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On behalf of the board of directors (the “Board” or the “Director(s)”) of China Agri-Products Exchange Limited (the “Company”, together with its subsidiaries, collectively the “Group”), I am pleased to present to our shareholders the annual report for the fifteen months ended 31 March 2020 (the “Period”). During the Period, the Group recorded a turnover of approximately HK$1,091 million (for the twelve months ended 31 December 2018: approximately HK$779 million). During the Period, due to the increase in turnover of sales of properties, increase in net gain in fair value of investment properties, decrease in impairment of stock of properties and loss in fair value of derivative financial instruments, as well as decrease in administrative expenses, the Group experienced a turnaround from loss to profit and recorded profit attributable to owners of the Company of approximately HK$6 million(for the twelve months ended 31 December 2018: loss attributable to owners of the Company of approximately HK$213 million).

The partial share offer in respect of shares of the Company made by Wai Yuen Tong Medicine Holdings Limited (“WYT”; stock code: 897) and parties acting in concert with it closed in February 2020. Accordingly, WYT is interested in 53.37% of the issued shares of the Company and became a controlling shareholder of the Group. The completion of the partial share offer marked the official transition of the Group to become a member of WYT and Wang On Group Limited (“WOG”; stock code: 1222), which not only strengthened the shareholder base of the Group, but was also conducive to the Group in generating synergies with the controlling shareholder in terms of assets and business. WYT owns a widely-known Chinese medicine and health food brand – “Wai Yuen Tong” and the world renowned Western medicine and health food brands – “Madame Pearl’s” and “Pearl’s”, being the industry leader in the Chinese and Western pharmaceutical and healthcare sectors. WOG, being one of the largest leasing operators of fresh markets in Hong Kong Special Administrative Region (“Hong Kong”), operates fresh markets in Hong Kong under the fresh market brand of the next-generation “Allmart”, and manages fresh markets through its joint venture under the “Huimin” brand in various districts of Shenzhen, Guangdong Province, the People’s Republic of China (the “PRC”). As a result of the completion of the partial share offer, the Group will be accounted for as a subsidiary in the financial statements of WOG and WYT. Accordingly, we have aligned the financial year end date with the holding company to save the expenses incurred in the preparation of separate financial statements.


During the Period, the global economy remained volatile with various unstable factors. According to the statistics announced by the National Bureau of Statistics of China, in 2019, the growth of gross domestic product (“GDP”) decreased to 6.1%, whereas the growth of gross value of agricultural production in China was approximately 3.1%. As a key segment of necessities for people’s livelihood, the growth and the overall business environment of the agricultural industry remained relatively steady. Moving forward to the first quarter of 2020, China and global economy was devastated amid the outbreak of Coronavirus Disease 2019 (the “COVID-19”) around the world. Despite the impact of the COVID-19, the agricultural industry in China maintained relatively steady growth momentum. The added value of agriculture (farming) grew by 3.5% against the adverse trend and became a bright torch in the first quarter reporting season.


The Group has successfully built a nationwide chain of wholesale markets and a network of modern agricultural produce logistics center, linking the southern and northern regions and across the eastern and south-western parts of the PRC. During the Period, the Group managed a total of 11 agricultural produce exchange markets in the Mainland China, covering Wuhan, Huangshi, Suizhou, Luoyang, Puyang, Kaifeng, Yulin, Qinzhou, Xuzhou, Huai’an and Panjin, spreading across various provinces, including Hubei Province, Henan Province, Guangxi Zhuang Autonomous Region, Jiangsu Province and Liaoning Province.

During the Period, the agricultural produce exchange markets maintained stable operations in general and generated remarkable results for the Group. In the first quarter of 2020, despite the outbreak of the COVID-19 in China, the Group’s Wuhan Baisazhou Agricultural and By-Product Exchange Market (“Wuhan Baisazhou Market”) in Hubei Province maintained normal operation under the “supply guarantee” policy. Its remarkable contributions towards “supply guarantee” in Wuhan were recognized by the Supplies Security Section under the Wuhan’s COVID-19 Epidemic Prevention and Control Division. Wuhan Baisazhou Market was titled “An Outstanding Enterprise in Contributing to the Epidemic Prevention and Control and Supply Guarantee in Wuhan”. Most of the agricultural produce exchange markets of the Group maintained normal operations during the COVID-19 epidemic. As a series of agricultural policies have been introduced to safeguard food supply, the impact on our business was relatively small. Since the outbreak of the COVID-19, we have taken various stringent hygiene measures towards all employees, commercial tenants and visitors, and also strengthened the awareness of employees on anti-epidemic education.


Asset-Light Operation Model Becoming A Growth Engine

During the Period, the asset-light operation model began to bear fruit. Since March 2018, the Group has been jointly operating Suizhou Baisazhou Agricultural and By-Product Exchange Market (“Suizhou Market”) through a joint venture established with an independent third party. Being a benchmark project of the Group that adopts the asset-light operation model, the operating performance of Suizhou Market was satisfactory during the Period. It is expected that the asset-light operation strategy will become the direction for the development of the Company’s business. At the same time, the Group continues to integrate resources internally and externally, strengthen cost control and enhance operating efficiency internally, while implementing a series of supplier management, customer relationship and product quality control enhancement projects externally, actively diversifying its businesses so as to increase sources of income.

Adopting Big Data Scientific Management

As a leading agricultural produce logistics and warehouse operator in China, in recent years, the Group has actively upgraded the environmental safety standards of the projects. In addition, to create a safe business environment for commercial tenants and customers, it has successively improved the strong electricity monitoring alert system for various agricultural produce exchange markets to monitor electricity and fire protection on a real-time basis. During the Period, in line with the development trend of electronic operations, the Group also began the upgrade of the lease transaction system in order to improve the customer experience holistically. Currently, the Group has completed the relevant set up for three of its markets and, in the future, will successively set up the relevant system in other markets.

Launching Online and Offline Omnichannel Synergistic Operation Model

In recent years, internet economy in China has been booming. The Group is exploring for opportunities to build a business model combining online and offline operations. While taking a prudent approach and moderately allocating resources to develop e-commerce activities, we have provided “delegated purchase and inspection, subcontracting to point” distribution services with Wuhan Baisazhou Market as the pilot site, thus linking online and offline customers of agricultural produce exchange markets.

Expanding New Business Model Integrating the Upstream, Midstream and Downstream of the Agricultural Produce Exchange Industry Chain

Leveraging on the business coverage of the wholesale markets and the strengths of the upstream supply chain of agricultural products, the Group has begun the extension of its business scope to the downstream segment of the industry chain. During the Period, the Group planned to establish the fresh food retail specialty store business in the areas of agricultural produce exchange markets. We opened franchise stores on e-commerce platform to gradually shape the retail business platform that integrates physical and virtual businesses. We targeted to expand the business segments in the midstream and downstream agricultural products, and endeavored to develop the new retail business of “physical store + e-commerce”. In addition, the Group actively tapped into the e-commerce sector and sought other business opportunities with partners that generate synergies.


The Ministry of Agriculture and Rural Affairs of the PRC has promulgated the Plan for High Quality Development of New Agricultural Operators and Service Providers (2020-2022) (the “Plan”), setting out the detailed plan for high quality development of new agricultural operators and service providers including family farms, agricultural cooperatives and agricultural social service organizations. The implementation of the Plan will certainly facilitate further development of new agricultural operators and service providers and drive the enhancement of the level of agricultural modernization. In addition, according to the Plan, by 2022, the level of marketization, professionalism and informatization of agricultural operation service will be significantly improved, and the service chain will be further extended. The government also encourages the acceleration of rural logistics networks and the construction of distribution centers in rural areas with certain conditions, thus providing more favorable policy conditions for revitalizing rural industries and promoting agricultural modernization.

In addition, according to the “No. 1 Central Document of 2020”, the central government reiterated that the work of “Three Rural Issues” should be strengthened and undertook to push forward the investment in agricultural produce exchange markets, expand agricultural produce network and build logistic infrastructure and storage facilities of agricultural products as well as improve regional cold storage infrastructure.

The Group is well positioned to capture the industry opportunities arising from the above national policies while adhering to agricultural produce exchange markets as the Group’s principal business. Within the PRC, the Group will, leveraging on its well-established nationwide chain of wholesale markets and a network of modern agricultural produce logistics center network, capitalize on its supply chain strengths to steadily expand its business. By focusing on the asset-light business strategy, the Group can maximize the added value of the wholesale markets through capitalizing on its modern management experience and expertise in the operation of agricultural by-products. The Group will also continue to optimize the assets and resources allocation while making use of existing business layout to extend the industry chain and seeking diversified development of related business segments with a view to enhancing operational efficiency and flexibility.

Due to strong market demand for food and agricultural by-products merchandising service, the Group will also continue to engage in the business of procurement of food and agricultural by-products. The management will consider expanding the distribution business and bulk trading business. On the one hand, it can supplement the development of the agricultural by-products wholesale business. On the other hand, it can support the Group’s business development of integrating e-commerce.

As to business digitalization development, the Group will centralize its resources to develop barcode tracking system for agricultural products to optimize food safety through tracking the origin and distribution process of agricultural products.

Outside the PRC, in response to the PRC government’s “Belt and Road Initiative”, the Group will take a prudent approach while actively exploring business opportunities with wholesale markets or buyers within the ASEAN region and seeking to replicate the success of the Group’s operation model to overseas markets.


As a socially responsible corporation, the Group is committed to promoting sustainable business development. During the Period, the Company participated in the “Love Teeth Day” and “Green Day” organized by The Community Chest of Hong Kong and the “Orbis World Sight Day” organized by Orbis International. Since the outbreak of the COVID-19, the Group’s projects in the Mainland China donated tons of supplies of various types including surgical face masks, alcohol-based hand sanitizers, rice, vegetables, fruits and instant noodles to government departments, anti-epidemic frontline workers and residents in the affected areas to contribute to daily life needs of citizens and support the country’s efforts in fighting the COVID-19 epidemic. Shouldering its corporate social responsibilities, the Group has for long adopted environmental protection measures to ensure that our construction projects and business operations comply with environmental protection laws and regulations of the PRC, while providing support to various education aid and poverty alleviation activities over the years.

Please refer to the environmental, social and governance report in this annual report for details of the Group’s environmental protection, social and governance related work during the Period.


I would like to express my sincere gratitude to the Company’s shareholders, bondholders, business partners and customers for their continued trust and support over the past year. Meanwhile, I would also like to thank my fellow board members, the management team and staff members at all levels for their dedication and remarkable contribution to the growth of the Group.

Chan Chun Hong, Thomas
Chairman and Chief Executive Officer

Hong Kong, 29 June 2020