Dragon Crown profit drops to HK$40mn

The group aims to expand business by broadening its market share in Nanjing and tap into the Pan-Bohai Economic Rim.

Dragon Crown Group Holdings Limited (“Dragon Crown”) a leading integrated terminal service provider in the PRC specialising in the storage and handling of liquid chemical products, announced its first interim results announcement after the listing of the Company’s shares on 10 June 2011 on the Main Board of The Stock Exchange of Hong Kong Limited.

For the six months ended 30 June 2011, the Group generated approximately HK$116.2 million revenue (1HFY2010: approximately HK$117.7 million). The Group recorded a gross profit of approximately HK$66.0 million (1HFY2010: approximately HK$76.3 million). Correspondingly, the gross profit margin of the Group maintained at a high level of 57% during the period (1HFY2010: 65%). Profit attributable to ordinary shareholders of the Company amounted to approximately HK$39.7 million (1HFY2010: approximately HK$56.0 million). Basic earnings per share was HK4.63 cents (1HFY2010: HK6.79 cents).

During the period, profit contributed from Nanjing Terminal accounted for approximately 92% of the Group’s total profit, making it the key source to the revenue and profit of the Group. The throughput volume of liquid chemical products handled by the Nanjing Terminal was 726,700 metric tones during the period, compared with 911,900 metric tonnes in the same period last year. The decrease was primarily due to the temporary production disruption of the acetic acid plant of our key customer, Celanese (NYSE:CE), who is a leading global acetic acid producer, and also the upgrade of our ethylene storage and handling facilities. In fact, the throughput volume of ethylene was in excess of the minimum throughput volume for the first time during the contract term between 1 July 2010 and 30 June 2011, according to a Dragon Crown report.

Mr Ng Wai Man, Chairman of Dragon Crown, said,” We consider that the temporary production disruption of our key customer is a non-recurrent incident. The upgrade of our ethylene storage and handling facilities is to improve the ethylene handling efficiency. It is beneficial to our long term growth albeit it was unfavourable to our business during the period. Our customer has resumed normal operation during the period and the throughput volume handled by the Nanjing Terminal has rebounded materially afterwards. At such, we are optimistic about the growth of our business in the second half of 2011.”

As the trusted business partner of Celanese in China, the Group has signed the fifteen year long-term terminal service contracts with Celanese’s subsidiaries which stated an annual fixed contract sum to be payable to Dragon Crown with reference to the stipulated minimum throughput volume. Currently, Celanese has signed a letter of intent to produce industrial ethanol at Nanjing Chemical Industry Park within the next thirty months. The Group will cooperate with Celanese as usual and strive to serve their latest project and expansion plan in Asia, according to a Dragon Crown report.

Mr Ting Yian Ann, Chief Executive Officer of Dragon Crown, concluded “As one of the key consumers of industrial products in the world, China’s petroleum and chemical industry is growing at a rapid pace. In addition, China has a competitive cost advantage over its competitors, which attracts lots of multinational chemical enterprises to relocate their production bases to China. It will lead to the increase in demand for independent third party logistic services by those petroleum and chemical enterprises and provides a solid base for the business expansion of the Group. Leveraging our extensive experience in the industry and advanced technology we embraced, we will continue to focus on our development in the Yangtze River Delta, Pearl River Delta and Bohai Bay regions, strive to grow our market share and optimize our service mix so as to strengthen our position in the market and to ultimately generate significant returns to our shareholders.”