Report Summary:
Date and Financial Year:
- The report is the Interim Report for 2024, covering the six months ended 30 June 2024.
- The report was released on 27 August 2024.
Key Business Review:
-
Distribution Business:
- Provides analytical instruments and lab equipment in the PRC.
- Revenue decreased by 81.1% to HK$3.1 million in HY2024 due to delays in equipment deliveries and hospital renovations.
- Signed sales contracts worth approximately HK$37.7 million, with more deliveries expected in the second half of 2024.
-
Supply Chain Business:
- Focuses on trading commodities, industrial, and consumer products.
- Recorded a significant revenue increase by 138.6% to HK$215.7 million from HK$90.4 million in HY2023.
- Gross profit in HY2024 was HK$6.1 million, with a gross profit margin of 2.8%.
Financial Overview:
- Revenue: Increased by 104.9% to HK$218.8 million due to the Supply Chain Business’s growth.
- Gross Profit: Rose by 244.4% to HK$6.2 million.
- Net Current Assets: Decreased to HK$124.2 million from HK$165.2 million as of 31 December 2023.
- Gearing Ratio: Increased to 93.8% as of 30 June 2024.
- No Dividends: The company did not declare an interim dividend for HY2024.
Special Activities for Profitability:
- The company is expanding its Supply Chain Business by entering into new contracts and actively exploring markets in PRC and Southeast Asia.
- Investment in green energy projects, including acquiring a 6.67% equity interest in Dayao Green Energy, a solar power generation company.
Investor Actions:
For Existing Shareholders:
- Hold: The company’s performance in the Supply Chain Business has shown positive growth, indicating potential for recovery and profitability.
- The Distribution Business, although facing delays, is expected to pick up in the second half of 2024 with the delivery of more equipment.
- The company’s investments in green energy could provide long-term growth opportunities.
For Potential Investors:
- Cautious Buy: The company shows growth potential, particularly in its Supply Chain Business. Its strategic investments in green energy projects could be a promising sign for future profitability. However, be mindful of the high gearing ratio and ongoing operational challenges in the Distribution Business.
Points of Note for Investors:
- The Supply Chain Business is the primary revenue driver for HY2024.
- The high gearing ratio at 93.8% suggests significant leverage, indicating a higher financial risk.
- The absence of dividends suggests that the company is prioritizing reinvestment in growth and operational activities.
- Active exploration of new markets in Southeast Asia and investments in green energy projects might support future profitability.
Disclaimer:
The above recommendations are based solely on the information provided in the company’s 2024 Interim Report. Investors should consider their own investment goals and conduct further analysis before making any investment decisions.
