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Chairman's Statement
Environmental Social
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Business Review and Outlook

In 2016, Vietnam recorded a GDP growth rate of merely 6.21%, which was the first time in four years showing a slowdown. The main reasons attributable to the slowdown were due to declines in growth from both the agricultural sector and the mining sector. During the year, historical droughts and salinization of the Mekong River Delta happened respectively in central and the southern part of Vietnam, resulted in serious impact on the agricultural and fisheries industries. Besides, a significant drop in both price and quantity of crude oil export added to the blow to the economic growth of Vietnam in 2016.

However, if ignoring the impact from the agriculture and mining sectors, overall economic performance of the Vietnam economy was indeed robust. Among which, services sector, retails sector, information and communications sector and real estate sector all recorded the highest growth rate in five years. For the fourth quarter alone, Vietnam recorded a growth rate of 6.7%. Foreign investment was in frenzy in 2016 with foreign investments amount reaching US$15.8 billion, an increase of more than 9% compared to last year. Although facing the global economic downturn, Vietnam still managed to record a total export of US$176 billion, up 8.6% over last year. Consequentially, a trade surplus of US$2.68 billion was recorded, reversing from a deficit of US$3.2 billion in previous year.

During the year, inflation was relatively stable, with the consumer price index increased by 4.74% on a year-on-year basis. In addition, the Vietnamese Dong was also relatively stable throughout the year. As at 31 December 2016, the exchange rate of Vietnamese Dong was 1 USD to 22,773 VND, representing a slight devaluation of 1.26% comparing to the rate at the end of last year.

For the year ended 31 December 2016, the Group recorded a turnover of HK$622,685,000, representing an increase of 2.0% as compared to HK$610,327,000 of last year. The Group’s principal revenue comes from the cement business and property investment. Of which, turnover from the cement business was HK$501,620,000 representing a year-on-year increase of 2.2%, whereas turnover from the property investment was HK$110,792,000, representing an increase of 0.6% as compared to 2015.

The consolidated net profit attributable to shareholders was HK$111,974,000 for the year, representing an increase of approximately 25.0% when compared to HK$89,580,000 of 2015. Earnings per share for 2016 were HK22.2 cents (2015: HK17.7 cents).

Cement business

In 2016, driven by strong performance of Vietnam real estate market and infrastructure development, Vietnam domestic demand of cement recorded a 6.2% year-on-year increase to about 60 million tons. On the other hand, the export of cement by Vietnam, in face of stiff competition from neighboring countries such as China and Thailand, recorded a 7.1% decline to about 14.7 million tons. Since the national cement supply still exceeded the total demand including export, competition of the domestic cement market became more intense in 2016.

In 2016, the total cement and clinker sales of the Group’s cement plant recorded 1,308,000 tons, an increase of 9.2% as compared with that of last year. Sales revenue translating into Hong Kong dollars recorded an increase of about 2.2%. Profit after tax translating into Hong Kong dollars was HK$45.33 million, a year-on-year decrease of about 14.8%.

In response to keen competition in the domestic cement market in 2016, strategy of the Group’s cement plant is to expand its market share in the central Vietnam’s cement market. As such, the cement plant has generally lowered its ex-factory prices of cement and thus achieved a substantial increase in sales volume of cement during the year.

On the production side, due to stable inflation throughout the year, most of the production costs were relatively flat. Consequential to an increase in sales volume, the cement output as well as the efficiency of production was lifted. The production cost of cement per ton recorded a drop of 3% comparing to last year. However, on the other hand, increase in transportation cost during the year attributed most to the profit decline of the cement plant.

Foreseeing 2017, the Group targets to increase the annual total sales quantity of cement and clinker to 1.45 million tons. Besides, the Group will put investment in upgrading part of the equipment of the cement plant, aiming to increase its overall production efficiency. Yet, on the other hand, both the coal price and salary are expected to have an increase of 5-10% during 2017. As a result, it is expected that the profit of the cement plant will remain stable in 2017.

Vietnam Property Investment and Development

During 2016, foreign investors were keen on investing in Vietnam, with newly increase foreign investments reaching US$15.8 billion, representing a year-on-year increase of 9%. South Korea became the top investing country with new projects invested by big corporations including Samsung and LG. Improved investment laws, cheap labour cost and various tax benefits were among the major causes in attracting foreign investments. However, foreign investments were mainly concentrated on manufacturing and real estate business, whereas financial and services sectors were relatively being ignored. Therefore, the Group’s Saigon Trade Center, with most of its clientele mainly coming from financial and services sectors, was not much benefited.

As at 31 December 2016, the lease-out rate of Saigon Trade Center was 72%, a slight decrease of a percentage point from 73% recorded as at the end of 2015. Yet, the average rental income recorded an increase during the year and thus the overall rental income of the Saigon Trade Center increased as a result when comparing to the same period of last year.

Foreseeing 2017, from figures released by the General Statistics Office of Vietnam, foreign investments kept pouring in Vietnam in Q4 of 2016 and Q1 of 2017. Moreover, investors also showed diversifying investments in various sectors apart from manufacturing and real estate business, which leads to a higher demand for office spaces. Therefore, it is expected that the rental performance of the Saigon Trade Center shall be more optimistic in 2017.

During 2016, the supply of residential apartments was abundant in Ho Chi Minh City, having surpassed the current market absorbing ability. The Group, as a result, will not kick start its development in the residential project for the land in Binh Thanh District in Ho Chi Minh City in a short period of time.

Hong Kong Hotel Project and Other Investment Properties

The structural and internal fitting out works of the Group’s hotel project in Tuen Mun of Hong Kong have basically been completed. It is currently pending for the government’s granting of the hotel operation license and the grand opening is expected to be taken place in the second half of 2017.

Currently, the hotel industry as well as retail business is a bit sluggish in Hong Kong. Under this situation, the hotel operation as well as the leasing of the shopping areas is expected to be slow growing in its beginning. Yet, the management is confident that when the hotel is running smooth, the hotel and its retail areas will bring long term and stable cashflow and income to the Group.

The Group has utilized its own cash reserve, as well as bank borrowing to finance the hotel construction. Considering the funding need for the construction, the board of directors recommended the final dividend to remain same as last year. It is expected that when the construction cost has been fully settled and income from the hotel having become stable, the dividend paid out of the Group will be increased accordingly.


The Board recommended to distribute a final dividend of HK6 cents per share to the shareholders and together with the interim dividend of HK4 cents per share already distributed, the total dividend for the full year of 2016 will be HK10 cents per share.


I would like to take this opportunity to extend my gratitude to my fellow directors, management and staff members for their contributions to the Group and to our shareholders for their support, confidence and recognition to the Group strategies and direction.

Cheng Cheung
31 March, 2017