Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
DRAGON CROWN
HKEx Stock Code : 00935 
 
Corporate Profile
Principally engaged in terminal storage and handling of liquid chemicals.

Business Review - For the year ended December 31, 2012

Dragon Crown is a leading PRC integrated terminal service provider that specialises in the storage and handling of liquid chemical products through three terminals in Nanjing, Tianjin and Ningbo. Over the years, the Group has strategically set up jetties and tank farms (ˇ§Terminalsˇ¨) along coastal areas to capture the immense demand from the petroleum and chemical industries in China. Dragon Crown offers comprehensive terminal and storage services, including loading and unloading facilities at its self-owned jetties, liquid chemical storage at its tank farms, and delivery to and from customer's factories through dedicated chemical pipelines or other transportation methods.

During the year ended 31 December 2012, the throughput volume of liquid chemical products handled by the Nanjing, Tianjin and Ningbo terminals reached 1,717,700 metric tonnes, 67,100 metric tonnes and 329,300 metric tonnes (2011: 1,588,200 metric tonnes, 222,300 metric tonnes and 479,000 metric tonnes) respectively, with combined throughput volume amounting to 2,114,100 metric tonnes (2011: 2,289,500 metric tonnes).

The Group's flagship terminal is located in the Nanjing Chemical Industry Park and is also the primary source of revenue and profit, accounting for approximately 96.6% of the Group's total profit (2011: 92.7%). The Nanjing Chemical Industry Park is one of the world's leading production bases for a wide range of chemicals and home to some of the leading chemical producers and users. The Group's major customer, Celanese Corporation (NYSE:CE), a world's leading producers of acetyl products, is also situated in the industrial park and accounted for 88.4% of the Group's total revenue during the year ˇV equivalent to HK$227.8 million (2011: HK$236.0 million).

The construction of Nanjing terminal Phase III is on schedule, and will ultimately help further expand the Group's throughput capacity to 4,400,000 metric tonnes per year. The Group has also signed a construction agreement on 6 February 2013 to build a new cryogenic ethylene tank for the storage and handling of deep cooled liquid at -104 degree Celsius and needs specific techniques to build and maintain the tank. The tank has a storage capacity of 20,000m3, construction of which will commence in the first quarter of 2013 with operation expected to start by the third quarter of 2014.

The Ningbo terminal retained a stable profit during the year. For the Tianjin Terminal, business was temporarily affected earlier in the year by the construction works of the local government along the inner river of Tianjin Bin Hai Xin Qu. Construction work was completed in May 2012 and the Group considers the event as a one-off incident. Normal operation has been resuming in the second half of 2012, and a volume rebound is expected in 2013.

Dragon Crown continued to maintain a healthy financial position, with total assets of HK$1,042.0 million (2011: HK$1,092.5 million) and total equity of HK$958.6 million (2011: HK$894.8 million). The Group is in a strong financial position with cash on hand of HK$265.7 million (2011: HK$403.2 million) and the gearing ratio decreased to 1.2% (2011: 14.3%) which was due to the repayment of bank loans in the year.

The Group entered into a memorandum of understanding with Dow Chemical China Holdings Pte. Ltd. (ˇ§DOW') in 2011 to establish chemical terminal facilities in Tianjin Nangang Industry Park. During the year, Dragon Crown and DOW are working closely to gain approval from relevant Government authorities. It is expected the facilities will become a strategic distribution hub for DOW within the Bohai Bay region in Northeast China. The planned site covers a total land area of 50 hectares, providing a solid base for the business expansion of the Group in the foreseeable future.

Business Outlook - For the year ended December 31, 2012

While the global economy is still full of uncertainty, we believe that China's economic growth will continue to gain momentum in 2013, spurred by the favourable Government policies and strong consumption demand, providing impetus for the chemical industry. The demand for liquid chemicals will likely remain robust.

The Group is optimistic about the outlook of the chemical storage and terminal industry, and will persist with its growth strategy of expanding its existing terminal storage business and replicating its success to other coastal regions in China. The expansion plan of Phase III at the Nanjing Terminal is progressing well and will commence operation in 2013. Four general tanks with a total capacity of 24,000m3 will start operating in the second quarter of 2013 with long-term terminal services contracts already secured. Seven more tanks with a total capacity of 14,000m3 are expected to start operation in the second quarter of 2013.

Apart from strengthening infrastructure, the Group will continue consolidating its presence along the coastal regions of China, with focus on our ongoing development in the Yangtze River Delta and Bohai Bay regions. Looking ahead, the Group will seek to expand and bolster its handling capabilities and customer base, aiming to become one of the country's leading integrated terminal service providers, and creating value for its shareholders.

Source: Dragon Crown Group (00935) Annual Results Announcement
Chairman NG, Wai Man Issued Capital (shares) 1,110M
Par Value HKD 0.1 Market Capitalisation (HKD) 1,054M
 
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