兴业控股(00132) - 2021 - 中期财报

Corporate Information This section provides essential corporate details of China Xingye Holdings Limited, including key personnel, registered offices, and professional advisors Corporate Information This chapter provides fundamental corporate information for China Xingye Holdings Limited (Stock Code: 132), covering board members, registered offices, and key professional contacts - The Chairman and Managing Director is Mr He Xiangming[5] - The company's principal place of business is located in Tsim Sha Tsui, Kowloon, Hong Kong[5] - The company's auditor is Heng Jian Certified Public Accountants Limited[7] Management Discussion and Analysis This section provides an overview and analysis of the company's financial performance, business segments, financial position, and future outlook Results & Business Review For the six months ended June 30, 2021, the Group's total revenue significantly increased by 114.6% to approximately HKD 205 million, while net loss narrowed by 27% to approximately HKD 13.09 million, despite strong revenue growth Performance Summary | Item | H1 2021 | H1 2020 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Revenue | approx HKD 205,207,000 | approx HKD 95,610,000 | +114.6% | | Net Loss | approx HKD 13,093,000 | approx HKD 17,939,000 | -27.0% | - Key drivers for revenue growth include the consolidation of Tiannuo Company, contributing approximately HKD 68.4 million, growth in financial leasing business adding approximately HKD 16.35 million, and the new wellness elderly care business from Taoyuan Welfare Center and Rehabilitation Hospital, generating approximately HKD 7.72 million[10][11] - Reasons for the limited improvement in net loss include reduced profit contribution from financial leasing due to increased competition and higher expected credit loss provisions, a loss of approximately HKD 9.82 million from Tiannuo Company due to technical upgrades and asset disposal, increased operating loss of approximately HKD 6.85 million from property investment due to the Dazao Industrial Park project being in its initial investment phase, and increased operating loss from the wellness elderly care business due to new project startup costs[13][14] Business Segment Analysis This chapter details the Group's operating performance across key business segments in H1 2021, highlighting revenue growth in financial leasing, property investment, big data, and wellness elderly care, alongside varying profitability and initial investment phase losses Financial Leasing Business Despite increased market competition and pandemic impacts, financial leasing operating revenue grew by 21.5% to HKD 92.53 million, but operating profit declined by 16.1% to HKD 35.56 million due to lower rates and a 4.4-fold increase in expected credit loss provisions Financial Leasing Performance | Item | H1 2021 | Year-on-Year Change | | :--- | :--- | :--- | | Operating Revenue | approx HKD 92,533,000 | +21.5% | | Operating Profit | approx HKD 35,560,000 | -16.1% | - The decline in operating profit was primarily due to proactive rate reductions amidst intense market competition and a significant 4.4-fold increase in expected credit loss provisions, amounting to approximately HKD 4.93 million[17][18] Investments in Properties and Industrial Parks Property investment total rental income increased by 36.6% to HKD 5.63 million, partly due to reduced rent relief compared to the prior year, while the partially completed Foshan Danzao New Energy Industrial Park generated approximately HKD 4.93 million in operating revenue - The occupancy rate of Zhongkong Building increased to 93.94%, with rental income rising by 39.3% to HKD 5.22 million[20][21] - Phase I of Danzao New Energy Industrial Park has approximately 180,000 square meters of leasable area, with about 73,000 square meters delivered by June 30, contributing approximately HKD 4.93 million in operating revenue to the Group[24][26] Big Data Business Big data business demonstrated strong performance, with operating revenue increasing by 59.6% to HKD 19.79 million and operating profit rising by 70.8% to HKD 1.78 million, as the Group continues to expand into industrial internet, smart healthcare, and smart energy Big Data Performance | Item | H1 2021 | Year-on-Year Change | | :--- | :--- | :--- | | Operating Revenue | approx HKD 19,794,000 | +59.6% | | Operating Profit | approx HKD 1,780,000 | +70.8% | Wellness Elderly Care Business Wellness elderly care business revenue significantly increased by 45.4 times to HKD 7.89 million following the takeover of Taoyuan Welfare Center and Rehabilitation Hospital, but operating loss expanded by 1.4 times to HKD 4.26 million due to initial investment in new ventures Wellness Elderly Care Performance | Item | H1 2021 | Year-on-Year Change | | :--- | :--- | :--- | | Operating Revenue | approx HKD 7,887,000 | +45.4 times | | Operating Loss | approx HKD 4,260,000 | +1.4 times | Hotel Business Hotel business showed recovery, with operating revenue increasing by 1.2 times to HKD 6.03 million and operating loss narrowing by 32.5% to HKD 3.22 million, driven by improved average occupancy rate and average room rate Hotel Performance | Item | H1 2021 | Year-on-Year Change | | :--- | :--- | :--- | | Operating Revenue | approx HKD 6,030,000 | +1.2 times | | Operating Loss | approx HKD 3,221,000 | -32.5% | | Average Occupancy Rate | 44.05% | +25.59 percentage points | Civil Explosives Business Tiannuo Company, acquired in September 2020, recorded a loss of approximately HKD 9.82 million due to technical upgrades, production line suspensions, and one-off asset disposal losses, with expected significant performance improvement post-renovation - Newly acquired Tiannuo (civil explosives business) recorded a loss of approximately HKD 9,818,000 due to technical upgrades and asset disposal[34][36] Profit from Investments in Associates Associate Nanhai Changhai Power Generation Co Ltd contributed HKD 31.59 million in profit to the Group, an 11.2% year-on-year increase, as significant increases in steam sales volume and unit price offset rising raw coal costs - Associate Changhai Power Generation contributed approximately HKD 31,590,000 in profit, representing an 11.2% year-on-year increase[35][37] Financial Position and Analysis As of June 30, 2021, the Group's total assets were HKD 6.91 billion, total liabilities HKD 4.93 billion, with the gearing ratio increasing to 71.3%, and despite net current liabilities of HKD 225 million, the Board considers liquidity positive due to specific loan terms, while facing RMB exchange rate risk Financial Position Summary | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | HKD 6,910,411,000 | HKD 6,105,371,000 | | Total Liabilities | HKD 4,927,955,000 | HKD 4,117,039,000 | | Gearing Ratio | 71.3% | 67.4% | | Net Current Liabilities | HKD 224,872,000 | HKD 66,332,000 | | Bank Balances and Cash | HKD 667,438,000 | HKD 798,263,000 | - The Board believes the Group's liquidity position remains positive despite net current liabilities, as approximately HKD 688 million of borrowings with 'repayable on demand' clauses are not expected to be fully repaid within one year under normal circumstances[39] - The Group faces exchange rate risk as its primary income and costs are RMB-denominated, holding substantial RMB monetary assets; a 5% fluctuation in RMB against HKD is estimated to impact annual profit by approximately HKD 8.17 million[42] Outlook The Group plans to focus on five core business segments: industrial park/material development and investment, finance, technology, wellness elderly care, and civil explosives, aiming to expand business areas and deliver stable shareholder returns through strategic initiatives like accelerating industrial park development, specializing in green financial leasing, driving profit with big data, establishing 'Taoyuan' as an industry benchmark, and completing Tiannuo's technical upgrades - The Group's future development will focus on five core segments: industrial park/material development and investment, finance, technology, wellness elderly care, and civil explosives[44] - Key strategic initiatives include: - Industrial Parks: Rapidly advance the construction and tenant recruitment for Danzao New Energy Industrial Park to become a primary profit source - Finance: Maintain specialization in green and environmental financial leasing to build core competitiveness - Technology: Develop big data industrial projects to create market-leading products and drive future profit growth - Wellness Elderly Care: Develop an 'integrated medical and elderly care' model, establishing the 'Taoyuan' brand as an industry benchmark - Civil Explosives: Expedite Tiannuo's technical upgrades and cost reduction to provide a solid profit base for the Group[44][47] Disclosure of Interests and Other Information This section covers disclosures regarding directors' and substantial shareholders' interests, employee information, dividend policy, and corporate governance practices Directors' and Substantial Shareholders' Interests This chapter discloses shareholdings of directors and substantial shareholders, noting Chairman Mr He Xiangming's 0.08% stake and Guangdong Nanhai Holdings Investment Co Ltd's 84.18% controlling interest, with no share options granted under the adopted scheme - Chairman Mr He Xiangming beneficially owns 1,441,000 shares of the Company, representing approximately 0.08% of the total share capital[51] - Substantial shareholder Guangdong Nanhai Holdings Investment Co Ltd, through its wholly-owned subsidiary Prize Rich Inc and convertible notes, holds an aggregate interest in 1,441,439,842 shares of the Company, representing approximately 84.18% of the total share capital[59][61] Employees, Dividend and Corporate Governance As of June 30, 2021, the Group's total employees increased to approximately 954, and the Board resolved not to declare an interim dividend; the company largely complies with corporate governance codes, though the Chairman and Managing Director roles are combined, a deviation deemed efficient for strategy execution, with plans to separate them when a suitable candidate is found - The Group's total number of employees increased from 527 at the end of 2020 to approximately 954 as of June 30, 2021[64][66] - The Board resolved not to declare an interim dividend for the six months ended June 30, 2021[65] - The Company deviates from Corporate Governance Code provision A.2.1, where the roles of Chairman and Managing Director (Chief Executive Officer) are held by the same individual, Mr He Xiangming; the Company believes this facilitates effective planning and execution and intends to separate these roles when a suitable candidate is identified[69][70][71] Condensed Consolidated Financial Statements This section presents the Group's condensed consolidated financial statements, including the statement of profit or loss, financial position, changes in equity, and cash flows Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2021, the Group's revenue from continuing operations was HKD 205 million, with a loss for the period of HKD 13.09 million, narrowing from HKD 17.94 million in the prior year, resulting in a basic loss per share of HKD 0.90 cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Item (HKD thousands) | H1 2021 (Unaudited) | H1 2020 (Unaudited) | | :--- | :--- | :--- | | Revenue (Continuing Operations) | 205,207 | 95,610 | | Gross Profit | 78,013 | 60,497 | | Loss Before Tax | (842) | (4,907) | | Loss for the Period | (13,093) | (17,939) | | Loss Attributable to Owners of the Company | (15,471) | (31,119) | | Basic Loss Per Share | (0.90 HK cents) | (1.82 HK cents) | Condensed Consolidated Statement of Financial Position As of June 30, 2021, the Group's total assets were HKD 6.91 billion, total liabilities HKD 4.93 billion, and total equity HKD 1.98 billion, with non-current assets significantly increasing to HKD 5.44 billion, while net current liabilities expanded to HKD 225 million Condensed Consolidated Statement of Financial Position | Item (HKD thousands) | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | | :--- | :--- | :--- | | Non-current Assets | 5,435,049 | 4,699,685 | | Current Assets | 1,475,362 | 1,405,686 | | Total Assets | 6,910,411 | 6,105,371 | | Current Liabilities | 1,700,234 | 1,472,018 | | Non-current Liabilities | 3,227,721 | 2,645,021 | | Total Liabilities | 4,927,955 | 4,117,039 | | Total Equity | 1,982,456 | 1,988,332 | Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2021, the Group's total equity slightly decreased from HKD 1.988 billion to HKD 1.982 billion, with equity attributable to owners of the Company increasing due to other comprehensive income offsetting the loss for the period, while non-controlling interests decreased due to dividend payments - During the period, equity attributable to owners of the Company increased by approximately HKD 5.97 million, primarily because other comprehensive income of HKD 21.44 million (mainly exchange gains) exceeded the loss for the period of HKD 15.47 million[164] - Non-controlling interests decreased by approximately HKD 11.85 million, mainly due to dividends of HKD 23.54 million paid to non-controlling interests[164] Condensed Consolidated Statement of Cash Flows In H1 2021, the Group reported a net cash outflow of HKD 438 million from operating activities and HKD 284 million from investing activities, offset by a net cash inflow of HKD 583 million from financing activities, primarily new borrowings, resulting in a net decrease of HKD 139 million in cash and cash equivalents to HKD 667 million at period-end Condensed Consolidated Statement of Cash Flows | Item (HKD thousands) | H1 2021 (Unaudited) | H1 2020 (Unaudited) | | :--- | :--- | :--- | | Net Cash Outflow from Operating Activities | (438,177) | (251,252) | | Net Cash (Outflow)/Inflow from Investing Activities | (283,794) | 10,464 | | Net Cash Inflow/(Outflow) from Financing Activities | 583,151 | (21,997) | | Net Decrease in Cash and Cash Equivalents | (138,820) | (262,785) | | Cash and Cash Equivalents at End of Period | 667,438 | 696,626 | Notes to the Condensed Consolidated Financial Statements This section provides detailed notes to the condensed consolidated financial statements, covering basis of preparation, segment information, borrowings, and related party transactions Basis of Preparation and Going Concern The financial statements are prepared under HKAS 34, and despite net current liabilities of approximately HKD 225 million as of June 30, 2021, the Directors believe the Group can continue as a going concern, as approximately HKD 688 million of borrowings with 'repayable on demand' clauses are not expected to be fully repaid within one year under normal circumstances - Despite net current liabilities of HKD 225 million, the Directors believe the Group can continue as a going concern, as approximately HKD 688 million of borrowings are not expected to be repaid within one year under normal circumstances[188] Revenue and Segment Information This chapter details the Group's revenue sources and segment performance, with total revenue of HKD 205 million primarily from financial leasing, civil explosives, and big data, noting financial leasing as the largest operating profit contributor while property investment and civil explosives incurred significant losses, with most revenue and assets concentrated in Mainland China Business Segment Performance | Business Segment | Revenue (HKD thousands) | Operating Profit/(Loss) (HKD thousands) | | :--- | :--- | :--- | | Big Data Business | 19,794 | 1,780 | | Civil Explosives Business | 68,404 | (9,818) | | Financial Leasing | 92,533 | 35,560 | | Hotel Business | 6,030 | (3,221) | | Property Investment | 10,559 | (20,641) | | Wellness Elderly Care Business | 7,887 | (4,260) | | Total | 205,207 | (600) | - The Group's revenue and non-current assets are highly concentrated in Mainland China, with revenue from Mainland China amounting to HKD 205 million, representing 99.8% of total revenue[237] Borrowings As of June 30, 2021, the Group's total borrowings increased from HKD 2.56 billion to HKD 3.25 billion, primarily comprising bank borrowings of HKD 2.82 billion, with HKD 2.70 billion being secured, and approximately HKD 775 million classified as current liabilities due to 'repayable on demand' clauses Borrowings Breakdown | Borrowing Type (HKD thousands) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Asset-backed Securities | 151,999 | 192,246 | | Bank Borrowings | 2,820,110 | 2,128,019 | | Loans from Direct Holding Company | 90,000 | 90,000 | | Other Loans, etc | 187,876 | 145,680 | | Total Borrowings | 3,249,985 | 2,555,945 | - Approximately HKD 2.70 billion of total borrowings are secured by the Group's investment properties, plant and equipment, finance lease receivables, and bank deposits[334] Related Party Transactions During the reporting period, the Group engaged in various related party transactions, including a HKD 90 million loan from direct holding company Prize Rich Inc and an extension agreement for HKD 166 million convertible notes with the same entity, alongside loans from non-controlling interests and procurement from Tiannuo Company's major shareholder - The Group obtained an unsecured loan of HKD 90 million from its direct holding company, Prize Rich Inc, at an annual interest rate of 3%, extended until December 2022[394] - The Group entered into an agreement with Prize Rich Inc to extend the maturity date of convertible notes with a principal amount of HKD 166 million by five years to October 2024[394] - The Group procured approximately HKD 1.64 million worth of cartons from a major shareholder of Tiannuo (a subsidiary), which was classified as an exempted connected transaction[396] Discontinued Operation Due to the impact of the COVID-19 pandemic on the operating environment, the Board decided to discontinue the Group's T-BOX® business on July 1, 2020; this business recorded a profit of HKD 3,000 in H1 2021, compared to a loss of HKD 126,000 in the prior period, with no related assets or liabilities classified as held for sale - The Group discontinued its T-BOX® business on July 1, 2020, which recorded a profit of HKD 3,000 during the reporting period[408][411]