Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
OPES ASIA
HKEx Stock Code : 00810 
 
Corporate Profile
Principally engaged in investment in listed and unlisted companies established in the People's Republic of China (the ˇ§PRCˇ¨), Hong Kong, Australia, Macau and the Cayman Islands while it has substantial operations in Hong Kong, in order to achieve medium to long term capital appreciation.

Business Review - For the year ended December 31, 2012

The Company is an investment company pursuant to the Chapter 21 of the Rules Governing the Listing of Securities on the Stock Exchange (the ˇ§Listing Rulesˇ¨). During the year under review, the Group remains principally engaged in listed investments in Hong Kong and in other main stock markets around the world and also in unlisted companies.

The losses attributable to the shareholders for the year ended 31 December 2012 represented:

1) the net investment income from securities of approximately HK$0.93 million (2011: HK$2.65 million);

2) the convertible bond interest income of approximately HK$3.70 million (2011: HK$Nil);

3) the unrealised fair value losses on financial assets at fair value through profit and loss of approximately HK$12.54 million (2011: HK$20.61 million);

4) the impairment loss on available-for-sale financial assets of HK$2.64 million (2011: HK$9.36 million);

5) the fair value decrease in conversion option in respect of the convertible bond receivable of approximately HK$3.89 million (2011: HK$Nil); and

6) the operating expenses of approximately HK$27.32 million (2011: HK$15.63 million). The operating expenses was increased in line with the expansion of the business.

Business Outlook - For the year ended December 31, 2012

Looking forward to the global economy, the United States will once again become the backbone of the promising recovery of global economy; the European debt crisis over Europe is gradually dissipating; the radical economic policies implemented by Japan may perhaps mark the beginning of its further economic recession. The emerging countries have become the signs of vulnerability and risk, unlike in the past in which they were signs of the global economic growth engines.

The United States, which had gradually come out from the financial crisis after striving relentlessly, is considering the QE (quantitative easing) exit, this will nevertheless trouble the global emerging economies. The United States' QE exit may not occur this year, but people's expectation will tumble the flow of global capital funds, thereby resulting capital pull-out from the emerging countries and thereby likely to cause the risk of global financial turmoil. As a leader of the emerging economies, China will no doubt become the focus of attention. It is expected that many financial institutes will give a negative outlook on China economy. We also concur that, since October 2008, as driven by the rapid growth of China economy with accumulating financial leverage, currently, its aggregate social financing capacity has reached an astonishing scale (aggregate social financing amount increased to RMB85 trillion from RMB27 trillion), and with the current economic growth slowing down, enormous financial risk may occur.

While recognising the risk of the China economy, we also noticed two aspects:

Firstly, the sustainability of the China economy. The imbalance regional economic development in China and the huge population consumption spending will provide a buffer for its economic downturn, and this will escalate the sustainability support of its economy.

Secondly, the trend of its economic structure transformation. The China economy is at its transformation stage, and downward economic development trend is inevitable. It is expected that in next three years, China's GDP growth rate will gradually drop from 9% to 7.5% and then to 6.5% and eventually to 6% or even 5%, however, it does not imply the China economy will collapse. Although the decrease in GDP growth rate will exert enormous pressure in employment, however, the fact is it may be true at the early stage, and with deepening economic structural adjustments, small and medium-sized enterprises and service sectors will enjoy more development opportunities, which in turn will help facilitating employment.

For investment market, from our study of the development history of the United States stock markets, it has revealed that, when GDP growth is entering into a time period of moderate growth, it will generate more opportunities in the investment markets. Of course, such deceleration in economic growth and economic structural transformation in China will cause a setback to those industries, such as the cyclical industries, that rely on GDP high growth originally. However, at the same time, this will bring tremendous opportunities for those industries, such as medical, education, pension and internet that represent the future development direction of China. We will continue to seek promising investment targets under such direction.

2013 is the first year of financial deleveraging of the China economy, for which those enterprises and sectors that have applied high leverage will inevitably be exposed to tremendous bombardment. We will pay more attention to the possible liquidity risks that may arise from such situation, thereby trying to avoid those risks brought by the economic fluctuations as a consequence.

Under the principle of prudence, the Company will closely monitor the changes in various marketing factors, in particular the possible policy adjustments of the United States and China. This will benefit us in exploring new investment opportunities and grasping investment timing, and timely assessing and appropriately adjusting its existing investment portfolios to strive to improve investment performance to achieve the long-term value-added goal of the Company's investment portfolio in assets.

Source: Opes Asia Dev (00810) Annual Results Announcement
Chairman N/A Issued Capital (shares) 299M
Par Value HKD 0.01 Market Capitalisation (HKD) 73M
 
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