Investment Rating - The report maintains a "Buy-A" rating for the company [2][6] Core Views - The company experienced a revenue decline of 10.1% year-on-year in 2023, with total revenue reaching 24.97 billion yuan. However, the net profit remained relatively stable, decreasing only by 0.1% to 4.557 billion yuan [3][4] - The company’s sales gross margin improved in the second half of 2023, driven by increased efficiency in overseas factories and a rise in production capacity utilization [6][5] - The company is expected to benefit from its vertical integration in fabric and garment production, which is anticipated to enhance profitability in the long term [6] Market Performance - In 2023, the company achieved revenues of 24.97 billion yuan, with a breakdown of 11.562 billion yuan in H1 and 13.408 billion yuan in H2, reflecting a year-on-year decline of 14.9% and 5.5% respectively [1] - The company’s core product lines include sportswear, casual wear, and underwear, with sportswear revenue declining by 13.6% and underwear revenue increasing by 30.2% [1][4] Financial Highlights - The company’s gross margin improved by 2.2 percentage points to 24.3% in 2023, with H2 gross margin reaching 25.8% [5][6] - The company’s earnings per share (EPS) for 2023 was 3.03 yuan, with a proposed total dividend of 2.03 yuan per share, resulting in a payout ratio of 60.3% [3][4] - Forecasted EPS for 2024-2026 is expected to be 3.59, 4.13, and 4.68 yuan respectively, with corresponding P/E ratios of 16.6, 14.5, and 12.8 [6][9]

证券研究报告 | 2024年03月27日 申洲国际（02313.HK） 买入 2023 年净利润持平，下半年毛利率修复至 25.8% 核心观点 公司研究·财报点评 纺织服饰·纺织制造 2023年净利润持平，下半年收入及毛利率环比提升明显。2023年公司收入 下降10%至249.7亿元，人民币单价提升5%左右，美金单价上升1%左右， 证券分析师：丁诗洁 证券分析师：关竣尹 0755-81981391 0755-81982834 体现品牌去库存影响。归母净利润同比持平45.6亿元，剔除政府补贴、 dingshijie@guosen.com.cnguanjunyin@guosen.com.cn 汇兑、利息净收入影响的主营净利润同比提升11%，主要由于毛利率提升2.2 S0980520040004 S0980523110002 百分点至24.3%，及税率更低的海外子公司盈利占比提升带动所得税率下降。 基础数据 全年经营性现金流净额52亿元，增长13%，净现比1.15；公司净现金 投资评级 买入(维持) 114亿元，同比增加32亿元。全年派息率小幅提升至60%。 合理估值 91.00 - 99.00港元 收盘价 65. ...

Sales Performance - Total sales for the year ended December 31, 2023, were approximately RMB 24,969,792,000, a decrease of 10.1% compared to 2022[2] - Sales of sportswear products accounted for 72.2% of total sales, decreasing by 13.6% year-over-year due to reduced demand in Europe and the US[2] - Sales of casual wear products accounted for 22.7% of total sales, with a slight decrease of 1.4% year-over-year, primarily due to reduced demand in Japan and other markets[2] - Sales of underwear products increased by 30.2% year-over-year, accounting for 4.3% of total sales, driven by increased demand in Japan and other markets[3] - Revenue from Mainland China increased slightly to RMB 7,124,052 thousand in 2023 from RMB 7,074,146 thousand in 2022, a growth of 0.7%[14] - Revenue from the EU decreased to RMB 5,027,285 thousand in 2023 from RMB 6,215,018 thousand in 2022, a decline of 19.1%[14] - Revenue from the US decreased to RMB 3,879,987 thousand in 2023 from RMB 4,873,358 thousand in 2022, a decline of 20.4%[14] - Revenue from Japan decreased to RMB 3,675,539 thousand in 2023 from RMB 3,926,014 thousand in 2022, a decline of 6.4%[14] - Total revenue decreased to RMB 24,969,792 thousand in 2023 from RMB 27,781,412 thousand in 2022, a decline of 10.1%[14] - Revenue from major customer A decreased to RMB 7,696,598 thousand in 2023 from RMB 8,630,511 thousand in 2022, a decline of 10.8%[16] - Sales of sportswear products decreased by 13.6% to RMB 18,031,526,000 in 2023, primarily due to reduced demand in European and American markets[41] - Sales of lingerie products increased by 30.2% to RMB 1,066,643,000 in 2023, driven by higher demand in Japan and other markets[42] - European market sales declined by 19.1% to RMB 5,027,285,000 in 2023, while U.S. market sales dropped by 20.4% to RMB 3,879,987,000[43] - Domestic sales in China increased slightly by 0.7% to RMB 7,124,052,000 in 2023, accounting for 28.5% of total sales[43] - European market sales decreased by 19.1% to RMB 5,027,285,000 in 2023 compared to RMB 6,215,018,000 in 2022, primarily due to reduced demand for sportswear[44] - US market sales declined by 20.4% to RMB 3,879,987,000 in 2023 from RMB 4,873,358,000 in 2022, driven by lower demand for sportswear[44] - Japanese market sales dropped by 6.4% to RMB 3,675,539,000 in 2023 from RMB 3,926,014,000 in 2022, mainly due to reduced demand for casual wear and discontinuation of mask sales[44] - Other overseas markets sales decreased by 7.6% to RMB 5,262,929,000 in 2023 from RMB 5,692,876,000 in 2022, primarily due to reduced exports to Australia, India, and Mexico[44] - Domestic China market sales increased by 0.7% in 2023, with apparel sales rising by 0.9% to RMB 6,964,278,000, driven by higher demand for casual wear[44] Profitability and Financial Performance - Gross profit margin for 2023 was 24.3%, an increase of 2.2 percentage points compared to 2022, with gross profit amounting to RMB 6,059,876,000, a slight decrease of 1.1% year-over-year[3] - Net profit after tax for 2023 was approximately RMB 4,557,263,000, a slight decrease of 0.1% compared to 2022[3] - The company proposed a final dividend of HKD 1.08 per share, with a total annual dividend of HKD 2.03 per share, representing a 6.3% increase compared to 2022 and a payout ratio of 60.3%[3] - Gross profit margin improved by 2.2 percentage points to 24.3% in 2023, attributed to increased capacity utilization, improved efficiency at overseas factories, and reduced COVID-19 related expenses[45] - Basic and diluted earnings per share (EPS) for 2023 were RMB 3.03, slightly down from RMB 3.04 in 2022[29] - The company achieved sales revenue of approximately RMB 24,969,792,000 in 2023, a decrease of 10.1% compared to the previous year, with net profit attributable to shareholders slightly declining by 0.1% to RMB 4,557,263,000[38] - The gross profit margin increased by 2.2 percentage points to 24.3% in 2023, driven by improved efficiency in overseas factories and reduced fixed costs per unit[38] Assets and Liabilities - Total non-current assets increased to RMB 20,131,649,000 as of December 31, 2023, compared to RMB 17,328,331,000 in 2022[7] - Total current assets stood at RMB 28,479,488,000 as of December 31, 2023, compared to RMB 26,164,534,000 in 2022[7] - Total current liabilities increased to RMB 13,384,483,000 as of December 31, 2023, compared to RMB 10,259,437,000 in 2022[7] - Net current assets decreased to RMB 15,095,005 thousand in 2023 from RMB 15,905,097 thousand in 2022, a decline of 5.1%[8] - Total assets minus current liabilities increased to RMB 35,226,654 thousand in 2023 from RMB 33,233,428 thousand in 2022, a growth of 6.0%[8] - Total non-current liabilities decreased to RMB 2,359,338 thousand in 2023 from RMB 2,467,644 thousand in 2022, a decline of 4.4%[8] - Total equity increased to RMB 32,867,316 thousand in 2023 from RMB 30,765,784 thousand in 2022, a growth of 6.8%[8] - Accounts receivable and notes increased to RMB 5,023,635 thousand in 2023 from RMB 5,005,167 thousand in 2022, with 97.3% of receivables aged within 6 months[31] - Cash and bank balances increased significantly to RMB 10,539,092 thousand in 2023 from RMB 7,097,073 thousand in 2022, while time deposits rose to RMB 12,199,178 thousand from RMB 7,099,231 thousand[36] - Total cash and cash equivalents reached RMB 11,596,453 thousand in 2023, up from RMB 7,369,498 thousand in 2022[36] - Financial assets at fair value through profit or loss decreased to RMB 803,889 thousand in 2023 from RMB 3,195,232 thousand in 2022, primarily due to a reduction in financial products issued by financial institutions[35] - Accounts payable increased to RMB 1,198,212 thousand in 2023 from RMB 931,593 thousand in 2022, with 98.8% of payables aged within 6 months[34] - The company held RMB 10,962,855 thousand in cash and bank balances denominated in RMB as of December 31, 2023, up from RMB 6,004,624 thousand in 2022[36] Costs and Expenses - Cost of goods sold decreased to RMB 18,904,165 thousand in 2023 from RMB 21,649,619 thousand in 2022[21] - Employee benefit expenses decreased to RMB 6,982,131 thousand in 2023 from RMB 7,694,740 thousand in 2022[21] - Tax expenses decreased to RMB 438,238 thousand in 2023 from RMB 698,908 thousand in 2022[23] - Current tax in Vietnam increased to RMB 92,840 thousand in 2023 from RMB 77,529 thousand in 2022[23] - Current tax in Macau slightly decreased to RMB 187,190 thousand in 2023 from RMB 188,846 thousand in 2022[23] - Deferred tax decreased to a loss of RMB 51,540 thousand in 2023 from a gain of RMB 118,345 thousand in 2022[23] - Financing costs increased to RMB 345,805 thousand in 2023 from RMB 228,359 thousand in 2022[20] - Financing costs increased by RMB 117,446,000 to RMB 345,805,000 in 2023 due to higher interest rates on USD and HKD loans[49] - Income tax expenses decreased by RMB 260,670,000 to RMB 438,238,000 in 2023, as a result of higher contributions from overseas subsidiaries with lower tax rates[49] Dividends and Shareholder Returns - The company proposed a final dividend of HKD 1.08 per share, with a total annual dividend of HKD 2.03 per share, representing a 6.3% increase compared to 2022 and a payout ratio of 60.3%[3] - Interim dividend per ordinary share decreased to HKD 0.95 in 2023 from HKD 1.06 in 2022, with a total payout of RMB 1,316,672 thousand compared to RMB 1,362,689 thousand in 2022[26] - Final proposed dividend per ordinary share increased to HKD 1.08 in 2023 from HKD 0.85 in 2022, with a total payout of RMB 1,471,198 thousand compared to RMB 1,141,404 thousand in 2022[26] - The company proposed a final dividend of HKD 1.08 per ordinary share (approximately RMB 0.98) for the year ended December 31, 2023, subject to approval at the Annual General Meeting on May 28, 2024[59] - The company will suspend share registration from May 23, 2024, to May 28, 2024, and from June 7, 2024, to June 12, 2024, to determine shareholders eligible for the annual general meeting and final dividend distribution[60] Operational and Strategic Highlights - Overseas factories accounted for 53% of the company's total apparel output in 2023, up from 46% in 2022, with Cambodia's output share rising to 26% from 22%[39] - The company's green energy consumption reached 50% of total electricity usage, with cumulative photovoltaic installed capacity reaching 75MW, a 65% increase year-over-year[39] - Net cash generated from operating activities increased to RMB 5,226,525,000 in 2023 from RMB 4,628,120,000 in 2022, reflecting stronger cash flow[47] - Net debt decreased by RMB 1,320,671,000 to RMB 507,515,000 in 2023, driven by higher operating cash inflows[47] - Total number of employees as of December 31, 2023, was approximately 92,030, with employee costs accounting for 28.0% of the company's sales, an increase of 0.3 percentage points from the previous year[52] - Total investment in property, plant, and equipment, and prepaid land lease payments for the year amounted to approximately RMB 1,059,526,000, with 42% allocated to purchasing production equipment and 53% to constructing and purchasing new factory buildings and prepaid land lease payments[53] - Capital commitments for land use rights, property, plant, and equipment as of December 31, 2023, were approximately RMB 956,201,000, to be funded mainly by internal resources and bank loans[53] - The company's capital-to-debt ratio as of December 31, 2023, was 36.8%, calculated as the percentage of total outstanding borrowings to equity attributable to owners of the parent[54] - The company expects global inflation pressures to ease, with potential interest rate cuts in major developed economies, which could boost consumer demand, particularly in overseas apparel markets[56] - The company plans to expand its overseas production capacity beyond existing bases in Vietnam and Cambodia to better meet customer procurement needs across different markets[56] - The company will focus on advancing smart manufacturing, digital management, green and low-carbon development systems, and diversifying and upgrading its product offerings[56] - The company aims to enhance its green development model by optimizing resource and energy usage, improving recycling processes, and increasing the use of clean energy and green materials[57] - The company plans to expand its product categories, invest in R&D for innovative and functional products, and strengthen collaboration with upstream and downstream partners in the industry chain[58] - The company aims to enhance corporate governance, focusing on net profit growth and stable cash flow, ensuring long-term development and shareholder returns[61] Corporate Governance and Committees - The board of directors complies with the requirement of having at least three independent non-executive directors, with one possessing appropriate professional qualifications or financial expertise[64] - The company has adopted a shareholder communication policy to address shareholder concerns and ensure effective communication, effective since March 26, 2012[67] - No purchases, redemptions, or sales of the company's listed securities were made during the year ended December 31, 2023[70] - The public holds at least 25% of the company's total issued share capital as of December 31, 2023[72] - The audit committee, chaired by Mr. Jiang Xianpin, consists of four independent non-executive directors and oversees financial practices, risk management, and internal controls[72] - The audit committee held two meetings with external auditors during the year to discuss audit procedures and accounting matters[73] - The company established a Remuneration Committee on October 9, 2005, responsible for recommending overall remuneration policies and structures for directors and senior management[74] - The Remuneration Committee consists of executive director Ma Renhe and three independent non-executive directors: Zhang Bingsheng, Jiang Xianpin, and Liu Chunhong, with Zhang Bingsheng as the chairman[74] - The company established a Nomination Committee on October 9, 2005, responsible for identifying and recommending suitable candidates for directorship and reviewing the board's structure and diversity[75] - The Nomination Committee includes executive director Ma Jianrong and three independent non-executive directors: Liu Xinggao, Jiang Xianpin, and Zhang Bingsheng, with Ma Jianrong as the chairman[75] - The company's auditor, Ernst & Young, confirmed that the preliminary results for the year ended December 31, 2023, matched the consolidated financial statements[76] - The annual report for the year ended December 31, 2023, will be published on the Hong Kong Stock Exchange and the company's website by April 30, 2024[77] - The Annual General Meeting will be held on May 28, 2024, at the company's office building in Ningbo, Zhejiang Province, China[78] - The company has four executive directors: Ma Jianrong, Huang Guanlin, Ma Renhe, and Wang Cunbo, and four independent non-executive directors: Jiang Xianpin, Zhang Bingsheng, Liu Xinggao, and Liu Chunhong[78] Miscellaneous - Government subsidies increased to RMB 250,305 thousand in 2023 from RMB 172,632 thousand in 2022[19] - Interest income rose significantly to RMB 778,904 thousand in 2023 compared to RMB 278,126 thousand in 2022[19] - Net exchange differences improved to RMB 150,577 thousand in 2023 from a loss of RMB 1,105,563 thousand in 2022[19]

Investment Rating - The report gives a "Buy" rating for Shenzhou International, with a target price of approximately 69.4 HKD, indicating a potential upside of 10.6% from the closing price on March 7, 2024 [5][13]. Core Views - Shenzhou International is the largest vertically integrated knitted garment manufacturer in China, primarily serving well-known global sportswear brands such as Nike and Adidas. The company combines fabric manufacturing (OEM) and garment design (ODM) to enhance its competitive edge [2][6]. - The company has three core competitive advantages: a vertically integrated production model, stable capacity release, and a strong focus on ESG and labor relations [3][10][11]. Summary by Sections Company Overview - Shenzhou International is the largest vertically integrated knitted garment manufacturer in China, providing products mainly in sportswear, casual wear, and underwear. The company has a significant market presence in China, Europe, Japan, and the United States [2][6]. - The company has shown stable revenue and profit growth, with revenue increasing from 2.483 billion CNY in 2005 to 27.781 billion CNY in 2022, representing a CAGR of approximately 15.3% [6]. Competitive Advantages - **Advantage 1: Vertically Integrated Production Model** The company extends its supply chain to fabric production, leading to higher gross and net profit margins compared to pure garment manufacturing. The self-sufficiency in fabric production enhances profitability [3][8]. - **Advantage 2: Stable Capacity Release** Shenzhou has established production bases in Vietnam and Cambodia, benefiting from lower labor and land costs, which supports business growth [10]. - **Advantage 3: Focus on ESG and Labor Relations** The company prioritizes environmental protection and energy efficiency, setting ambitious sustainability goals for 2025-2030. It also maintains strong labor relations, resulting in improved employee retention and productivity [11][12]. Financial Projections - Revenue projections for 2023-2025 are 27.28 billion CNY, 30.57 billion CNY, and 34.98 billion CNY, with year-on-year growth rates of -1.8%, +12.1%, and +14.4% respectively. Net profit projections are 4.58 billion CNY, 5.51 billion CNY, and 6.23 billion CNY, with growth rates of +0.3%, +20.4%, and +13.2% respectively [5][13].

智通财经APP获悉，申洲国际(02313)的代工客户Nike(NKE.US)最新预计，全年收入增长1%，低于原先指引的中个位数百分比增长。其中，耐克预计第三财季收入将略有负增长，第四财季收入将出现低个位数增长。公司解释新指引反映了宏观阻力的增加，特别是在大中华区和欧洲、中东和非洲地区。二级市场上，12月22日，申洲国际收跌7.69%，报78港元。 据悉，申洲国际以OEM和ODM相结合的方式为客户提供高质量针织品，主要客户包括Nike及Adidas等国际品牌。该公司业绩稳健，2013-2019年保持双位数的复合增速，2020-2022年三年疫情，对材料价格及品牌商订货节奏产生冲击，盈利受到了影响。 从业务上看，运动类服装和休闲类服装为申洲国际核心收入来源，往年收入份额超过90%，其中运动类服装超过70%，2020-2022年，上述两大服装业务收入复合增速为14.45%及13.13%，带动整体收入复合增速9.83%。该公司客户集中度非常高，四大客户收入份额超过80%，包括Nike、Uniqlo、Adidas和Puma，2022年收入份额分别为31%、21%、18%及12%，分布往年相对稳定，不过Nike收入份额 ...

智通财经APP获悉，国盛证券发布研究报告称，维持申洲国际(02313)“买入”评级，考虑近期基本面情况整体符合预期，综合预计2023~2025年公司归母净利润分别为45.7/55.3/64.7亿元，同比分别+0%/+21%/+17%。公司是成衣制造龙头，合作下游优质大客户，国际化、一体化产业链布局具备竞争力。 国盛证券主要观点如下： 订单：该行判断目前公司订单需求情况稳步向好，符合预期。 近期公司基本面改善趋势明确，伴随着下游品牌商库存压力的改善，该行估计公司订单及出货同比表现环比均有改善。1)出货层面：该行估计公司9月份出货同比转正、10月以来同比稳健快速增长，综合来看该行估计2023H2公司收入有望同比实现中个位数增长。2)分客户来看：公司深度合作Nike、Uniqlo、Adidas、Puma等核心品牌，2023H1向前四大客户销售分别为34.7/25.4/18.9/13.4亿元，同比分别-22%/+5%/-26%/-29%，占比分别为30%/22%/16%/12%。考虑品牌客户自身销售及库存情况，该行估计公司2024年Uniqlo/Adidas/Lululemon订单有望健康快速增长、Nike客户订单有 ...

Financial Performance - For the six months ended June 30, 2023, the company reported sales of RMB 11,561,962,000, a decrease from RMB 13,592,789,000 in the same period of 2022, representing a decline of approximately 15.0%[24]. - Profit attributable to owners of the parent was RMB 2,126,829,000, compared to RMB 2,366,616,000 in the prior year, reflecting a decrease of about 10.1%[24]. - Gross profit for the reporting period was RMB 2,594,904,000, with a gross profit margin of 22.4%, slightly down from 22.6% in 2022[24]. - For the first half of 2023, the Group reported sales revenue of approximately RMB 11.56 billion, a decrease of approximately 14.9% compared to the same period last year[32]. - Profit attributable to owners of the parent was approximately RMB 2.13 billion, representing a year-on-year decrease of approximately 10.1%[32]. - Gross profit decreased by approximately 15.4% to approximately RMB 2.59 billion compared to the same period last year[32]. - Total revenue for the six months ended 30 June 2023 was approximately RMB 11,561,962,000, representing a decrease of approximately RMB 2,030,827,000 or approximately 14.9% from RMB 13,592,789,000 for the six months ended 30 June 2022[47]. - Total comprehensive income for the period was RMB 2,536,871, a decrease of 6.1% compared to RMB 2,701,830 in the previous year[90]. Assets and Liabilities - Total assets increased to RMB 46,335,581,000 as of June 30, 2023, up from RMB 43,492,865,000 at the end of 2022, indicating a growth of approximately 6.4%[24]. - Equity attributable to the owners of the parent company increased to approximately RMB 32,154,301,000 as of 30 June 2023, compared to RMB 30,752,918,000 as of 31 December 2022[53]. - Non-current liabilities totaled RMB 2,410,434, a slight decrease from RMB 2,467,644, down 2.3%[95]. - Total current assets decreased to RMB 25,404,794, down from RMB 26,164,534, a decline of 2.9%[93]. - Net current assets decreased to RMB 13,633,948, down 14.3% from RMB 15,905,097[93]. Cash Flow and Financing - The company's cash and cash equivalents rose to RMB 10,365,717,000, compared to RMB 7,369,498,000 at the end of 2022, marking an increase of about 40.5%[24]. - Net cash generated from operating activities for the six months ended June 30, 2023, was approximately RMB 2,703,715,000, representing an increase of RMB 2,157,517,000 from approximately RMB 546,198,000 for the same period last year[56]. - The balance of bank borrowings was approximately RMB 10,760,034,000 as of June 30, 2023, compared to approximately RMB 9,197,684,000 as of December 31, 2022[59]. - Financing costs increased to approximately RMB 146,258,000 for the six months ended June 30, 2023, from approximately RMB 103,557,000 for the same period last year, primarily due to higher interest rates on HKD and USD loans[61]. - The net cash flows from financing activities for the period were RMB 266,995 thousand, a recovery from a net cash outflow of RMB (1,494,435) thousand in the prior year[107]. Market and Operational Insights - The overall market demand remains the largest operational pressure for the industry due to sluggish global economic growth and high inventory adjustments[32]. - The management remains optimistic about the recovery of demand in the second half of 2023, despite the challenges faced in the first half[22]. - The company plans to focus on market expansion and new product development to drive future growth[22]. - The Group's strategy includes promoting product diversification and high-end offerings, incorporating elements of technology, sustainability, and fashion[81]. - There are signs of gradual recovery in consumer demand, with expectations that business performance in the second half of the year will surpass that of the first half[85]. Production and Efficiency - The new garment factory in Cambodia achieved a production output of approximately 17% of the Group's total output in the first half of 2023[32]. - The production efficiency of the new garment factory in Cambodia improved significantly, with its output accounting for approximately 17% of the Group's total production in the first half of the year[35]. - The Group has implemented policies to hedge against foreign exchange risks due to fluctuations between USD and RMB[64]. - The company aims to enhance product competitiveness by improving interaction with customers during the product development stage, targeting higher success and accuracy rates in clothing design[81]. - The Group is focusing on talent development and management to drive technological advancements within the industry[83]. Sales and Revenue Breakdown - Sales of sportswear products were approximately RMB 8,560,723,000, a decrease of approximately 19.9% from RMB 10,687,190,000 for the same period last year, mainly due to reduced demand in the European and US markets[43]. - Revenue from the European market decreased by approximately RMB 905,227,000 or approximately 27.2% to RMB 2,421,402,000 for the six months ended June 30, 2023[49]. - Revenue from the US market decreased by approximately RMB 889,175,000 or approximately 32.7% to RMB 1,831,356,000 for the six months ended June 30, 2023[49]. - Domestic retail sales of apparel amounted to approximately RMB 501.67 billion, representing a year-on-year increase of approximately 15.5%[29]. - Revenue from the Japanese market increased by approximately RMB 33,573,000 or approximately 2.1% to RMB 1,666,147,000 for the six months ended June 30, 2023[50]. Employee and Operational Costs - Employee benefit expenses amounted to RMB 3,365,715, a decrease from RMB 4,118,932 in the previous year[134]. - The Group employed approximately 95,050 employees as of June 30, 2023, with total staff costs accounting for approximately 29.1% of the Group's revenue[68]. - The increase in trade payables was RMB 110,322, compared to a modest increase of RMB 6,820 in the same period last year, suggesting improved supplier relationships[103]. Investments and Capital Expenditures - Total investment in property, plant, and equipment for the six months ended June 30, 2023, amounted to approximately RMB 532,429,000, with about 43% allocated for acquiring production facilities[69]. - The Group's capital expenditures for the six months ended June 30, 2023, included additions of RMB 413,029,000 for property, plant, and equipment[157]. - As of June 30, 2023, the Group had contracted capital commitments of approximately RMB 448,645,000 related to the acquisition and construction of properties, plants, and equipment[69]. Taxation and Compliance - Income tax expense decreased to approximately RMB 221,595,000 for the six months ended June 30, 2023, from approximately RMB 400,724,000 for the same period last year, mainly due to lower profitability[61]. - The total income tax expense for the six months ended June 30, 2023, was RMB 221,595, a decrease of 44.7% from RMB 400,724 in 2022[141]. - The company’s income tax rate in China is 25%, with certain subsidiaries qualifying for reduced rates of 5% and 15%[147].

Financial Performance - For the six months ended June 30, 2023, total sales reached approximately RMB 11,561,962,000, a decrease of about 14.9% compared to the same period in 2022[1]. - Gross profit for the six months was approximately RMB 2,594,904,000, down about 15.4% year-on-year, with a gross margin of approximately 22.4%[1]. - Net profit attributable to equity holders of the parent company was approximately RMB 2,126,829,000, a decrease of about 10.1% year-on-year[1]. - Basic earnings per share were RMB 1.41, down approximately 10.2% from RMB 1.57 in the same period last year[1]. - Total revenue for the six months ended June 30, 2023, was RMB 11,561,962 thousand, a decrease of 15% compared to RMB 13,592,789 thousand in the same period of 2022[13]. - The profit attributable to equity holders of the parent company for the six months ended June 30, 2023, was approximately RMB 2,126,829,000, down 10.1% from RMB 2,366,616,000 for the same period in 2022[21]. - The gross profit margin for the six months ended June 30, 2023, was approximately 22.4%, a slight decrease of 0.2 percentage points from 22.6% in the previous year[48]. Sales Breakdown - Sales from sports products accounted for approximately 74.0% of total sales, with a decline of about 19.9% year-on-year[1]. - Sales from leisure products represented approximately 19.9% of total sales, increasing by about 10.1% compared to the previous year[1]. - Sales of sports products were approximately RMB 8,560,723,000, down RMB 2,126,467,000 or 19.9% from RMB 10,687,190,000 in the previous year, primarily due to decreased demand in the European and American markets[44]. - Sales of leisure products increased to approximately RMB 2,299,766,000, an increase of RMB 211,822,000 or 10.1%, driven by higher demand in the Japanese and Chinese markets[45]. - Sales in the European market were approximately RMB 2,421,402,000, a decrease of RMB 905,227,000 or 27.2% compared to RMB 3,326,629,000 in the previous year, mainly due to reduced orders for sports apparel[47]. - Sales in the U.S. market decreased to approximately RMB 1,831,356,000, down RMB 889,175,000 or 32.7% from RMB 2,720,531,000, primarily due to decreased demand for sports apparel[47]. Assets and Liabilities - Total non-current assets as of June 30, 2023, amounted to RMB 20,930,787,000, an increase from RMB 17,328,331,000 as of December 31, 2022[6]. - Total current assets were RMB 6,319,495,000, compared to RMB 6,260,803,000 as of December 31, 2022[6]. - Total equity increased to RMB 32,154,301,000 as of June 30, 2023, from RMB 30,765,784,000 as of December 31, 2022[7]. - The company’s total liabilities decreased to RMB 1,338,811,000 as of June 30, 2023, from RMB 1,670,595,000 as of December 31, 2022, indicating a reduction of approximately 19.8%[29]. - Accounts receivable and notes amounted to RMB 4,585,421,000 as of June 30, 2023, down from RMB 5,005,167,000 as of December 31, 2022[25]. Expenses and Costs - Employee benefits expenses, including wages and salaries, totaled RMB 2,906,471 thousand, a decrease of 19.3% from RMB 3,600,922 thousand[16]. - The total cost of sales, selling and distribution expenses, and administrative expenses was RMB 9,961,881 thousand, a decrease of 14.5% from RMB 11,654,333 thousand[16]. - Financing costs rose to RMB 146,258 thousand, compared to RMB 103,557 thousand in the previous year, reflecting an increase of 41.1%[18]. - The income tax expense for the six months ended June 30, 2023, totaled RMB 221,595,000, a decrease of 44.7% from RMB 400,724,000 for the same period in 2022[19]. Dividends and Shareholder Returns - The board declared an interim dividend of HKD 0.95 per share, a decrease of about 10.4% from HKD 1.06 per share in the previous year[1]. - The interim dividend declared is HKD 0.95 per share, totaling approximately HKD 1,428,061,000 (approximately RMB 1,316,672,000), a decrease from HKD 1.06 per share for the same period in 2022[22]. Operational Insights - The company has enhanced its digital management ecosystem, achieving comprehensive data collection and visualization across the entire production process[42]. - The company has diversified its product offerings by adding new fabric categories, which is expected to help expand its business and increase market share[42]. - The company anticipates that the business performance in the second half of the year will be better than the same period last year, with gradual improvement in production capacity utilization[60]. - The company recognizes the challenges in the current economic environment but believes there are significant growth opportunities in the domestic market[59]. Governance and Compliance - The board is responsible for governance and managing the assets entrusted by shareholders, including setting business strategies and evaluating management performance[71]. - The Audit Committee, consisting of four independent non-executive directors, reviews the group's financial practices and internal controls, including the unaudited financial statements for the six months ending June 30, 2023[72]. - The Remuneration Committee ensures that the compensation policies for directors and senior management are fair and competitive based on market levels and responsibilities[73]. - The Nomination Committee is responsible for identifying qualified candidates for directorship and reviewing the board's structure and composition[74].

Company Overview - Shenzhou International is one of the largest vertically integrated knitwear manufacturers globally, producing approximately 500 million pieces of knitwear annually[9]. - The company has around 94,340 employees and operates factories covering over 6.44 million sq.m. in China, Vietnam, and Cambodia[9]. - Major clients include international brands such as NIKE, UNIQLO, ADIDAS, and PUMA, with products distributed across Mainland China, Japan, Asia Pacific, Europe, and the US[9]. - Shenzhou International was listed on the Hong Kong Stock Exchange in November 2005, with stock code 2313[10]. - The company has been included in various indices, including the Hang Seng Composite Index and MSCI Index, enhancing its market visibility[10]. - Shenzhou International has received multiple awards for corporate governance and investor relations, including "Best Investor Relations Listed Company" in 2017[13]. - The company aims to be the most competitive knitwear manufacturer globally, focusing on high-end knitwear production through OEM and ODM methods[8]. - Shenzhou International's strategic expansion includes establishing garment factories in key locations to optimize production and distribution[9]. - The company has been recognized as one of Asia's top listed companies by Forbes Asia in 2018[14]. - Shenzhou International's commitment to sustainability and corporate governance has been acknowledged through various awards, reflecting its dedication to responsible business practices[14]. Financial Performance - Total revenue for 2022 reached RMB 27,781,412, an increase of 16.4% from RMB 23,845,006 in 2021[20]. - Profit for the year was RMB 4,563,165, up 35.3% from RMB 3,371,679 in 2021[20]. - Gross profit margin decreased to 22.1% in 2022 from 24.3% in 2021[20]. - Net profit margin improved to 16.4% in 2022 compared to 14.1% in 2021[20]. - Non-current assets increased to RMB 17,328,331 in 2022 from RMB 15,622,465 in 2021[20]. - Current liabilities decreased to RMB 10,259,437 in 2022 from RMB 13,532,431 in 2021[20]. - Revenue from sportswear accounted for 75.1% of total sales in 2022, up from 73.9% in 2021[21]. - Revenue from international markets reached RMB 20,000,000, representing 72.1% of total revenue in 2022[25]. - The gearing ratio improved to 29.9% in 2022 from 38.1% in 2021[20]. - Cash and cash equivalents increased to RMB 7,369,498 in 2022 from RMB 6,687,623 in 2021[20]. Market Challenges - In 2022, the average price of cotton yarns was significantly higher than the previous year, despite fluctuations throughout the year[49]. - The domestic apparel consumption experienced a year-on-year decline for the first time due to unstable income and pandemic-related travel restrictions[49]. - The Group's Ningbo base faced two production suspensions of approximately half a month each due to the pandemic, increasing operational pressure[49]. - Rising costs and weak demand were identified as major difficulties faced by the industry in 2022[49]. - Geopolitical conflicts and high inflation levels in major economies suppressed external demand and consumption[49]. - The apparel brand owners generally undertook destocking actions in response to weakened market demand in the second half of 2022[49]. - The global economic recession risk and high inflation levels in developed countries have contributed to a slowdown in external demand for Chinese textile and apparel products[63]. Sustainability and Corporate Governance - The Group emphasized green production and accelerated transformation and upgrading initiatives[49]. - The Group has made significant progress in promoting green production and corporate transformation, ensuring employee income stability amid fluctuating demand and rising costs[82]. - The Chinese government aims to peak carbon dioxide emissions by 2030, with specific targets for energy consumption and emissions reductions by 2025[79]. - The Group aims to enhance corporate competitiveness and sustainable development capabilities by optimizing regional layouts and strengthening new product development[58]. Production and Sales Insights - Sales of sportswear reached approximately RMB 20,869,553,000, an increase of approximately RMB 3,257,425,000 or 18.5% from RMB 17,612,128,000 in the previous year, driven by increased demand in European and US markets[92]. - Casual wear sales increased to approximately RMB 5,751,836,000, up by approximately RMB 1,031,101,000 or 21.8% from RMB 4,720,735,000, mainly due to rising demand in Japan and other markets[92]. - Lingerie sales decreased to approximately RMB 819,133,000, a decline of approximately RMB 221,113,000 or 21.3% from RMB 1,040,246,000, primarily due to reduced demand from the Japanese market[92]. - Domestic sales in China decreased by 6.5%, with apparel sales down approximately RMB 490,736,000 or 6.6% to approximately RMB 6,904,658,000, mainly due to reduced procurement demand from international brands[100]. Corporate Governance and Board Structure - The Board complied with the requirement of having at least three independent non-executive directors, with independent directors representing at least one-third of the Board[144]. - The Company received written annual confirmations of independence from all independent non-executive directors, affirming their compliance with independence guidelines[144]. - The Board is responsible for formulating the Group's business strategies and management objectives, as well as supervising management performance[153]. - The Company has adopted a shareholders' communication policy to ensure shareholders' views and concerns are appropriately addressed[150]. - The Company has established three Committees: Audit Committee, Remuneration Committee, and Nomination Committee, with a majority of independent non-executive Directors in the latter two[169]. Risk Management and Internal Controls - The risk management and internal control system was reviewed for effectiveness, covering financial reporting, operations, and compliance for the year ended December 31, 2022[194]. - The internal audit function reported directly to the Chairman and had unrestricted access to information for reviewing risk management and governance processes[193]. - The Company established procedures for handling and disclosing inside information to ensure timely reporting to the Board[192]. - The independent external auditor for the Group is Ernst & Young, with audit and non-audit service fees amounting to RMB3,595,000 and RMB874,000 respectively for the year ended December 31, 2022[198].

Financial Performance - For the year ended December 31, 2022, total sales reached approximately RMB 27,781,412,000, an increase of about 16.5% compared to 2021[1] - Net profit after tax for the year was approximately RMB 4,563,165,000, a significant increase of about 35.3% year-over-year, driven by higher sales of sports and leisure products and increased foreign exchange gains[2] - Total revenue for the year was RMB 27,781,412 thousand in 2022, compared to RMB 23,845,006 thousand in 2021, reflecting a growth of approximately 16.5%[17] - The profit attributable to the owners of the parent company for 2022 was RMB 4,562,783,000, a significant increase of 35.3% year-over-year, including a foreign exchange gain contributing approximately RMB 1,105,563,000 to pre-tax profit[40] - Basic and diluted earnings per share for 2022 were RMB 3.04, an increase of 35.7% from RMB 2.24 in 2021[29] Sales Breakdown - Sales of sports products accounted for approximately 75.1% of total sales, with a significant increase of about 18.5% year-over-year, driven by rising demand in Europe and the United States[1] - Sales of leisure products represented approximately 20.7% of total sales, showing a notable increase of about 21.8% year-over-year, primarily due to strong demand in Japan[2] - Sales of lingerie products accounted for approximately 3.0% of total sales, declining by about 21.3% year-over-year, mainly due to decreased demand in Japan[2] - The sales revenue of leisure products increased from approximately RMB 4,720,735,000 in 2021 to approximately RMB 5,751,836,000 in 2022, representing a growth of about RMB 1,031,101,000 or 21.8%[44] - The sales revenue of underwear products decreased from approximately RMB 1,040,246,000 in 2021 to approximately RMB 819,133,000 in 2022, a decline of about RMB 221,113,000 or 21.3%[44] Geographic Revenue - Revenue from external customers in mainland China decreased to RMB 7,074,146 thousand in 2022 from RMB 7,568,345 thousand in 2021, a decline of about 6.5%[14] - Revenue from the European Union increased significantly to RMB 6,215,018 thousand in 2022, up from RMB 4,732,599 thousand in 2021, representing a growth of approximately 31.3%[14] - Revenue from the United States rose to RMB 4,873,358 thousand in 2022, compared to RMB 3,805,130 thousand in 2021, indicating an increase of about 28.1%[14] Cost and Profitability - Gross profit margin for the year was approximately 22.1%, a decrease of about 2.2 percentage points from the previous year, while gross profit increased by about 5.8% to RMB 6,125,849,000[2] - The cost of goods sold was RMB 21,649,619,000 in 2022, compared to RMB 18,050,496,000 in 2021, indicating a significant increase in costs[22] - Financing costs rose to RMB 228,359,000 in 2022 from RMB 144,036,000 in 2021, primarily due to increased bank borrowing interest[21] - The total income tax expense for 2022 was RMB 698,908,000, compared to RMB 451,637,000 in 2021, showing a substantial increase[24] Assets and Liabilities - Total non-current assets as of December 31, 2022, amounted to RMB 17,328,331,000, compared to RMB 15,622,465,000 in 2021[6] - Current assets totaled RMB 26,164,534,000, a slight decrease from RMB 26,509,441,000 in the previous year[6] - Total current liabilities decreased to RMB 10,259,437,000 from RMB 13,532,431,000 in 2021, indicating improved liquidity[6] - Net current assets increased to RMB 15,905,097 thousand in 2022 from RMB 12,977,010 thousand in 2021, representing a growth of approximately 22.5%[8] - Total equity reached RMB 30,765,784 thousand in 2022, up from RMB 27,783,063 thousand in 2021, marking an increase of around 7.1%[8] Cash Flow and Debt - The net cash generated from operating activities for 2022 was approximately RMB 4,628,120,000, compared to RMB 3,594,348,000 in 2021[49] - The net debt (bank borrowings minus cash and cash equivalents) decreased to approximately RMB 1,828,186,000 in 2022 from RMB 3,901,056,000 in 2021[49] - The debt-to-equity ratio decreased to 29.9% in 2022 from 38.1% in 2021, a reduction of 8.2 percentage points[49] Dividends - The proposed final dividend is HKD 0.85 per share, leading to a total proposed dividend of HKD 1.91 per share for the year, an increase of about 17.2% from HKD 1.63 per share in 2021[2] - The proposed final dividend for 2022 is HKD 0.85 per share, up from HKD 0.57 per share in 2021, totaling RMB 1,141,404,000 compared to RMB 700,550,000 in the previous year[27] Corporate Governance - The company has adopted a corporate governance code since October 9, 2005, and has complied with all provisions during the year ended December 31, 2022[61] - The Audit Committee, consisting of four independent non-executive directors, reviewed the financial statements for the year ending December 31, 2022, ensuring compliance with accounting principles and practices[73] - The company has established a policy for shareholder communication to ensure that shareholder views and concerns are appropriately addressed[67] Future Outlook - The company anticipates a gradual recovery in domestic consumption as COVID-19 restrictions ease, supported by government policies to stimulate domestic demand[57] - The company aims to enhance competitiveness and sustainable development through product diversification and new customer acquisition[57] - Due to weak global clothing demand and ongoing inventory destocking by major customers, the company's production capacity utilization is expected to remain below ideal levels in the first half of 2023, with a potential decline in revenue compared to the same period in 2022[58]