OP Financial Limited (“OP Financial”, 1140.HK) (through one of its subsidiaries) signed agreements in June 2019 with the seller to purchase a total of 63,202,590 shares, or 19.9% of total capital of Dagang Holding Group CO., LTD. (“Dagang Holding”, stock code: 300103.SZ) (the “Acquisition”). The total consideration is agreed to be paid in instalments based on certain contractual terms. As at 31 March 2020, RMB450 million has been prepaid according to plan and the Acquisition has yet to be completed.
Dagang Holding announced its results for the six months ended 30 June 2020 (the “Period”) on the evening of 24 August 2020. Revenue for the Period amounted to RMB652 million, representing an increase of 63.7% as compared to the same period last year; operating profit for the Period amounted to RMB58.53 million, representing an increase of 86.3% as compared to the same period last year; net income for the Period amounted to RMB62.82 million, representing an increase of 118.1% as compared to the same period last year and net income attributable to owners of the parent amounted to RMB50.52 million with a significant year-over-year increase of 194.6%.
According to its interim report of 2020, Dagang Holding’s overseas engineering and industrial products business contributed revenue of RMB1.7285 million and RMB108 million , accounting for 0.3% and 16.6% of total revenue, respectively. Its resource comprehensive recycling business contributed revenue of RMB471 million, accounting for 72.2% of total revenue and urban road smart operation and maintenance business contributed 9.7% of total revenue, i.e. RMB63.43 million. It suggests that Dagang Holding has successfully developed a triple–engine-driven business structure of “high-end road equipment R&D and manufacturing, urban road smart operation and maintenance, and comprehensive recycling of hazardous waste and solid waste”.
In terms of high-end road equipment R&D and manufacturing, Dagang Holding, as a high-tech company with strong R&D capabilities, started relatively early in Mainland China to independently develop, manufacture and sell smart and environmental-friendly road construction and maintenance products. As at the end of 2019, Dagang Holding has accumulated 6 invention patents, one of which is an overseas patent, 199 utility model patents and 14 design patents. In the meantime, Dagang Holding also drafted and developed a number of national standards and industry standards in the relevant field.
Comprehensive recycling of hazardous waste and solid waste is the second business segment of Dagang Holding, which completed purchasing 52% of the total capital of Zhongde Environmental Protection Science and Technology Limited (“Zhongde Environmental Protection”) in April 2019 and in turn penetrated into the environmental protection sector. As a hazardous waste and solid waste disposal company engaging in production, R&D and sale of relevant products, Zhongde Environmental Protection has developed proven production craftwork of the recycling of waste materials, waste residues and other materials containing non-ferrous metal. Zhongde Environmental Protection has stable supply of raw materials and demand for finished products and has maintained the trend of profitability and growth with strong competitiveness.
The third business segment of Dagang Holding is urban road smart operation and maintenance. With the advantages of over 30-year’s technology accumulation in road construction and maintenance, industry-leading finished products, comprehensive and unique research on construction material features, complete and reliable construction craftwork, as well as professional and dedicated road project construction teams, Dagang Holding also adopts advanced and remote control technologies including Internet of Things, 5G, GIS and BIM to provide comprehensive technical support and resource provision for urban road smart operation and maintenance.
About Dagang Holding (300103.SZ)
Founded in May 2002, Dagang Holding originated from a research group of Chang’an University (formerly Xi’an Highway College). The research group was founded by Professor Li Taijie together with a number of experts and scholars in 1988 and was dedicated to solving the high energy consumption and high pollution problem during the process of drum unloading, heating, transportation and use of asphalt for China’s highway construction. Dagang Holding has currently developed into a comprehensive high-tech group with a number of fully-owned or controlling subsidiaries including Dagang Equipment, Dagang Road Construction Machinery, Zhongde Environmental Protection and Dagang Smart Operation and Maintenance etc. which have formed three major business segments which are “high-end road equipment R&D and manufacturing, urban road smart operation and maintenance, and comprehensive recycling of hazardous waste and solid waste”. Dagang Holding’s products and services have been widely used for road construction, urban infrastructure management, environmental protection and metallurgy etc. Being listed on the SME Board of Shenzhen Stock Exchange in August 2010, Dagang Holding has been trading under 300103.
About OP Financial (1140.HK)
OP Financial (1140.HK), listed on the main board of the Stock Exchange of Hong Kong Limited, is a cross-border and cross-sector investment company with strong capability of investment, financing and industry consolidation with portfolio covering listed and unlisted companies in multiple sectors. OP Financial builds its cross-cycle portfolio flexibly based on different holding period and strategy, including long-term core holding, medium-term PE/VC and short-term arbitrage, striving to create diversified and steady returns for shareholders.
This document, and the website of OP Financial (http://www.opfin.com.hk/) has not been reviewed by the Securities and Futures Commission of Hong Kong. This document is solely for information purposes and is not intended as an offer, a solicitation of offer or a recommendation, to deal in shares of securities or any financial instruments. Past performance and the predictions, projections, or forecasts on the economy, securities markets or the economic trends of the markets are not necessarily indicative of the future or likely performance of OP Financial or Dagang Holding. Information herein is believed to be reliable at time of publication but OP Financial or Dagang Holding does not warrant its completeness or accuracy and is not responsible for error of facts or opinion nor shall be liable for damages arising out of any person’s reliance upon this information. Any opinion or estimate contained in this document may subject to change without notice. This document may not be published, circulated, reproduced or distributed without the prior written consent of OP Financial or Dagang Holding.