Sunday, March 29, 2020
 
Columnist
Martin Hennecke
 
CHINA SEVENSTAR
HKEx Stock Code : 00245 
 
Corporate Profile
The Group is principally engaged in the retail and distribution of consumer products and provision of television advertising services in the PRC, and property holding and investment in Hong Kong.

Business Review - For the year ended December 31, 2012

The Group had entered into an advertising agency business in 2010, since signing the media management services agreement with the Guangdong Television on 31 December 2009. The media management services agreement granted the Group a three-year exclusive right of sale of all the advertising time of the satellite television channel (¡§GSTV¡¨) of Guangdong Television, which covers more than 20 programs for a total advertising air time of 114,000 minutes. After three years' continuous effort and active development of the Group, the Group has deepened its understanding towards to television advertising industry, established professional knowledge, improved management skill, accumulated experience through actual practices, introduced and trained professional talents to develop more strategic marketing plan. The turnover from advertising agency business in 2012 was approximately HK$553,070,000 (2011: approximately HK$500,870,000), accounting for over half of the Group's turnover and was the major source of the Group's revenue. Meanwhile, the Group also actively worked with a number of large and influential advertising companies in 2012. Apart from maintaining friendly and close relationship with existing business partners and clients, the Group also adopted active expansion strategy and actively seeked long-term business partners. Currently, the Group cooperates with various advertising companies, including Beijing Dentsu Advertising Co. Ltd., DDB Beijing Advertising Co. Ltd, GroupM (Shanghai) Advertising Co. Ltd, Leo Burnett Worldwide and Saatchi & Saatchi Great Wall. Cooperative arrangements involve a variety of sectors, including food, medicine, household products, health care products, medical, education institutes and vehicles etc. Meanwhile, the advertising customers of the Group include some world renowned brands such as Pepsi, Seven-Up, Mead Johnson, Ashly, China Mobile, Unicom and Shanghai Volkswagen.

GSTV is the number one television channel among all provincial satellite television stations in southern China, covering more than 70 major cities and over 8 hundred million people. The television programs of GSTV are diverse and filmed in a serious manner. They gained widespread recognition from the society and overwhelmingly positive response from the audience. However, due to the high advertising agency cost, which will affect the financial statement of the Group, the Group decided to change the cooperation model with Guangdong Television after the completion of the three years media management services agreement on 31 December 2012. The Group decided not to renew the media management services agreement and to continue the advertising agency business through subcontracting. The Group believes the change in cooperation model to subcontracting can further lower the operating cost and expand the Group's profit.

In addition, subject to the unfavorable factors in the media shopping industry, the Group decided to make appropriate adjustments on its business in the media shopping industry in order to provide a fast, high-quality, safe and reliable shopping services for customers. At the same time, the Group also strengthened the retail and wholesale business of kitchenware to TV shopping companies. In 2012, the revenue from retail and wholesale of kitchenware was approximately HK$52,445,000, accounting 8.5% of the Group's revenue. The Group will continue its investment in the retail and wholesale business of kitchenware and expect steady development in the future years.

Business Outlook - For the year ended December 31, 2012

During the period of Twelve Five-Year, China's advertising industry is facing a significant development opportunity. The steady growth of national economy, continuous improvement on income level and consumption power of citizens bring good economic foundations and market conditions for rapid development in advertising industry. Furthermore, according to the ¡§World Economic Outlook Report¡¨ published by the International Monetary Fund, it forecasts that China's economy will experience an 8.5% growth rate, which is 4.6% higher than its forecasts for global economic growth of 3.9%. From an international economic level, the high and rapid growth rate of China's economy drives the development of the advertising market and creates a better market prospect. Besides, a series of economic and social development strategy launched by the PTC brings a stronger policy support and system guarantee for the advertising industry. The ¡§12th Five-Year Plan of Advertising Industry¡¨ proposed by SAIC in May 2012 does not only proves the significant attention of central government toward the advertising industry, but also improves, strengthens and promotes the development of the advertising market as a whole. The Group will make use of its own advantages, professionalism and experience to seize the booming advertising market and the emerging opportunities. Together with the subcontracting cooperation model with the GSTV, it can further improve the quality of service of the Group and thus assisting the Group in seeking expansion opportunities for long-term profitability and development.

Regarding to the media shopping industry, the Ministry of Commerce is actively regulating the mode of operation in the industry. It is expected that the ¡§Media Shopping Industry Standards¡¨ will be implemented very soon to improve the efficiency of media shopping industry. The Group will pay close attention to the development of media shopping industry and grasp business opportunities to develop steadily in the market.

Source: China Seven Star (00245) Annual Results Announcement
Chairman Ni Xinguang Issued Capital (shares) 2,198M
Par Value HKD 0.01 Market Capitalisation (HKD) 204M
 
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