Chu Kong Shipping Announces 2022 Annual Results

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  • Profit Attributable to the Shareholders of the Company Surges by 112.1% to HK$93.5 Million
  • Successfully Promotes the Upgrades of Logistics Strategy to Drive Continued Strong Growth in Results

Chu Kong Shipping Enterprises (Group) Company Limited (Chu Kong Shipping, or the Company, together with its subsidiaries, the Group; HKG: 560) is pleased to announce its annual results for the year ended 31 December 2022 (the Year).

During the Year, benefited from the improved profitability of its terminal logistics business, including a significant increase of warehouse storage business and value-added services, the Group achieved a substantial increase in annual profit and remarkable results of business expansion. The Group’s consolidated turnover increased by 27.8% year-on-year to HK$2,899.5 million (2021: HK$2,268.4 million). In line with the growth in consolidated turnover, profit for the Year increased remarkably by 63.0% year-on-year to HK$108.0 million (2021: HK$66.3 million) and the profit attributable to equity holders of the Company was HK$93.5 million (2021: HK$44.1 million), representing a significant increase of 112.1% as compared to the same period last year.

The board of directors of the Company resolve to propose a final dividend of HK4 cents per ordinary share. In commemoration of the Company’s 25th listing anniversary and appreciation for the shareholders’ undivided support, a special dividend of HK2 cents per ordinary share was proposed.

Business Review
In 2022, the rebound of the COVID-19 epidemic (“epidemic”) situation remained continuous, resulting in greater downward pressure on the global economy. Yet, benefited from the effective implementation of the new development concept of “Domestic-international Dual Circulation” in the People’s Republic of China (“PRC”), the PRC’s logistics industry has recovered at a relatively fast pace and the market scale has also steadily expanded which strongly supported the smooth and orderly operation of various areas of the industrial chain and livelihood consumption businesses. Meanwhile, the cross-border passenger business has recovered steadily with the gradual relaxation of the anti-epidemic policy. Compared with the same period last year, the Group’s terminal logistics business progressed well, with both increases in the break bulk cargoes transportation volume and handling volume. The waterway passenger transportation business has been transformed actively in facing difficulties by developing new routes and exploring new business opportunities.

Focusing on Upgrades of Logistics Strategy and Actively Supporting Hong Kong to Fight against the Epidemic
The Group continued to leverage on advantages of the terminals’ network within the Guangdong-Hong Kong-Macao Greater Bay Area and adhered to synergistic development on both domestic and foreign trade businesses. The profitability of the terminal logistics business has continually enhanced, and the scale of integrated logistics, cross-border e-commerce, and air freight logistics businesses has continually expanded.

During the Year, regarding the cargoes transportation business, the break bulk cargoes transportation volume reached 678,000 tons, representing a year-on-year increase of 3.5%. The container transportation volume for the Year reached 1,285,000 TEU, while the volume of container hauling and trucking on land for the Year recorded 200,000 TEU. For the cargo handling and storage business, the volume of container transportation was 1,131,000 TEU, while the volume of break bulk cargoes handling volume during the year was 10,209,000 tons, representing a year-on-year increase of 30.0%.

Besides, the Group fully implemented its strategic plans, continued to optimise its business models. There was a steady improvement in operating efficiency of Zhaoqing, Foshan, Qingyuan, Zhuhai, Zhongshan and Hong Kong regions. Driven by strong growth in break bulk cargoes, Foshan and Zhongshan regions recorded explosive growth of 403.0% and 239.6% respectively. In Zhaoqing region, Zhaoqing New Port Production and Operation Centre were officially launched and Gaoyao Port actively developed new sources of goods such as precision machinery and furniture products. Foshan region Gaoming Port opened a new mode of “trans-customs” transportation business between Gaoming Port and Guangzhou Baiyun International Airport, and successfully launched the cross-border e-commerce direct purchase and export business. In Zhuhai region, the official launch of the “Doumen-Shekou” combined port project enabled Doumen Port to fully utilise its resources to attract foreign trade enterprises in the region, while the acceptance process of the imported fruits at the designated fruit supervision sites was completed. Civet Port developed the sand and gravel handling business continuously and pioneered shipping e-commerce.

Taking the new warehouse as an important strategic pivot, Chu Kong Transhipment & Logistics Co., Ltd. (“CKTL”), has leveraged its strength in resources to develop emerging businesses, deepen the cooperation between cargo terminals and navigation, and promote the transformation and upgrade. The new warehouse in Tuen Mun commenced operation smoothly, in turn, continued boosting the growth of the warehouse storage business of CKTL. CKTL successfully undertook the integrated logistics business for clients such as Sinopharm Holdings Guangzhou Co., and also completed the renovation and upgrade of the supervisory warehouse of Cathay Pacific America Line. The Group has successfully put its Yau Ma Tei construction logistics loading, unloading and distribution base in operation, and rapidly developed the local construction logistics business in Hong Kong. CKTL has successfully implemented multiple large-scale construction logistic projects, and has taken advantage of the opportunity to upgrade the “Huangpu-Hong Kong” building materials logistics line. While the regular line for the waterway e-commerce logistics between Shenzhen and Hong Kong was successfully launched, CKTL also completed the construction of the integrated operation platform for ports and barges with the Zhaoqing region.

During the Year, the Group has fully leveraged its business advantage as a combination of “transit + port” in the Guangdong-Hong Kong-Macao Greater Bay Area, and successfully opened up “Green Passages” and “Synergised Passages” for waterway transportation to secure a full logistics chain, which in turn efficiently supplied anti-epidemic medical materials, anti-epidemic quarantine facilities, as well as the daily necessities such as fresh food and grocery items. During the Year, a total of 20 Guangdong-Hong Kong transportation routes were opened-up by the Group to support Hong Kong in the fight against the epidemic, the total accumulated capacity of 68 barges and 168,000 container cargoes is recorded, with a cumulative volume of 650,000 tons of livelihood and anti-epidemic materials were supplied to Hong Kong.

Enabling Upgrading of Airport Strategy while Passenger Transportation Business Gradually Recovered
Despite the impact of the epidemic, Chu Kong Passenger Transport Company Limited (“CKPT”) still recorded an increase in business compared with last year, the local ferry business recorded a total number of passengers of 11,339,000.

The Group concentrated its superior resources and actively participated in the bidding for new projects of the Hong Kong International Airport. The Group made every effort to prepare the launching of the new routes between the Shenzhen Airport and the Hong Kong International Airport, further capturing the opportunities in the cross-border passenger transportation market in the Guangdong-Hong Kong-Macao Greater Bay Area. During the Year, the Group actively promoted the upgrading of airport strategy and achieved breakthroughs in the airport business. Hong Kong International Airport terminal services Limited, a subsidiary of the Group, won the bid for the project of passenger and baggage services in the transit terminal of the Hong Kong International Airport, thereby the Group’s cross-border airport passenger service will be expanded from the original “sea-air intermodal” to “sea-land-air intermodal”. Hong Kong International Airport related service businesses, which were developed previously by CKPT, have maintained normal operations under the impact of the epidemic, among which, the car-sharing business on the apron of the Hong Kong International Airport has maintained a steady growth. CKPT officially signed the code-sharing development and coordination agreement with Hong Kong Express, and completed the launching of the product as well. The Group achieved the completion of code-sharing cooperation with the three major base airlines, Cathay Pacific, Hong Kong Airlines and Hong Kong Express.

Promoting the Upgrading of Hong Kong Strategy and Achieving Remarkable Results in Business Expansion
Regarding water cultural tourism business, Orient Pearl Cruise Company Limited ( “Orient Pearl” ) successfully obtained the Hong Kong Travel Agency License, and its sightseeing cruise “Orient Pearl” has obtained the qualification for berthing in Central Pier No.8 in Hong Kong. Moreover, “Orient Pearl” continued to carry out the trial berthing training at Central Pier, and has now obtained the qualification for berthing at Central Pier No. 8. At the same time, the Group completed the construction of box offices in the core areas of Hong Kong and obtained the Hong Kong Travel Agency License, which creates favourable condition for the Group to accelerate the innovation and upgrade of water-based tourism projects.

As to the fuel supply business, Sun Kong Petroleum Company Limited (“Sun Kong Petroleum”) actively developed its business in the unfavourable environment of the epidemic. In addition to successfully developing the business in the storage and operation of Castrol’s lubricant, Sun Kong Petroleum achieved growth in sales volume of both diesel and engine oil during the year, turning a loss into a profit against the odds, thus laying a solid foundation for the Group to continue to deepen its strategy in Hong Kong.

Prospects
In early 2023, Hong Kong, Macao, and Mainland China officially resumed normal traveller clearance, and multiple cross-border waterway passenger routes operated by the Group across Guangdong-Hong Kong, as well as across Hong Kong-Macao, have resumed operation. As the movement of cross-border personnel and material flow has gradually resumed normal, the market environment will be further improved, so a new wave of business growth is expected for the Group’s business.

Focused on the objective of becoming a first-class waterway public transportation service provider and a first-class full-scope logistics services provider in the Guangdong-Hong Kong-Macao Greater Bay Area, the Group will continue to take advantage of its strength in resource integration, promote innovation and development in terminal logistics, optimise the strategic layout of passenger transportation segment, and develop new routes under new quality agency service. Moreover, the Group will actively carry out material acquisition projects with an aim to improve the overall profitability of the Group. Firmly grasping the strategic opportunities brought by the national “14th Five-Year Plan”, the Guangdong-Hong Kong-Macao Greater Bay Area development, as well as the “Belt and Road” initiative, the Group will accelerate the strategic transformation of the enterprise in the following areas:

Firstly, the Group will promote the transformation of its business operation model for better structure and greater synergy. The Group will fully leverage the integrated role of CKTL as a transhipment hub, optimise the business layout, integrate inner port resources, consolidate development synergy, and continue to enhance the overall competitiveness of its terminals. The Group will also accelerate the implementation of integrated management for its cross-border waterway passenger transportation business and continue to optimise cross-border passenger transportation routes.

Secondly, the Group will promote the transformation of its warehousing and storage services business to a larger scale and higher efficiency. The Group will further build a professional platform for the construction logistics centre, expand the construction logistics services business related to the construction projects in Hong Kong, and simultaneously develop the building materials supply business. Besides, the Group will vigorously develop its modern logistics businesses, including air freight logistics, supply chain logistics, cold chain logistics, duty-free product storage, etc., to promote the development of its logistics business to be an extension of the modern industrial chain by forming a comprehensive supply chain logistics network. Moreover, the Group will accelerate the establishment of logistics business outlets in the ASEAN region, acquisition of investment projects of synergistic value, as well as establishment of overseas bases, and will actively explore the markets along the “Belt and Road”.

Thirdly, the Group will promote the transformation of its Hong Kong local businesses for service enhancement and better branding. The Group will deeply integrate into the Hong Kong airport business circle, actively participate in the bidding for the strategic quality projects related to the Hong Kong International Airport, and strive to become a comprehensive service provider for the Hong Kong International Airport. The Group will also delve into the exploration of the market potential of its local public transportation business in Hong Kong and continue to expand the new local ferry services. In addition, the Group will persistently build up the brand of “Oriental Pearl” by carrying out advertising and sponsoring campaigns on vessels, increasing advertising and marketing efforts, and continuing to expand the cultural tourism market.

Fourthly, the Group will promote the transformation of its waterway passenger transportation and other auxiliary businesses for better business models and greater resilience. The Group will firmly grasp the new development opportunities in the resumption of cross-border waterway passenger transportation, and endeavour to carry out the operation resumption of important cross-border routes such as routes between Guangzhou Pazhou to Hong Kong, and Shenzhen Airport to Hong Kong. The Group will also actively participate in the bidding for the oil supply in the sea project of the Hong Kong Government, strive for new agency business in lubricant storage, and expand the fleet for lubricant shipping.

About Chu Kong Shipping Enterprises (Group) Company Limited
Chu Kong Shipping is a listed company incorporated in Hong Kong held by Chu Kong Shipping Enterprises (Holdings) Company Limited and subject to Guangdong Provincial Port & Shipping Group Company Limited. Chu Kong Shipping operates and manages the largest high-speed passenger fleet and network of waterway passenger transport in Guangdong, Hong Kong Macau which is based in Hong Kong and covered cities in the Guangdong-Hong Kong-Macao Greater Bay Area namely Guangzhou, Shenzhen, Shunde, Zhongshan, Dongguan, Macau and so on. Since the acquisition of Sun Ferry Services Company Limited in May 2020, CKSG has entered the local ferry market in Hong Kong, providing services on five main inner harbour and outlying island ferry routes, and developing the Victoria Harbour water cultural tourism projects simultaneously. Chu Kong Shipping is also one of the largest operators of inland terminal and logistics service in the PRD. Based in Hong Kong, Chu Kong Shipping builds up a network covering multiple cities in the PRD, including Zhaoqing, Qingyuan, Foshan, Guangzhou and Jiangmen etc., providing the operation of inland cargo terminals, integrated logistics, international forwarding and solutions to logistic supply chain and so on.

For more information, please visit: https://www.cksd.com/

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