The ongoing impact of the COVID-19 pandemic, coupled with geographical instability and global inflation, posed challenges to global economic growth in 2022. In the People’s Republic of China (the “PRC” or “China”), the tightening of COVID-19 restrictions and lockdown measures triggered by COVID-19 outbreaks in several cities led to business disruptions that continued to put pressure on economic activity throughout 2022. The Group recorded revenue of approximately RMB409.9 million for the year ended 31 December 2022, a drop of 40.5% from the previous year. The profit for the year was about RMB86.9 million, decreased by about 35.3% from about RMB134.3 million for the year ended 31 December 2021 (restated). Although the COVID-19 infections might continue to create short-term macroeconomic volatility, the PRC government’s announcement in December 2022 of a nationwide easing of COVID-19 restriction brightens the outlook for the economy in 2023 and beyond.

In December 2022, we entered into an agreement to dispose of the 60% equity interest in our Sui-Yue Expressway (Hunan Section) (the “Sui-Yue Expressway”) operation. Upon completion, expected to be in or about April 2023, we will receive a substantial amount of consideration which will significantly improve our cash position. This disposal provided an opportunity to unlock our investment amid the recent uncertain economic environment and fluctuating COVID-19 pandemic condition in the PRC.

After the disposal of the Sui-Yue Expressway operation, trading of liquor and spirits will become one of the most significant business segments in the Group. Upon the easing of COVID-19 restriction from December 2022, the business has returned to normal in the first quarter of 2023. Without the lock-down policy and restrictions in social activities, we will continue our effort in the brand building for Huamaojiu and Xijiushaofang through our active marketing campaigns and promotion, such as the wine tasting events and promotion conference.

In addition to the trading of liquor and spirits business, we invested about RMB86.6 million in the development of base wine production facility in Guizhou, through an associate of the Group for the year ended 31 December 2022. With this production facility, we can increase our presence in the wine industry in the PRC. Additional injection will be made to this project in 2023.

About our core business, toll road operation, the Qing Ping Expressway provides a stable income to the Group. Although its business was seriously affected by the COVID-19 pandemic, the traffic flow and the toll revenue recovered and were back to normal from the first quarter of 2023. Located in Shenzhen, with a high growth rate in the economic activities, the expressway will be one of the major sources of cash flow to the Group in future.

With the success in the liquor and spirits trading business, we are keeping our eyes on other prosperous business opportunities. In accordance with our strategy, we will pursue other infrastructure projects in China whenever suitable opportunities arise. Furthermore, we will also consider extending our operations to include other prosperous businesses once favourable opportunities appear.

On behalf of the Board, I would like to express my deepest gratitude to our shareholders, investors, business partners and customers for their unwavering trust and support, and to our directors, management and staff for their invaluable contributions over the past years. We will continue to recalibrate our efforts to bring greater returns to all Shareholders as the Group embraces a sustainable and prosperous future.

Chan Yeung Nam

Hong Kong, 30 March 2023