The Group’s air freight forwarding services include arranging for consignment upon receipt of booking instructions from customers, cargo pick up, obtaining cargo space, preparation of freight documentation, arranging for customs clearance and cargo handling at origin and destination as well as other related logistics services such as supporting transportation for freight forwarding purposes. For FY2017, FY2018, FY2019 and 3M2020, the Group's air freight forwarding services contributed to HK$1,014.9 million, HK$992.0 million, HK$917.0 million and HK$210.3 million, representing 66.6%, 64.5%, 61.8% and 58.1% of the Group's total revenue, respectively. The Group’s revenue generated from the provision of air freight forwarding services decreased from HK$1,014.9 million for FY2017 to HK$992.0 million for FY2018, which was mainly attributable to (i) the decrease in revenue generated from the PRC of HK$41.9 million which was primarily due to the global economy being adversely affected by the Sino-US trade war and mainly impacted the export consignments of the Group's Group from the PRC to Europe; and (ii) the decrease in revenue generated from Hong Kong of HK$29.0 million primarily due to the decrease in co-loading business with freight forwarder business partners. According to the understanding of the Group's Directors, such decrease was primarily due to the decrease in demand from the freight forwarder business partners’ customers for transportation of goods for the relevant freight forwarding routes that the Group provide, which was partially offset by (i) the increase in revenue generated from Italy of HK$37.5 million, benefited from the Group's business expansion and source of new customers; and (ii) net additional revenue contribution of HK$12.1 million from business expansion in other jurisdictions, namely Japan, Switzerland and the U.S., in which the Group's business operations only commenced in FY2017. The Group’s revenue generated from the provision of air freight forwarding services decreased from HK$992.0 million for FY2018 to HK$917.0 million for FY2019, which was mainly attributable to (i) the decrease in revenue generated from the PRC of HK$78.9 million as a result of the continuous impact on the global economy brought by the Sino-US trade war and mainly impacted the export consignments of the Group's Group from the PRC to Europe; and (ii) the fall in price of cargo space charged by airline carriers in general, as the Group price the Group's services on a cost-plus basis. The Group’s revenue generated from the provision of air freight forwarding services increased from HK$194.9 million for 3M2019 to HK$210.3 million for 3M2020, which was mainly attributable to the increase in revenue generated from Hong Kong of HK$30.2 million as a result of (i) the increase in freight charges, which drove up the Group's revenue as the Group price the Group's services on a cost-plus basis, due to the shortage in supply of cargo space caused by the COVID-19 outbreak; and (ii) the increase in demand from other freight forwarders in Hong Kong to co-load with us in view of the limited supply of cargo space and the Group's ability to obtain cargo space from suppliers, which was partially offset by the decrease in revenue generated from the PRC of HK$15.3 million mainly due to the adverse impact on the PRC market and freight forwarding industry brought by the outbreak of COVID-19. Distribution and logistics services The Group’s distribution and logistics services involve the provision of a wide range of logistics services, such as organising and optimising warehousing usage, transportation routes and trucking service providers, storage, palletising, trucking and distribution, managing vendor inventory, picking and packing finished goods, reverse logistics services and recycling, providing quality control and various ancillary value-added services such as supply chain management and storage services through the Group's proprietary CN WMS. the Group would also advise the Group's customers on complying with local customs regulations. For FY2017, FY2018, FY2019 and 3M2020, the Group's distribution and logistics services contributed to HK$234.3 million, HK$285.2 million, HK$313.7 million and HK$74.1 million, representing 15.4%, 18.5%, 21.1% and 20.4% of the Group's total revenue, respectively. The Group’s revenue generated from the provision of distribution and logistics services increased from HK$234.3 million for FY2017 to HK$285.2 million for FY2018, which was mainly attributable to (i) the improved service capacity and efficiency of the Group's distribution centres in the PRC, as the Group had relocated certain part of the Group's distribution and logistics operation in Shanghai to a larger distribution centre equipped with semi-automated conveyor belts in Shanghai during FY2018 which allowed us to satisfy more demand from the Group's customers and generated additional revenue; and (ii) the increased demand for the Group's distribution and logistics services provided in Hong Kong. The Group’s revenue generated from the provision of distribution and logistics services further increased from HK$285.2 million for FY2018 to HK$313.7 million for FY2019, which was mainly attributable to (i) the improved service capacity and efficiency brought by the relocation of certain part of the Group's distribution and logistics operation in Shanghai during FY2018 as discussed above, which resulted in higher revenue for the full year of FY2019 as compared to FY2018; and (ii) the improved service capacity brought by the expansion of the Group's distribution and logistics services in Italy as the Group had relocated the Group's office and distribution centre in Italy to a property with a larger gross floor area in late 2018. The Group’s revenue generated from the provision of distribution and logistics services decreased from HK$79.5 million for 3M2019 to HK$74.1 million for 3M2020, which was mainly attributable to the decrease in demand for the Group's services in Hong Kong and the PRC as a result of the adverse impact brought by the outbreak of COVID-19. Ocean freight forwarding services The Group’s holistic logistics solutions also include the provision of ocean freight forwarding services mainly to the Group's air freight forwarding services customers and other customers in Italy and Taiwan when they require us to ship some of their products by sea incidentally or on a stand-alone basis, which involve similar services that the Group provide under the Group's air freight forwarding services. Further, while the Group's customers for wine logistics services mainly require the Group's air freight forwarding services, they may also require us to arrange for wine to be transported by sea. For FY2017, FY2018, FY2019 and 3M2020, the Group's ocean freight forwarding services contributed to HK$274.8 million, HK$261.5 million, HK$253.2 million and HK$77.9 million, representing 18.0%, 17.0%, 17.1% and 21.5% of the Group's total revenue, respectively. The Group’s revenue generated from the provision of ocean freight forwarding services decreased from HK$274.8 million for FY2017 to HK$261.5 million for FY2018, which was mainly due to the decrease in revenue of HK$56.8 million in Taiwan primarily brought by the Group's commercial decision to slow down the Group's business relationships with four customers with relatively lower gross profit margin than the Group's other customers, which was partially net off by (i) the increase in revenue generated from Italy of HK$26.9 million as a result of businesses brought by new and existing customers stemmed from the Group's strategy in seeking business expansion actively in Italy; and (ii) the net increase in revenue of HK$10.9 million contributed by the Group's ocean freight forwarding services in jurisdictions other than the PRC, Hong Kong, Taiwan and Italy, in particular the expansion of the Group's business in Japan. To the best knowledge of the Group's Directors upon making reasonable enquiries, the abovementioned four Taiwan customers are trading companies in Taiwan with a business scope of, amongst others, international trade and wholesale of a wide range of products including food and grocery, clothes, shoes, ironware, machinery and household appliance. During the Track Record Period, these four customers mainly engaged us for the provision of ocean freight forwarding services. the Group have not conducted any further business with these four customers and the Group's business relationships with them completely ceased since April 2018. The gross profit margins of these four customers in Taiwan, ranging from 4.3% to 5.8% in FY2017 and 4.4% to 6.3% in FY2018, respectively, were lower than the Group's overall gross profit margin for ocean freight forwarding services for FY2017 and FY2018 at 23.1% and 26.6%, respectively. Excluding the revenue and gross profit generated from the ocean freight forwarding services provided to these four customers in Taiwan, the Group's gross profit margin from Taiwan was 46.1% and 45.1% for FY2017 and FY2018, respectively. the Group's gross profit margins in respect of the transactions with these four customers were lower than the Group's average gross profit margin in respect of the transactions with other customers in Taiwan for FY2017 and FY2018. This was mainly attributable to the combined effect of factors including: (i) the high transaction volume offered by these four customers put them in a better bargaining position in negotiating prices and the Group had to set prices that were more competitive in order to secure their orders, resulting in a lower gross profit margin as compared to the Group's other customers in Taiwan; (ii) these four customers generally did not require us to provide customs clearance and declaration services, which generally entail additional fees and higher gross profit margin; (iii) the Group primarily provided freight forwarding services in respect of frozen food for these four customers which required special arrangements including temperature-controlled delivery and constant monitoring of the goods’ condition throughout the freight process, thus involving higher costs; (iv) a majority of the Group's customers in Taiwan were customers with whom the Group had nurtured a stable and long-term relationship by providing quality, customer-oriented and efficient services, enabling us to charge a comparatively higher premium for such services; and (v) the Group's know-how and experience in providing quality and customer-oriented freight forwarding services in Taiwan allowed us to offer one-stop services to the Group's Taiwan customers and charge at a comparatively higher margin as well as additional fees for the customs clearance and declaration services. The Group competed for and secured orders in FY2017 from these four customers as they represented a new source of revenue and contributed additional gross profit for the Group's Taiwan business despite having to offer them competitive prices and record comparatively lower gross profit margins as a result. However, the Group subsequently decided to slowdown and eventually cease the Group's business relationships with these four customers after taking into account of the following factors: (i) as the transaction volume of these customers was high for FY2017, the Group dedicated up to three customer service staff to serve these customers specifically (depending on the services required by these customers) as opposed to the Group's general practice of one customer service staff serving multiple customers; (ii) the settlement pattern of 30 to 60 days of these customers, while being similar to the Group's other customers in Taiwan, was normally longer than the Group's settlement pattern of seven days to the Group's suppliers, namely shipping companies; and (iii) due to the large volume of transactions with these four customers, the time lag between their settlement to us and the Group's settlement to the shipping companies created substantial pressure on the Group's cashflow in Taiwan, as the Group had to settle large amount of freight charges of the shipping companies before being paid by these four customers. In view of the resources (including manpower and working capital) allocated to these four customers and their comparatively low gross profit margin, the Group therefore decided to strategically slow down the business with them in order to better manage the Group's working capital. The Group’s revenue generated from the provision of ocean freight forwarding services decreased from HK$261.5 million for FY2018 to HK$253.2 million for FY2019, which was mainly attributable to the decrease in revenue of HK$39.6 million in Taiwan primarily as a result of the complete cessation of the Group's business relationships with the four abovementioned customers, partially net off by (i) the increase in revenue of HK$22.5 million generated from Italy as a result of the improved service capacity brought by the relocation to a larger operation space which coincided with the Group's primary business expansion strategy as discussed above; and (ii) the net increase in revenue of HK$22.5 million contributed by the Group's ocean freight forwarding services in jurisdictions other than the PRC, Hong Kong, Taiwan and Italy, in particular as a result of the expansion of the Group's business in the U.S. The Group’s revenue generated from the provision of ocean freight forwarding services remained relatively stable at HK$78.9 million and HK$77.9 million for 3M2019 and 3M2020, respectively. Prospects: With the aim of further developing our business and continuing our growth, the group will implement the following strategies: • Enhancement of capability in distribution and logistics business and optimisation and expansion of our local presence • Expansion of our B2C services • Development and enhancement of recycling services • Continuing expansion and diversification of our customer base

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