Core Points - Zhengzhou's cold chain industry has successfully established two local standards after four years of effort [1][3] - The local standards are aimed at improving the operational efficiency and safety of cold chain logistics in the region [3][4] Group 1: Local Standards Development - The two local standards are titled "Functional Requirements for Cold Chain Delivery to Store Systems" and "Guidelines for the Construction of Cold Chain Logistics Temperature and Humidity Monitoring Platforms" [2][3] - The standards were approved by a panel of eight experts from various sectors, including logistics associations, universities, and enterprises [3][4] - The implementation of these standards is expected to enhance the information system for cold chain logistics, reduce logistics costs, and improve service quality in Zhengzhou [3][4] Group 2: Industry Context - As of the end of 2022, there were 61,969 local standards registered in China, with only 66 related to food cold chain logistics [1][2] - Zhengzhou's cold chain industry is recognized as a leader in China's cold chain sector, with 12 companies listed in the top 100 cold chain logistics firms in 2022-2023 [4] - The establishment of local standards is seen as a significant step for Zhengzhou's cold chain logistics, aligning with the region's economic development needs [3][4] Group 3: Company Profile - Huading Cold Chain, which led the drafting of the local standards, has established itself as a key player in the cold chain logistics industry since its inception in 2019 [5][6] - The company operates over 25,000 cold chain transport vehicles and has a network of 18 regional storage centers, covering nearly all provinces in China [5][6] - The successful approval of the local standards marks a significant milestone for Huading Cold Chain, reinforcing its commitment to high industry standards and operational excellence [6]

Financial Performance - Revenue for the year ended December 31, 2023, was RMB 21,446 million, representing a 2.3% increase from RMB 20,968 million in 2022[2] - Adjusted EBIT for the year was RMB 1,757.4 million, up 10.7% from RMB 1,588.0 million in the previous year[2] - Adjusted EBITDA increased by 13.3% to RMB 2,607.1 million from RMB 2,301.6 million in 2022[2] - The net profit for the year was RMB 1,385.6 million, compared to RMB 1,210.4 million in 2022, reflecting a growth of 14.5%[5] - Basic earnings per share for the year were RMB 29.76, an increase from RMB 23.59 in the previous year[4] - Other income for 2023 totaled RMB 264,358 thousand, up from RMB 162,409 thousand in 2022, driven by government grants and interest income[20] - The total tax expense for the year was RMB 458,428 thousand, compared to RMB 404,022 thousand in 2022[25] - Basic earnings per share for 2023 was RMB 29.76, an increase from RMB 23.59 in 2022, reflecting improved profitability[28] - The company reported a net profit attributable to shareholders of RMB 832,577 thousand for 2023, up from RMB 659,836 thousand in 2022[28] Assets and Liabilities - Total assets as of December 31, 2023, amounted to RMB 16,225.6 million, up from RMB 15,062.9 million in 2022[6] - Cash and cash equivalents increased significantly to RMB 2,293.0 million from RMB 1,037.4 million in the previous year[6] - Non-current liabilities rose to RMB 579.1 million from RMB 337.4 million in 2022, indicating a 71.5% increase[7] - The total equity attributable to the owners of the company increased to RMB 6,015.4 million from RMB 5,520.2 million in the previous year[7] - Trade receivables increased from RMB 374,082,000 in 2022 to RMB 404,506,000 in 2023, with a credit loss provision of RMB 34,533,000[40] - The accounts payable increased to RMB 774,354 thousand in 2023 from RMB 689,980 thousand in 2022, with trade payables at RMB 751,893 thousand[42] Revenue Breakdown - Revenue from carbonated beverages amounted to RMB 15,973,126 thousand, while juice and water products generated RMB 3,386,144 thousand and RMB 1,246,932 thousand respectively[14] - The total revenue from other beverage products was RMB 840,234 thousand, showing an increase from RMB 762,879 thousand in the previous year[14] - The company's juice category revenue achieved a double-digit year-on-year growth, driven by strong sales of orange-flavored juice and key new products[52] - The ready-to-drink coffee brand "Kafei Jia" captured over 10% market share, maintaining its position as the second brand in key markets[53] Acquisitions and Investments - The acquisition of five subsidiaries from Coca-Cola Bottlers Manufacturing Holdings Limited was completed on January 1, 2023, with a purchase price of RMB 554,179,000[36] - The acquired subsidiaries contributed revenue of RMB 32,000 and net profit of RMB 15,290,000 to the consolidated income statement from January 1, 2023[38] - The investment accounted for using the equity method decreased from RMB 839,787,000 in 2022 to RMB 252,371,000 in 2023, representing a decline of approximately 70%[29][31] - The group recognized a disposal gain of RMB 91,606,000 from the sale of equity interests in 11 wholly-owned beverage production subsidiaries[32] Operational Insights - The group operates as a single reporting segment, focusing on the processing, bottling, and distribution of carbonated and non-carbonated beverages[16] - The company has approximately 10,000 sales personnel serving over 2.9 million customers, with controllable business accounting for nearly 90% of total operations[47] - The group maintains a credit period of 7 to 90 days for key customers, while other customers typically require prepayment or payment upon delivery[40] - The group has no collateral or other credit enhancements for its trade receivables, indicating a low concentration of credit risk[40] Corporate Governance and Compliance - The company has adopted the principles of the Corporate Governance Code as per the Hong Kong Stock Exchange, with a deviation regarding the separation of the roles of Chairman and CEO[65] - The audit committee has reviewed the consolidated financial statements for the year ending December 31, 2023, and discussed matters related to audit, internal control, and financial reporting[67] - The consolidated financial statements for the year ending December 31, 2023, have been audited and confirmed by PwC, aligning with the group's financial data[68] Future Outlook and Strategy - The management anticipates that the domestic economy will face challenges and uncertainties in 2024, but aims to maintain stable performance throughout the year[55] - The company plans to continue promoting the transformation and upgrading strategy for its water category, focusing on the "Pure Joy" brand to enhance profitability[53] - The company will continue to optimize product structure and business portfolio to improve gross margins and overall profitability[55] - The company aims to enhance its supply chain efficiency and quality through ongoing optimization and integration measures[49] Dividends - The company proposed a final dividend of RMB 0.148 per share for the year ending December 31, 2023, an increase from RMB 0.117 per share in 2022[45] - The proposed final dividend for the year ending December 31, 2023, is RMB 0.148 per share, an increase from RMB 0.117 per share in 2022, subject to approval at the 2024 Annual General Meeting[61] - The company will withhold a 10% corporate income tax on the final dividend distributed to non-resident corporate shareholders[62]

研究报告Research Report 13 Mar 2024 中国食品 China Foods (506 HK) 首次覆盖：碳酸龙头稳定增长，低估值高股息值得关注 Carbonated grows steadily, low valuation and high dividends are worth paying attention to [观Ta点ble聚_y焦em Ieniv1e]s tment Focus [Tab首le次_In覆fo盖] 优于大市Initiate with OUTPERFORM (Please see APPENDIX 1 for English summary) 平台专业化，国企资源与国际先进经验结合。作为中粮集团子公 评级 优于大市OUTPERFORM 司，公司自2007 年以来业务逐渐精简，2017年后成为专业化软饮 现价 HK$2.95 料业务运营平台，专注运营可口可乐公司在华装瓶、配送及分销 目标价 HK$3.54 业务。公司一方面背靠中粮集团在食品饮料领域多年运营经验和 HTI ESG 2.4-3.5-4.0 业务网络，同时与国际软饮料龙头可口可乐深度合作，吸取先进 E ...

Business Operations - China Foods holds an exclusive franchise to manufacture, market, and distribute Coca-Cola products across 19 provincial-level regions, covering approximately 50% of mainland China's population[11]. - The company has around 10,000 salespersons serving over 2.8 million customers, with controllable business orders accounting for nearly 90% of overall business[11]. - The smart retail business achieved over 100% revenue growth and ranked second in the industry in terms of equipment numbers[12]. - The company offers 10 major beverage types under 24 brands, including sparkling drinks, juices, and plant-based protein drinks[11]. - The Company launched new products including "Coca-Cola Strawberry Flavor" and "Minute Maid Bergamot Sparkling Drink," enhancing its product portfolio[25][30]. - The Company is involved in processing, bottling, and distribution of sparkling and still beverage products, indicating a focus on beverage market expansion[85]. Financial Performance - In the first half of 2023, China Foods reported revenue of RMB 12,455.9 million, a year-on-year increase of 4.7% compared to RMB 11,893.7 million in the same period of 2022[22]. - The sales volume increased by 5.5% year-on-year, indicating a recovery in market demand as domestic economic activities returned to normal[22]. - The gross profit margin declined by 0.7 percentage points year-on-year due to rising white sugar prices, despite a decrease in can prices[22]. - The domestic juice industry showed a double-digit revenue growth for the Company's juices segment, driven by successful new product launches[29]. - The revenue increased by 4.7% year-on-year, driven by a sales volume growth of 5.5%[38]. - Profit for the period reached RMB 1,016,876, up from RMB 879,769 in the previous year, reflecting a growth of approximately 15.6%[73]. - Basic earnings per share for the period was 21.47 RMB cents, compared to 17.21 RMB cents in the same period last year, marking an increase of about 24.5%[71]. - Other income and gains rose by 113% year-on-year, primarily due to one-off gains of RMB 91.61 million from the disposal of investments[40]. Strategic Initiatives - In early 2023, China Foods completed the acquisition of the non-sparkling beverage production business, enhancing supply chain capabilities and reducing production costs, which positively impacted overall profit margins[12]. - The company aims to become a world-class food and beverage group, focusing on high-quality and sustainable development[12]. - The strategic focus includes improving quality, enhancing efficiency, and promoting innovation while maintaining a commitment to green practices[13]. - China Foods continues to implement a strategic layout for developing a full-service beverage business while promoting innovative business practices[13]. - The company is focusing on digital transformation and optimizing supply chain structures to enhance efficiency and quality[16]. Corporate Social Responsibility - China Foods emphasizes corporate social responsibility and sustainable practices, setting ambitious goals for carbon reduction and environmental protection[13]. - The company is dedicated to fulfilling social responsibilities throughout its production and logistics processes[13]. Human Resources - As of June 30, 2023, the Group employed 19,027 staff in Mainland China and Hong Kong, a decrease from 19,243 staff as of December 31, 2022[49]. - The Group has established comprehensive policies for employee recruitment, remuneration, and benefits to protect employee interests and eliminate discrimination[50]. - The Group emphasizes a "contributor-oriented" talent development concept, providing a robust career development platform and comprehensive training system[51]. - The Group's human resources policies aim to ensure mutual development between the Group and its employees through continuous training and performance appraisal[50]. Financial Position - As of June 30, 2023, the group had unpledged cash and cash equivalents of approximately RMB 2,280 million, up from RMB 1,040 million at the end of 2022[46]. - The company has no interest-bearing bank borrowings as of June 30, 2023, maintaining a nil gearing ratio[46]. - The total assets as of June 30, 2023, amounted to RMB 16,089,450, an increase from RMB 15,062,955 as of December 31, 2022, representing a growth of 6.8%[76]. - Current assets increased to RMB 5,774,192 as of June 30, 2023, compared to RMB 4,566,293 at the end of 2022, reflecting a rise of 26.4%[76]. - Total liabilities reached RMB 6,683,842, up from RMB 6,200,743 at the end of 2022, indicating an increase of 7.8%[78]. - Net assets as of June 30, 2023, were RMB 9,405,608, compared to RMB 8,862,212 at the end of 2022, showing a growth of 6.1%[78]. Dividends and Share Capital - The company did not declare any interim dividend for the six months ended June 30, 2023, compared to nil for the same period in 2022[61]. - The Company declared a final dividend of RMB 337,361 during the period, impacting retained profits[81]. - The company’s issued and fully paid share capital remained at 2,797,223,396 shares as of June 30, 2023, equivalent to RMB 293,201,000[167]. Acquisitions and Investments - The Group acquired 100% equity interests in five subsidiaries of Coca-Cola Bottlers Manufacturing Holdings Limited on January 1, 2023, with a purchase consideration of RMB 541,535[137][138]. - The revenue contribution from the acquired subsidiaries since January 1, 2023, was RMB 32,000, while the net profit contribution was RMB 8,996,000[145]. - The Group disposed of equity interests in eleven entities, resulting in a disposal gain of RMB 91,606,000[153]. Cash Flow Management - Cash generated from operations for the six-month period ended June 30, 2023, was RMB 1,721,673,000, an increase from RMB 1,496,478,000 in the same period of 2022, representing a growth of approximately 15%[83]. - Net cash used in investing activities was RMB 202,245,000, a significant improvement compared to RMB 407,459,000 in the prior year, indicating a reduction of about 50%[83]. - The Group reported net current liabilities of RMB 333,042,000 at the end of the reporting period, which the Directors believe can be managed through expected net cash inflows from operations over the next twelve months[85].

Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 12,455.9 million, an increase of 4.7% compared to RMB 11,893.7 million for the same period in 2022[4] - Adjusted EBIT for the same period was RMB 1,329.3 million, reflecting a 15.0% increase from RMB 1,156.0 million in 2022[4] - Adjusted EBITDA reached RMB 1,662.8 million, up 11.8% from RMB 1,487.4 million in the previous year[4] - Net profit attributable to the company’s owners for the period was RMB 600.6 million, compared to RMB 481.5 million in 2022, representing a significant increase[8] - Basic and diluted earnings per share for the period were RMB 21.47, up from RMB 17.21 in the same period last year[8] - The company reported a net profit of RMB 600,610,000 for the six months ended June 30, 2023, up from RMB 481,498,000 in the same period of 2022, reflecting a growth of 24.8%[32] - The weighted average effective tax rate for the period was 23.4%, slightly down from 23.7% in 2022[29] - The effective tax expense increased by 13% to RMB 310 million, in line with pre-tax profit growth[56] Profitability Metrics - Gross profit margin decreased to 35.5% from 36.2%, a decline of 0.7 percentage points[4] - Distribution and selling expenses ratio improved to 24.4% from 25.7%, a reduction of 1.3 percentage points[4] - Administrative expenses ratio slightly decreased to 1.9% from 2.0%, a decline of 0.1 percentage points[4] - The gross profit margin decreased by 0.7 percentage points due to rising sugar prices and falling can prices, impacting overall profitability[49] - Other income and gains increased by 113% year-on-year, primarily due to a one-time sale of assets amounting to RMB 91,610,000[55] Revenue Breakdown - Revenue from carbonated drinks was RMB 9,305,769, representing a growth of 3.0% compared to RMB 9,035,110 in 2022[25] - The juice category achieved double-digit revenue growth year-on-year, with the introduction of new products like "Meiziyuan Lemon Sparkling Drink" contributing to this success[51] - The instant coffee brand "Kafei Jia" captured over 10% market share, maintaining its position as the second brand in key markets[53] Assets and Liabilities - Total assets as of June 30, 2023, amounted to RMB 16,089.5 million, an increase from RMB 15,062.9 million as of December 31, 2022[10] - Total liabilities increased to RMB 6,683.8 million from RMB 6,200.7 million, indicating a rise in financial obligations[11] - The group reported a net current liability of RMB 333,042,000 as of June 30, 2023, but continues to prepare financial statements on a going concern basis[13] - Trade receivables as of June 30, 2023, totaled RMB 1,026,869 thousand, significantly up from RMB 360,035 thousand as of December 31, 2022[42] - Trade payables and notes payable amounted to RMB 1,135,959 thousand as of June 30, 2023, compared to RMB 689,980 thousand at the end of 2022[44] Strategic Initiatives - The company aims to enhance supply chain quality and efficiency through continuous optimization and digital transformation initiatives[46][47] - The company completed the acquisition of a non-carbonated beverage production business, enhancing supply chain capabilities and reducing management costs[45] - The company plans to continue promoting the "Pure Joy" water brand and expand into high-end water products to enhance profitability[52] - The company aims to optimize product structure and improve efficiency through digital transformation and supply chain integration to mitigate high raw material costs[53] Market Position - The overall sales situation in the non-alcoholic beverage industry remains stable, with a GDP growth of 5.5% in the first half of 2023[48] - The market share of the soda category remained over 50%, significantly outpacing major competitors[50] - Sales volume increased by 5.5% year-on-year, reflecting a gradual recovery in market demand[49] Corporate Governance - The company has adopted the Corporate Governance Code as per the Hong Kong Stock Exchange's Listing Rules throughout the interim period[62] - All directors confirmed compliance with the standards set out in the Model Code for Securities Transactions by Directors during the entire interim period[63] - There were no purchases, sales, or redemptions of the company's listed securities by the company or its subsidiaries during the interim period[64] - The interim financial information for the six months ended June 30, 2023, has been reviewed by the company's auditors according to the relevant review standards[64] - The interim results announcement is available on the Hong Kong Stock Exchange's website and the company's website[65] - The board of directors includes key members such as Mr. Qing Lijun as Chairman and Executive Director, and several independent non-executive directors[66] Employee Metrics - As of June 30, 2023, the group employed 19,027 employees in mainland China and Hong Kong, a decrease from 19,243 employees as of December 31, 2022[61] Dividends - The company declared a final dividend of RMB 337,361,000 for the year ended December 31, 2022, compared to RMB 297,051,000 for the previous year[31] - The company did not declare an interim dividend for the period ending June 30, 2023[62]

Financial Performance - Adjusted EBITDA increased from RMB 1,998 million in 2021 to RMB 2,302 million in 2022, representing a growth of 15.2%[9] - COFCO Coca-Cola achieved a 6% increase in revenue and a 13% increase in total profit in 2022, outperforming the industry average[23] - For the year ended December 31, 2022, the company's revenue reached RMB 20,967.8 million, representing a year-on-year increase of 6.0% from RMB 19,784.4 million in 2021[45] - The sales volume experienced a year-on-year decrease of 2.0% due to the impact of frequent domestic pandemic outbreaks[45] - The gross profit margin slightly decreased compared to the previous year, but the operating margin improved due to effective cost management and efficiency optimization measures[46] Operational Developments - The 20th bottling plant, COFCO Coca-Cola Guizhou Plant, commenced production on July 10, 2022, improving supply chain efficiency in southwestern China[17] - The acquisition of non-sparkling production lines was completed in 2022, enhancing the company's capacity in fruit juice, fruit milk, tea, and coffee production[20] - COFCO Coca-Cola initiated a comprehensive digital transformation, establishing a digital governance committee to integrate digital strategies with business needs[14] - The company operates in 19 provincial-level regions in China, offering 24 brands across 10 major beverage categories[2] - The company plans to continue developing its smart retail and new retail businesses, aiming to become the largest full-service beverage supplier and digital retail platform in China[34] Sustainability and ESG Initiatives - The company is committed to achieving carbon peaking and carbon neutrality goals at the national level[27] - The company has released an ESG White Paper to promote green and sustainable development, setting challenging goals in carbon reduction and environmental protection[31] - China Foods aims to adopt a sustainable development model to enhance safety, quality, and environmental protection while achieving low-carbon growth[41] - The company emphasizes sustainable development, integrating economic and social benefits while promoting a low-carbon economy[134] - The company aims to establish a sound ESG management system with clear, quantitative, and advanced environmental and social performance goals by 2023[140] Market Strategy and Consumer Engagement - The establishment of COFCO Yuexiang Club aims to enhance online consumer services and improve corporate competitiveness[16] - The company focuses on enhancing online sales and targeted marketing strategies through the establishment of Yuexiang Club[16] - The "Rubik's Cube" project was launched to refine market segmentation and enhance decision-making through data analysis across 20 bottling plants[15] - The company is focused on expanding its market presence through strategic partnerships and management expertise in the food and beverage sector[92][94] - The company aims to leverage its subsidiaries to enhance supply chain efficiency and product offerings in the beverage sector[91] Employee and Management Development - China Foods is implementing a three-year talent development plan to empower key talent pools and ensure sustainable development[31] - The company provides various employee benefits including retirement, life insurance, and medical insurance, adhering to local laws in both Hong Kong and mainland China[77] - The company emphasizes talent development and has established policies for recruitment, compensation, training, and performance evaluation to ensure employee rights and non-discrimination[77] - The management team is composed of experienced professionals with backgrounds in finance, strategy planning, and operational management[79][83][87] - The company is focused on providing a comprehensive training system through various online platforms to enhance employee skills and knowledge[77] Environmental Impact and Resource Management - The company aims to reduce carbon emissions per ten thousand yuan of output value by 30% by 2030 compared to 2020 levels[175] - The company aims to reduce water consumption per ten thousand yuan of output value by 8% by 2025, compared to 2020 data[189] - The long-term goal is to cut water consumption per ten thousand yuan of output value by 15% by 2030 and achieve 100% water return by the same year[189] - The company is committed to maintaining 100% compliance with wastewater discharge standards across all self-owned plants and foundries[189] - The company has established a long-term management mechanism focused on effective water resource utilization, energy efficiency improvement, and packaging reduction[164] Governance and Compliance - The Board of China Foods reviewed ESG-related matters twice during the year, focusing on material issues and environmental goals[133] - The ESG Committee formulated policies and strategic planning, assessing ESG-related risks and opportunities[134] - The Board of Directors is the top decision-making body for ESG matters, responsible for assessing risks and opportunities related to ESG[142] - The company has established an ESG management model with a Board, ESG Committee, and Task Force to oversee and implement ESG practices[146] - The company maintains communication with stakeholders, including shareholders, customers, and employees, to balance interests and mitigate social risks[149]

Financial Performance - Revenue for the year ended December 31, 2022, was RMB 20,968 million, representing a 6.0% increase from RMB 19,784 million in 2021[4] - Adjusted EBIT for the year was RMB 1,588 million, up 13.6% from RMB 1,398 million in the previous year[4] - Adjusted EBITDA increased by 15.2% to RMB 2,302 million from RMB 1,998 million in 2021[4] - Net profit for the year was RMB 1,210 million, an increase from RMB 1,075 million in 2021, reflecting a growth of 12.5%[8] - Basic and diluted earnings per share for the year were RMB 23.59, up from RMB 20.46 in 2021[7] - The company's net profit attributable to shareholders increased to RMB 659,836,000 in 2022, up from RMB 572,415,000 in 2021, reflecting a growth of approximately 15.3%[29] - Basic earnings per share rose to RMB 23.59 in 2022 from RMB 20.46 in 2021, an increase of about 10.4%[29] Revenue Breakdown - Total revenue for the year 2022 reached RMB 20,967,837,000, an increase from RMB 19,784,422,000 in 2021, representing a growth of approximately 6.0%[18] - Revenue from carbonated beverages was RMB 15,875,110,000, up from RMB 15,052,041,000 in the previous year, indicating a growth of about 5.5%[19] - Juice product revenue increased to RMB 3,001,855,000 from RMB 2,531,038,000, reflecting a growth of approximately 18.5%[19] Expenses and Costs - The cost of sales for the year was RMB 13,469,507,000, compared to RMB 12,723,534,000 in 2021, resulting in an increase of about 5.8%[23] - Employee benefits expenses totaled RMB 2,425,933,000, slightly down from RMB 2,456,554,000 in the previous year, a decrease of around 1.2%[23] - Advertising and promotional expenses rose to RMB 1,539,658,000, compared to RMB 1,490,574,000 in 2021, marking an increase of approximately 3.3%[23] Assets and Liabilities - Total assets as of December 31, 2022, were RMB 15,063 million, a slight decrease from RMB 15,168 million in 2021[9] - Total liabilities decreased to RMB 6,201 million from RMB 6,779 million in the previous year[10] - The company's net assets increased to RMB 8,862 million from RMB 8,389 million in 2021[10] Dividends - The company proposed a final dividend of RMB 0.117 per share, compared to RMB 0.102 per share in 2021[4] - The proposed final dividend for the year ended December 31, 2022, is HKD 0.133 per share, totaling approximately HKD 372,031,000 (about RMB 327,275,000), an increase from HKD 0.125 per share in 2021[34] Market and Operations - The group operates primarily in the mainland China market, with all revenue generated from customers in this region[21] - The company maintained a market share of over 50% in the soft drink category within its operating region, significantly outpacing major competitors[41] - The juice category achieved a double-digit revenue growth year-on-year, driven by the strong performance of "Fruit Pulp Orange" and new product sales[42] - The ready-to-drink coffee category saw double-digit growth, with the "Coffee House" oat coffee targeting high-income young professionals in first- and second-tier cities[44] Strategic Initiatives - The company aims to become China's largest all-category beverage supplier and a digital platform for smart retail, focusing on health, channel penetration, and digital transformation[37] - The company is implementing a series of optimization measures, including a central planning center and supply chain integration, to enhance efficiency and reduce selling and administrative expense ratios[40] - The company is focusing on digital marketing, supply chain, and governance capabilities as part of its digital transformation strategy[38] Financial Management - The company has established financial risk management processes, regularly reviewed by senior management[50] - The company has no interest-bearing bank borrowings as of December 31, 2022, maintaining a debt-free status[51] - There are no significant contingent liabilities or asset pledges as of December 31, 2022[52] Governance and Compliance - The company has adopted the Corporate Governance Code as per the Hong Kong Stock Exchange rules, with a deviation regarding the separation of roles between the Chairman and the CEO[59] - The company confirmed that all directors have complied with the standards set out in the Model Code for Securities Transactions by Directors of Listed Issuers throughout the year[60] - The audit committee reviewed the consolidated financial statements for the year ended December 31, 2022, and discussed matters related to the audit, internal controls, and financial reporting[61] - The auditor, PwC, confirmed that the financial statements align with the audited figures for the year[62] Future Outlook - The company anticipates that raw material prices will remain high in 2023, impacting profit margins, and plans to optimize product structure and supply chain integration to mitigate cost pressures[47] - The company remains confident in achieving revenue and profit growth in 2023, with expectations for stable performance throughout the year[47]

Business Operations - China Foods holds an exclusive franchise to manufacture, market, and distribute Coca-Cola products across 19 provincial-level regions, covering approximately 50% of mainland China's population[11]. - The company offers 24 brands across 11 major beverage categories, including sparkling drinks, juices, and energy drinks, supported by a sales force of approximately 10,000 serving over 2.4 million customers[11]. - Nearly 90% of the overall business is driven by customer orders served directly by sales representatives, indicating a strong direct sales model[11]. - The marketing network of China Foods reaches 100% of cities and counties in its operating regions, with over 60% of towns also covered[11]. - The company operates Coca-Cola products across 19 provincial regions, covering approximately 50% of China's population, with a marketing network serving over 2.4 million customers[13]. Financial Performance - Revenue for the first half of 2022 reached RMB 11,893.7 million, representing a year-on-year growth of 6%, despite a 4% decrease in sales volume[23][24]. - The gross profit margin decreased by 2.7 percentage points compared to the same period last year, while the operating margin improved due to reduced selling and administrative expenses[24]. - The smart retail business generated revenue exceeding RMB 200 million, with over 20,000 vending machines installed, covering more than 5 million consumers, marking a year-on-year increase of over 100%[25][26]. - Revenue increased by 6% year-on-year despite a slight decline in sales volume, attributed to improvements in product and packaging structure[52]. - The company expects external uncertainties and high raw material prices to pressure gross profit margins in the second half of the year, despite a 6% year-on-year revenue increase[48][49]. Product Development and Strategy - The company aims to enhance product quality and optimize its business portfolio through resource investment and differentiated development strategies[12]. - China Foods plans to implement a total beverage strategy to meet the growing consumer demand for healthier options and sustainable practices[12]. - The company launched several new products, including "Coca-Cola Peach Coke" and three new sugar-free variants, enhancing its product portfolio in the sparkling drinks segment[29][30]. - The revenue from the juice segment achieved double-digit growth, driven by significant increases in "Minute Maid Pulpy Orange Juice" and new product sales, with revenue exceeding RMB10 million shortly after launch[33][35]. - The company launched a new sugar-free and fat-free sparkling juice series, which includes three flavors: peach, grape, and apple, contributing to the overall revenue growth in the juice category[33][35]. Digital Transformation and Efficiency - Efficiency improvements will focus on supply chain integration and digitalization of production and logistics, aiming for better standardization and flexibility[12]. - Digital transformation will be a key focus area to drive high-quality growth in performance[12]. - The company is focusing on digital transformation, with over 1.8 million customers using the "Coke GO" platform and more than 1.35 million active users[16][19]. Sustainability and Development Goals - The company is committed to high-quality development, emphasizing market-oriented approaches and risk containment strategies[12]. - The company is committed to sustainable development, enhancing safety, quality, and environmental protection[18][20]. - The company is dedicated to achieving development goals centered on high quality and sustainability[12]. Market Position and Competitiveness - The market share of sparkling drinks maintained over 50% in operating regions, consistently outperforming major competitors[30]. - The company maintained a market share of over 50% in the soda category, continuing to outperform major competitors[31]. - The management remains cautiously optimistic about the non-alcoholic ready-to-drink industry maintaining healthy development throughout the year, despite economic uncertainties[47]. Financial Position and Cash Flow - As of June 30, 2022, the company had unpledged cash and cash equivalents of approximately RMB 1,992 million, an increase from RMB 1,592 million at the end of 2021[58]. - The company maintained a net cash position of approximately RMB 1,992 million with a gearing ratio of nil as of June 30, 2022[63]. - For the six-month period ended June 30, 2022, net cash from operating activities was RMB 1,265,309, an increase from RMB 699,650 in the same period of 2021, representing an 81.3% growth[98]. - The company generated RMB 1,496,478 from operations during the six-month period ended June 30, 2022, compared to RMB 878,361 in the same period of 2021, indicating a 70.5% increase[98]. Employee and Governance - The workforce decreased to 19,048 employees as of June 30, 2022, from 19,189 at the end of 2021[68]. - The company provides various employee benefits, including retirement plans, life insurance, and medical insurance, in compliance with local laws[71]. - The company emphasizes talent development and has established policies for recruitment, training, and performance evaluation to ensure employee rights and non-discrimination[71]. - The Company has complied with all Code Provisions of the Corporate Governance Code throughout the six-month period ended June 30, 2022[78]. Shareholder Information - As of June 30, 2022, substantial shareholders include China Foods (Holdings) Limited, holding 2,072,688,331 shares, representing approximately 74.10% of the issued shares[76]. - The total number of issued shares as of June 30, 2022, was 2,797,223,396 shares[76]. Financial Reporting and Compliance - The Group's interim financial information for the six-month period ended June 30, 2022, has been reviewed by the Audit Committee[79]. - The interim financial information is prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[84]. - The review concluded that there are no significant matters that would lead to the belief that the interim financial information is not materially compliant with the relevant standards[84].

Financial Performance - Total revenue for 2021 reached RMB 19,784 million, an increase of 14.7% compared to RMB 17,249 million in 2020[5] - Adjusted EBITDA for 2021 was RMB 1,990.7 million, reflecting an 11.3% increase from RMB 1,789.3 million in 2020[9] - Earnings per share rose to RMB 20.46 in 2021, up 14.8% from RMB 17.83 in 2020[5] - Profit before income tax for 2021 was RMB 1,422.9 million, compared to RMB 1,253.2 million in 2020[9] - In 2021, China Foods achieved a revenue of nearly RMB 20 billion and a net profit exceeding RMB 1 billion, marking a double-digit increase compared to the previous year[19] - Revenue for 2021 increased by 14.7% year-on-year, while sales volume grew by 13.5%[68] - Other income and gains increased by 19.1% year-on-year, primarily due to an increase of approximately RMB 20 million in interest income[72] - Income tax expenses rose to RMB 348 million, reflecting a 16.1% increase in line with profit growth[75] Market Presence and Strategy - The company maintains a strong market presence with 24 brands across 11 major beverage categories[2] - China Foods Limited is focused on market-oriented strategies, globalization, and risk containment[1] - The company operates in 19 provincial-level regions, covering approximately 50% of mainland China's population, with a marketing network reaching 100% of cities and counties in its operating regions[31] - The company aims to maintain its leading position in classic sparkling drinks while boosting the development of sugar-free products and light sparkling drinks[27] - China Foods intends to accelerate the growth of the juice category to maintain the No. 1 market position for Minute Maid products[28] - The company will expand catering channels and enhance its presence in both online and offline markets, particularly in rural areas[28] Product Development and Innovation - COFCO Coca-Cola launched a total of 91 new products in 2021, with each of COSTA, Minute Maid peach juice, Light Soda AHHA, and Chunyue functional water generating over RMB 100 million in revenue during the year[14] - The sparkling drinks segment saw a year-on-year double-digit growth, driven by sleek and mini cans, both increasing by over 50%[45] - The "Sugar-free" and "Fiber+" series maintained rapid growth, with a growth rate exceeding 50%[46] - The domestic juice industry recorded a year-on-year revenue increase, with "Minute Maid Pulpy Orange Juice" seeing significant revenue growth due to new packaging[49] - The company launched "Minute Maid 100% Juice" and "Minute Maid Apple Soda Water," entering the fruit juice sparkling water segment[50] - The ready-to-drink coffee market share surpassed 10% for the first time, with "Costa" becoming the second largest brand in key markets[57] Operational Efficiency and Digital Transformation - The smart retail business established approximately 20,000 vending machines and smart refrigerators, generating annual sales exceeding RMB 300 million and a profit of over RMB 10 million in its first full year of operation[25] - The company is focusing on digital transformation, including the establishment of a big data center to enhance consumer insights and improve marketing strategies[36] - The management team focused on reaching more consumers through new channels and improving operational efficiency through new technologies[20] - The company aims to enhance efficiency through supply chain integration and digitalization of production and logistics[35] Environmental, Social, and Governance (ESG) Initiatives - The ESG Committee was established on June 1, 2021, to guide and supervise the implementation of the Company's ESG practices, ensuring compliance with relevant laws and regulations[143] - The Company aims to create long-term value for shareholders through sound ESG performance, which is crucial for future sustainability[139] - The Company engages in public welfare activities and contributes to community development, promoting targeted poverty alleviation and environmental protection[156] - The Company is committed to reducing energy consumption and emissions in its operations, aligning with national policies for sustainable development[166] - The company invested a total of RMB 7,350,000 in energy conservation and emission reduction projects, expected to save 1,034 tonnes of standard coal and reduce carbon emissions by approximately 2,500 tonnes[178] Leadership and Management - The Company has a strong leadership team with diverse backgrounds in finance, strategy, and operations, enhancing its market position[102] - Mr. Chen Lang was appointed as a non-executive director and chairman of the board in April 2019, currently serving as executive vice president of COFCO Corporation[91] - The board of directors includes members with significant experience in corporate governance and financial oversight, ensuring robust management practices[111] - The Company is focused on expanding its market presence through strategic leadership and management expertise in the beverage industry[95] Challenges and Future Outlook - The company anticipates a GDP growth rate of 5.5% in 2022, which is expected to create new opportunities for the food and beverage industry despite challenges from rising raw material prices and market competition[21] - The Company faced production challenges due to insufficient power supply, with 11 plants experiencing brownouts, leading to a total of 975 hours of work affected[172] - The company recognizes the urgency of addressing climate change and aims to drive the entire value chain to tackle this challenge[171]