Hong Kong-based Zibao Metals Recycling continues to struggle to keep its existing business “viable in the long-term” because of the impact of China’s import ban.
The company says it will need to make a “significant” write-down of the carry value of its trading subsidiary Masterpiece Enterprises. December 2018, Zibao reported its revenue decreased 71 percent to $139 million from $479 million and gross profit decreased by 91 percent to $0.3 million from $3.83 million. The losses are from lower revenues and margins as a result of the impact of the Chinese regulations restricting imports, the company says.
“Despite undertaking significant cost-cutting and implementing measures to seek new suppliers, which can comply with the new import regulations into China for the group’s products, the pace of this change has been very slow and this has continued in the second half and into the current financial period, with the group continuing to make trading losses,” the company says in a September trading update.
As the regulations have prevailed for 18 months, Zibao says trading losses are increasing and there’s “no indication that there will be any immediate solution to the structural change in our industry.”
The company also announced the immediate resignation of two of the company’s directors Chin Phang Kwok and Chor Wei “Alan” Ong, who was the company’s finance director.
“Given the current position, the board has been considering alternative options for the group, which it hopes to present to shareholders in the near future,” the company says.
Zibao Metals Recycling provides nonferrous metals in the metal recycling industry, including aluminum and copper, which it sources from a panel of suppliers across world and sells to a base of customers in China.