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CHINA INV HOLD (132)
Company Profile

Principal Activities

The principal activities of the Group are big data business, property development and investment, financial leasing, hotel operation, investment holding and wellness elderly care business.

Latest Results

The Group's profit attributable to shareholders for the year ended 31-12-2019 amounted to HKD 68.61 million, an increase of 61.9% compared with previous corresponding period. Basic earnings per share was HKD 0.0401. No dividend declared. Turnover amounted to HKD 161.1 million, an increase of 1.03X over the same period last year, gross profit margin down 9.2% to 43.6%. (Announcement Date: 31 Mar 2020)

Business Review - For the year ended December 31, 2019

For the year ended 31 December 2019, the Group recorded total revenue of HK$161,107,000, another significant increase of 102.5% year-on-year. Such significant increase was attributable to the increases in operating income of approximately HK$55,310,000 and HK$6,824,000 respectively from the growing financial leasing business and the newly developed big data business, as well as an increase of approximately HK$13,278,000 in the income from disposal of development properties as a result of further sale of shopping mall units in block B of Shantou Commercial Plaza during the year.

In addition to the new profit contribution from the financial leasing business mentioned above, the Group recognised income of approximately HK$78,819,000 from the reversal of payables for convertible notes which became due in 2007 but have exceeded the effective limitation period of prosecution, and increase in fair value of financial assets at fair value through profit or loss amounting to HK$41,015,000. Moreover, the Group received other incomes totaling approximately HK$74,288,000 including government subsidies for relevant projects in relation to its development of the industrial park in Danzao. After deducting financing costs including interest expenses incurred by the development of the industrial park in Danzao and other projects and investments, depreciation of land use right assets and other factors, the Group still posted net profit of approximately HK$79,912,000 for the year, representing a significant increase of 43.2% year-on-year.

FINANCIAL LEASING BUSINESS

In view of the increasing economic penetration of financial leasing driven by its growing demand from sustainable growth in China’s economy and diversified financing models, the Group remains positive on the outlook of financial leasing sector in China based on rational risk management, despite the pressure from heightened bad debt risks amid the economic impact from the Sino-US trade tensions. Against this backdrop, the Group has been engaged in the operation and management of financial leasing business and gradually accumulated experience through Guangdong Financial Leasing Co., Ltd.*(廣東粵科融資租 賃有限公司), a 25%-owned associate of the Group, and established a wholly-owned subsidiary Canton Risen Financial Leasing Co., Ltd.*(廣東粵盛科融資租賃有限公司)to further develop related business, which initially intends to focus on business areas including public utilities, environmental protection and energy conservation, new energy and telecommunication projects. Thanks to its rapid growth during the year, the segment recorded operating income of approximately HK$80,531,000, representing a significant increase of 2.2 times year-on-year with operating profit of approximately HK$35,457,000 which is expected to fuel the Group’s future earnings growth.

Furthermore, given the COVID-19 outbreak in early 2020 (the “coronavirus outbreak”), the Group carried out a series of inspections on its financial leasing customers to understand and track the fallout on delayed production resumption, product sales and collection of receivables, in a bid to mitigate adverse impact of the epidemic on relevant asset quality. Based on our current elevation, we believe that the existing customers are able to draw upon their sound fundamentals including stable cash flows, an indicator to resilience against the epidemic once it becomes under control, to survive the challenges with our aid at present. In this regard, the Group sees a sound picture of asset quality, and will keep a close eye on the assets under a well-established emergency response plan.

PROPERTY INVESTMENTS

The Group’s overall rental income in 2019 was approximately HK$9,879,000, representing an increase of 45.7% year-on-year. As the ancillary facilities at China Holdings Building in Foshan and its surroundings were increasingly mature, the overall occupancy rate of China Holdings Building increased to approximately 90% and the rental income for the year amounted to approximately HK$8,143,000, representing a significant increase of 71.22% year-on-year. As a majority of the properties of Shantou Commercial Plaza were sold out last year, its rental income for the year decreased year-on-year by 26.61% to approximately HK$1,023,000. Huizhou International Commerce Building registered no rental income for the year as all its remaining properties were sold out early last year. As for the properties in Hong Kong sales, the rental income increased by 15.75% year-on-year to HK$713,000 for the year, as a result of higher rent rate after the lease renewal.

In respect of property sales, the Group successfully completed the disposal of shopping mall units in block B of Shantou Commercial Plaza, cashing out a total of approximately HK$30,378,000. It posted a slight loss of approximately HK$524,000 from disposal of development properties for the year, as the disposal was made at a consideration slightly lower than book value.

With its solid position in the property development and investment sector and by capitalizing on experience in such fields, the Group established Guangdong Sino Rock Tyco Construction Co., Ltd.*(廣 東中岩泰科建設有限公司)(“Sino Rock Tyco”), a 72%-owned joint venture of the Group, to develop the industrial park in Danzao Town, Nanhai District, Foshan City, the PRC, which is designed to house the main and spare production plants, pilot base, research and development center and ancillary facilities for new energy vehicles. In the first half of the year, we completed leasing the land right of approximately 1,400 Chinese acres for industrial park use, and commenced the site levelling. Subsequently, we will implement construction stage by stage depending on the actual situation. Meanwhile, we completed our plan on the acquisition of the Danzao Xianhuwan property, which was expected to be reconstructed into a research and development center and ancillary facilities for the park. We completed reconstruction of the exhibition hall in October 2019, while for other parts, reconstruction and fitting-out design were completed and the construction process will be started soon. The primary construction work for the industrial park is expected to be completed in 2020.

After the reporting period, the coronavirus outbreak in early 2020 might weigh on and bring down the Group’s rental income amid potentially depressed economic sentiment. In addition, labor shortage due to the delayed production resumption as a result of epidemic control should affect the development and construction paces of our industrial park project in Danzao Town, leading to a potential delay in its completion schedule. Meanwhile, the epidemic may also drag down economic environment, thus mounting pressure to the industrial park in lease solicitation. The Group will make every effort in epidemic control, and take countermeasures to minimize its impact on operation and construction.

WELLNESS ELDERLY CARE BUSINESS

With the experience in building a smart platform for the management of integrated elderly care services in Nanhai District (the “Smart Elderly Care Services Platform”), Guangdong Yibaijian Comprehensive Health Technology Ltd.*(廣東壹佰健大健康科技有限公司)(“Guangdong Yibaijian”), a 100%-owned subsidiary of the Group, planned to gradually expand the exemplary Smart Elderly Care Services Platform to other towns in Nanhai District, aiming to develop platform in the surrounding areas of Foshan and even within and outside Guangdong Province. During the year, we proactively promoted the development of the Smart Elderly Care Services Platform in Shuangyashan, Heilongjiang, and helped Shuangyashan Civil Affairs Administration to complete inspecting the platform, which laid a solid foundation for the initiative of “walking out of Nanhai and facilitating surrounding areas”. On 26 November 2019, the platform in Shuangyashan passed initial examination. Besides, the Group will further optimize the Smart Elderly Care Services Platform and ensure more efficient management with IT-based approaches. In addition, the Group will explore various value-added services for health management, such as referral and quality supervision of home elderly care services and relief, to diversify sources of operating income. The segment recorded operating income of approximately HK$7,877,000, representing an increase of 78.8% year-on-year, and turned profitable with insignificant operating profit of approximately HK$1,088,000 contributed to the Group.

At the same time, in accordance with the “Nanhai District Inclusive Elderly Care Service System” approved by the Nanhai District Government of Foshan City, the Group accelerated the restructuring and management transfer of the Nanhai District Social Welfare Center. In the first half of the year, we established a wholly-owned subsidiary Guangdong Taoyuan Comprehensive Health Operation Co., Ltd.* (廣東桃苑大健康產業運營有限公司)for investment, construction and operation of elderly care service system throughout the district. The Group also cooperated with Jiujiang Town to launch the first townlevel elderly care service project in Nanhai District to manage investment and operation of Jiujiang Taoyuan Nursing Home*(九江桃苑頤養院). Despite numerous difficulties, Jiujiang Taoyuan Nursing Home was completed in an efficient manner, commenced operation on 26 June 2019 and began to offer quality service for elderly people from 1 July 2019. However, as no income was generated at the initial investment stage, it recorded an operating loss of approximately HK$4,139,000.

After the coronavirus outbreak in early 2020, we stepped up our epidemic control efforts to minimize safety risk to the epidemic. In particular, various epidemic control measures were launched according to actual situation at Jiujiang Taoyuan Nursing Home, to ensure quality elderly care services for elderly people, a high-risk vulnerable group susceptible to the epidemic.

BIG DATA BUSINESS

In February of last year, the Group established a wholly-owned subsidiary Guangdong Sinsing Technology Ltd.*(廣東鑫興科技有限公司)to engage in industrial Internet project construction, smart city construction, big data operation and management and other businesses. Remarkable results were achieved in the year, as evidenced by the independent research and development of Industrial Internet Identification Public Service Platform. Equipped with SSL server credentials, the platform is able to provide identification application enterprises with reliable identification registration and resolution services, product tracing and demonstration, to facilitate business promotion and expand the scope of business. Besides, the proprietary Smart Elderly Care Services Platform co-developed with our fellow subsidiary Guangdong Yibaijian owns independent technical capability, enabling us to independently develop other projects without relying on other technological service providers and hence laying a solid foundation for growth upon our enhanced technical research and development capability. Also, we were recognised by the industry with the 2018 Outstanding Contribution Award from the Alliance of Industrial Internet. The segment recorded operating income of approximately HK$18,881,000, representing an increase of 56.6% year-on-year, with insignificant net profit of approximately HK$29,000.

HOTEL BUSINESS

Guilin Plaza (“Guilin Plaza”) stepped up promotion to exhibition customers, marketing through online platforms and offline marketing focusing on overseas tourist groups, tapped into new markets for more customers, and made the system more sensitive to market fluctuations and more quick and flexible for pricing adjustment. We took initiative to develop value-added services based on hardware with a view to maximizing operating income, seeking to expand the business portfolio. The average occupancy rate improved by 2.89% year-on-year, reaching 59.81%. Despite a 2.13% drop in average room rate, the operating income increased by 2.2% year-on-year to approximately HK$13,519,000, and the operating loss narrowed by 8.5% year-on-year to HK$5,504,000.

After the reporting period, China’s tourism industry suffered from the coronavirus outbreak in early 2020, particularly the city-wide quarantine policy, travel restrictions adopted by a number of cities in China, and public concerns about the epidemic. As a result, guest room marketing of Guilin Plaza was suspended until late March 2020. Even if the hotel reopens, the Group is not optimistic about its income in 2020.

In order to diversify businesses related to hotel operations, the Group established China Select Small Hotel Union Limited, a 51%-owned subsidiary of the Group, with T-Box Union (China) Financial Holdings Investments Limited and T-Box Union Investments Limited, in an effort to provide integrated service in the homestay inn and small hotel industry, including the provision of quickly-constructed T-BOXR mobile homes with zero-sewage discharge environmental-friendly systems, direct sale management software and financing solutions. Based on the future-oriented interdependent business model and with the dawn of the 5G era, the year witnessed the establishment of Duoduo Meisu*(多多美宿直賣), a domestically leading direct sale platform for scenic homestay inns, with the online market promotion and brand awareness work under way. As the business was still in initial promotion, it posted an operating loss of approximately HK$1,506,000, narrowing by 58.6% year-on-year.

Business Outlook - For the year ended December 31, 2019

With experience accumulated during the course of transformation and upgrade over past years, the Group has generally set its focus and direction for development. To seize opportunities of market development, the Group will strive to adjust and optimize its businesses, shifting to segments such as industrial parks/ property development and investment, financial service, technology and wellness elderly care. In respect of the property development and investment, with our solid position in the property development and investment sector and by capitalizing on experience in such fields, the Group will continue to develop the new energy industrial park in Danzao Town, Nanhai District, Foshan City, China. In respect of the financial service sector, drawing upon the increasing demand for finance lease amid China’s economic growth and changes in financing models and in view of the fallout of the Sino-US trade war and the coronavirus outbreak, the Group will further develop the financial leasing business and intends to focus on business areas including public utilities, energy conservation and environmental protection, new energy and telecommunication projects, while being cautious to risk management. In respect of the technology sector, by taking advantages of the opportunities arising from the new smart city construction plan in Nanhai District, the Group will continue its research and development efforts in the Big Data industry projects on an independent basis, as a main driver to our profit growth in the future. In the wellness elderly care sector, based on the Smart Elderly Care Services Platform, the Group will expand to cover other wellness elderly care services. After establishing the first institutional elderly care project in the first half of the year, the Group will continue to head in the direction of institutional elderly care business and the development of a 3-tier elderly care system comprising institutes, communities and households in Nanhai District. Meanwhile, the Group will, through its joint ventures and associates, participate and invest in power generation, civil explosives, and other high-growth industries in the PRC.

With the aforesaid business development directions, the Group will be able to expand its business and gradually achieve the goal of increasing and maintaining stable returns for shareholders. >

Moreover, addressing the coronavirus outbreak in early 2020, the Group will take decisive countermeasures to minimize the impact on operation and development in addition to effective epidemic control to mitigate safety risk.



Source: China Investments H (00132) Annual Results Announcement

Financial Highlights
(HK$m)
2019
Final
Turnover 161.11
Operating Profit 138.72
Pre-Tax Profit/Loss 114.04
Net Profit/Loss 68.61
Earnings Per Share(cents) 4.01
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Dividends
Year End Ex-Date (HK$)
Amount
Chairman and Executive Director
He Xiangming
Financial Ratios
2019
Final
Return On Asset(ROA) 1.33
Return On Equity(ROE) 4.02
Net Profit Margin 42.59
Gross Profit Margin 86.10
Asset To Equity Ratio 301.74
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Financial Reports

2019 ANNUAL REPORT

Interim Report 2019
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21 May 2020
PROXY FORM
24 Apr 2019
PROXY FORM
24 Apr 2019
PROXY FORM
17 Apr 2019
PROXY FORM
08 May 2018
PROXY FORM
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Quote
HSI: 24,377.43 -154.19
0.48
0.03 (6.7%)
As of16:10 10 Aug 2020
Open: 0.47 52Wk High: 0.52
Day High: 0.48 52Wk Low: 0.18
Day Low: 0.45 P/E: 11.97
Prev. Close: 0.45 Yield: 0.00%
Volume: 186K
Mkt Cap: 770.55M
Turnover: 86.46K NAV: 0.645
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Unit 501, Wing On Plaza, 62 Mody Road, Tsimshatsui, Kowloon, Hong Kong
Web: http://chinainvestments.tonghaiir.com

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