[Company Information](index=2&type=section&id=Company%20Information) This section details the company's corporate governance structure, including registration information, board and committee members, advisors, and registrars - This section details the company's corporate governance structure, including registration information, board and committee members, advisors, and registrars[5](index=5&type=chunk)[7](index=7&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the company's performance, financial position, and future outlook, analyzing key operational and financial metrics [Industry Review](index=5&type=section&id=Industry%20Review) The report period saw China's manufacturing sector face downward pressure and slower GDP growth due to the US-China trade war, while e-commerce boosted consumer retail and paper packaging demand - China's economic growth faced increased downward pressure, with GDP growth rate decreasing to **6.2%** in the first three quarters of 2019 (compared to 6.7% in the same period last year)[12](index=12&type=chunk) - Despite manufacturing slowdown, total retail sales of consumer goods grew by **8.2%** year-on-year to **RMB 29.67 trillion** in the first three quarters of 2019, driven by e-commerce penetration[12](index=12&type=chunk) - Total profit of large paper and paper product manufacturers decreased by **20.2%** year-on-year in the first nine months of 2019, affected by tighter import paper policies and raw material price fluctuations[13](index=13&type=chunk) [Business Review and Operating Results](index=5&type=section&id=Business%20Review%20and%20Operating%20Results) The Group shifted focus to China's domestic sales to maintain volume amid the US-China trade war, resulting in a revenue decrease to HKD 534 million due to lower raw paper prices and RMB depreciation, yet gross profit margin improved to 22.9% 2019 Interim Results Overview (For the six months ended September 30) | Indicator | 2019 Interim | 2018 Interim | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | HKD 533.9 million | HKD 652.7 million | -18.2% | | Gross Profit | HKD 122.2 million | HKD 136.0 million | -10.1% | | Gross Profit Margin | 22.9% | 20.8% | +2.1pp | | Profit for the Period | HKD 26.3 million | HKD 28.5 million | -7.7% | | Net Profit Margin | 4.9% | 4.4% | +0.5pp | - The Group strategically shifted its focus to developing domestic sales clients in China to offset the slowdown in export business growth[14](index=14&type=chunk) - Net profit decreased primarily due to a fair value loss of approximately **HKD 1.7 million** on investment properties (compared to a gain of HKD 7.2 million in the prior period)[17](index=17&type=chunk)[33](index=33&type=chunk) [Segment Performance](index=7&type=section&id=Segment%20Performance) The Group's operations are segmented into Guangdong, Fujian, and property leasing, with Guangdong being the primary revenue and profit driver despite a slight decline in revenue and gross profit, while Fujian experienced a significant drop Performance by Business Segment (For the six months ended September 30) | Business Segment | Revenue (HKD) | YoY Change | Gross Profit (HKD) | Gross Profit Margin | | :--- | :--- | :--- | :--- | :--- | | Guangdong Business | HKD 434.8 million | -16.9% | HKD 107.7 million | 24.8% | | Fujian Business | HKD 96.6 million | -24.0% | HKD 12.2 million | 12.6% | | Property Leasing | HKD 2.5 million | +13.6% | - | - | - Guangdong business, primarily engaged in high-value-added structural design corrugated paperboard and paper packaging products, contributed the majority of the Group's gross profit[29](index=29&type=chunk) - Fujian business primarily produces lower-margin corrugated paperboard products, with its gross profit margin below the Group's overall level[30](index=30&type=chunk) [Expenses and Finance Costs](index=8&type=section&id=Expenses%20and%20Finance%20Costs) During the reporting period, the Group's selling expenses remained stable, administrative expenses significantly decreased, and finance costs increased due to the adoption of new leasing standards and higher bank borrowing interest rates - Overall administrative expenses decreased from **HKD 65.9 million** in the prior period to **HKD 51.3 million**, indicating strengthened internal cost control[31](index=31&type=chunk) - Finance costs totaled approximately **HKD 9.7 million**, including approximately **HKD 2.0 million** in interest on lease liabilities due to the adoption of HKFRS 16 and approximately **HKD 7.7 million** in bank borrowing interest[32](index=32&type=chunk) [Working Capital, Liquidity and Financial Resources](index=9&type=section&id=Working%20Capital%2C%20Liquidity%20and%20Financial%20Resources) The Group's cash conversion cycle increased from 60 to 69 days due to higher accounts receivable and inventory days, while active reduction of bank borrowings improved the gearing ratio from 31.0% to 23.9%, maintaining a stable liquidity ratio of 1.21 Changes in Working Capital Turnover Days | Indicator | September 30, 2019 | March 31, 2019 | | :--- | :--- | :--- | | Trade and Bills Receivables Turnover Days | 77 days | 72 days | | Inventory Turnover Days | 46 days | 41 days | | Trade and Bills Payables Turnover Days | 54 days | 53 days | | Cash Conversion Cycle | 69 days | 60 days | Liquidity and Financial Ratios | Indicator | September 30, 2019 | March 31, 2019 | | :--- | :--- | :--- | | Current Ratio | 1.21 | 1.22 | | Gearing Ratio | 23.9% | 31.0% | - The Group actively reduced bank borrowings during the period, with the total amount decreasing from **HKD 376.5 million** to **HKD 297.1 million**[40](index=40&type=chunk) [Other Financial Information](index=10&type=section&id=Other%20Financial%20Information) This section outlines the Group's foreign exchange risks, asset pledges, capital commitments, contingent liabilities, and employee information, including a tax reassessment from the Hong Kong Inland Revenue Department for which no provision has been made - As of September 30, 2019, the Group pledged assets with a total carrying amount of approximately **HKD 318.2 million** to secure bank financing[43](index=43&type=chunk) - The Group had contracted capital expenditure of approximately **HKD 8.8 million** for the expansion of production facilities[44](index=44&type=chunk) - The Hong Kong Inland Revenue Department issued estimated and additional tax assessments totaling **HKD 12.782 million** to six of the Group's subsidiaries for past assessment years, for which the directors believe no provision is required[49](index=49&type=chunk) - As of September 30, 2019, the Group employed **1,217 staff**, with total staff costs for the period amounting to approximately **HKD 71.5 million**[50](index=50&type=chunk) [Prospects](index=11&type=section&id=Prospects) The Group is optimistic about the demand for quality paper packaging in China's domestic market, particularly in the Greater Bay Area, and plans to expand its Huidong plant while continuing to broaden domestic sales channels and secure export orders outside the US - The Group plans to expand its plant in Huidong, Guangdong Province, to capitalize on market opportunities arising from the Greater Bay Area development[51](index=51&type=chunk) - Marketing strategies will continue to focus on expanding domestic sales channels in China and leveraging existing international client bases to secure export orders outside the US[51](index=51&type=chunk) - To mitigate raw material price fluctuations, the Group will adhere to a diversified procurement strategy, maintaining a balance between domestic and overseas raw material supplies[52](index=52&type=chunk) [Other Information](index=11&type=section&id=Other%20Information) This section covers various corporate governance and financial disclosures, including directors' and major shareholders' interests, share repurchases, corporate governance compliance, share option schemes, and significant events [Interests of Directors, Chief Executive and Major Shareholders in Shares](index=12&type=section&id=Interests%20of%20Directors%2C%20Chief%20Executive%20and%20Major%20Shareholders%20in%20Shares) This section details the shareholdings of the company's directors, chief executive, and major shareholders, with controlling interest primarily held by Chairman Mr. Zhuang Jinchou through his family trust, which beneficially owns approximately 66.35% of the company's shares - Chairman Mr. Zhuang Jinchou and his family members indirectly hold **233,000,000 shares**, representing **66.35%** of the issued shares, through an irrevocable discretionary trust named 'Zhuang Family Trust'[56](index=56&type=chunk)[58](index=58&type=chunk)[62](index=62&type=chunk) [Purchases, Sales or Redemptions of the Company's Listed Securities](index=15&type=section&id=Purchases%2C%20Sales%20or%20Redemptions%20of%20the%20Company%27s%20Listed%20Securities) During the reporting period, the company repurchased a total of 2,300,000 ordinary shares on the Stock Exchange for approximately HKD 1.5 million, all of which have been cancelled Details of Share Repurchases | Month of Repurchase | Number of Shares Repurchased | Price Range Per Share (HKD) | Total Consideration (HKD) | | :--- | :--- | :--- | :--- | | April 2019 | 742,000 | 0.79 - 0.80 | 593,560 | | August 2019 | 1,558,000 | 0.54 - 0.57 | 882,260 | | **Total** | **2,300,000** | | **1,475,820** | [Corporate Governance and Audit Committee](index=15&type=section&id=Corporate%20Governance%20and%20Audit%20Committee) The company complied with the Corporate Governance Code during the reporting period, and the Audit Committee, comprising three independent non-executive directors, reviewed the interim report - The company complied with the applicable code provisions of the Corporate Governance Code set out in Appendix 14 to the Listing Rules[70](index=70&type=chunk) - The Audit Committee, whose members are all independent non-executive directors, has reviewed this interim report[73](index=73&type=chunk)[74](index=74&type=chunk) [Share Option Scheme](index=16&type=section&id=Share%20Option%20Scheme) This section discloses details of outstanding share options under the 2009 Share Option Scheme, with 9,800,000 options unexercised as of the reporting period end, and no options granted, exercised, or lapsed during the period - As of September 30, 2019, a total of **9,800,000 share options** remained unexercised under the Share Option Scheme[77](index=77&type=chunk) - No share options were granted, exercised, or lapsed during the reporting period[77](index=77&type=chunk) [Events During and After the Period](index=17&type=section&id=Events%20During%20and%20After%20the%20Period) During the reporting period, the company completed the acquisition of a property in North Point, Hong Kong, for HKD 28 million and decided not to exercise its pre-emptive right regarding a joint venture equity transfer, with no significant events occurring post-period - On June 13, 2019, the acquisition of a property in North Point, Hong Kong, was completed for a total consideration of **HKD 28.0 million**[81](index=81&type=chunk) - The company decided not to exercise its pre-emptive right regarding the transfer of a **40% equity interest** in the joint venture, Sun Hing Group Limited[82](index=82&type=chunk)[83](index=83&type=chunk) [Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=17&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This section presents the unaudited consolidated financial performance of the Group, including revenue, gross profit, operating profit, and profit attributable to owners for the period [Summary of Consolidated Statement of Profit or Loss](index=18&type=section&id=Summary%20of%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended September 30, 2019, the company reported revenue of HKD 534 million, an 18.2% decrease year-on-year, with profit attributable to owners of HKD 26.44 million and basic earnings per share of 7.48 HK cents Key Data from Consolidated Statement of Profit or Loss (For the six months ended September 30) | Indicator | 2019 (HKD '000) | 2018 (HKD '000) | | :--- | :--- | :--- | | Revenue | 533,875 | 652,658 | | Gross Profit | 122,228 | 136,042 | | Operating Profit | 46,216 | 48,014 | | Profit Before Tax | 36,524 | 40,850 | | Profit Attributable to Owners of the Company | 26,441 | 26,432 | | Basic and Diluted Earnings Per Share | 7.48 HK cents | 7.29 HK cents | [Unaudited Condensed Consolidated Statement of Financial Position](index=18&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This section presents the unaudited consolidated financial position of the Group, detailing assets, liabilities, and equity as of the reporting date [Summary of Consolidated Statement of Financial Position](index=19&type=section&id=Summary%20of%20Consolidated%20Statement%20of%20Financial%20Position) As of September 30, 2019, the Group's total assets were approximately HKD 1.245 billion, total liabilities approximately HKD 623 million, and net assets approximately HKD 622 million, with net current assets of HKD 111 million indicating sound short-term solvency Key Data from Consolidated Statement of Financial Position | Indicator | September 30, 2019 (HKD '000) | March 31, 2019 (HKD '000) | | :--- | :--- | :--- | | Non-current Assets | 606,500 | 529,776 | | Current Assets | 638,957 | 682,925 | | Current Liabilities | 528,155 | 561,535 | | Non-current Liabilities | 95,669 | 18,659 | | **Net Assets** | **621,633** | **632,507** | | Equity Attributable to Owners of the Company | 630,967 | 640,084 | [Unaudited Condensed Consolidated Statement of Changes in Equity](index=19&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This section presents the unaudited consolidated changes in equity for the Group, detailing movements in various equity components during the reporting period [Summary of Changes in Equity](index=20&type=section&id=Summary%20of%20Changes%20in%20Equity) For the six months ended September 30, 2019, equity attributable to owners decreased from HKD 640 million to HKD 631 million, primarily due to adjustments from new accounting standards, negative exchange differences, and share repurchases, partially offset by profit for the period - Retained profits at the beginning of the period were retrospectively adjusted downwards by approximately **HKD 10.58 million** due to the initial adoption of HKFRS 16[93](index=93&type=chunk) - Share capital and share premium collectively decreased by approximately **HKD 1.485 million** during the period due to share repurchases[93](index=93&type=chunk) - Exchange differences arising from the translation of overseas operations resulted in a decrease of approximately **HKD 23.49 million** in exchange reserves, negatively impacting total equity[93](index=93&type=chunk) [Unaudited Condensed Consolidated Statement of Cash Flows](index=20&type=section&id=Unaudited%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This section presents the unaudited consolidated cash flow activities of the Group, categorizing cash flows from operating, investing, and financing activities for the period [Summary of Cash Flows](index=21&type=section&id=Summary%20of%20Cash%20Flows) During the reporting period, the Group generated net cash inflow of HKD 24.32 million from operating activities and HKD 5.07 million from investing activities, while financing activities resulted in a net cash outflow of HKD 83.66 million, leading to a net decrease in cash and cash equivalents of HKD 54.27 million Key Data from Consolidated Statement of Cash Flows (For the six months ended September 30) | Indicator | 2019 (HKD '000) | 2018 (HKD '000) | | :--- | :--- | :--- | | Net Cash From Operating Activities | 24,318 | (43,511) | | Net Cash From Investing Activities | 5,068 | 24,505 | | Net Cash Used In Financing Activities | (83,657) | (1,118) | | **Net Decrease in Cash and Cash Equivalents** | **(54,271)** | **(20,124)** | | Cash and Cash Equivalents at Beginning of Period | 232,294 | 257,513 | | Cash and Cash Equivalents at End of Period | 164,596 | 229,334 | [Notes to the Unaudited Condensed Consolidated Financial Statements](index=21&type=section&id=Notes%20to%20the%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes to the unaudited condensed consolidated financial statements, covering accounting policies, segment information, taxation, earnings per share, dividends, and trade balances [Notes 1 & 2: Basis of Preparation and Changes in Accounting Policies](index=22&type=section&id=Notes%201%20%26%202%3A%20Basis%20of%20Preparation%20and%20Changes%20in%20Accounting%20Policies) These financial statements are prepared in accordance with HKAS 34, with HKFRS 16 "Leases" first applied during this period using the modified retrospective approach, leading to the recognition of right-of-use assets and lease liabilities without restating comparative data - The Group first applied HKFRS 16 'Leases' from April 1, 2019, opting for the modified retrospective approach without restating comparative information[101](index=101&type=chunk)[102](index=102&type=chunk) - The cumulative effect of initial application of the standard was recognized as an adjustment to the opening equity balance as of April 1, 2019, with retained profits decreasing by approximately **HKD 10.581 million**[112](index=112&type=chunk) - As of April 1, 2019, the Group recognized total lease liabilities of **HKD 107.1 million**[113](index=113&type=chunk) [Note 3: Revenue and Segment Information](index=25&type=section&id=Note%203%3A%20Revenue%20and%20Segment%20Information) The Group's reportable operating segments include corrugated products, offset-printed corrugated products, and property leasing, with the corrugated products segment being the largest contributor to revenue and profit, recording HKD 440 million in revenue and HKD 37.41 million in segment results Segment Results (For the six months ended September 30, 2019) | Segment | External Sales Revenue (HKD '000) | Segment Results (HKD '000) | | :--- | :--- | :--- | | Corrugated Products | 440,476 | 37,413 | | Offset-Printed Corrugated Products | 90,903 | 15,833 | | Property Leasing | 2,496 | (575) | | **Total** | **533,875** | **52,671** | [Note 6: Income Tax Expense](index=29&type=section&id=Note%206%3A%20Income%20Tax%20Expense) Total income tax expense for the period was HKD 10.2 million, lower than the prior period's HKD 12.36 million, with Shenzhen Jinsheng Packaging enjoying a 15% preferential tax rate as a high-tech enterprise, and no provision made for Hong Kong tax reassessments - Jinsheng Packaging (Shenzhen) Co., Ltd., as a high-tech enterprise, enjoys a preferential corporate income tax rate of **15%**[137](index=137&type=chunk)[138](index=138&type=chunk) - The Group has objected to estimated and additional tax assessments totaling **HKD 12.782 million** issued by the Hong Kong Inland Revenue Department[139](index=139&type=chunk) [Notes 8 & 9: Earnings Per Share and Dividends](index=32&type=section&id=Notes%208%20%26%209%3A%20Earnings%20Per%20Share%20and%20Dividends) Basic and diluted earnings per share for the reporting period increased to 7.48 HK cents from 7.29 HK cents in the prior period, and the Board of Directors did not recommend an interim dividend for the six months ended September 30, 2019 - Basic and diluted earnings per share were **7.48 HK cents**[148](index=148&type=chunk) - The Board of Directors did not recommend the payment of any interim dividend[150](index=150&type=chunk) [Notes 12 & 13: Ageing Analysis of Trade and Other Receivables and Payables](index=33&type=section&id=Notes%2012%20%26%2013%3A%20Ageing%20Analysis%20of%20Trade%20and%20Other%20Receivables%20and%20Payables) This note provides an ageing analysis of trade and other receivables and payables, showing total trade and bills receivables of HKD 242 million, mostly not yet due, and total trade and bills payables of HKD 133 million - Total trade and bills receivables amounted to **HKD 242,005 thousand**, with **HKD 204,348 thousand** being not yet due[156](index=156&type=chunk) - Total trade and bills payables amounted to **HKD 133,030 thousand**, with the largest portion aged within 30 days[159](index=159&type=chunk)

Financial Performance - For the fiscal year ending March 31, 2019, the company reported revenue of HKD 1,184,886,000, a decrease of 10.7% compared to HKD 1,326,986,000 in the previous year[12]. - The gross profit for the same period was HKD 234,316,000, representing a gross margin of approximately 19.8%[12]. - The net profit for the year was HKD 41,048,000, a decline from HKD 95,405,000 in the previous year, indicating a decrease of 57.0%[12]. - The operating profit for the year was HKD 65,390,000, a significant decrease from HKD 135,229,000 in the previous year[12]. - The company's revenue for the year was approximately HKD 1,184,900,000, a decrease from HKD 1,327,000,000 in 2018, reflecting the impact of global economic uncertainty and trade tensions[35]. - The company's net profit decreased to approximately HKD 41,000,000 from HKD 95,400,000 in the previous year, resulting in a net profit margin of about 3.5%[50]. - The overall gross profit was approximately HKD 234,300,000, with a gross profit margin of about 19.8%, maintaining relative stability compared to previous years[41]. Assets and Liabilities - Total assets as of March 31, 2019, were HKD 1,212,701,000, down from HKD 1,371,896,000 in the previous year[13]. - The total liabilities decreased to HKD 580,194,000 in 2019 from HKD 713,906,000 in 2018, reflecting improved financial health[13]. - The company's current ratio was approximately 1.22 as of March 31, 2019, indicating a stable liquidity position[53]. - The debt-to-asset ratio remained stable at approximately 31.0%, up from 29.6% in 2018[60]. - Total bank borrowings decreased to approximately HKD 376.5 million from HKD 405.6 million in 2018, with HKD 338.5 million due within one year[60]. Sales and Market Performance - Domestic sales in China accounted for 80.5% of total sales, amounting to HKD 949,516,000, while export sales contributed 15.5% with HKD 183,149,000[34]. - The company maintained a stable sales volume despite fluctuations in the business environment, attributed to efforts in acquiring new domestic market customers[17]. - Revenue from the Fujian plant increased significantly by approximately 27.5% to about HKD 227,500,000, compared to HKD 178,500,000 in the previous year, indicating strong brand recognition in the Fujian and surrounding markets[39]. - Guangdong business revenue remained stable at approximately HKD 952,700,000, down from HKD 1,109,900,000 in 2018, despite a slight decline in sales volume due to adverse business conditions[38]. Cost Management and Procurement - The company successfully expanded its raw material sourcing to include imports from countries like Vietnam, which helped mitigate cost pressures from rising paper costs in China[18]. - The company emphasized strengthening relationships with key suppliers to reduce supply risks and enhance cost management[18]. - The group has improved its ability to combat cost pressures from domestic raw paper supply by diversifying its procurement sources, including imports from a major supplier's paper mill in Vietnam[70]. - The company plans to continue implementing cost control measures to address ongoing challenges in the market[17]. Research and Development - The company plans to enhance research and development efforts to develop sustainable green packaging, aiming for stable sales growth and expanded revenue sources[23]. - The group has been recognized as a national high-tech enterprise, which provides tax benefits and supports further development in R&D and value-added products[33]. - The group aims to optimize operations and product offerings through effective measures such as integrating production processes and securing stable raw material sources[73]. Corporate Governance - The board proposed a final dividend of HKD 0.04 per share for the year[50]. - The company has established four board committees: audit committee, remuneration committee, nomination committee, and executive committee, each with defined responsibilities[97]. - The audit committee includes three independent non-executive directors and is tasked with monitoring the relationship with external auditors and reviewing financial reports[98]. - The company has established a risk management and internal control system in compliance with the corporate governance code principle C.2[127]. - The board of directors is responsible for reviewing the effectiveness of the risk management and internal control systems annually[140]. Shareholder Engagement - The company encourages shareholders to attend annual general meetings to provide feedback and engage with the board[144]. - The group emphasizes transparency and values shareholder feedback, encouraging communication with the investor relations team[153]. - The company maintains strong relationships with employees, customers, and suppliers, emphasizing communication and feedback[193]. Future Outlook - The company aims to diversify its customer base and raw material sources to stabilize profits amid economic fluctuations[23]. - The management team is actively involved in regional political and business associations, enhancing the company's network[157][160]. - The group has made significant investments in new technologies and product development to drive future growth[169].