Friday, March 5, 2021
 
Columnist
Martin Hennecke
 
GD NY LOGISTICS
HKEx Stock Code : 03399 
 
Corporate Profile
principally engaged in the following businesses: (1) material logistics services, mainly including logistics management for expressway and other sizable infrastructure projects; (2) expressway service zones operation and related auxiliary services, such as operating food and beverage network, convenience stores, outdoor advertising for expressways, vehicle maintenance and gas stations; (3) transportation intelligence services, including safety facilities installation and maintenance and toll collection; and (4) cross- border transportation services, in particular operating routes between Hong Kong Special Administrative Region of the PRC (“Hong Kong”) and the Guangdong Province, the PRC and (5) toll collection and operation businesses at Tai Ping Interchange in the Guangdong Province, the PRC.

Business Review - For the year ended December 31, 2012

As at 31 December 2012, the four main businesses of the Group were as follows:

(i) material logistics services;

(ii) expressway service zones;

(iii) transportation intelligence services; and

(iv) motor vehicle transportation and auxiliary services.

Save for the above major businesses, the Group also had toll collection business at Tai Ping Interchange.

Material logistics services

In 2012, the Group strengthened its management of material logistics projects to enhance its overall level of professional management of material logistics business, and formed strategic alliance with upstream suppliers to explore the market. Apart from projects with Guangdong Provincial Communication Group Company Limited (“GCGC”), the Group also actively participated in material logistics business for major state projects other than with GCGC. In 2012, the Group supplied a total of approximately 490,200 tonnes of steel bars, 32,000 tonnes of steel strands, 2,168,700 tonnes of cement and 90,500 tonnes of asphalt.

The Group successfully commenced operation of the wharf of Dongguan Storage and Transportation Centre. In June 2012, the wharf of Dongguan Storage and Transportation Centre formally opened as a newly built wharf in Humen Port. Meanwhile, the Company accelerated the construction of Phase II of the wharf and completed the projects such as power distribution and capacity expansion, basin desilting, procurement and installation of dock portal crane equipment. Currently, the tendering of design and construction contract for phase II of the wharf has completed, and joint design of the construction plan has passed internal inspection, while preparation prior to full swing construction are under progress in an orderly manner. The operation of the wharf of Dongguan Storage and Transportation Centre and the construction of Phase II will lay a solid foundation for the Group to build a multi-functional base combining asphalt storage and transportation, research and development and processing.

The Group actively nurtured and established the high-end asphalt brand of “Nanyue”. Through cooperation with the South China University of Technology, Research Institute of Highway under Ministry of Transportation successively to constantly improve the research and development and production capability of modified asphalt, our successfully developed production lines have covered a full range of emulsified asphalt for highways and emulsified asphalt for high-speed rails. In 2012, the Group processed and supplied I-D modified asphalt of approximately 8,901 tonnes for Fokai Expressway extension, modified emulsified asphalt of approximately 900 tons for Inter-city Railway between Guangzhou and Zhuhai and Guangzhou-Shenzhen-Hong Kong High Speed Railway, high-viscosity modified asphalt of approximately 140 tonnes for Meilong Expressway extension, and high-viscosity modified asphalt (test section) of approximately 25 tonnes for Phase III of the Guangzhou-Zhuhai West Expressway.

Expressway service zones

In 2012, the Group focused on creating a good brand of service zone: It further strengthened promotion of the “Top-E” brand in service zones, and formulated the framework of brand building and promotion plan suitable for development requirement to further highlight the image of integrated management and operation; and also strengthened the building and management of the “Le Relay” convenient store brand and conducted market research and analysis in more than ten passenger terminals in cities including Zhaoqing and Yangjiang as well as several shopping malls in second-tier cities, so as to explore the operation mode for the “Le Relay” convenient stores to expand into passenger terminals.

The Group continued to invite various service providers to operate in its service zones and strengthen our efforts in introducing highly recognised quality brand names such as “McDonald's”, which was introduced to Houmen Service Zone, Wayaogang and Yangjiang Service Zones successively, and “KFC” and “Zhengongfu”, which were successfully introduced to Liangjinshan and Wayaogang Service Zones. The Group also formed a strategic alliance with “Zhengongfu”.

The Group actively promoted its gas station business. In 2012, the Group received confirmation letters for the new construction plan of gas stations at Yongan (永安),Xiegang (North) 謝崗(北),Yayao (雅瑤) and Shaxi (沙溪) service zones and signedgas stations operating rights contracts with Sinopec and Shell.

The Group vigorously promotes commercial properties planning and reconstruction of service zones. In 2012, the Group modified the original planning on commercial properties of the service zones and prepared the “Planning Report on Commercial Properties and Implementation Rules of the Twelfth Five-year Plan (商業地產規劃報告及十二五規劃細則)”. It has identified business potentials of the service zones andimproved the overall revenue of the service zones.

The Group focused on marketing, and gradually established a marketing system centering on regional self-marketing supplemented by general marketing of Top-E. In 2012, with successful marketing experience accumulated in 2011, the Group carried out overall marketing for non-integral contracting service zones. It also encouraged personalized marketing strategy to further explore market potential, which helped increase overall income of the service zones.

The Group also continued the development of automobile repair services and landscape engineering business. For automobile repair services, the Group has introduced a number of renowned large automotive chains and has formed a chain operation model. As for landscape engineering, the Group actively competed in the market and strived to expand businesses both within and outside the Guangdong province.

As at the end of 2012, the Group had entered into advertisement agency contracts for 38 expressway sections, 7 of which are newly signed in 2012. By signing those contracts, the Group effectively integrated advertisement media resources within GCGC and realized economies of scale for expressway advertisement business which drove the increase in advertisement income.

Transportation intelligence services

In respect of transportation intelligence business, the Group participated in over 10 transportation intelligence projects in 2012, including Jiangzhao Expressway, Xingtu Expressway in Xinjiang, GCGC control centre, Ningdao Expressway in Hunan. In addition, the Group has won the tenders for 17 transportation intelligence projects with a total contract amount of RMB 567 million.

Upon completion of the Asset Swap at the end of 2012, Guangdong Xin Yue Communications Investment Company Limited and Guangdong Oriental Thought Technology Company Limited, which are engaged in transportation intelligence businesses, were transferred to GCGC and ceased to be the subsidiaries of the Group. Accordingly, the Group will no longer engage in transportation intelligence services in 2013. For the details relating to the Asset Swap, please refer to the Company's announcements dated 23 September 2012 and the Company's circulars dated 5 November 2012.

Motor transportation and auxiliary services

On 18 December 2012, the Group held an extraordinary general meeting and an H shares class meeting to approve the asset swap. Pursuant to the resolutions passed by the shareholders, the Company acquired from GCGC 100% of the equity interest in Guangdong Vehicles Transportation Group Company Limited (“Guangdong Vehicles Transportation Group”) which is engaged in bus transportation business within Guangdong Province and cross-provincial bus transportation business. At the end of 2012, Guangdong Vehicles Transportation Group became a subsidiary of the Company.

In 2012, in order to strengthen its competitive edges, Guangdong Vehicles Transportation Group deeply explored the synergies of its transportation resources, actively expanded into new projects and nurtured new business models while consolidating its existing market shares: (1) in December 2012, it entered into a joint venture agreement to establish Heyuan City Yueyun Vehicles Transportation Co. Ltd., so as to build a business platform in Heyuan region of eastern Guangdong and pave the way for constructing the Group's transportation network in north-eastern Guangdong in the future; (2) it initiated the expressway rescue project, pursuant to which Guangdong Yueyun Traffic Rescue Co., Ltd (廣東粵運交通拯救有限公司)under Guangdong Vehicles Transportation Group has undertaken the rescue of 22 expressway sections of GCGC totaling 2,330 km, which has good development prospects; (3) it jointly founded Foshan Sanshui Yueyun Transportation Company Limited (佛山市三水區粵運交通有限公司) to actively expand its publictransportation business in Sanshui, Foshan. The implementation of Sanshui public transportation project has created synergies with Guangdong Vehicles Transportation Group's resources in Foshan passenger transportation market by connecting the routes to form the backbone of a network in Foshan passenger transportation market, which can effectively compete with Guangzhou-Foshan subway and lay a solid foundation for future development.

In light of the changes in conditions of passenger transportation market, Guangdong Vehicles Transportation Group timely adjusted its operational policies in 2012. Firstly, it expanded its self-operated vehicle fleet to increase operating revenues. Secondly, it adjusted the allocation of its transportation capacity and optimized the deployment of routes and vehicles according to market conditions by adjusting the times and routes of vehicle departure, in an effort to raise the carriage rate and lower operating costs. Thirdly, it applied preferential pricing policies such as roundtrip ticketing of certain routes to secure customers and revenues.

Guangdong Vehicles Transportation Group is active in building an online ticket system platform to coordinate with Guangdong Transportation Bureau (廣東省交通運輸廳) in its implementation of online ticket system in various passenger terminals.With the employment of modern e-commerce business model, Guangdong Vehicles Transportation Group has boosted the innovation of operation management as well as development of the traditional transportation industry, driving transformation of the industry from a traditional industry into a modern service industry.

For cross-border transportation services, in 2012, The Motor Transport Company of Guangdong and Hong Kong Limited (“GD-HK Company”), a company under the Group which has been principally engaged in cross-border transportation, has been the director unit of the Hong Kong Guangdong Boundary Crossing Bus Association for eight consecutive sessions (two years for each session). In 2012, Dashatou Station, the first station in Guangzhou for nonstop bus to Hong Kong and Macao, which was jointly developed by GD-HK Company and Guangzhou Port Group Passenger Transportation Service Co., Ltd. (廣州港集團客運服務有限公司),officially commenced operation. Dashatou Station has greatly enhanced the Group's competiveness. GD-HK Company took various effective measures to increase the carriage rate and retained major customers through adjusting its supply structures. It formed alliance with counterparts to provide storage services, resulting in increasing revenue and profit of cross-border freight. The Group also attempted to introduce new businesses. With its own bus resources, the Group cooperated with CTS (港中旅)to launch Meizhou pilot tourist shuttle bus.

Tai Ping Interchange

The Group has the right of toll collection at Tai Ping Interchange and the revenue from toll collection increased by 2.22% in 2012 as compared with the same period of 2011.

Development of land held by Guangdong Province Transportation Engineering Company Limited

As approved by the extraordinary general meeting, the Company acquired 100% equity interests of Guangdong Province Transportation Engineering Company Limited on 30 November 2010. According to the approval of the Special Plan on Old Plant Renovation in Guangzhou (2010-2020) (廣州市舊廠房改造專項規劃(2010-2020) (in January 2011, the land parcel of Guangdong Province Transportation Engineering Company Limited was included in the “old towns, plants and villages” redevelopment project. The land parcel of Guangdong Province Transportation Engineering Company Limited was planned for commercial and residential purposes before the approval of the Detailed Regulatory Plan for the Extension of Western Baiyun New Town in Guangzhou (廣州市白雲新城西部延伸區控制性詳細規劃)issued in May 2011. Currently, the Group is proceeding with various works relating to the application and development of the project. The Company is maintaining proactive communications with the competent governmental authorities of the Baiyun District of Guangzhou where the land parcel is located regarding the planning adjustment and land consolidation matters relating to the development of the project, and has gained supports from the governmental authorities of the Baiyun District. Meanwhile, the Group has also reported to the municipal government of Guangzhou the existing problems in relation to the development of the project so as to strive for its support. The Detailed Regulatory Plan for the Extension of Western Baiyun New Town in Guangzhou (廣州市白雲新城西部延伸區控制性詳細規劃) relating to theland parcel is under preparation and adjustment. The Group will pay close attention to the Detailed Regulatory Plan for the Extension of Western Baiyun New Town in Guangzhou to actively strive for support from the the Guangzhou Municipal Government for the development of the land parcel and accelerate the development progress in accordance with the “old towns, plants and villages” redevelopment policy.

Business Outlook - For the year ended December 31, 2012

In 2013, the domestic economy is expected to remain to center around stable growth, transformation, structure adjustment, accelerating industrial structure adjustment through reform of economic system, and promotion of urbanization, hence driving the sustained and healthy development of the economy. According to the 2013 Guangdong Provincial Transportation Work Conference (2013年廣東省交通運輸工作會議), Guangdong will invest RMB72 billion in improving transportationinfrastructure, including RMB64.45 billion which is planned to invest in for highways and RMB550 million in highway terminals. Such investment plan is set to bring new opportunities to the business of the Group which is closely related to the construction of expressways and transportation.

The Group completed its strategical reorganization in late 2012 by disposing of its highly competitive and low-profit transportation intelligence business and consolidating Guangdong Vehicles Transportation Group, the leading enterprise in Guangdong's motor vehicle transportation industry. In 2013, the Group will further enhance its comprehensive capability by consolidating its logistics and motor vehicle transportation businesses to realize resource sharing and synergies, and will focus on its core business while further expanding market coverage to further ensure its sustainable and steady growth.

1. Motor vehicle transportation and auxiliary services

— Insist on the development strategy of “mergers and acquisitions — consolidation — growth”, integrate transportation resources and focus on expanding its corporate development scale: Develop the business model of “Yueyun” in an innovative way, strengthen internal management, reduce costs, ensure the subsequent consolidation of the Heyuan Motor Vehicle Transportation (河源汽運) project meets the expected target; activelypromote and implement the mergers, acquisitions and cooperation of new projects, keep identifying and tracking potential cooperation projects, and actively develop and seek strategic partners.

— Capitalize on the integration of the Group's business to utilize its post-integration advantages in resources: Promote the synergy of service zone business and motor vehicle transportation business, gradually open and operate “Leyi” convenience stores in passenger terminals under Guangdong Vehicles Transportation Group, and develop advertising business in carriers such as passenger terminals and coaches; explore setting up crossprovince and cross-border transportation transit bases in expressway service zones to improve the operating efficiencies of vehicles.

— Optimize and combine the resources of its road transportation business to continuously grow the motor vehicle transportation business. Based on market conditions, organize passengers, dispatch routes in a scientific way, further optimize its corporate structures in lines and networks, take the initiative to apply for special pilot lines, try to offer passenger carrying services for long haul lines such as Guangxi route so as to develop interest from cross-border passengers from other provinces; promote in an all-round way a “one stop” (一站式) servicing mode, endeavor to set up stations toHong Kong and Macao in Meizhou, Heyuan and Zhaoqing in 2013; continuously improve the construction of online booking system, develop various marketing modes and further consolidate and increase the efficiencies of leading routes so as to improve the efficiencies of operations.

— Extend the industry chain, actively expand new business areas and develop new business models and profit growth contributors: Improve the operations of expressway rescue projects, expand the insurance assessment business, achieve higher revenue from extension business; combine with service zone business to build maintenance platforms in service zones for active development of motor vehicle maintenance business; broaden cross-border transportation business, properly scale up cross-border cargo transportation and business lines; rely on its coach resources to continuously build touring routes characteristic of Guangdong and Hong Kong so as to improve its profitability; promote the utilization of LNG new energy and the investment in and the construction of gas stations, combine with its own advantages in motor vehicle transportation to enter the upstream new energy sector of the industry, implement the Ministry of Transport's LNG new energy coach application trial plan, actively strive for support from government authorities in terms of funding and policy.

— Further improve brand management by improving and revising the corporate image recognition system of Guangdong Vehicles Transportation Group and GD-HK Company, maintaining its brand image and further enhancing the influence and appeal of brands so as to improve corporate competiveness.

2. Material logistics services

— In 2013, the Group will seize the opportunity arising from the construction of Guangdong provincial expressways to continuously improve its management servicing level in material logistics business to achieve real normalized, standardized and programmed project management.

— The Group will actively engage in major state investment projects and expand its material logistics business while ensuring safe recovery of fund, so as to further expand its market share in the material logistics market.

— The Group will improve its research and development capability in respect of high end asphalt, reinforce cost management, fully leverage on its processing capacity of asphalt and give full play to its warehousing advantage, so as to further increase its market share of asphalt.

— The Group will strive for completion of the works for phase II of the wharf of Dongguan Storage and Transportation Centre in 2013, promote the full operation of the wharf for the launch of its warehouse, transit, loading and unloading and sales businesses, enhance the marketing of the wharf business and strengthen its logistics chain.

— The Group will adjust the mode of charging logistics management fees for the materials logistics business in GCGC in accordance with the existing requirements of the relevant documents of the government authorities to ensure the sustained and healthy development of the materials logistics business.

3. Expressway service zones

— The commercial transformation of service zones will be promoted steadily to improve the commercial value of service zones. The Group will implement step by step the commercial property redevelopment and commercial development of service zones as scheduled, optimize the trade mix of service zones, so as to improve the economic efficiencies and social image of service zones as a whole.

— The Group will strengthen marketing, further enhance the popularity of the “Top-E” and “Le Relay” brands, and establish its own marketing mode for the service zones, so as to improve operational efficiency.

— The Group will accelerate the increase in presence of “Le Relay” convenience stores at passenger terminals, and take advantage of the opportunity of the Group's business integration to open “Le Relay” convenience stores on a trial basis at passenger terminals under Guangdong Vehicles Transportation Group.

— The Group will promote the planning and construction of gas stations to further standardize their management.

— The Group will continue to secure more expressway advertising resources from GCGC, while exploring other quality advertising resources, and enhancing the investment in and construction and maintenance of media resources to increase the profitability of resources.

Source: Guangdong Nan Yue (03399) Annual Results Announcement
Chairman Liu Wei Issued Capital (shares) 138M
Par Value RMB 1 Market Capitalisation (HKD) 265M
 
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