At the end of 1992, Shougang Holding (Hong Kong) Limited ("Shougang Holding (Hong Kong)"), a wholly-owned subsidiary established by the Shougang Group in Hong Kong, embarked on the road of overseas operation and became one of the first batch of large-scale state-owned enterprises to "go global" in China. With several ups and downs over the past 30 years, facing complicated internal and external environmental changes and many challenges in industrial development, the Shougang Group has planned the development path of Shougang Holding (Hong Kong) under every new situation. In 2013, Shougang made up its mind to comprehensively promote industrial transformation and upgrading in Hong Kong, effectively improved the management and risk prevention and control level of overseas enterprises, and successfully reshaped their industrial development and corporate governance capabilities.

Considering the transformation outcomes after ten years, Shougang Holding (Hong Kong) completely reversed the continuous loss situation from a decade before. It achieved profit of HK $3.35 billion in the first half of 2022 and nearly HK $5 billion for the whole year, creating the best performance since its establishment 30 years ago. Shougang Holding (Hong Kong)'s total assets has increased by 175%, its net assets have increased by 627% and its state-owned assets achieved substantial preservation and appreciation. The total market value of its four listed companies including Shougang Resources (00639), Shoucheng Holdings (00697), Shoujia Technology (00103) and Global Digital Creations (08271) increased from HK $19.6 billion to HK $27 billion by the end of 2022, up by 38%, far exceeding the market performance of the Hang Seng Index which fell by 15% in the same period. In addition, Shougang Resources and Shoucheng Holdings have successively become constituent stocks of the Hang Seng Composite Index and underlying stocks of the Shenzhen-Hong Kong Stock Connect, and have been recognized by capital markets in the Chinese mainland and Hong Kong.

Implementing the Group's strategy to reshape the industrial layout

In order to solve the development dilemma of Shougang Holding (Hong Kong), the Shougang Group conducted in-depth research, comprehensively analyzed the business segments around the main business, increased the professional integration of internal resources, gradually established the industrial layout arrangement of Shougang Holding (Hong Kong) focusing on mineral resources and infrastructure asset management, and maintained the determination of "blueprint implementation" to accelerate the transformation of old and new kinetic energy with high-quality industrial development. In the past ten years, through the joint efforts of the team, the industrial layout of the Shougang Group in Hong Kong was successfully implemented. In this layout, the revenue and profit of Shougang Resources, which is mainly based on mineral resources, reached a record high in 2021. Its operating performance in the first half of 2022 increased significantly compared with the same period in 2021. As a boutique coal resource operation and management platform, it strongly supports the strategic development of the Shougang Group's steel business. Shoucheng Holdings, which takes infrastructure asset management as its carrier, has revived its main business after successful transformation, with an operating income compound growth rate of nearly 100% in the past three years, and is becoming a pioneer in the field of REITs and a leader of smart travel and transportation in China. The industrial combination of infrastructure asset management, coal and advanced manufacturing covered by Shougang Holding (Hong Kong) has been successfully changed from traditional cyclical industries towards the direction of spanning economic cycles, good cash flow, stable and healthy operation, and a more solid industrial development foundation.

Standardizing corporate governance to enhance development vitality

Shougang Holding (Hong Kong) relies on listed companies to focus on modern corporate governance, optimize stock right management and internal operation, and builds a relatively sound and efficient corporate governance structure, organizational structure and internal operation rules. In optimizing stock right management, Shougang Holding (Hong Kong) takes advantage of Hong Kong's capital market resources, seizes the right time, organizes and implements nearly 20 major capital operations, and introduces strategic shareholders such as the Orix Corporation of Japan, New World Development Company Limited, Beijing State-owned Capital Operation and Management Company Limited and several well-known investment institutions for listed companies to exert synergy, thereby effectively resolving debt risks in industrial development and continuously improving its corporate governance capacity and decision-making efficiency. Meanwhile, Shougang Holding (Hong Kong) actively explores market-oriented selection and employment and the reform of the incentive mechanism. In its implemented equity incentive plans, Shoucheng Holdings set a number of strict exercise indicators, such as maintaining an average annual growth rate of 48% in its main business income, in order to stimulate the entrepreneurial enthusiasm of team managers and build a community with a shared future for the development of employees and enterprises.

Managing the front line of the industry to prevent operational risks

Shougang Holding (Hong Kong) has always adhered to the concept of "industrial operation is the core of listed companies", absorbed the many lessons taught by several listed companies' emphasis on capital operation and neglect of specific operation, and attached great importance to the long-term thinking and front-line management of industrial operation. In recent years, Shougang Holding (Hong Kong) and its listed companies have strengthened their industrial operation management from their respective levels on the basis of clarifying the boundaries of powers and responsibilities: Shougang Holding (Hong Kong) adjusts and optimizes the industrial layout of its listed companies around the main business of Shougang, follows the Group's direction, manages the overall situation and ensures implementation. Through expatriate directors and post-investment functional departments, it carries out the overall management of the strategy, investment and core executives of the listed companies, supervises and evaluates key issues such as the profitability, capital operation, quality of assets, financing capacity and benchmarking management of the listed companies, and puts forward clear requirements for the industrial front-line management time of expatriate directors, while the listed companies are positioned to make decisions, plan operations and strengthen management, and promotes listed companies to improve their quality, increase their efficiency and prevent risks through efficient and high-quality operation management. The listed companies under Shougang Holding (Hong Kong) have fully achieved operating profit for many years.

With the deepening of the national dual-cycle strategy and Hong Kong entering a critical period of a fresh start and new glory, Shougang Holding (Hong Kong) will continue to carry forward the spirit of Shougang, focus on the standardized management of Hong Kong's industries to make them better and stronger, and continue to serve Hong Kong's social livelihood and economic transformation and upgrading in order to meet the next golden decade of development.