Public company info - Shuoao International Holdings Limited , 02336.HK
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Shuoao International Holdings Limited, 02336.HK - Company Profile
Chairman Cao Jianguo
Share Issued (share) 1,816,000,000
Par Currency Hong Kong Dollar
Par Value 0.01
Industry Semiconductors
Corporate Profile Business Summary: The Company is principally engaged in the sale of metals and semiconductors and related products business, the development and provision of electronic turnkey device solutions business, and the property development business. Performance for the year: For the year ended 31 December 2019, the Group recorded revenue of HK$476,042,000, representing a decrease of 51% as compared with the same period in 2018 (2018: HK$976,993,000), and gross profit decreased by 37% to HK$7,448,000 as compared with the same period in 2018 (2018: HK$11,749,000). Basic loss per share was HK0.60 cent (2018: HK0.03 cent). Business Review: Sale of Metals The Group has put most of the efforts on metal trading business during the year under review by leveraging on the market experience of Hailiang Group to sell metals such as copper and nickel to customers since 2015. This segment recorded segment profit of HK$935,000 during the year ended 31 December 2019 (2018: HK$4,871,000), and segment margin of 0.2% (2018: 0.5%), suffering from the unfavourable trade environment worldwide. The electronic market in China remains highly competitive and volatile as impacted by continuing overcapacity. The Group’s business of sale of semiconductors and related products encountered weak demand from business partners and customers and did not generate any revenue for the Group in 2019. Facing this adversity, the Group focused on the more profitable metal trading business. Due to market downturn, metal trading business has recorded revenue of HK$418,048,000 (2018: HK$911,385,000), which represented approximately 88% of the Group’s total revenue for the year ended 31 December 2019 (2018: 93%). After thorough operation and credibility evaluation, the Group granted credit term to selected customers with continuous monitoring. As the Group maintains strict credit controls on its customers in order to protect the interest of the Group and its stakeholders, it considers that the risks associated with reliance on these major customers are minimal. Development and Provision of Electronic Turnkey Device Solutions The results of the Group’s business of development and provision of electronic turnkey device solutions was mainly driven by the results of a subsidiary in the PRC which is 50.21% owned by the Group and is principally engaged in the manufacturing and sale of microcontrollers for home electrical appliances. With the enhanced sales efforts and management, this segment achieved segment revenue of HK$57,994,000 (2018: HK$62,970,000), representing a decrease by 8% when compared with the corresponding figure in 2018. Segment loss of HK$782,000 (2018: HK$1,316,000) was resulted from the unfavourable business environment. Property Development Property development in Australia going forward The Group conducts its business of property development by establishing a property development operation in Australia. For the year ended 31 December 2019, the Group did not generate any segment revenue (2018: HK$2,638,000) and segment loss of HK$2,093,000 (2018: HK$3,242,000) were recorded. The decrease in segment loss was mainly attributable to the reduction of administrative expenses during the reporting period. As at the date of this annual report, the Group has not yet obtained the relevant development consents in relation to a land in Australia acquired by the Group in February 2015 (the “Site”) due to the fact that the rezoning of the Site (and surrounding area) is under review by local council. Details of the relevant agreement in relation to the acquisition of the Site and the delay in development are set out in the circular and the announcement of the Company dated 24 January 2015 and 30 November 2015, respectively. In 2015, the Department of Planning and Environment of the New South Wales Government of Australia (the “Department”) issued the draft precinct plans (the “Draft Plans”) for the region in which the Site is located indicating a willingness to rezone the Site to allow for residential use. After the public consultation conducted in 2016, the Department decided to revise the Draft Plans and the draft Sydenham to Bankstown Corridor Strategy (the “Corridor Strategy”), indicating support for a change of zoning allowing residential use. Due to a prolonged transitional period of government reform caused by the parallel State and Federal election and amalgamation of local councils, the revised Draft Plans and the revised Corridor Strategy were only completed and released for public consultations in July 2017. The final Corridor Strategy was reported and endorsed by Canterbury Bankstown Council (the “Council”) in May 2018. Due to the significant size of the Site and the uniqueness of the employment zoning, the Council will require further preparation of a planning proposal and amendments to the Canterbury Local Environment Plan 2012 and Canterbury Development Control Plan 2012 prior to any potential development consent being granted, should that consent be for residential use. The Group has continued to take a proactive approach in advocating for the rezoning of the Site by actively meeting the Department and the Council, and the newly elected Mayor. In addition, the Group is exploring the possibilities of alternative development strategies and plans that are permitted within the current zoning in order to fasten the approval process with the assistance of various professional parties. Given the close proximity of the Site to the Canterbury Public Hospital, and the State government’s announcement of funding for the rejuvenation of that hospital, the Council and State government have both indicated support for a health use on the Site, which is permissible within the current zoning and achieves Councils’ desire of employment usage on the Site. The rezoning and development consent would be expected to be within a 12 to 18 month timeframe after the submission of a planning proposal. The Company will make further announcement in relation to the updates on the Site as and when appropriate pursuant to the Listing Rules. Investment in the Jinjiang Shares On 25 July 2016, Sable International Limited, an indirect wholly-owned subsidiary of the Company, applied for the subscription of 21,431,000 ordinary shares of China Jinjiang at an aggregate subscription price of SGD19,287,900 (equivalent to approximately HK$111,727,000). The quotation of and dealing in the Jinjiang Shares on the Main Board of the Singapore Exchange Securities Trading Limited commenced on 3 August 2016. Details of the subscription are set out in the announcement and the circular of the Company dated 25 July 2016 and 25 October 2016, respectively. As at 31 December 2019, the Group held approximately 1.47% of the total issued share capital of China Jinjiang (31 December 2018: approximately 1.48%). The Jinjiang Shares are recorded as financial assets at fair value through other comprehensive income, and are measured at fair value at the end of each reporting period. The fair value of the Jinjiang Shares stood at HK$74,269,000 as at 31 December 2019 (31 December 2018: HK$56,326,000), accounting for approximately 15.4% of the Group’s total assets (31 December 2018: 11.8%). During the year under review, an unrealised fair value gain on the investment in the Jinjiang Shares of HK$17,943,000 was recorded under other comprehensive income in the consolidated statement of profit or loss and other comprehensive income of the Group for the year ended 31 December 2019 (2018: unrealised fair value loss of HK$29,431,000), which were mainly attributable to (i) an approximately 30.4% increase in the market price of the Jinjiang Shares (2018: approximately 32.8% decrease) since the beginning of 2019; and (ii) an exchange gain due to an approximately 1.1% appreciation of Singapore dollars against Hong Kong dollars (2018: approximately 2.2% depreciation). It is the Group’s business strategy to select attractive investment opportunities to strengthen and extend its business scope and to maintain prudent and disciplined financial management to ensure its sustainability. The Group is optimistic about the prospects of China Jinjiang, the principal business of which includes waste incineration and power generation in the PRC, which involves burning of municipal solid waste at high temperature, and, during the process, the heat energy generated is transformed to high temperature steam to initiate the rotation of turbines for power generation. Having considered the financial performance, business development and prospects of China Jinjiang, the Group believes that the investment is attractive and will enable the Group to generate sustainable and attractive returns for the Shareholders. Save as disclosed above, the Group did not make any significant investments or acquisitions during the year ended 31 December 2019. Prospects: Affected by the outbreak of novel coronavirus and global trade protectionism, global economic activities become more complex and severe in 2020, the metal trading and electronic industry was adversely affected in general. The Group is seeking to alleviate such adverse impact, including but not limited to maintaining contact with customers and suppliers to adjust time schedules favourable for production and goods delivery, while at the same time implementing cost control measures to reduce the impacts of the epidemic on the operations and financial performance of the Group. In the long term, the Group will continue to pursue development of its project in Sydney, Australia to enhance the growth prospect of the Group. In the meantime, the Group is continuously strengthening its sales and marketing force in relation to the metal trading business with emphasis on serving the needs of different customers in different geographical markets. The Group will continue to develop its existing businesses and will also continue to proactively seize new business opportunities with bright prospects and good returns to create value to the Shareholders.

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