When the late Mr. Wong Kwoon Chung launched a car cleaning service in 1948, he would not have envisaged that Kwoon Chung Bus Holdings Limited (the “Company”) and its subsidiaries (collectively the “Group”) would become one of the largest non-franchised bus operators in Hong Kong. The expansion in Mainland China, in particular the cross-boundary bus service, can also be described as dramatic. After over half a century of development, the Group has made its name in the transport history of Hong Kong as a comprehensive bus service provider.
Hong Kong Operations
The Group has made its strong presence in student services, and is regarded as the leading school bus service operator. It is also well positioned in resident, employee and cross-boundary services. Every morning from the northwestern edge of the New Territories to Hong Kong Island South, there are buses of the Group carrying passengers to their places of work or study. The acquisitions of Tai Fung Coach Company Limited (“Tai Fung”) and Trade Travel (Hong Kong) Limited in 1997 have enabled the Group to become the largest provider of tour buses and coaches to hotels and tour operators in Hong Kong.
New Lantao Bus Company (1973) Limited (“NLB”), a subsidiary of the Group, is the franchised bus operator in Lantau Island. Route 23 running between Tung Chung town centre and Ngong Ping is one of the most popular routes. NLB also runs the franchised cross-boundary route B2 between Shenzhen Bay Port and Yuen Long. Another subsidiary, Lantau Tours Limited, is the major tour service provider in Lantau Island that offers a wide range of travel packages, covering the new and old sceneries of Lantau.
When Hong Kong was still recovering from its lowest ebb in 2003, the Group had cast a vote of confidence in Hong Kong and acquired 100% equity interest in Trans-Island Limousine Service Limited (“TIL”) and all its subsidiaries and co-operative joint ventures (“CJVs”) in Hong Kong and Mainland China. TIL is a non-franchised bus operator focusing mainly on cross-boundary bus business while its subsidiary, Intercontinental Hire Cars Limited is a limousine service provider. Both of the companies provide cross-boundary and tour passenger services and a major portion of their fleet of vehicles has cross-boundary licenses. In addition, TIL operates a number of service counters at the passenger terminal of the Hong Kong International Airport (“HKIA”) and Shenzhen Baoan International Airport (“Shenzhen Airport”). Synergy can be achieved to strengthen the Group’s operations in the provision of tour, limousine and cross-boundary bus services. Since 2004, a new mode of cross boundary bus service has been developed, with a network of six routes operating a 24-hour service between Huanggang Port of Shenzhen and designated locations in Hong Kong. The Group, through its associated company, All China Express Limited, succeeded in the bidding of three of the above routes. The number of passengers has remained steady.
In early 2004, the Group further acquired 50% equity interest in GoGo TIL (Cross Border) Transportation Services Co. Ltd. (“GoGo TIL”), which provides cross-boundary bus services mainly to Taiwanese travelers for routes between the HKIA and various locations in Guangdong Province. The Group’s shareholding in GoGo TIL had increased to 92.3% since 2006.
In view of the increasing demand for cross-boundary travel, in April and December 2011, the Group through TIL, acquired 90% effective equity interest in Chinalink Express Holdings Limited and Chinalink Transport Group Limited (collectively “Chinalink”) (now 100%) and 100% equity interest in Hin Wan 991 Group (“991 Group”) respectively. Chinalink and 991 Group are renowned cross boundary bus operators in the market. Chinalink mainly runs various long-haul routes, routes servicing the Shenzhen Airport, and the route between Huanggang Port of Shenzhen and Tsuen Wan. 991 Group mainly runs the Zhongshan route, the route between Huanggang Port of Shenzhen and Tsuen Wan, and maintains a position of prominence in cross-boundary school bus services. Each of the companies also held a travel agency, which mainly sells bus tickets, air tickets and related travel packages. The acquisitions of Chinalink and 991 Group have added significant synergy to the Group’s current cross-boundary operations and have amplified the Group’s market share in this strategic core business.
Mainland and China Operations
Besides Hong Kong, since 1992, the Group has been trying to realise its vision of the enormous market in Mainland China. Guangzhou Kwoon Chung Bus Co., Ltd. (“GZKC”), which operates mainly intra-city bus services in Guangzhou, was one of the CJVs set up by the Group in Mainland China. In 2008, GZKC was transformed into a 40% owned equity joint venture (“EJVs”), namely Guangzhou City No. 2 Bus Co., Ltd. (“GZ2B”).
In 2000, the Group acquired 60% equity interest in Chongqing Tourism (Group) Co. Ltd. (“CQ Tourism Group”), which together with its fellow companies operate a hotel and a travel agency in Chongqing. The travel agency, namely Chongqing Everbright International Travel Service Co. Ltd. (“CQ Everbright”), holds domestic, inbound and outbound travel business licenses in Mainland China.
In 2002, the Group acquired 52.5% effective equity interest in GFTZ Xing Hua Tourism Bus Co., Ltd. (“XH Tourism Bus”) and GFTZ Xing Hua International Transport Ltd (“XH International Transport”), which operated a number of intra-city and long distance bus routes in Guangzhou and within Guangdong Province respectively. In 2004, the Group further acquired 56% equity interest in Guangzhou New Era Express Bus Co., Ltd. (“GZ New Era”), which operates long-distance bus routes within Guangdong Province. In 2008, the intra-city bus business of XH Tourism Bus was merged with GZ2B and GZ New Era had acquired the Group’s equity interest in XH International Transport.
In 2004, the Group acquired 100% equity interest in Hubei Shenzhou Transport Holdings Co., Ltd. (“Hubei Shenzhou”), which holds a bus terminal and operates long-distance bus services to and from Xiangyang, Hubei Province. Hubei Province is located in the central region of Mainland China and is considered an important transportation hub.
In 2006, the Group acquired 51% equity interest in Lixian Bipenggou Tourism Development Co., Ltd (“Bipenggou Tourism”). The local government has granted this subsidiary the right to develop and operate a vast and distinctive scenic area called Miyaluo in Sichuan Province for 50 years, in which “Bipenggou” is the fi rst scenic spot being developed. The total area of the scenic area of Miyaluo is approximately 613.8 square kilometers. Bipenggou is only about 175 kilometers away from Chengdu city. The major income is the entrance fee and hotel room rentals from tourists visiting these scenic spots. Bipenggou has been awarded 4A National Scenic Spot by the National Tourism Administration since late 2012 and the number of visitors is soaring at speed.
Changes in Shareholders
The Group has been listed on the Stock Exchange since September 1996. In September 1999, First Action Developments Limited (“First Action”) (a 100% owned subsidiary of New World Development Company Limited) acquired approximately 20% of the issued share capital of the Company and became the Group’s strategic partner. As at 31 March 2014, the shareholding of First Action increased to approximately 29.48% following its subsequent further acquisitions of the Company’s shares.
On 2 April 2014, First Action sold 121,593,019 shares of the Company to Basic Faith Company Limited (“Basic Faith”), which is indirectly wholly owned by Mr. Wong Leung Pak, Matthew, Chairman of the Company. On the same date, Basic Faith acquired 131,880,981 shares of the Company from Wong Family Holdings (PTC) Limited (“WFHL”), the then controlling shareholder of the Company. Upon the above two acquisitions and the close of the subsequent mandatory unconditional cash offer made by Basic Faith to the Company pursuant to the Takeovers Code, Basic Faith has become the existing largest and controlling shareholder of the Company. The cash offer was completed on 21 May 2014.
Given that logistics and tourism are two of the four pillar industries in Hong Kong and Mainland China market is enormous and fast growing, the Group has full confidence in its continuing development in various businesses.