Friday, November 27, 2020
 
Columnist
Martin Hennecke
 
SHEEN TAI
HKEx Stock Code : 01335 
 
Corporate Profile
The principal activities of the Group are manufacturing and supply of cigarette packaging materials in the PRC.

Business Review - For the year ended December 31, 2012

The Group's turnover represents the sales value of goods sold less returns, discounts and value added taxes and other sales taxes and which are principally derived from the manufacturing and trading of cigarette-related and non-cigarette related packaging materials. The Group reported turnover of approximately HK$699.6 million for the year ended 31 December 2012, an increase of approximately 3.6% compared to approximately HK$675.0 million for the year ended 31 December 2011. The increase in turnover is attributable not only to the continued strategic efforts made in developing the customer base in other provinces, but also the Group's renowned strength in producing delicate packaging product which further reflects that the business strategy adopted by the Group is appropriate.

Manufacturing and sale of cigarette-related packaging materials

The increase in turnover from cigarette-related packaging materials by approximately 10.1% to approximately HK$572.2 million (2011: approximately HK$519.5 million) was mainly contributed by (i) the growth in sales of the Group's cigarette paper boxes by approximately 7.0%, from approximately HK$268.0 million for the year ended 31 December 2011 to approximately HK$286.8 million for the year ended 31 December 2012, primarily as a result of the increase in demand from the Group's customer of cigarette paper boxes; (ii) the increase in sales of the Group's other cigarette films by approximately 32.9%, from approximately HK$111.8 million for the year ended 31 December 2011 to approximately HK$148.6 million for the year ended 31 December 2012, primarily due to one of the Group's key customers of other cigarette films has purchased more products from the Group and the Group is its sole supplier for other cigarette films after the termination of its BOPP film production line.

The increase was partially offset by the decrease in the sales of anti-counterfeiting films by approximately 11.8%, from HK$84.8 million for the year ended 31 December 2011 to approximately HK$74.8 million for the year ended 31 December 2012, primarily due to the delay of purchase orders from the Group's major customer of anti-counterfeiting films as a result of their internal machinery renewal during the first half year of 2012. The demand of anti-counterfeiting films of the Group's major customer has recovered in the second half of 2012.

Trading of imported films

Revenue from the Group's trading of imported films increased by approximately HK$7.0 million, or approximately 12.7%, from approximately HK$55.0 million for the year ended 31 December 2011 to approximately HK$62.0 million for the year ended 31 December 2012. The revenue has increased gradually after the Company's indirect wholly-owned subsidiary, Ling Xian Fei Yu Import & Export (Shenzhen) Co., Ltd. (ˇ§Ling Xian Fei Yuˇ¨), has taken over all trading activities of imported films from the Group's agents after obtaining the approved supplier status for supplying imported films to particular cigarette manufacturer.

Manufacturing and sale of non-cigarette-related packaging materials

Revenue from the Group's manufacturing and sale of non-cigarette-related packaging materials decreased by approximately HK$28.1 million, or approximately 18.1%, from approximately HK$155.4 million for the year ended 31 December 2011 to approximately HK$127.3 million for the year ended 31 December 2012. The decrease was consistent with the Group's production and sales plan to adjust the Group's sales mix by switching the manufacturing and sale of BOPP films from non-cigarette-related packaging BOPP films to other cigarette BOPP films with a higher gross profit margin.


Business Outlook - For the year ended December 31, 2012

With over eight months since the listing of the Shares on the Stock Exchange in July 2012, the Company has completed most of the proposed future plans as discussed in the Prospectus. They included:

(i) the payment for an acquisition of the remaining 30% equity interest in the Group's subsidiary, Qingdao Ener,

(ii) the repayment of a bank loan,

(iii) market expansion, and

(iv) product development and enhancement of quality management.

In addition, the Group has acquired the remaining 31.85% effective interest in the Group's subsidiary, Jiangsu Sheen Colour in 2012.

Going forward, the Group will continue to capture the growth potential and promote the Group's products in Jiangsu province. Meanwhile, the Group will continue to explore new business opportunities for existing products in other provinces so as to promote a diversified quality customer base by implementing strategic initiatives and enhancing marketing efforts. In addition, to cope with the rising cost of raw materials, the Group will strive to further tighten control over its operating expenses and streamline the production processes. The Group will continue to grow market share with its major customers while broadening customer mix in the PRC market. Further capital will be invested in enhancing the Group's product development and capabilities. Besides, there will be attractive opportunities for cigarette-related packaging industry during the market consolidation driven by the government policies and the Group will seek opportunities to acquire other cigarette-related manufacturers, through selective acquisitions, joint ventures and/or other strategic investments.

Source: Sheen Tai Holdings (01335) Annual Results Announcement
Chairman Guo Yumin Issued Capital (shares) 415M
Par Value HKD 0.01 Market Capitalisation (HKD) 743M
 
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