Termbray Industries International
Clarendon House Church Street Hamilton HM11 Bermuda
Head Office and Principal Place of Business
Room 2107-8, 21 / F, COSCO Building, 183 Queen's Road Central, Sheung Wan, Hong Kong
Hong Kong motherboard
Tianli Industrial International (Group) Co., Ltd. is a Hong Kong investment holding company engaged in property business. The company's main business includes property leasing and property sales. Its properties include residential units in Yongsheng Square. The company mainly develops its business in Hong Kong and mainland China.
The Group is mainly engaged in property investment and development, oil field engineering and consulting services.
Property investment and development
As at 30 September 2015, the business environment for the Group's property investment and development business remained difficult. The overall performance of the property market in Guangdong Province in mainland China ("China") remains sluggish. The development of the Group's property projects is mainly in Guangdong Province and its business was not active during the period.
Yongsheng Plaza, a completed property for sale of the Group in Zhongshan City, Guangdong Province, has more than 440 residential units located in a three-storey shopping mall and car park. The property is located in a prime location with convenient transportation and a noble riverside view. The competition in Zhongshan property market is fierce. There is an ample supply of modern properties. The occupancy rate of continuously vacant shopping malls and residential units is lower than that of the same period last year. The management is committed to the marketing activities of these properties and strives to improve the operation of the mall. During the period, the rental income of the Group at Yongsheng Plaza decreased by approximately 6% compared with the same period last year. During the period under review, the Group sold one residential unit. As at 30 September 2015, 213 residential units of the Group were still unsold, of which 131 had been leased out.
Oil field engineering and consultancy services
On 1 April 2015 and 30 September 2015, the Group held a 30.47% interest in Baiqin, an associate company, through Tianli Natural Resources Limited, a wholly-owned subsidiary of the Group.
During the period under review, the Group has adopted the equity accounting method for the results of Baiqin Group (as an associate) for the six months ended 30 June 2015.
According to the interim report published by Baiqin, in the first half of 2015, the Baiqin Group recorded revenue of HK $416000000, an increase of about 18% compared with HK $353000000 for the six months ended June 30, 2014 ("first half of 2014"). The increase in revenue is mainly due to the overseas performance growth of Baiqin Group. Due to the increase in net financial costs, the net profit attributable to owners of Baiqin Group fell by about 39 per cent in the first half of 2015 to about HK $8200000 from about HK $13500000 in the first half of 2014.
On 24 September 2015, the Group signed a subscription agreement with Baiqin to subscribe for 28480000 new shares in consideration of approximately HK $22499000 in cash. The completion of the subscription is subject to the completion of certain conditions on or before the deadline (i.e. 30 November 2015), including the approval of the subscription Agreement at the extraordinary General meeting of Baiqin shareholders (the "extraordinary General meeting"). On 16 November 2015, the subscription Agreement was not approved by the Independent shareholders at the EGM. Baiqin is negotiating with the Group on the conclusion of a supplementary agreement to, among other things, extend the deadline.
The first half of 2015 was the most challenging period for Baiqin Group in the past decade. The slowdown in China's economic growth and weak international oil prices have led to strict cost-cutting plans for most of Baiqin's Chinese customers, leading to a reduction in overall exploration and production activity in the Chinese market. Baiqin Group made significant progress and recorded revenue growth from overseas markets (mainly in the Middle East) in the first half of 2015, weak international crude oil prices remain a major uncertainty considered by most international oil companies ("international oil companies"). Baiqin management expects most international oil companies to continue to implement cost-saving measures in response to weak oil prices.
To tide over the difficult times during the downturn in the oil field service industry, Baiqin implemented a number of risk mitigation measures in the first half of 2015, including streamlining the cost structure of all major service lines and reducing overall staff.
As a high-end integrated oil field service provider, Baiqin Group attaches great importance to technology and prides itself on launching innovative products and services in a number of oil field service fields. In the first half of 2015, Baiqin Group continued to seek to upgrade its technology and introduce new products to the market.
The global economy is gradually recovering from the global financial crisis that broke out in 2008. The United States and China are facing various challenges in the wake of the global financial crisis. Various factors, including the European debt crisis, the cessation of US government bond purchases and the process of US interest rate hikes, have had an unpredictable impact on the global economic recovery. In China, the central government has introduced a number of tightening monetary policies to cool its overheated property market. We believe that China will continue to play a key role in the future global economic recovery. The Group is confident that it can seize these opportunities and seize various opportunities to build its own unique advantages and develop new business in China.
Property investment and development have been the Group's main business in recent years, and the Group has invested substantial resources in identifying investment opportunities in the property market in the PRC, particularly in Guangdong Province. However, due to the fierce competition in the property market in Guangdong Province, the Group did not acquire any land or properties during the review period, but the Group will continue to look for investment opportunities in the PRC property market.
Looking forward to the second half of 2015, the management of Baiqin Group believes that the overall business environment of the oil field service industry will still be challenging. International oil prices fell further after rebounding at the beginning of the year, lowering market expectations for oil prices as a whole. Clearly, the market remains bearish on oil prices and believes that oil companies will continue to invest cautiously in capital.
As there are still many uncertainties in the current business environment for oilfield services, such as weak oil prices and the slowdown in China's economic growth, Baiqin management will continue to act cautiously in the second half of 2015 to seek business development.
We are cautiously optimistic about the future performance of Baiqin Group.
The Group will continue to operate its property investment and development business and engage in oil field engineering and consultancy services through its interest in the Baiqin Group. The Group will carefully explore various investment opportunities to maintain steady growth in the Group's long-term performance. On the other hand, the Group cannot ignore a number of potential risk factors that currently exist, such as fluctuations in oil and commodity prices, interest rate trends, global economic recovery and natural disasters. The Group is cautiously optimistic about its business in the coming year and is confident that it can enhance its competitiveness and create value for its shareholders.