MIRA INFORM REPORT

 

 

Report Date :           

06.07.2011

 

IDENTIFICATION DETAILS

 

Name :

FONG’S  STEELS  SUPPLIES  CO.  LTD.

 

 

Registered Office :

8/F., 22-28 Cheung Tat Road, Tsing Yi Island, New Territories

 

 

Country :

Hong Kong

 

 

Date of Incorporation :

27.05.1988

 

 

Com. Reg. No.:

11981633

 

 

Legal Form :

Private Limited Company

 

 

Line of Business :

Importer and Exporter; Agent of all kinds of stainless steel supplies

 

RATING & COMMENTS

 

MIRA’s Rating :

Ba

 

RATING

STATUS

PROPOSED CREDIT LINE

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

Satisfactory

 

Status :

Satisfactory

 

 

Payment Behaviour :

Usually Correct

 

 

Litigation :

Clear

 

 

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

 

 

ECGC Country Risk Classification List – March 31st, 2011

 

Country Name

Previous Rating

                   (31.12.2010)                  

Current Rating

(31.03.2011)

Hong Kong

a2

a2

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

Company Name

 

FONG’S  STEELS  SUPPLIES  CO.  LTD.

 

 

Company ADDRESS

 

8/F., 22-28 Cheung Tat Road, Tsing Yi Island, New Territories, Hong Kong.

PHONE:            2497 7889,  2435 5707,  2449 9240

FAX:                 2431 7033,  2432 2923,  2436 9872

E-MAIL:                        steels@fongs.com

alberthyl@fongssteels.com

 

 

MANAGEMENT

 

Director & General Manager:  Mr. Fong Kwok Leung, Kevin

 

 

SUMMARY

 

Incorporated on:             27th May, 1988.

 

Organization:                 Private Limited Company.

 

Capital:                         Nominal:           HK$10,000.00

Issued:              HK$10,000.00

 

Business Category:        Trading in stainless steel supplies.

 

Group Revenue:-            (Year ended 31-12-2010)

HK$2,587,182,000  (Whole Group)

HK$   621,028,000  (Stainless Steel Supplies Trading Segment)

 

Group Employees:         Approx. 3,920.  (As at 31-12-2010)

 

Main Dealing Banker:     The Hongkong & Shanghai Banking Corp. Ltd., Hong Kong.

 

Banking Relation:           Good.

Company ADDRESS

 

Registered Head Office:-

8/F., 22-28 Cheung Tat Road, Tsing Yi Island, New Territories, Hong Kong.

 

P.O. Box 79369, Mongkok, Kowloon, Hong Kong.

 

Immediate Holding Company:-

Fong’s Manufacturers Co. Ltd., British Virgin Islands.

 

Penultimate Holding Company:-

Fong’s Industries Co. Ltd., Bermuda/Hong Kong.

 

Ultimate Holding Company:-

China Hengtian Group Co. Ltd., China.

 

Associated/Affiliated Companies:-

Fong’s Group of Companies

·         Falmer Investments Ltd., British Virgin Islands/Hong Kong.

·         Fong’s Engineering Services Co. Ltd., Hong Kong.

·         Fong’s Europe GmbH, Germany.

·         Fong’s Group Management Ltd., Hong Kong.

·         Fong’s Industrial Engineering Management (H.K.) Ltd., Hong Kong.

·         Fong’s National Dyeing & Finishing Machinery (Macao Commercial Offshore) Co. Ltd., Macau.

·         Fong’s National Engineering (Shenzhen) Co. Ltd., China.

·         Fong’s National Engineering Co. Ltd., Hong Kong.

·         Fong’s National Engineering Holding Ltd., Hong Kong.

·         Fong’s National Engineering Shenzhen Holding Ltd., Hong Kong.

·         Fong’s Nominees Ltd., Hong Kong.

·         Fong’s Steels Supplies Zhongshan Holding Ltd., Hong Kong.

·         Fong’s Technology Investment Co. Ltd., Hong Kong.

·         Fong’s Water Technology & Conservation Equipment (Shenzhen) Co. Ltd., China.

·         Fong’s Water Technology Co. Ltd., Hong Kong.

·         Fong’s Water Technology Zhongshan Holding Ltd., Hong Kong.

·         Foshan East Asia Co. Ltd., China.

·         Goller (HK) Ltd., Hong Kong.

·         Goller Textile Machinery (Shenzhen) Co. Ltd., China.

·         Monforts Fong’s Textile Machinery (Macao Commercial Offshore) Co. Ltd., Macau.

·         Monforts Fong’s Textile Machinery (Shenzhen) Co. Ltd., China.

·         Monforts Fong’s Textile Machinery Co. Ltd., Hong Kong.

·         Plexxor Co. Ltd., Hong Kong.  [In liquidation]

·         Sunshine Glory Ltd., British Virgin Islands/China.

·         THEN Maschinen (HK) Ltd., Hong Kong.

·         Tycon Alloy Industries (Hong Kong) Co. Ltd., Hong Kong.

·         Tycon Alloy Industries (Shenzhen) Co. Ltd., China.

·         Xorella AG, Switzerland.

·         Xorella Hong Kong Ltd., Hong Kong.

etc.

 

BUSINESS REGISTRATION NUMBER

 

11981633

 

 

COMPANY FILE NUMBER

 

0217204

 

 

MANAGEMENT

 

Group Chief Executive Officer:  Mr. Wan Wai Yung

Director & General Manager:       Mr. Fong Kwok Leung, Kevin

 

 

CAPITAL

 

Nominal Share Capital: HK$10,000.00 (Divided into 10,000 shares of HK$1.00 each)

 

Issued Share Capital:     HK$10,000.00

 

 

SHAREHOLDERS

(As per registry dated 27-05-2011)

 

Name

 

No. of shares

Fong’s Manufacturers Co. Ltd.

Craigmuir Chambers, Road Town, Tortola, British Virgin Islands.

 

9,999

Fong’s Nominees Ltd., Hong Kong.

 

1

 

 

––––––

 

Total:

10,000

=====

 

DIRECTORS

(As per registry dated 27-05-2011)

 

Name

(Nationality)

 

Address

FONG Sou Lam

   (Chinese)

House No. 10, 27th Street, Hong Lok Yuen, Tai Po, New Territories, Hong Kong.

 

FONG Kwok Leung, Kevin

   (Canadian)

House No. 2, 8th Street, Hong Lok Yuen, Tai Po, New Territories, Hong Kong.

 

WAN Wai Yung

   (British)

Flat B, 27/F., Tower 2, Manhattan Hill, 1 Po Lun Street, Lai Chi Kok, Kowloon, Hong Kong.

 

 

SECRETARY

(As per registry dated 27-05-2011)

 

Name

(Nationality)

 

Address

LEE Che Keung

   (British)

Flat B, 10/F., Hoi Ngan Mansion, Riviera Gardens, Tsuen Wan, New Territories, Hong Kong.

 

 

HISTORY

 

The subject was incorporated on 27th May, 1988 as a private limited liability company under the Hong Kong Companies Ordinance.

Originally the subject was registered under the name of Finemate Development Ltd., name changed to the present style on 2nd December, 1988.

Apart from these, neither material change nor amendment has been ever traced and noted.

 

 

OPERATIONS

 

Activities:                      Importer and Exporter; Agent.

 

Lines:                           All kinds of stainless steel supplies.

 

Group Employees:         Approx. 3,920.  (As at 31-12-2010)

 

Commodities Imported:-

·         “UGINE-SAVOIE”, “UGIMA” and “UGIMANSU” stainless steel sheet, plate and materials – France.

·         “HOKO”, “AVESTA” and “UGINE” stainless steel – France and Japan.

·         “SAMMI” stainless steel tubes – Korea.

·         “AICHI” stainless steel bars – Japan.

·         “NTK” and “NAS” stainless steel plates – Japan.

 

Markets:           China, Hong Kong, Asia Pacific, Europe, North and South America, etc.

 

Group Revenue:-

Period

Whole Group

Stainless Steel Supplies Trading Segment

Year ended 31-12-2006

HK$2,380,036,000

HK$809,195,000

Year ended 31-12-2007

HK$3,029,189,000

HK$902,650,000

Year ended 31-12-2008

HK$2,499,856,000

HK$623,034,000

Year ended 31-12-2009

HK$1,797,695,000

HK$363,693,000

Year ended 31-12-2010

HK$2,587,182,000

HK$621,028,000

 

Terms/Sales:     L/C and on credit.

 

Terms/Buying:  L/C or 30-90 days credit.

 

 

MEMBERSHIP

 

·         Hong Kong Watch Manufacturers Association Ltd., Hong Kong.

·         The Chinese Manufacturers’ Association of Hong Kong, Hong Kong.
[Membership No. 009133]

 

 

FINANCIAL INFORMATION

 

Nominal Share Capital:   HK$10,000.00 (Divided into 10,000 shares of HK$1.00 each)

 

Issued Share Capital:     HK$10,000.00

 

Segment Result (Stainless Steel Supplies Trading Segment):-

·         HK$145,275,000  (Year ended 31-12-2006)

·         HK$100,395,000  (Year ended 31-12-2007)

·         HK$  16,903,000  (Year ended 31-12-2008)

·         HK$    7,367,000  (Year ended 31-12-2009)

·         HK$  33,507,000  (Year ended 31-12-2010)

 

Group Net Profit/(Loss):

HK$260,033,000            (Year ended 31-12-2006)

HK$274,405,000            (Year ended 31-12-2007)

(HK$142,779,000)          (Year ended 31-12-2008)

(HK$106,335,000)          (Year ended 31-12-2009)

HK$302,965,000            (Year ended 31-12-2010)

 

Profit or Loss:                Operation is profitable.

 

Condition:                      Business is active and satisfactory.

 

Facilities:                      Making active use of general banking facilities.

 

Payment:                      Met trade commitments as required.

 

Commercial Morality:     Satisfactory.

 

Bankers:-

·         The Hongkong & Shanghai Banking Corp. Ltd., Hong Kong.

·         Hang Seng Bank Ltd., Hong Kong.

·         Standard Chartered Bank (Hong Kong) Ltd., Hong Kong.

·         Bank of China (Hong Kong) Ltd., Hong Kong.

 

Standing:  Good.

 

 

GENERAL

 

Fong’s Steels Supplies Co. Ltd. is a wholly-owned subsidiary of Fong’s Manufacturers Co. Ltd., a BVI-registered firm which in turn is a subsidiary of Fong’s Industries Co. Ltd. [FIC], a public listed firm in Hong Kong.

Established in 1988, the subject specialises in retail and wholesale of stainless steel materials, covering local as well as China markets.  The products comprise sheets, coils, plates, pipes, flats, angles, checkers, bars, tubes, flanges, elbows, square/rectangular tubes, hexagonal bars, aluminium checker plates, etc. and originates from many countries but mostly Japan and Europe.  Due to their special characteristics, stainless steel has always been considered, as a sector within the steel industry, having the highest growth potential.  World consumption is rising steadily and is especially acute in Asia which is enjoying high rates of economic growth.  The subject is positioned to reap the benefits from this handsome development, particular in China, with sustained growth foreseeable in the near future.

FIC was incorporated in Bermuda on 11th January, 1989 as a holding company of the Fong’s Group.  In September 1990, FIC has established a principal place of business in Hong Kong.  In October 1990, FIC became a listed company in Hong Kong by offering 52 million New Issue Shares of HK$0.10 each at HK$1.00 per share to the public.  The proceeds of the new issue after deducting expenses amounted to HK$44.5 million, of which HK$20 million was invested in new machinery and facilities as well as in research and development, another HK$20 million on repayment of short‑term loans and HK$4.5 million as general working capital.  Trading in the shares of FIC commenced on 12th October, 1990 under the stock code 641.

The core business of the Fong’s Group is the design, manufacture and sale of dyeing and finishing machinery.  With over 30 years of research and manufacturing experience, the brand name “FONG’S” has built up a solid image for supplying modern and high quality machines for the textile dyeing industry in the world.  While keeping the manufacturing based activities in sight, FIC has expanded to a conglomerate with diversified business activities.  Its operations also include the trading in stainless steel supplies and machine parts, manufacture and sale of stainless steel casting products, textile garments merchandising, agency representations, joint ventures for textile machinery and accessories trading, and in property investments.

In 2010, the performance of the Stainless Steel Supplies Trading Segment was satisfactory.  For the year ended 31st December, 2010, the sales volume amounted to approximately HK$621 million (2009: HK$364 million), representing an increase of 71% as compared to the previous year and accounted for 24% of the Group’s total revenue.  Its operating profit was approximately HK$34 million as compared to approximately HK$7 million last year.  The increase in profitability was mainly attributable to the increase in sales volume and selling price of stainless steel products.

This Segment’s stainless steel materials are sold to customers mainly in the Mainland China and Hong Kong in the sectors of construction, houseware, machinery, chemical processes, watch and kitchen equipment, the high growth in sales volume was due to the strong demand in the relevant industries driven by the recovery of global economy in 2010.  In addition, the stainless steel prices have reversed the decline since the second quarter of 2009 and the prices are anticipated to be on a moderate upward trend in line with the rising commodity prices.  As the sales volume and profit margin were boosted by the increasing demand and stainless steel prices, this Segment recorded a remarkable improvement in profit in 2010.

For the year ended 31st December, 2010, the Group’s consolidated revenue amounted to approximately HK$2,587 million (2009: HK$1,798 million), an increase of 44% as compared with the previous year.  Profit for the year was approximately HK$303 million (2009: loss of HK$106 million).

Looking ahead, the Group will also face same challenges as other manufacturers in China – the fluctuation of stainless steel raw material prices, the rise of the labour costs and the uncertain economic environment.  Against the backdrop of such challenges, the Group will endeavor to further strengthen its marketing teams and sales network through maintaining good and close relationship with distribution agents and valuable customers, and to improve its operational efficiency by optimizing its production process with an aim to better control its operating costs.  The Group also keeps putting effort in research and development of new products and improvement of existing products in order to meet the needs of the dynamic textile industry.

The Board believes that the Group enjoys its significant advantage in brandname and comprehensive product portfolio, the Group is confident to encounter those challenges ahead.

To cater for the anticipated business growth, the Group has entered into land‑use rights sale and purchase agreements to acquire two parcels of land in Zhongshan, one of which with a site area of approximately 172 mu (115,000 sq.m.) will be for use by this business segment.  The construction of the new production commenced in 2010 and will be completed by the end of 2012.

On 7th January, 2011, China Hengtian Group Co. Ltd. [China Hengtian], a China-based firm, acquired 37.7% interests of FIC.  As at 3rd June, 2011, China Hengtian has acquired 61.05% of FIC’s interest.  Since then, China Hengtian has become the ultimate holding company of the subject.  The old chairman of FIC Mr. Fong Sou Lam has resigned and his position has been replaced by Ms. He Fengxian who was appointed on 9th June, 2011.

The subject is fully supported by the Fong’s Group and ultimately by China Hengtian.

On the whole, consider the subject good for normal business engagements.

 

REMARKS:

 

Brief introduction on the principal directors:-

Mr. WAN Wai Yung, aged 59, is the Chief Executive Officer and a member of the Remuneration Committee of FIC.  Mr. Wan is responsible for the overall supervision of the Group’s operations and assisting the Chairman in strategic planning and business development.  Mr. Wan first joined the Group in 1978 and has over 30 years of experience with excellent customer relationships in the textile and dyeing industry.

Mr. FONG Kwok Leung, Kevin, aged 49, is the eldest son of Mr. Fong Sou Lam, he joined the Group in 1986.  Mr. Kevin Fong has been involved in the business of stainless steel trading since 1988 and is currently responsible for overseeing the stainless steel trading and stainless steel casting businesses of the Group.  Mr. Kevin Fong holds a Bachelor’s degree in Business Administration from the Simon Fraser University, Canada.  Mr. Kevin Fong is a director of GBOGH Assets Ltd. which, through its six wholly-owned subsidiaries, beneficially owns an aggregate of 287,397,360 shares, representing approximately 52.12% of the issued share capital of FIC.

 

Court Cases:           None per our.

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.44.50

UK Pound

1

Rs.71.25

Euro

1

Rs.64.40

 

 

RATING EXPLANATIONS

 

RATING

STATUS

 

 

PROPOSED CREDIT LINE

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

 

Unlimited

71-85

Aa

Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums

 

Large

56-70

A

Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums

 

Fairly Large

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

 

Satisfactory

26-40

B

Capability to overcome financial difficulties seems comparatively below average.

 

Small

11-25

Ca

Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity

 

Limited with full security

<10

C

Absolute credit risk exists. Caution needed to be exercised

 

 

Credit not recommended

----

NB

New Business

----

 

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

 

Financial condition (40%)            Ownership background (20%)                 Payment record (10%)

Credit history (10%)                    Market trend (10%)                                Operational size (10%)

 

 

 

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This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.