Qinhuangdao Bohai Physical Distribution Holding Co. Ltd.

Public (SZ: 000889)

Company Facts:Qinhuangdao Bohai Physical Distribution Holding CO. Ltd. (BPDH) is located in Qinhuangdao City, Hebei province, China; The Company was established by merging two local shopping mall based companies: Shangsha Company and Shangcheng Company on May, 1997. Shangsha Company was initiated by Hualian Department Store Co. Ltd. in 1993 while Shangcheng Company was known as Qinhuangdao City shopping centre.

BPDH is a multi-functional enterprise which unites logistic, stores, e-commerce etc. The company’s overall business operating area is over 60,000 square meters, which includes six large scale (10,000 square meter and more) shopping malls, super markets, and retailing stores.

The company has invested RMB 200 million to enhance its logistics chain. Three projects are in process: Shanghai Qingpu agriculture products logistic centre, Hefei New Changjiang Food and Hard Drink Logistic centre, and Wuhu New Changjiang Food and Hard Drink Logistic centre.

Moreover, New Changjiang e-Commerce Development Company, one of the subsidiaries of BPDH, has adopted world most advanced net-management modules and developed its B2C e-Commerce solution in fast moving consumer’s goods, as well as B2B E-Commerce in building and decoration products, and machinery products. It has become Chinese most famous business networks, and has been granted by Chinese government as sample project in the country’s ‘Golden Trading Project’.

Financial Overview

Related companies: (Name, relationship, and percentage of ownership/rights & interests):

Qinhuangdao Hualian Kangbao Co. Ltd. Shareholding Company

Anhui New Changjiang Investment Co. Ltd. Holding Company, percentage of ownership: 15.26%

Huainan City New Oriental Real Estate Investment Co. Ltd. Holding subsidiaries, percentage of ownership: 95%

Qinhuangdao Hualian Shangcheng Jinyuan Real Estate Development Co. Ltd. . Holding subsidiaries, percentage of ownership: 99%

Anhui Province WuhuMi City Development Co. Ltd. Holding subsidiaries, percentage of ownership: 80%

Qinhuangdao Hualian Shangcheng Jingyuan Supermarket Co. Ltd. Holding subsidiaries, percentage of ownership: 99%

Qinhuangdao City Xiandai Shopping Plaza Co. Ltd. Holding subsidiaries, percentage of ownership: 100%

Chuzhou Guorun Investment Development Co. Ltd. Holding subsidiaries, percentage of ownership: 95%

Anhui Guorun Investment Development Co. Ltd. Holding subsidiaries, percentage of ownership: 99.83%

Wuhu Guorun Investment Development Co. Ltd. Holding subsidiaries, percentage of ownership: 95%

Qinhuangdao City Jinyuan Real Estate Development Co. Ltd. Holding subsidiaries, percentage of ownership: 99.96%

Qinhuangdao Hualian Shangcheng Mineral Water Co. Ltd. Holding subsidiaries, percentage of ownership: 49%

Qinhuangdao Hualian Shangcheng JInyuan Operational Service Co. Ltd. Holding subsidiaries, percentage of ownership: 99%

Qinhuangdao City Jinyuan Grand Hotel Co. Ltd. Holding subsidiaries, percentage of ownership: 100%

Qinhuangdao Bohai Logistic Trading Co. Ltd. Holding subsidiaries, percentage of ownership: 96.67%

Qinhuangdao Jinyuan Home Decoration Mall Co. Ltd. Holding subsidiaries, percentage of ownership: 90%

Anhui Province New Changjiang Merchants Exchange Co. Ltd. Holding subsidiaries, percentage of ownership: 90%

Wei Chao (President of the company), Actual controller, percentage of ownership: 57.40%

Wei Ju (Sister of Wei Chao), Actual Controller, percentage of ownership: 33.10%

Stock Health:

As on 23rd July, 2008

Open: 4.16     High: 4.16   Low: 3.97   Close: 3.98   Vol.:  4,065,375                 

Key Stats & Ratios

     Unite: RMB 10,000 Yuan

Daily Stats (last one month):

     DATE         OPEN   HIGH   LOW   CLOSE       VOL

Qinhuangdao Bohai Physical Distribution Holding Co. Ltd. has also reformed Tianhua Grand Hotel this year. The company will enhance its business advantages in E-Commerce field in order to pursue maximum profits.

The company’s retailing business has achieved profit margin of RMB 3.4 million that contributes an increase of 56.06% in the first half of year 2008 correspondingly to the same period of the previous year. Moreover, the real estate business in Anhui province has achieved profit margin of RMB 2.9 million that throw in a growth of 114.17% compare with first two quarters of year 2007. However, due to the real estate business in Qinhuangdao City has suffered major crash of total amount RMB 6.6 million has been lost; sadly, the company’s the overall profitability is not looking good.

It is assumed that the company’s realty business in Qinhuangdao City, is unlikely to pick up in this year as the investment return is lower than expected and the market demand is shorter than supply. Therefore, investors should be aware of the fact that the company’s business performance will not be able to improve unless some good news comes along which will change the industrial situation in Qinhuangdao City.

To have a look at domestic retailing sector in the first half of year 2008, a dramatic drop-down has shown caused by various risks, such as competition among domestic retailers, entry of foreign retailer companies increase the industrial competition, reducing in retailing margins and inflation that has affected consumer behaviors, largely.

In my opinion, this stock contains higher risks at the moment; investors should choose leading retailing companies to invest over this specific company. However, investors should be aware of company’s events regarding its E-Commerce business, which maybe a motivation for the stock. To conclude, this stock is risky for short term and middle term; has potentials for long term.