Golden Resources Development International [HKG:0677], a Hong Kong-based rice wholesaler and distributor, is scouting for potential joint venture (JV) and minority stake investment opportunities, said Vice Chairman and CEO Anthony Lam.
The company is looking for good opportunities that fit its three major businesses – Circle K convenience store operations in Vietnam, rice distribution in Hong Kong and recyclable packaging materials production in mainland China, he said.
It will, in return, guide the potential JV partners and targets to explore new market entry or increase their market presence in the three markets, he added.
“We hope to achieve mutually beneficial situation, instead of considering self-interest only,” he said.
Lam pointed to the JV with Hong Kong-based hot bento vending machine operator Kamakura Foods as an ideal example.
In September 2022, Golden Resources, together with its largest shareholder Yuen Loong – owned by Lam and his families, formed a 70.82/29.18 JV with Kamakura Foods for a total initial cash contribution of HKD 7.1m (USD 903,854.3), in order to operate one central kitchen, retail stores and vending machines for railway lunchbox Ekiben bento and Japanese rice ball Onigiri in Hong Kong, as announced.
Golden Resources has held discussions with a couple of potential parties from various countries, however no conclusion has been reached, Lam said.
The company is selective as it targets to leverage on the potential transactions to enhance its service offerings and add values, he said.
Companies with proven track records and seasoned management teams are most preferred, he said.
Golden Resources is happy to hear from investment banks or law firms with suitable candidates, he said, noting that it has a strong referral network.
The company intends to finance the transactions using its balance sheet with HKD 594.1m cash and cash equivalents as of 30 September 2022, he said.
No plan for Circle K Vietnam stake sale
Golden Resources currently has no plans to launch a minority stake sale of its Circle K convenience store operations in Vietnam despite market rumours, Lam said.
The unit has seen strong growth momentum. For the six months ended September 2022, it hit an around 52% year-on-year (YoY) rise in revenue, he explained.
The company was rumoured late last year to have mandated an advisor to help sound out investors about a potential deal, a source familiar with the matter told this news service.
Convenience store operations contributed 58.9% or HKD 606.9m to the total revenue of HKD 1bn in the six months ended September last year, referring to its interim report.
Its original key revenue driver – its rice business – accounted for 33.9% of its total revenue, followed by 7.4% from the packaging materials unit, as per the report.
The company reported a net profit of HKD 74.8m for the six months ended September 2022, a turnaround from a net loss of HKD 14m for the same period the year prior. The change was due to the substantial and continuous growth of the convenience store business, the report reads.
Golden Resources, with a market capitalisation of HKD 2bn, closed at HKD 1.18 per share on 21 February 2023, up 136% year-to-date (YTD). It reached an intraday high of HKD 1.36 on 3 February this year but has since edged back to the current price.
The company was not aware of any reasons for such increases in the price and trading volume, as announced on 31 January 2023.
