Group 1 - The company, 理文化工 (00746), announced a mid-term dividend of HKD 0.195 per share to be distributed on September 9, 2025 [1]

Core Viewpoint - The company reported stable revenue of HKD 1.932 billion for the six months ending June 30, 2025, with a significant profit increase of 36.0% to HKD 327 million due to lower energy costs and raw material prices [1] Group 1: Financial Performance - Revenue remained flat at HKD 1.932 billion [1] - Profit increased by 36.0% to HKD 327 million [1] - Gross margin improved by 7.4 percentage points to 36.3% [1] - The company proposed an interim dividend of HKD 0.195 per share [1] Group 2: Business Segments - In the chemical business, geopolitical uncertainties continue to affect domestic manufacturing sentiment, leading to cautious market conditions [1] - Chemical product prices showed mixed developments compared to the same period last year [1] - The property segment has 11 unsold residential units remaining in the "Xinyuexi" project, with rental income of approximately HKD 1.7 million during the period [1] Group 3: Financial Health - The company maintained a robust financial position with a net debt ratio of 3.2% [1] - After increasing the dividend payout ratio to 49.6% last year, the company continues to show strong financial stability [1]

EF001 免責聲明 | 香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因 公告全部或任何部份內容而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 | | | --- | --- | | 股票發行人現金股息公告 | | | 發行人名稱 | 理文化工有限公司 | | 股份代號 | 00746 | | 多櫃檯股份代號及貨幣 | 不適用 | | 相關股份代號及名稱 | 不適用 | | 公告標題 | 截至2025年6月30日止六個月之中期股息 | | 公告日期 | 2025年8月7日 | | 公告狀態 | 新公告 | | 股息信息 | | | 股息類型 | 中期（半年期） | | 股息性質 | 普通股息 | | 財政年末 | 2025年12月31日 | | 宣派股息的報告期末 | 2025年6月30日 | | 宣派股息 | 每 股 0.195 HKD | | 股東批准日期 | 不適用 | | 香港過戶登記處相關信息 | | | 派息金額及公司預設派發貨幣 | 每 股 0.195 HKD | | 匯率 | 1 HKD : 1 HKD | ...

[Financial Summary & Performance Overview](index=1&type=section&id=Financial%20%26%20Performance%20Summary) [Financial Summary](index=1&type=section&id=Financial%20Summary) In H1 2025, the company's revenue remained flat at HKD 1.932 billion, while profit for the period surged 36.0% to HKD 327 million, driven by lower costs and a 7.4 percentage point increase in gross profit margin to 36.3% Key Financial Metrics | Metric | H1 2025 | Change | | :--- | :--- | :--- | | Revenue | HKD 1.932 billion | Flat | | Profit | HKD 327 million | ▲ 36.0% | | Gross Profit Margin | 36.3% | ▲ 7.4 percentage points | | Interim Dividend | 19.5 HK cents per share | ▲ 39.3% | [Business Review](index=15&type=section&id=Business%20Review) The Group's revenue slightly decreased by 2.9% to HKD 1.932 billion, while profit surged 36.0% to HKD 327 million, driven by significant cost reductions in the chemical business, improving gross profit margin to 36.3% and net profit margin to 16.9% Key Performance Indicators | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenue | HKD 1.932 billion | HKD 1.990 billion | | Profit for the Period | HKD 327 million | HKD 240 million | | Gross Profit Margin | 36.3% | 28.9% | | Net Profit Margin | 16.9% | 12.1% | - The primary reason for improved profitability was a **significant decrease in energy costs** and a **decline in raw material prices**, leading to **gross profit growth**[39](index=39&type=chunk) - For the property business, the "Xinyuexi" project has **11 residential units remaining for sale**, with rental income of approximately **HKD 1.7 million** during the period, **contributing minimally** to the Group's overall performance[39](index=39&type=chunk)[44](index=44&type=chunk) [Operating Results](index=16&type=section&id=Operating%20Results) The chemical business, as the core revenue source, generated approximately HKD 1.930 billion in turnover, a slight 2.0% year-on-year decrease, with varied selling price performance across key products and stable production volumes Average Selling Prices of Key Products | Key Product | H1 2025 Average Selling Price (RMB/ton) | Y-o-Y Change | | :--- | :--- | :--- | | Chloromethane | Approx. 2,600 (Dichloromethane) / 2,500 (Trichloromethane) | Flat / ▼ 7% | | Caustic Soda | Approx. 1,000 | ▲ 11% | | PTFE | Approx. 45,000 | Flat | | Hydrogen Peroxide | Approx. 700 | ▼ 22% | Production Volumes of Key Products | Key Product | H1 2025 Actual Production Volume (including self-use) | | :--- | :--- | | Chloromethane | Approx. 211 thousand tons | | 100% Caustic Soda Equivalent | Approx. 310 thousand tons | | PTFE | Approx. 5.0 thousand tons | | 27.5% Hydrogen Peroxide | Approx. 198 thousand tons | [Financial Statements](index=2&type=section&id=Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=2&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) In H1 2025, revenue slightly decreased to HKD 1.932 billion, but gross profit increased 21.9% to HKD 701 million due to lower cost of sales, leading to a 36.0% surge in profit for the period to HKD 327 million and basic earnings per share of 39.6 HK cents Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Highlights | Item (HKD '000) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenue | 1,931,959 | 1,989,690 | | Cost of Sales | (1,230,588) | (1,414,476) | | **Gross Profit** | **701,371** | **575,214** | | R&D Expenses | (82,994) | (54,529) | | Profit Before Tax | 394,923 | 297,776 | | **Profit for the Period** | **326,627** | **240,085** | | **Basic Earnings Per Share (HK cents)** | **39.6** | **29.1** | [Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total assets increased to HKD 7.315 billion and total equity to HKD 6.232 billion, with liquidity significantly improving as net current assets rose to HKD 429 million and the current ratio to 1.44, alongside a reduction in bank borrowings to HKD 484 million Condensed Consolidated Statement of Financial Position Highlights | Item (HKD '000) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Non-current Assets** | **5,911,794** | **5,809,033** | | **Current Assets** | **1,403,568** | **1,387,410** | | **Current Liabilities** | **(974,661)** | **(1,146,176)** | | Net Current Assets | 428,907 | 241,234 | | **Non-current Liabilities** | **(108,743)** | **(114,297)** | | **Net Assets** | **6,231,958** | **5,935,970** | | Bank Balances and Cash | 203,434 | 222,781 | | Bank Borrowings | 484,142 | 648,378 | [Notes to Financial Statements](index=6&type=section&id=Notes%20to%20Financial%20Statements) [Revenue](index=7&type=section&id=Revenue) The Group's total revenue primarily from chemical product sales saw caustic soda revenue grow 10.6% to HKD 883 million as a key driver, while other chemical products experienced declines and property sales revenue was zero Revenue by Product/Business Segment | Product/Business (HKD '000) | H1 2025 | H1 2024 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Caustic Soda | 882,965 | 798,288 | ▲ 10.6% | | Chloromethane | 414,123 | 457,431 | ▼ 9.5% | | Polymer Materials | 193,629 | 230,974 | ▼ 16.2% | | Fluorochemical Products | 164,912 | 133,091 | ▲ 23.9% | | Hydrogen Peroxide | 128,494 | 188,876 | ▼ 31.9% | | **Total Chemical Products** | **1,930,270** | **1,968,854** | **▼ 2.0%** | | Property Sales | – | 18,994 | - | | **Total Revenue** | **1,931,959** | **1,989,690** | **▼ 2.9%** | [Segment Information](index=8&type=section&id=Segment%20Information) The chemical business is the core, contributing almost all revenue and HKD 418 million in segment results, a 39.8% increase, while the property segment recorded a HKD 495 thousand loss, with most of the Group's revenue and non-current assets located in China Segment Performance | Segment (HKD '000) | H1 2025 | H1 2024 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | **Segment Revenue** | | | | | Chemical | 1,930,270 | 1,968,854 | ▼ 2.0% | | Property | 1,689 | 20,836 | ▼ 91.9% | | **Segment Results** | | | | | Chemical | 418,108 | 298,997 | ▲ 39.8% | | Property | (495) | 1,645 | - | - The Group's operations (including chemical and property segments) and the **vast majority of non-current assets** are located in **China**[19](index=19&type=chunk) [Expense & Cost Analysis](index=17&type=section&id=Expense%20%26%20Cost%20Analysis) The company effectively controlled expenses, with selling and distribution, administrative, and finance costs decreasing, while R&D costs significantly increased by 50.9% to HKD 83 million, reflecting a strong focus on product quality and innovation - Selling and distribution expenses **decreased by approximately HKD 9 million** year-on-year, primarily due to a **reduction in property sales commission expenses** during the period[45](index=45&type=chunk) - Administrative expenses **decreased by approximately HKD 4 million** year-on-year, primarily due to a **reduction in carbon emission fees** after implementing carbon reduction measures[46](index=46&type=chunk) - R&D costs **increased by approximately HKD 28 million** year-on-year (**a 50.9% increase**), as the Group focused on **optimizing core product process technology** and **developing new chemical products**[47](index=47&type=chunk) - Finance costs **decreased by approximately HKD 3 million** year-on-year, primarily due to a **reduction in the average loan amount** during the period[48](index=48&type=chunk) [Liquidity, Financial Resources & Capital Structure](index=18&type=section&id=Liquidity%2C%20Financial%20Resources%20%26%20Capital%20Structure) The company's financial position is robust and improving, with the current ratio rising to 1.44 and the net debt to equity ratio significantly decreasing to 3.23%, demonstrating enhanced solvency and reduced leverage, supported by ample cash and credit facilities Liquidity and Capital Structure Metrics | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Shareholders' Equity | HKD 6.232 billion | HKD 5.936 billion | | Current Ratio | 1.44 | 1.21 | | Bank Balances and Cash | HKD 283 million | HKD 291 million | | Net Debt | HKD 201 million | HKD 358 million | | Net Debt to Equity Ratio | 3.23% | 6.03% | - The Group actively **optimized its financing cost structure** across different currencies during the period and will continue to maintain **ample cash** and **available bank credit facilities**[50](index=50&type=chunk) [Shareholder Returns & Corporate Actions](index=12&type=section&id=Shareholder%20Returns%20%26%20Corporate%20Actions) [Dividends](index=12&type=section&id=Dividends) Based on robust earnings and financial health, the Board declared a 2025 interim dividend of 19.5 HK cents per share, a 39.3% increase from the prior period, demonstrating commitment to shareholder returns and confidence in future profitability Interim Dividend Declaration | Dividend Type | 2025 | 2024 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Interim Dividend | 19.5 HK cents per share | 14 HK cents per share | ▲ 39.3% | - The interim dividend will be paid to shareholders whose names appear on the register of members on **August 25, 2025**, with an estimated payment date of **September 9, 2025**[27](index=27&type=chunk)[37](index=37&type=chunk) [Outlook & Strategy](index=15&type=section&id=Outlook%20%26%20Strategy) [Outlook](index=15&type=section&id=Outlook) Facing a challenging global economic environment, the Group will accelerate factory automation and enhance cost efficiency, focusing on high-end, green, and intelligent product transformation, expanding high-value-added products and overseas sales channels, and committing to sustainable development for long-term shareholder returns - The core strategy is to **accelerate the application of automation in three factories** to **enhance cost efficiency** and **production efficiency**[40](index=40&type=chunk) - The company will align with industry trends to promote production transformation towards **high-end, green, and intelligent solutions**[40](index=40&type=chunk) - Future growth drivers include developing **high-end fluoropolymer production lines** in new land parcels in Jiangxi and continuing to expand **overseas sales channels**[41](index=41&type=chunk) - The Group will continue to **invest in R&D for high-value-added chemical products**, **strengthen its product portfolio**, and promote various **sustainable development initiatives**, such as optimizing energy efficiency, water conservation, and expanding green energy applications[41](index=41&type=chunk) [Corporate Governance & Others](index=18&type=section&id=Corporate%20Governance%20%26%20Others) [Human Resources](index=18&type=section&id=Human%20Resources) As of June 30, 2025, the Group had approximately 1,900 employees, maintaining competitive remuneration and good employee relations without significant labor disputes or recruitment difficulties - As of June 30, 2025, the Group had **approximately 1,900 employees**, maintaining **good labor relations** without any **operational disruptions** due to labor disputes[51](index=51&type=chunk) [Corporate Governance & Audit](index=18&type=section&id=Corporate%20Governance%20%26%20Audit) The company consistently complied with the Corporate Governance Code, and the Audit Committee reviewed the interim results, discussing accounting principles, internal controls, and financial reporting with management without disagreement - The Board believes that the company has **consistently complied with the provisions of the Corporate Governance Code** during the reporting period[53](index=53&type=chunk) - The Audit Committee has **reviewed the Group's interim results** and had **no disagreements**[36](index=36&type=chunk)[54](index=54&type=chunk)

| 截至月份: 2025年7月31日 | | --- | | 狀態: 新提交 | 股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 致：香港交易及結算所有限公司 公司名稱: 理文化工有限公司 呈交日期: 2025年8月1日 本月底法定/註冊股本總額： HKD 500,000,000 FF301 第 1 頁 共 10 頁 v 1.1.1 FF301 II. 已發行股份及/或庫存股份變動 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | 於香港聯交所上市 (註1) | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 00746 | 說明 | | | | | | | | | 已發行股份（不包括庫存股份）數目 | | 庫存股份數目 | | 已發行股份總數 | | | 上月底結存 | | | 825,000,000 | | 0 | | 825,000,000 | | 增加 / 減少 (-) | | | | | | | | | 本月底結存 | | | 825,000,000 | | ...

Financial Performance - For the year ended December 31, 2024, the Group recorded total revenue of HK$3,951 million, a decrease of 2.5% year-on-year, while profit for the year was HK$482 million, an increase of 20.4% year-on-year[10]. - The gross profit margin of the chemical operations was 29.4%, representing a 3.4 percentage point increase compared to last year, and the Group's net profit margin rose by 2.3 percentage points year-on-year to 12.2%[10]. - The basic earnings per share for the year ended December 31, 2024, was HK58.5 cents, compared to HK48.6 cents in 2023[21]. - The Group recorded revenue from Chemical operations of approximately HK$3,922 million, a decrease of HK$59 million or 1.5% compared to last year[22]. - Gross profit amounted to HK$1,164 million, an increase of HK$102 million, primarily due to a decline in raw material prices and energy costs[31]. - Administrative expenses increased by approximately HK$16 million to HK$275 million, representing 7.0% of total revenue compared to 6.4% last year[33]. - Research and development costs were approximately HK$136 million, representing 3.4% of total revenue, focusing on optimizing process technology and improving product quality[34]. - The total shareholders' equity as of December 31, 2024, was HK$5,936 million, an increase from HK$5,800 million in 2023[45]. - The current ratio was 1.21 as of December 31, 2024, down from 1.29 at the end of 2023[45]. - The net debt to equity ratio was 6.03% as of December 31, 2024, compared to 7.04% in 2023[46]. Operational Developments - The Group plans to continue promoting production automation at its three factories to improve cost-effectiveness and production efficiency in 2025[12]. - The construction of the vinylene carbonate (VC) production line at the Changshu plant and the optimization of fluoroethylene carbonate (FEC) capacity at the Zhuhai plant were completed by the end of 2024, with trial production and sales expected to begin this year[14]. - The Group is actively planning to develop a high-end fluoropolymer production line at a new site in Jiangxi and expand overseas sales channels to support future sales growth[14]. - The Group's focus on developing diversified high-value-added chemical products and maintaining high product quality is expected to strengthen its competitive advantage[13]. - The operating environment in 2025 is anticipated to be challenging due to global economic uncertainties, but the Group is committed to navigating these challenges through strategic initiatives[12]. Sustainability and Environmental Initiatives - The Group aims to implement various sustainable development plans, including improving energy efficiency and reducing carbon emissions, to achieve sustainable development while providing satisfactory returns to shareholders[15]. - The Group has established clear and quantifiable targets for sustainable development, adhering to HKFRS S1 requirements, and maintained full compliance with environmental protection laws throughout 2024[163]. - The Group has optimized production processes and automated production control, leading to reductions in energy consumption and pollutant emissions[165]. - The Group aims to minimize carbon emissions through a comprehensive carbon emissions inventory and strategies including "prevention at source, process control, end treatment, and comprehensive utilization"[168]. - The Group has maintained full compliance with environmental laws and regulations throughout the year, with no reported violations[166]. - The Safety and Environmental Protection Department (SEPD) has been set up to manage compliance and monitoring of ESG-related risks, particularly in the chemical industry[172]. - The Group emphasizes a "green supply chain and high-quality low-carbon products" as part of its commitment to sustainable development[173]. Governance and Risk Management - The Board of Directors comprises seven members, including three Executive Directors and three Independent Non-executive Directors, ensuring a diverse governance structure[75]. - The Company has complied with the Corporate Governance Code as set out in the Listing Rules, demonstrating its commitment to high standards of corporate governance[68][72]. - The Group has established a risk management framework involving the Board, Audit Committee, and Risk Management Taskforce[116]. - The Risk Management Taskforce identifies and prioritizes significant risks annually, establishing mitigation plans for those deemed significant[117]. - The Group's risk management and internal control systems are reviewed annually by the Board, which considers them effective in managing risks associated with business objectives[122]. - The Company is committed to ensuring that announcements are not misleading and provide a clear and balanced view of both positive and negative facts[124]. Employee and Stakeholder Engagement - The Group's workforce consisted of around 1,900 employees as of December 31, 2024, with competitive compensation and incentives based on performance and market conditions[52][57]. - The Group's workforce consists of approximately 76% male employees and 24% female employees, indicating a commitment to gender diversity[145]. - Employee satisfaction metrics improved, with a reported 85% satisfaction rate, up from 80% last year[198]. - Stakeholder engagement is crucial for understanding expectations and recommendations related to ESG topics, involving various parties such as management, employees, and local organizations[185]. - The Group's long-term development plan will incorporate stakeholder suggestions to foster mutually beneficial relationships[187]. Future Outlook and Growth Strategies - The company provided guidance for the next quarter, expecting revenue to reach between $1.6 billion and $1.8 billion, indicating a potential growth of 7% to 20%[200]. - New product launches are anticipated to contribute an additional $200 million in revenue over the next fiscal year[198]. - Market expansion plans include entering three new international markets by Q3 2024, projected to increase market share by 15%[200]. - The company is exploring strategic acquisitions to bolster its product portfolio, with a budget of $100 million allocated for potential deals[198]. - Environmental compliance initiatives are expected to reduce operational costs by 10% over the next two years[199]. - The company aims to achieve a 30% reduction in carbon emissions by 2025, aligning with new regulatory standards[200].

Revenue and Profit - Revenue remained flat at HKD 3.951 billion[4] - Total revenue for the year ended December 31, 2024, was HKD 3,950,833, a decrease of 2.5% from HKD 4,050,581 in 2023[16] - The group reported a pre-tax profit of HKD 596,198 for 2024, compared to HKD 493,898 in 2023, representing an increase of 20.8%[22] - Profit increased by 20.4% to HKD 482.3 million, benefiting from lower raw material and energy costs[4] - Net profit for the year was HKD 482.3 million, up from HKD 400.7 million[5] - The net profit attributable to shareholders for 2024 was 482,284,000 HKD, up from 400,665,000 HKD in 2023, representing a growth of 20.3%[33] Dividends - Proposed final dividend of HKD 0.15 per share, totaling HKD 0.29 for 2024 compared to HKD 0.19 in 2023[4] - Total dividend declared for 2024 was 231,000,000 HKD, an increase of 27.3% from 181,500,000 HKD in 2023[35] - The board proposed a final dividend of HKD 0.15 per share for the year ended December 31, 2024, subject to shareholder approval at the upcoming annual general meeting[44] Costs and Expenses - Total sales cost decreased to HKD 2.787 billion from HKD 2.988 billion[5] - Research and development costs increased to HKD 135.8 million from HKD 120.8 million[5] - Administrative expenses increased to approximately HKD 275 million, up about HKD 16 million from the previous year, accounting for 7.0% of total revenue compared to 6.4% last year[60] - Interest expenses decreased to approximately HKD 22 million from HKD 39 million in the previous year, primarily due to the repayment of bank loans[62] - The company's total employee costs for 2024 were 388,774,000 HKD, up from 365,027,000 HKD in 2023, indicating a rise of 6.5%[32] Assets and Liabilities - Non-current assets increased from HKD 5,515,991 thousand in 2023 to HKD 5,809,033 thousand in 2024, representing a growth of 5.3%[6] - Current assets decreased from HKD 1,512,976 thousand in 2023 to HKD 1,387,410 thousand in 2024, a decline of 8.3%[6] - Total assets less current liabilities rose to HKD 6,050,267 thousand in 2024, up from HKD 5,857,151 thousand in 2023, indicating an increase of 3.3%[7] - The company's total equity increased from HKD 5,799,755 thousand in 2023 to HKD 5,935,970 thousand in 2024, a growth of 2.3%[7] - The company's total liabilities increased from HKD 1,171,816 thousand in 2023 to HKD 1,146,176 thousand in 2024, a decrease of 2.2%[7] Inventory and Receivables - Inventory decreased to 600,940,000 HKD in 2024 from 787,749,000 HKD in 2023, a reduction of 23.7%[37] - Trade receivables as of December 31, 2024, amounted to 209,621,000 HKD, an increase from 189,853,000 HKD in 2023[39] - Overdue trade receivables reached 77,274,000 HKD in 2024, significantly higher than 29,981,000 HKD in 2023[40] Segment Performance - Total income from chemical segment was HKD 3.922 billion, while the property segment contributed HKD 28.6 million[5] - Chemical segment revenue was HKD 3,922,260, down from HKD 3,980,919 in the previous year, reflecting a decline of 1.5%[22] - Property segment revenue decreased significantly to HKD 28,573 from HKD 69,662, a drop of 59.0%[22] Financial Position - The company's cash and bank balances decreased from HKD 263,666 thousand in 2023 to HKD 222,781 thousand in 2024, a reduction of 15.5%[6] - Trade and other payables increased from HKD 383,345 thousand in 2023 to HKD 493,417 thousand in 2024, marking a rise of 28.8%[6] - Bank borrowings increased from HKD 587,937 thousand in 2023 to HKD 671,767 thousand in 2024, an increase of 14.2%[6] - The group maintained a strong financial position with cash and bank deposits of approximately HKD 291 million, an increase from HKD 264 million in the previous year[66] Operational Developments - The group plans to continue investing in the automation of three factories to enhance cost efficiency and production effectiveness amid a challenging economic environment[49] - The construction of the vinyl acetate production line at the Changshu factory and the optimization of production capacity at the Zhuhai factory were completed by the end of 2024, with trial production and sales expected to commence within the year[50] - The group aims to develop a high-end fluoropolymer production line in Jiangxi and expand overseas sales channels to support future sales growth[50] Market and Pricing - The average selling prices for key products such as dichloromethane and trichloromethane increased by approximately 4% and 7% respectively, while the price for hydrogen peroxide decreased by about 16%[54] - The majority of the group's revenue is derived from external customers located in China, with significant non-current assets also situated in China[24] Other Financial Metrics - The gross profit margin for the chemical business improved by 3.4 percentage points to 29.4%, and the net profit margin rose by 2.3 percentage points to 12.2%[48] - The group's gross profit for the year was approximately HKD 1.164 billion, an increase of HKD 102 million compared to the previous year, attributed to a decline in raw material prices and energy costs[58] - The sales and distribution costs were approximately HKD 203 million, representing about 5.1% of total revenue, a slight decrease from 5.2% in the previous year[59] - Research and development costs were approximately HKD 136 million, constituting about 3.4% of total revenue, focusing on optimizing product craftsmanship and enhancing market competitiveness[61]

Financial Performance - Total revenue for the six months ended June 30, 2024, was HK$1,989,690,000, a slight decrease of 0.3% compared to HK$1,996,136,000 in the same period last year[9]. - Gross profit increased to HK$575,214,000, representing a 30.4% increase from HK$440,984,000 in the previous year[9]. - Profit for the period reached HK$240,085,000, up 129.4% from HK$104,611,000 in the same period last year[9]. - Earnings per share for the period were HK$29.1 cents, compared to HK$12.7 cents in the previous year, marking a significant increase[9]. - The company reported a profit before taxation of HK$297,776,000, significantly higher than HK$130,510,000 in the previous year[9]. - Total comprehensive income for the period was HK$240,368,000, which includes a profit for the period of HK$240,085,000, reflecting stable performance compared to previous periods[15]. - Profit for the period attributable to owners of the Company was HK$240,085,000, a significant increase from HK$104,611,000 in 2023, representing a growth of approximately 129%[45]. Revenue Breakdown - Revenue from the manufacture and sale of chemical products was HK$1,968,854, compared to HK$1,938,347 in the previous year, indicating an increase of about 1.6%[26]. - Revenue from chloromethane products decreased to HK$457,431 from HK$467,513, reflecting a decline of approximately 2.3%[26]. - The Group's revenue from contracts with customers was HK$1,987,848, slightly down from HK$1,996,136, a decrease of about 0.4%[26]. - The Group's rental income for the period was HK$1,842, which is a new revenue stream introduced this year[26]. - The chemical segment includes the manufacture and sale of various products, with a focus on maintaining operational efficiency and profitability[28]. - The property segment generated revenue from property development and sales, alongside rental income, contributing to the overall financial performance[28]. Cost Management - The cost of sales decreased to HK$1,414,476,000, down 9.1% from HK$1,555,152,000 in the previous year[9]. - Research and development costs were HK$54,529,000, a decrease from HK$71,850,000 in the previous year, indicating a focus on cost management[9]. - Selling and distribution expenses for the six months ended June 30, 2024, were approximately HK$108 million, a decrease of approximately HK$1 million from HK$109 million in the previous period, representing about 5.4% of total revenue[92]. - General and administrative expenses increased to approximately HK$135 million, up HK$7 million from HK$128 million in the previous period, representing approximately 6.8% of total revenue[93]. - Finance costs for the six months ended June 30, 2024, were approximately HK$13 million, a decrease of approximately HK$9 million from HK$22 million in the previous period due to reduced outstanding loan balances[95]. Asset and Liability Management - As of June 30, 2024, total assets less current liabilities amounted to HK$5,990,018, an increase from HK$5,857,151 as of December 31, 2023, reflecting a growth of approximately 2.26%[11]. - The company's total equity as of June 30, 2024, was HK$5,924,623, up from HK$5,799,755 at the end of 2023, representing an increase of approximately 2.15%[11]. - Current liabilities increased to HK$1,137,548 from HK$1,171,816, showing a decrease of about 2.92%[10]. - Bank borrowings decreased significantly to HK$491,209 from HK$671,767, a reduction of approximately 26.8%[10]. - The net debt to equity ratio as of June 30, 2024, was 4.77%, down from 7.04% as of December 31, 2023, reflecting improved financial stability[103]. Cash Flow and Investments - For the six months ended June 30, 2024, net cash from operating activities was HK$606,222,000, a significant increase from HK$271,082,000 in the same period of 2023, representing a growth of approximately 124%[16]. - The company reported a net cash used in investing activities of HK$351,096,000 for the six months ended June 30, 2024, compared to HK$332,307,000 in the prior year, indicating a slight increase of about 5.2%[16]. - Payments for the purchase of property, plant, and equipment amounted to HK$295,666,000, compared to HK$127,222,000 in the previous year, indicating a significant increase in capital expenditures[16]. - The Group spent approximately HK$485 million on property, plant, and equipment to expand its operations during the period[51]. Future Outlook and Strategic Initiatives - The company continues to explore market expansion opportunities and new product development strategies[8]. - Future outlook remains positive with ongoing investments in technology and potential acquisitions to enhance market position[8]. - The Group plans to enhance production automation across its three factories to improve cost-effectiveness and production efficiency[80]. - New production lines for vinylene carbonate and fluoroethylene carbonate are expected to start operation in the second half of the year, improving production cost-effectiveness[81]. - The Group is actively investing in research and development of high-value-added chemical products to strengthen its product portfolio and competitive advantages[80]. Shareholder Information - The final dividend paid during the period was HK14 cents per share, down from HK17 cents per share in 2022, totaling HK$115,500,000 compared to HK$140,250,000 in the previous year[44]. - The interim dividend declared for 2024 is HK14 cents per share, an increase from HK5 cents per share in 2023, amounting to HK$115,500,000 compared to HK$41,250,000 in the previous year[44]. - As of June 30, 2024, Mr. Lee Man Yan holds 536,250,000 ordinary shares, representing 65% of the issued share capital of the Company[108]. - Ms. Wai Siu Kee holds 82,500,000 ordinary shares, representing 10% of the issued share capital of the Company[108]. Compliance and Governance - The Company has complied with the Corporate Governance Code throughout the six months ended June 30, 2024[115]. - All directors confirmed compliance with the Model Code for securities transactions during the reporting period[114]. - The Audit Committee reviewed the Group's results for the six months ended June 30, 2024, discussing accounting principles and internal controls[122].

Revenue and Profitability - Revenue remained stable at HKD 1.99 billion, a slight decrease from HKD 1.996 billion in the same period last year[2] - Profit increased by 129.5% to HKD 240.1 million, compared to HKD 104.6 million in the previous year[2] - Total comprehensive income for the period was HKD 240.4 million, compared to HKD 102.5 million in the previous year[3] - Basic earnings per share increased to HKD 29.1 from HKD 12.7[3] - The group reported a profit of HKD 240,085,000 for the six months ended June 30, 2024, compared to HKD 104,611,000 in 2023, reflecting a substantial increase of 129.4%[23] - The group's net profit for the same period was approximately HKD 240 million, representing a significant increase of 129.5% from HKD 105 million year-on-year[32] Dividends - Proposed interim dividend of HKD 0.14 per share, up from HKD 0.05 per share for the same period last year[1] - The interim dividend declared for the six months ended June 30, 2024, is HKD 115,500,000, consistent with the previous year's interim dividend of HKD 41,250,000[22] - The interim dividend declared is HKD 0.14 per share, expected to be paid on September 5, 2024[30] Asset Management - Non-current assets increased to HKD 5.74 billion from HKD 5.52 billion as of December 31, 2023[4] - Current assets decreased to HKD 1.38 billion from HKD 1.51 billion[5] - Total assets less current liabilities increased to HKD 5.99 billion from HKD 5.86 billion[5] - Net assets increased to HKD 5.92 billion from HKD 5.80 billion[5] - The total accounts receivable, including trade and other receivables, amounted to HKD 471.237 million, an increase from HKD 408.230 million[27] - The total accounts payable, including trade and other payables, increased to HKD 566.992 million from HKD 408.242 million[28] - As of June 30, 2024, total equity was approximately HKD 5.925 billion, with current assets of approximately HKD 1.385 billion and current liabilities of approximately HKD 1.138 billion, resulting in a current ratio of 1.22[43] Segment Performance - Chemical manufacturing and sales generated revenue of HKD 1,968,854, representing an increase of 1.6% from HKD 1,938,347 in the previous year[13] - The segment performance for chemicals was HKD 298,997, up from HKD 161,362 in the prior period, indicating a significant improvement[13][14] - The property segment generated revenue of HKD 20,836, a decrease from HKD 57,789 in the previous year, reflecting a decline in property sales[13][14] - Revenue from the property business was approximately HKD 21 million, primarily from the sale and delivery of 13 residential units at "Xinyuexi" with 15 unsold units remaining at the end of the period[38] Expenses and Costs - Total employee costs amounted to HKD 187,618,000, up from HKD 177,464,000 in the previous year, an increase of 5.0%[21] - Selling and distribution expenses for the six months ended June 30, 2024, were approximately HKD 108 million, a decrease of about HKD 1 million compared to approximately HKD 109 million in the same period last year, representing about 5.4% of sales revenue[39] - Administrative expenses increased to approximately HKD 135 million, up about HKD 7 million from approximately HKD 128 million in the same period last year, accounting for about 6.8% of total revenue[40] - R&D costs for the six months ended June 30, 2024, were approximately HKD 55 million, a decrease of about HKD 17 million compared to HKD 72 million in the same period last year[41] - Interest expenses for the six months ended June 30, 2024, were approximately HKD 13 million, a decrease of about HKD 9 million compared to approximately HKD 22 million in the same period last year[42] Financial Position - The group maintained a healthy financial position with bank balances and cash of HKD 208 million and a net debt of HKD 283 million as of June 30, 2024[43] - The group incurred interest expenses of HKD 13,055,000 on bank borrowings, down from HKD 21,978,000 in 2023, a decrease of 40.4%[21] Government Support and Other Income - Government subsidies increased to HKD 21,834,000 for the six months ended June 30, 2024, up from HKD 17,437,000 in 2023, representing a growth of 25.9%[18] - The net income from electricity and steam rose to HKD 2,295,000, compared to a loss of HKD 1,873,000 in the previous year, indicating a significant turnaround[18] - Total other income increased to HKD 32,705,000 in 2024 from HKD 22,338,000 in 2023, marking a growth of 46.5%[18] Production and Operations - The group plans to enhance production automation across its three factories to improve cost efficiency and production effectiveness[33] - The production line for vinyl acetate (VC) at the Changshu factory and the expansion of fluorinated ethylene carbonate (FEC) capacity at the Zhuhai factory are expected to commence in the second half of the year, significantly optimizing cost efficiency[34] - The actual production volume for methylene chloride was approximately 197,000 tons, caustic soda approximately 294,000 tons, PTFE approximately 5,300 tons, and hydrogen peroxide approximately 202,000 tons[37] Market and Pricing - The average selling prices for key products during the review period were approximately RMB 2,600 and RMB 2,700 for methylene chloride, RMB 900 for caustic soda (down 7%), RMB 45,000 for PTFE (down 10%), and RMB 900 for hydrogen peroxide (up 12%) compared to the same period last year[36]

Investment Rating - The report maintains a "Buy" rating for Lee & Man Chemical (LMC) with a target price of HKD 4.10, corresponding to price-to-earnings ratios of 6.1x, 3.7x, and 3.2x for the years 2024, 2025, and 2026 respectively [1]. Core Insights - The report forecasts a 125% year-on-year increase in shareholder net profit for the first half of 2024, amounting to approximately HKD 230 million, driven by a decrease in raw material and energy costs, as well as increased demand for chloromethane products like dichloromethane due to rising refrigerant prices [1]. - A strong recovery is anticipated in 2024, supported by improved demand and a favorable product mix. The report highlights that the elimination of some small producers during recent market consolidation is expected to lead to a rebound in prices for certain basic chemical products [2]. - New production lines for vinyl carbonate (VC) and fluorinated ethylene carbonate (FEC) at the Changshu and Zhuhai plants, respectively, are projected to generate additional revenue [2]. - LMC has adjusted the use of newly acquired land in Jiangxi to develop higher-margin high-end fluoropolymers [2]. Summary by Sections Financial Performance - The report maintains earnings per share forecasts of HKD 0.674, HKD 1.109, and HKD 1.284 for 2024, 2025, and 2026, reflecting year-on-year growth rates of 58.5%, 95.3%, and 31.1% respectively [1]. Market Dynamics - The acceleration of market consolidation is expected to enhance the company's market share [3]. - New material projects are set to commence production in 2024 and 2025, potentially boosting revenue streams [3].