China Chaintek United Co., Ltd Trading Update (8951V)
August 12 2015 - 11:30AM
UK Regulatory
TIDMCTEK
RNS Number : 8951V
China Chaintek United Co., Ltd
12 August 2015
Press Release 12 August 2015
China Chaintek United Co., Ltd
("Chaintek" or the "Group")
Trading Update
Chaintek (AIM: CTEK), the provider of logistics services to
manufacturers of consumer goods in China, is pleased to provide the
following trading update ahead of the Group's Interim Results for
the six months ended 30 June 2015, which will be announced in
September 2015. Financial information contained in this
announcement for the six months period is unaudited.
Trading for the period is in line with the guidance previously
given in the Group's final results for 2014, with unaudited
revenues down 25% to RMB129.9 million (GBP13.4 million) (H1-2014:
RMB173.8 million). Of this, the logistics services business
represented approximately RMB110.8 million (GBP11.4 million), with
the inventory solutions business accounting for approximately RMB19
million (GBP1.9 million).
Unaudited profit before tax is down 56% when compared to the
prior year at RMB64.2 million (GBP6.6 million) (H1-2014: RMB144.7
million) with the Group's profit margin falling to 77% (H1 2014:
83%) resulting from rebate payments due to suppliers, principally
to transportation partners, and additional discretionary marketing
expenses incurred in the context of new marketing initiatives aimed
at expanding the business into new regional markets.
Management wish to sound a cautionary note about market
conditions, which have significantly worsened during the period
under review. Retail sales in the shoes and apparel sector have
been slowing in China for some time, and after having benefitted
for the last 18-24 months from sustained volumes due to de-stocking
sales, the effect of the retail downturn is now starting to bite.
Many of the Company's key suppliers have been particularly hard hit
by these conditions, with lower volumes combining with higher fuel
prices to create the worsening trading conditions which have led
them to seek better terms from the Company, resulting in the
payment of the rebates. Management are of the view that these
challenging conditions are likely to continue for some time, with
the corresponding effect on trading and margins.
However, the Group continues to be highly cash-generative,
resulting in a cash position at the half year of RMB514.1 million
(GBP53.3 million) (H1-2014: RMB411.6 million).
The Group maintained customer levels in its logistics services
business (covering sectors including shoes and apparel, food,
building materials, textile and trading) with 10 out of the top 20
customers being listed companies. ANTA, a Hong Kong Stock Exchange
listed sporting goods and apparel manufacturer is considered by the
Group to be a significant customer, contributing approximately 9.9%
to the Group's logistics services revenue.
The management team remains focused on expanding capacity and
growing its customer base despite the slowdown in the growth of the
Chinese economy.
The Group will continue to update shareholders in relation to
obtaining a full refund from the Local Government ("LDC") for the
purchase of Land Use Rights ("LUR"), for the intended site to build
the Group's new Logistics Park. As reported in the Company's final
results statement, the Group has the right to request full
re-payment of RMB 273 million from the LDC. The Group continues to
negotiate the refund with the Local Government, and shall update
shareholders as and when appropriate.
As announced in June, the Group has entered into an agreement to
lease a Regional Distribution Centre ("RDC") in Changsha, the
capital of Hunan Province in South-Central China. The facility is
intended to service Chaintek's existing manufacturing customers
which are relocating to Central China to reduce land and labour
costs.
On 30 April 2015, a final scrip dividend of 4 pence per share,
in respect of the year ended 31 December 2014 was announced. The
new ordinary shares were issued to shareholders on the register on
20 May 2015.
Xu Meijin, Chief Executive Officer of Chaintek, said: "As
previously indicated in our final results,
the Group's operations has been facing pressure from the
slowdown of the Chinese economy and the changes in the shoe and
apparel manufacturers' business model. These factors, in addition
to increased costs from our suppliers and the increased spending in
advertising, have impacted the Group's bottom line in the first
half of the year."
"The Group, however is pleased that significant progress has
been made in promoting the Company and its' development plans. In
addition, the opening of the Group's RDC in Changsha will continue
to progress the Group's aim of becoming a national logistics
Company.
- Ends -
For further information:
China Chaintek United www.chaintek-united-ir.com/
Co., Ltd
Derrick Wong (Finance +65 9227 8485
Director) +86 159 8597 3034
ZAI Corporate Finance
Ray Zimmerman / Ivy
Wang (Nomad)
Steven Baird (Broker) +44 (0) 20 7060 2220
Abchurch Communications
Quincy Allan / Canace
Wong +44 (0) 20 7398 7710
chaintek@abchurch-group.com www.abchurch-group.com
This information is provided by RNS
The company news service from the London Stock Exchange
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