Recovery in tourism drives improvement

HONG KONG SAR - Media OutReach - 31 August 2022 - Travel business process management services provider and travel products services provider Cinese International Group Holdings Limited ("Cinese International", collectively with its subsidiaries, the "Group"; stock code: 1620) has announced its interim results for the six months ended 30 June 2022.

The Group recorded total revenue of approximately HK$26.6 million for the six months ended 30 June 2022, representing an increase of approximately 100.0% when compared with the corresponding period last year. The increase was mainly due to the increase in revenue generated from the travel business process management segment, and to a lesser extent the air ticket distribution segment. Gross profit for the period amounted to approximately HK$12.6 million, up by approximately 186.4% when compared with the corresponding period last year. The loss for the period of the Group decreased by approximately 59.5%, from the loss of approximately HK$33.1 million for the six months ended 30 June 2021 to the loss of approximately HK$13.4 million for the six months ended 30 June 2022. Such decrease in loss for the period was mainly due to an increase in the Group's gross profit and a decrease in expected credit losses allowance on financial assets, partially offset by a decrease in other income.

The Group's performance in the first half of 2022 continued to be impacted by the ongoing coronavirus disease 2019 ("COVID-19") pandemic. However, the travel industries experienced a gradual recovery following higher vaccination rates and relaxation of travel restrictions worldwide, and the Group recorded an increase in transaction volume and revenue for its air ticket distribution services and travel business process management services for the six months ended 30 June 2022, as compared to the corresponding period in 2021. The Group also leveraged its knowledge and experience as travel services provider to explore new business opportunities. It reached a non-legally binding memorandum of understanding (the "MOU") with a travel services provider in the Guangdong-Hong Kong-Macao Greater Bay Area ("Greater Bay Area") in relation to potential travel business cooperation.

Ms. Mariana Kou, Chairperson and Executive Director of Cinese International, said, "In the first half of 2022, the Group's performance was constantly impacted by the ongoing COVID-19 pandemic. However, we witnessed a gradual recovery of the travel industries on the back of rising rates of vaccination and the loosening of travel restrictions in different parts of the world. The Group is continuing to explore new business opportunities in its different segments, and we consider there is good prospect for an upturn in revenue."

Different segments show improvement

The air ticket distribution segment experienced a gradual recovery for the six months ended 30 June 2022 despite the continued impact of the COVID-19 pandemic. Segment revenue increased by approximately 80.0% period-on-period to approximately HK$5.4 million for the six months ended 30 June 2022. The increase was mainly attributable to an increase transaction volume of air tickets sales and gross sales proceeds generated from air tickets sales, primarily due to a gradual recovery of the travel industries driven by an increasing rate of vaccination and the easing of travel restrictions worldwide.

The travel business process management segment includes air ticket transaction processing, customer contact, BSP/ARC settlement and reconciliation, software development and travel licensing, compliance and other administrative matters. Segment revenue increased by approximately 82.5% period-on-period to approximately HK$18.8 million for the six months ended 30 June 2022. The increase was primarily attributable to the rise in transaction volume resulting from the gradual recovery of the travel industries from the COVID-19 pandemic, with higher global vaccination rate.

By leveraging the knowledge and experience gained from the travel business process management segment, the Group developed its other business process management segment and provided a range of business process management services. Segment revenue amounted to approximately HK$2.3 million for the six months ended 30 June 2022.

Prospects

Looking ahead, it is expected that the COVID-19 pandemic would continue to impact the airline, travel and tourism industries worldwide until travel restrictions are further relaxed. As the spread and containment of the COVID-19 pandemic remains uncertain and fluid, the Group will closely monitor the global environment and maintain a pragmatic approach towards managing its businesses.

Ms. Mariana Kou, Chairperson and Executive Director of Cinese International, concluded, "According to the latest UNWTO World Tourism Barometer, international tourism saw a strong upturn in the first five months of 2022, rebounding to almost half of pre-pandemic 2019 level. We believe that demand from travelers, whether for business or leisure, is building, hence the travel industries will improve as a whole. In addition to more countries relaxing or even canceling quarantine restrictions, airlines of different countries are increasing their number of destinations and passenger capacities are also on the rise. We hope that in an improving macro environment, tourists could resume traveling activities."

"The Group will leverage its knowledge and experience to further explore business diversification opportunities so as to expand income sources and enhance its future earning capabilities and potential, which in turn will help generate business synergies and create value for shareholders of the Company."

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About Cinese International Group Holdings Limited

Cinese International is a long-established air ticket consolidator, travel business process management provider and travel products and services provider in Canada, founded in 1976 and with more than 40 years of operating history. The principal businesses of the Group include (i) air ticket distribution in which it distributes air tickets to travel agents and travelers and issue air tickets directly on behalf of contracted airlines; (ii) travel business process management in which it provides mid-office and back-office support services to travel agents; (iii) other business process management in which it provides certain translation and agent services for its customers; and (iv) travel products and services in which it designs, develops and sells package tours, as well as other travel products and services to travel agents and travelers.