Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
ACR HOLDINGS
HKEx Stock Code : 08025 
 
Corporate Profile
The principal activities are investment holdings, provision of online content information and related technical services, business consultation services, logistics services and internet protocol television services.

Business Review - For the year ended December 31, 2012

The Board wishes to report that, despite a rather challenging year for the Management in 2012, whereby the World faced various financial and economic instabilities, coupled with the austerity measures imposed by the Government of the People's Republic of China on housing, which had material impact on the end users of our internet platform, the Management nevertheless, is pleased to state that with all the efforts given into repositioning of the market focus and the regenerating of revenue drives of the Group, we have completed in the early quarter of 2013 with a solid start by raising new capital from the successful placement of HK$65 million by new shares issued, and the entering into the management contract with a PRC operator, which provides a scalable development platform for the IPTV operations in near future.

During the period under review, because of the difficult general market conditions, the Management had taken a more conservative approach in terms of expansion and marketing of the IPTV division compared to an aggressive one that was originally planned. The conservative strategy led to a low risk but high reward plan of promoting IPTV via the bundling of value added services. Hence, the Board was actively seeking a strategic partner that would enhance the growth of IPTV and its value added services platform as well as the generating of a new stream of revenue.

With the expertise of operating the IPTV division, the group is providing a company, Guangdong Yingxin, with management services. Guangdong Yingxin is an Internet service provider as well as value added services provider. One of the services Guangdong Yingxin provides is VOD (video on demand) and the Company will leverage its expertise from its IPTV division to assist Guangdong Yingxin operate their operations with efficiency and realize their true value and creating more value for the Group.

Via the revenue generated by the IPTV division, the new business management services, and other assets from the group it has sufficient cashflow generated to operate its business as a going concern. The Company does not have any financial difficulties to an extent that may seriously impair the Company's ability to continue its business.

Information Technology Division

As with broadcasting any medium within the PRC, it requires diligent effort to satisfy the ever so changing complex rules and regulations it adheres to. The company has invested in the effort of keeping up to date to any changes and remains as an approved IPTV provider. During the course of the year the company was searching for strategic alliance with a partner that would help the Company be better positioned to have a more dynamic IPTV platform that enables for deployment of value added services which will in turn lead to a greater customer base.

During the 4Q the Company, the Subsidiary and Guangdong Yingxin entered into the Management Agreement pursuant to which the Subsidiary agreed to provide management service (through Guangzhou Wavecom) to Guangdong Yingxin. The Subsidiary will receive all the net profits after taxation of the Guangdong Yingxin as the management fee. Guangdong Yingxin is a company principally engaged in building the lastmile digital cable networks for residential real estate projects and the subsequent management of such network including, among others, provision of value-added services and content to end users of such networks, which also includes Video on Demand (VOD). Yingxin provides coverage of three major cities in China: Guangzhou, Shenzhen and Beijing. This management service provided by the Company is viewed as a synergy that compliments both the Company and Guangdong Yingxing. This arrangement is viewed as utilizing the strong
background of both companies; where the group will provide the expert operating and market knowledge from operating IPTV division and Guangdong Yingxing can concentrate on deployment and maintaining their solid digital network backbone. In addition, Yingxing can further assist the company in research and development, and deployment of other value added services on the Company's existing IPTV platform. This synergy is maximizing the efficient deployment of both companies' existing resources as well as creating new ones.

In managing Guangdong Yingxing, the Company believes it can assist by helping Yingxing to reach a higher level of profitability and to create more value in the company. This is because the Company views the PRC Internet market is a market that has yet to reach its maturity. According to the statistics provided by the Ministry of Industry and Information Technology of the People's Republic of China (MIIT) the number of Internet users in PRC will reach over 20 million with an Internet penetration rate of only 11.5%. When comparing to the penetration rate of the OECD member countries' 16%, it can be viewed as a market yet to reach its maturity. In addition, Yingxing currently only has coverage over 3 major cities. It would be able to increase a substantial amount of business by expanding their network coverage across the nation since the MIIT is now accepting new applications for the Nationwide ISP provider license. Furthermore, Focused Marketing can be viewed as another value added services to be considered. Customer data of the websites they visited and programs they watched can be collected and retrieved from the technical platforms and can be used as a tool for analyzing the market interests and concerns. Specific groups with points of interest can be identified which in turn would serve as a valuable asset for providing specific focused marketing that can be deployed as a new service.

The Management believes it is in a better position to achieve a higher level of performance together with the deployment of other value added services.

Financial Consultancy

The Group's Financial Consultancy division is now concentrating its efforts on the aforementioned business management services that it is providing to Guangdong Yingxing.

In addition, apart from the aforementioned operations, the Group continues to research, develop and explore investment opportunities which are strategic to its business operations and which will contribute significantly to the return of the Company's shareholders.

Business Outlook - For the year ended December 31, 2012

The Board, looking forward, views that by leveraging on the strategic alliance with Guangdong Yingxing and with the bundling of other value added services to the existing IPTV model, it will be able to enhance the company's incremental business and future value.

Source: ACR Holdings (08025) Annual Results Announcement
Chairman Chu Yat Hong Issued Capital (shares) 1,486M
Par Value HKD 0.1 Market Capitalisation (HKD) 654M
 
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