Revenue and Profitability - Revenue for the six months ended June 30, 2024, was RMB 7,542.9 million, representing a 25.6% increase from RMB 6,003.4 million in the same period of 2023[1] - Profit attributable to equity holders of the parent rose by 5.6% to RMB 244.8 million, compared to RMB 231.8 million in the prior year[1] - The company reported a decrease in net profit for the period of 5.3%, down to RMB 241.7 million from RMB 255.3 million in the previous year[1] - Basic earnings per share for the period was RMB 0.18, compared to RMB 0.17 in the same period last year[3] - The company reported a pre-tax profit of RMB 5,614,959 thousand for the first half of 2024, compared to RMB 4,539,577 thousand in 2023, reflecting a growth of 23.7%[23] - The profit for the period was RMB 241.7 million, a decrease of 5.3% year-on-year, while the profit attributable to the parent company increased by 5.6% to RMB 244.8 million[54] Gross Profit and Margins - Gross profit increased by 29.8% to RMB 1,061.8 million, with a gross margin of 14.1%, up from 13.6% in the previous year[1] - The gross profit rose by 29.8% to RMB 1,061.8 million, with an overall gross margin increasing from 13.6% to 14.1%[58] Revenue Breakdown by Segment - The backup battery segment accounted for 41.6% of total sales, generating RMB 3,135.4 million in revenue, a 9.9% increase compared to the same period in 2023[43] - The starter battery segment contributed 37.7% to total sales, with revenue of RMB 2,841.1 million, marking a significant year-on-year growth of 93.4%[44] - The power battery segment represented 9.1% of total sales, achieving revenue of RMB 686.8 million, which is a 10.5% increase year-on-year[45] - The lead recycling business reported revenue of RMB 744.4 million, a decrease of 25.3% compared to the previous year, impacted by market challenges and lead price fluctuations[46] Revenue by Region - Revenue from mainland China increased to RMB 4,363,895 thousand in 2024, a rise of 19.2% from RMB 3,662,189 thousand in 2023[17] - The Americas region saw revenue of RMB 1,349.5 million, a substantial increase of 67.6% year-on-year, supported by high demand for lead-acid batteries in automotive and industrial applications[49] - Sales in the Europe, Middle East, and Africa region amounted to RMB 1,165.2 million, representing an 18.5% increase compared to the same period last year[50] - The Asia-Pacific region (excluding mainland China) generated revenue of RMB 664.4 million, a 20.2% increase year-on-year, driven by growth in automotive and industrial sectors[51] Financial Position and Assets - Total assets as of June 30, 2024, amounted to RMB 14,054.1 million, compared to RMB 14,095.2 million as of December 31, 2023[6] - Total non-current assets as of June 30, 2024, amounted to RMB 4,597,871 thousand, an increase from RMB 4,340,384 thousand as of December 31, 2023[18] - The net asset value of current assets was RMB 1,473,698 thousand, up from RMB 1,160,659 thousand, indicating a significant increase[7] - The company's total liabilities and equity as of June 30, 2024, were RMB 4,833,509 thousand, compared to RMB 4,588,640 thousand as of December 31, 2023[7] Liabilities and Financial Costs - Non-current liabilities, including interest-bearing bank loans, rose to RMB 1,257,911 thousand from RMB 956,169 thousand, reflecting a 31.5% increase[7] - The company incurred finance costs of RMB 160,085 thousand in the first half of 2024, significantly higher than RMB 98,058 thousand in 2023, marking a 63.3% increase[25] - The company's total liabilities related to bank loans due within one year were RMB 3,689,369,000 as of June 30, 2024, compared to RMB 3,501,194,000 as of December 31, 2023[38] Dividends and Shareholder Returns - The company maintained an interim dividend of 4 HK cents per share, consistent with the previous year[1] - The proposed interim dividend is 4 Hong Kong cents per share, consistent with the previous year, amounting to RMB 50,227,000 for the six months ended June 30, 2024, compared to RMB 50,219,000 for the same period in 2023[28] Research and Development - R&D expenses rose by 13.0% to RMB 181.5 million, mainly for enhancing product performance and developing new products[62] Administrative and Other Expenses - Administrative expenses increased by 14.0% to RMB 222.3 million for the six months ended June 30, 2023, primarily due to employee costs and office depreciation from business acquisitions[61] - Other income and gains decreased to RMB 65.9 million from RMB 124.0 million, indicating a decline in additional revenue streams[2] Strategic Focus and Innovations - The company continues to focus on technological innovations to enhance energy density, lifespan, and charging efficiency in response to market demands[42] - The company is actively expanding its lithium battery production capacity to meet the growing demand from various sectors, including communications and data centers[53] - The company plans to enhance its product performance and quality while deepening cooperation with clients across various fields to seize more market opportunities[52]

Summary of the Conference Call Company Overview - The company is focused on the lead-acid battery sector since 1999 and has recently expanded into lithium battery production and technology to support green transformation in the industry [1][2]. Industry and Market Position - The company has established a global production network with factories in China, Vietnam, Mexico, India, and Malaysia, which helps meet overseas customer demands and reduces transportation costs [2]. - The main product segments include: - **Backup Batteries**: Primarily for telecommunications, UPS data centers, alarms, and renewable energy systems [3]. - **Automotive Starting Batteries**: Comprising 27.4% of total sales, serving both electric and traditional fuel vehicles [3]. - **Recycling Business**: Servicing both internal and third-party manufacturers [4]. - **Power Batteries**: Providing stable cash flow for low-speed vehicles and industrial applications [4]. Financial Performance - In 2023, the company reported revenues of 13.47 billion, a year-on-year increase of 4.9% [13]. - Net profit reached 568 million, up 12.9% year-on-year, with a gross margin increase from 12.4% to 14.4% [14]. - The dividend payout for 2023 was 0.01 per share, with a payout ratio of 25.6% [15]. Customer Base and Growth - The customer base includes major telecommunications companies and data centers, with new clients like Amazon and Century Internet added in 2023 [6]. - The company has a significant market share in the backup battery market, holding 32% in China, with 50% of these batteries used in data centers [25]. Strategic Initiatives - The company is focusing on product diversification, particularly in lithium and lead-carbon batteries, aiming for lithium battery revenue to reach 50% within five years [31]. - Recent acquisitions include a 70% stake in Tianjin Jieshi and Shunde, enhancing production capacity and market share in the Japanese automotive sector [27]. Future Outlook - The company plans to expand its lithium battery production lines and establish a logistics management center in Singapore to enhance international operations [29][35]. - The focus on data centers and AI-driven growth is expected to increase demand for battery products significantly [60]. Challenges and Risks - The company faces challenges from rising raw material prices, particularly lead, which has seen significant price increases recently [67]. - Tariff policies in the U.S. on electric vehicle batteries may impact growth, but the company has mitigated risks through its global manufacturing footprint [46][47]. Conclusion - The company is well-positioned in the battery industry with a strong focus on innovation, customer proximity, and strategic growth through acquisitions and product diversification. The outlook remains positive, driven by increasing demand in data centers and electric vehicles, despite potential challenges from raw material costs and regulatory changes.

Summary of Conference Call Transcript Industry or Company Involved - The discussion revolves around the lead-acid battery sector and the company's expansion into lithium battery production Core Points and Arguments - The company has focused on leading players in various industries since 1999, emphasizing its commitment to the lead-acid battery segment [1] - Continuous improvement in production processes for lead-acid batteries has been a priority for the company [1] - In recent years, the company has diversified its operations by entering the lithium battery market, indicating a strategic shift [1] - The company has established lithium battery production lines and invested in research and development for lithium battery products [1] - New technologies have been introduced to support the industry's green transformation, highlighting a commitment to sustainability [1] Other Important but Possibly Overlooked Content - The mention of the company's long-term focus on the lead-acid battery sector suggests a deep understanding of the market dynamics and customer needs [1] - The transition to lithium batteries may indicate a response to changing market demands and the growing importance of renewable energy solutions [1]

Global Battery Market Overview - The global lead acid and lithium battery market size was estimated at USD 104.31 billion in 2023, with a projected CAGR of 15.8% from 2024 to 2030[1] - The global lead-acid and lithium battery market size was estimated at USD104.31 billion in 2023, with a projected CAGR of 15.8% from 2024 to 2030, driven by industries reliant on UPS equipment[36] - Lead-acid batteries accounted for the second-largest share of the global battery market in 2023, with the automobile sector holding over 50% of the lead-acid battery market share[78] - Industrial batteries held the largest market share of 35.85% in 2023, driven by the growing need for energy storage and backup systems, while automotive batteries ranked second with a 34.62% market share[79] - Industrial batteries accounted for the largest market share at 35.85%, followed by automotive batteries at 34.62%[97] Regional Market Performance - Asia Pacific held the largest revenue share of over 65% in 2023, driven by rapid industrial expansion and energy efficiency needs in major countries like China, India, and Australia[8] - Overseas markets contributed RMB 5,313 million, accounting for 40% of the company's revenue share, with North America and EMEA being primary contributors[9] - China region contributed RMB8,158 million in revenue, representing 60% of total revenue, supported by the integration and expansion of the Tianjin joint venture with GS Yuasa[31] - Overseas market revenue reached RMB5,313 million, representing 40% of total revenue, with strong contributions from North America and EMEA regions[117] - China dominates the global battery market with nearly 900 gigawatt-long periods of assembling capacity, representing 77% of the global total, and is home to six of the world's top 10 battery manufacturers[116] Company Revenue and Profitability - The company's sales of reserve power batteries increased by 4.6% to RMB 6,284.4 million in 2023, representing 54.9% of total battery sales revenue[21] - Battery sales revenue increased by 28.6% in the second half of 2023 compared to the first half, with PRC and overseas markets growing by 30.1% and 27.0% respectively[19] - The company's revenue from batteries and related items in the second half of 2023 was RMB 6,440.6 million, a 28.6% increase from the first half[19] - The company's gross profit for 2023 was RMB 1,594,774 thousand, with a net profit attributable to owners of the parent company of RMB 535,372 thousand[23] - Group revenue reached RMB13,471 million, representing a 4.9% growth, driven by Start Battery's market expansion in the EMEA region and strong performance in Backup Power and Motive Battery product lines[28] - Revenue for the year ended 31 December 2023 increased to RMB 13,471,235,000, up 4.9% from RMB 12,845,859,000 in 2022[176] - Gross profit for 2023 was RMB 1,943,707,000, a 21.9% increase from RMB 1,594,774,000 in 2022[176] - Profit before tax for 2023 was RMB 643,854,000, up 10.4% from RMB 583,392,000 in 2022[176] - Profit for the year 2023 was RMB 567,836,000, a 12.9% increase from RMB 502,744,000 in 2022[176] Product Line Performance - Start Battery product line generated RMB3,687 million in sales, accounting for 27.4% of the company's revenue, with growth fueled by the development of auto start-stop technology[30] - Motive power batteries business recorded sales revenue of RMB1,209.4 million, a decrease of 3.9% compared to the previous year, accounting for 10.6% of total battery sales revenue[34] - Recycling Battery product line reported revenue of RMB2,024 million, representing 15% of the portfolio, with growth expected due to increasing demand for EV and renewable energy storage systems[45] - Backup battery sales amounted to RMB6,284.4 million, a 4.6% increase from the previous year, accounting for 54.9% of total battery sales revenue[54] - The Start Battery Product Line generated sales revenue of RMB3,687 million, representing 27.4% of the company's total revenue, driven by demand for start-stop technology to reduce CO2 emissions[82] - Motive battery product line's 2023 revenue reached RMB1,209 million, accounting for 9% of the company's total revenue[83] - SLI battery sales increased by 28.9% to RMB3,687.0 million in 2023, representing 32.2% of total battery sales revenue[93] - Backup power product line reported sales revenue of RMB6,284 million, contributing 46.6% to the company's total portfolio[98] Expansion and Strategic Initiatives - The company is expanding its battery plant in New Mexico and increasing production capacity in Malaysia and Vietnam to address order backlogs and enhance lithium output capacity[10] - The company's five-year expansion program includes strategic projects aimed at capturing untapped opportunities in the US and Europe, leveraging proximity and improved logistics[10] - The company is positioning itself as a key industrialization partner in the global battery market, with ongoing discussions for global footprint partnership projects[10] - The company is implementing a five-year expansion plan, including commissioning a new battery plant in New Mexico and expanding production capacity in Malaysia and Vietnam[88] - The company aims to produce clean and affordable batteries to accelerate the decarbonization of global energy and transportation systems, focusing on energy storage systems (ESS) and commercial mobility[39] - The company is focusing on sustainability and energy optimization, with plans to revolutionize the energy and automotive industries through cleaner energy ecosystems[86] Market Challenges and Risks - The company faces challenges in the domestic industry, including lopsided supply chain development, supply-demand imbalance, local protectionism, and quality inconsistencies[116] - The company's reliance on lead-acid battery technology poses a risk if the market does not grow as expected or if the technology is replaced by alternatives[138] - Fluctuations in raw material prices, particularly lead, could materially and adversely affect the company's operations[140] - The company derives a significant portion of its income from major customers, particularly in UPS and telecommunications, with no long-term sales contracts, posing a risk if orders are reduced or cease[140] - The Group's inventory balance amounted to RMB2,749 million, representing 20% of the total assets, with significant risk of obsolescence due to rapid technological developments in the lead-acid battery industry[164] Financial Performance and Dividends - The Group recommended a final dividend of HK7 cents per share for the year ended 31 December 2023, compared to HK10 cents per share in 2022[142] - The Group paid an interim dividend of HK4 cents per share for the six months ended 30 June 2023, compared to no interim dividend in the same period of 2022[142] - Research and development costs for 2023 were RMB 371,868,000, a 2.9% decrease from RMB 382,868,000 in 2022[176] - Selling and distribution expenses increased to RMB 464,279,000 in 2023, up 19.3% from RMB 389,151,000 in 2022[176] - Administrative expenses rose to RMB 446,084,000 in 2023, a 33.7% increase from RMB 333,676,000 in 2022[176] - Finance costs increased to RMB 223,554,000 in 2023, up 43.1% from RMB 156,222,000 in 2022[176] - Other income and gains decreased to RMB 240,766,000 in 2023, down 17.7% from RMB 292,494,000 in 2022[176] - The company reported a net reversal of impairment losses on assets of RMB 4,134,000 in 2023, compared to impairment losses of RMB 27,516,000 in 2022[176] Environmental and Compliance Initiatives - The Group installed wastewater treatment facilities at its production facilities, achieving "zero discharge" by reusing purified water in the production process at Zhaoqing and Anhui facilities[144] - The Group maintained high standards of quality control and compliance with applicable laws, rules, and regulations, ensuring timely updates to procedures and operations in response to any changes[146] - The Group had no material or significant disputes with its suppliers and/or customers during the year ended 31 December 2023, maintaining strong relationships to support long-term goals and development[147] Market Recovery and Growth Prospects - The Group reversed a sales decrement of RMB92.2 million in H1 2023, driven by a 17% increase in lead-acid battery shipping tonnage in the PRC and a 10% increase overseas in H2 2023[62] - Year-over-year shipping tonnage growth in the PRC exceeded 30%, with overseas shipping tonnage in H2 2023 nearly doubling compared to H1 2023, resulting in a 40% growth compared to the same period last year[63][64] - Overseas demand for motive power battery declined by 30% in H1 2023 compared to the previous year, but the decline narrowed to 10% in H2 2023, indicating a potential market recovery[68] - The company's reserve power batteries business is expected to benefit from global economic recovery and stimulus in China's high-tech industry, supporting growth in 2024[123] - The company expects a healthy CAGR driven by strong demand from emerging markets, particularly for smart storage, decentralized networks, and intelligent automation[83]

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 1.82, indicating a potential upside of 43% from the current price of HKD 1.27 as of April 9, 2024 [1][18]. Core Insights - The company achieved a revenue of RMB 13.471 billion in 2023, representing a year-on-year increase of 4.9%. The gross profit reached RMB 1.595 billion, up 21.9%, and the net profit attributable to shareholders was RMB 535 million, an increase of 11.3% [18]. - The company is expanding its production capacity globally, with new battery assembly plants in Mexico and plans for a new starter battery production facility in Malaysia, expected to begin production by late 2024 or early 2025 [19]. - The gross margin improved to 14.4% in 2023, primarily due to better control over manufacturing costs and a significant reduction in transportation costs [19]. - The company is actively developing its overseas business, with overseas sales revenue reaching RMB 950 million, a substantial increase from RMB 480 million the previous year [19]. Financial Projections - Revenue is projected to grow to RMB 16.176 billion in 2024 and RMB 19.404 billion in 2025, with corresponding net profits of RMB 652 million and RMB 840 million [5][19]. - The earnings per share (EPS) are expected to be RMB 0.48 for 2024 and RMB 0.62 for 2025 [19]. - The company maintains a dividend yield of 8% based on the current stock price, with a proposed final dividend of HKD 0.07 per share [19]. Shareholder Structure - The major shareholders include 董李 with 74.5%, 睿思资本 with 6.0%, and RUAN David Ching Chi also holding 6.0%, with other shareholders making up the remaining 8.5% [2].

Financial Performance - The company's revenue for the year 2023 was RMB 13,471.2 million, representing a 4.9% increase from RMB 12,845.9 million in 2022[1]. - Gross profit increased by 21.9% to RMB 1,943.7 million, compared to RMB 1,594.8 million in the previous year[1]. - Net profit for the year was RMB 567.8 million, up 12.9% from RMB 502.7 million in 2022[1]. - Revenue from batteries and related products amounted to RMB 11,447.5 million, up 9.7% from RMB 10,432.8 million in the previous year, driven by a 19.4% growth rate in the Chinese market and a 0.3% growth rate in overseas markets[34]. - In the second half of 2023, revenue from batteries and related products was RMB 6,440.6 million, representing a 28.6% increase compared to RMB 5,006.9 million in the first half of the year[34]. - The company's customer contract revenue for 2023 was RMB 13,471,235,000, compared to RMB 12,845,859,000 in 2022, indicating growth[75]. - The company's profit attributable to equity holders for 2023 was RMB 545,389,000, an increase from RMB 481,075,000 in 2022, representing a growth of approximately 13.4%[89]. Market Expansion and Strategy - The company plans to establish a battery assembly plant in Mexico to enhance competitiveness in the Americas, with production expected to commence in a few months[14]. - The company has acquired a 70% stake in two advanced starter battery factories to expand its market share in China, anticipating rapid growth in this sector in 2024[14]. - The company aims to expand its market share in emerging economies while strengthening risk management and enhancing technological innovation capabilities in response to global instability factors[21]. - The company is confident in its starter battery business and plans to enhance R&D investment while integrating resources from previous acquisitions to capitalize on the growing demand for new energy vehicles[64]. - The company aims to expand its global footprint in green energy storage products, aligning with the international consensus on climate change and sustainable development[66]. Research and Development - The R&D team consists of over 380 personnel focused on developing new models of lead-acid batteries and lithium-ion batteries, as well as energy management systems[13]. - Research and development costs totaled RMB 597.0 million, compared to RMB 574.3 million in the previous year, indicating a continued investment in innovation[52]. - The company plans to accelerate production capacity expansion for lithium battery production lines in Anhui, China, and Vietnam starting in 2024[155]. Sales and Revenue Breakdown - The sales revenue from starter batteries reached RMB 3,687.0 million, a significant increase of 28.9% from RMB 2,860.1 million in 2022, accounting for approximately 32.2% of total battery sales revenue[7]. - The sales revenue of backup batteries for the period was RMB 6,284.4 million, an increase of 4.6% compared to RMB 6,006.1 million in the previous year, accounting for approximately 54.9% of total battery sales revenue[37]. - The sales revenue of power batteries decreased to RMB 1,209.4 million, a decline of 3.9% from RMB 1,258.3 million in the previous year, representing about 10.6% of total battery sales revenue[41]. - The sales revenue from recycled lead products was RMB 2,023.8 million, a decrease of 16.1% compared to RMB 2,413.0 million in the previous year[43]. Financial Position and Assets - The total value of non-current assets increased to RMB 4,724.5 million in 2023 from RMB 3,704.9 million in 2022[33]. - Cash and cash equivalents rose significantly to RMB 1,563.3 million in 2023, compared to RMB 436.2 million in 2022[33]. - The company's total liabilities increased to RMB 3,003,992,000 in 2023 from RMB 2,361,044,000 in 2022, marking an increase of about 27.3%[103]. - The company's inventory remained stable at approximately RMB 100,000,000 in both 2023 and 2022, indicating no change year-over-year[90]. - The company's trade receivables increased to RMB 3,320,369,000 in 2023 from RMB 2,817,996,000 in 2022, reflecting a growth of about 17.8%[91]. Economic Outlook - The International Monetary Fund has adjusted the global economic growth forecast for 2024 to 3.1%, with emerging Asian economies expected to grow at 5.2%[19]. - The global data center market is projected to reach USD 340 billion by 2024, growing at a CAGR of 6.56% to over USD 438.7 billion by 2028, positively impacting the UPS battery industry[22]. - The household energy storage market is expected to grow from approximately USD 4.38 billion in 2023 to USD 16.75 billion by 2029, with a CAGR of 24.4%[29]. - The telecommunications battery market is projected to grow at a CAGR of 15.76%, reaching USD 9.24 billion from 2023 to 2028, driven by advancements in communication technologies[24]. Dividend and Shareholder Returns - The proposed final dividend per share is 7.0 HK cents, down from 10.0 HK cents in the previous year[1]. - The company plans to propose a final dividend for the fiscal year 2023, subject to approval at the upcoming annual general meeting[87].

Financial Performance - The Group's revenue for the period was RMB6,003.4 million, a decrease of 2.7% compared to RMB6,168.3 million in the same period of 2022[4][6]. - Profit for the period increased significantly by 141.1% to RMB232.6 million, with profit attributable to owners of the parent rising by 161.3% to RMB209.1 million[4][5]. - Basic and diluted earnings per share for the period were RMB0.15[4][5]. - The Group's gross profit increased by 19.3% to RMB818.0 million, with the overall gross profit margin rising from 11.1% to 13.6%[12][18]. - The Group's cost of sales decreased by 5.4% to RMB 5,185.4 million, down from RMB 5,482.9 million, attributed to a shift in revenue mix towards higher margin products[48]. - Profit before tax for the Period was RMB265.7 million, compared to RMB144.5 million for the six months ended 30 June 2022, reflecting a significant increase[147]. - Income tax expenses decreased by 31.3% from RMB48.1 million for the six months ended 30 June 2022 to RMB33.0 million for the Period, mainly due to a decrease in taxable profit[147]. - The Group recorded a profit for the Period of RMB232.6 million, up from RMB96.5 million for the six months ended 30 June 2022, with profit attributable to owners of the parent at RMB209.1 million[147]. Revenue Breakdown - Revenue from the Power Solutions business slightly increased by 1.9% to RMB5,006.9 million, while revenue from the Recycled Lead business decreased by 20.7% to RMB996.5 million[6]. - Revenue from power solutions increased by 1.9% to RMB 5,006.9 million, while revenue from recycled lead products decreased by 20.7% to RMB 996.5 million[128]. - The total revenue from reserve power batteries was RMB 2,853.2 million, accounting for 47.5% of total revenue, with a slight decrease of 3.1% compared to the previous year[131]. - The SLI battery business contributed 24.5% of total sales, with revenue of RMB1,469.1 million, an increase of 4.4% year-on-year[104]. - The motive power battery segment contributed 10.4% of total sales, with revenue of RMB621.8 million, representing a 16.3% increase compared to the previous year[106]. - Sales revenue from power batteries amounted to RMB 621.8 million, a 16.3% increase compared to RMB 534.6 million in the same period last year[116]. - Sales revenue from lead recycling products was RMB 996.5 million, a decrease of 20.7% from RMB 1,257.1 million in the same period last year[117]. Dividends and Shareholder Information - An interim dividend of HK4 cents per share has been recommended for the Period, compared to nil for the same period last year[34]. - The Board proposed an interim dividend of HK 4 cents per share, compared to no dividend in the same period last year[70]. - As of 30 June 2023, Dr. DONG Li beneficially owns 1,014,021,000 shares, representing 74.47% of the total shares issued[38]. - The total number of shares in issue as of 30 June 2023 is 1,361,707,666[38]. - Ms. YIN Haiyan holds 3,650,000 shares, which includes options granted under the 2010 Share Option Scheme and the New Share Option Scheme[38]. Operational Developments - The Group plans to enhance its global production layout and expand its product range to meet the increasing demand for energy storage and starting batteries[1]. - A flagship factory in Anhui will focus on lithium battery production, with plans to gradually increase annual production capacity[1]. - The Group intends to establish a battery assembly plant in Mexico to extend its production lines into the North American market[1]. - The Group plans to commence construction of a battery assembly plant in Mexico within the year to serve the North American market[112]. - The Group signed an agreement in July to acquire 70% stakes in Tianjin Jieshi Battery Co., Ltd. and Shunde Yuasa Battery Co., Ltd. for approximately HK$230 million, aiming to enhance cooperation and expand business scale[127]. Employee and Expense Information - As of June 30, 2023, the Group had 13,019 employees, with employee benefit expenses totaling RMB 533.1 million, up from RMB 488.0 million in the previous year[48]. - The Group's selling and distribution expenses decreased by 29.0% from RMB 301.7 million in the first half of 2022 to RMB 214.3 million in the current period[139]. - Administrative expenses increased by 28.2% from RMB 152.1 million in the first half of 2022 to RMB 195.0 million, primarily due to increased staff costs[139]. - Research and development expenditure rose by 31.5% from RMB 122.2 million in the first half of 2022 to RMB 160.7 million, aimed at enhancing product performance and developing new products[139]. Financial Position and Borrowings - As of June 30, 2023, the Group's bank borrowings amounted to RMB2,916.8 million, with an effective interest rate range of 1.88% to 8.10%[22]. - The Group's bank borrowings are secured by various assets including properties, equipment, and trade receivables[32]. - The Group's gearing ratio as of June 30, 2023, was 25.9%, slightly up from 25.8% at the end of 2022[141]. - The Group's cash and bank deposits amounted to RMB1,139.9 million as of 30 June 2023, compared to RMB1,230.0 million as of 31 December 2022[147]. - The Group's finance costs increased by 32.3% from RMB74.1 million for the six months ended 30 June 2022 to RMB98.1 million for the Period due to higher average interest rates[147]. Market Outlook and Trends - The average growth rate of the Group's battery business in China was over 27% in terms of turnover during the first half of 2023[87]. - The Group expects overseas shipments to recover in the second half of the year, while growth in China is anticipated to continue[102]. - The global start-stop battery market size is projected to grow from US$70.6 billion in 2022 to US$273.4 billion in 2032, representing a compound annual growth rate of 14.5%[110]. - The market size of data centers is expected to rise from US$5 billion in 2023 to over US$120 billion in 2030, with a compound annual growth rate of 12%[119]. - The market size of household energy storage products is expected to grow from approximately US$4.38 billion in 2023 to US$16.75 billion in 2028, representing a compound annual growth rate of 24.4%[124]. Risks and Challenges - The Group's financial performance is subject to foreign exchange risk[44]. - The decrease in recycled lead revenue was attributed to increased internal sales to battery factories and a reduction in sales to unprofitable third-party accounts[107]. - The Group's profit contribution from the recycled lead business has improved, as reflected in the profit attributed to minority interest[107].

Financial Performance - Revenue for the six months ended June 30, 2023, decreased by 2.7% to RMB 6,003.4 million compared to RMB 6,168.3 million in the same period of 2022[8]. - Gross profit increased by 19.3% to RMB 818.0 million, with a gross margin improvement from 11.1% to 13.6%[9]. - Profit for the period surged by 141.1% to RMB 232.6 million, up from RMB 96.5 million in the previous year[9]. - Profit attributable to equity holders of the parent increased by 161.3% to RMB 209.1 million, compared to RMB 80.0 million in the same period last year[9]. - The total comprehensive income for the period was RMB 312.4 million, compared to RMB 132.3 million in the same period last year[11]. - The total revenue for the six months ended June 30, 2023, was RMB 6,003,416, a decrease of 2.67% from RMB 6,168,315 in the same period of 2022[27]. - The company's net profit for the same period was RMB 232.6 million, an increase of 141.1% year-on-year, with profit attributable to equity holders rising by 161.3% to RMB 209.1 million[103]. Dividends and Shareholder Returns - The company declared an interim dividend of 4 HK cents per share, with a payout ratio of 24.0%[8]. - The group proposed an interim dividend of HKD 0.04 per share, compared to no dividend for the previous period[135]. Revenue Breakdown - Revenue from the power solutions business increased to RMB 5,006,921, up 1.99% from RMB 4,911,188 in the previous year[27]. - Revenue from lead recycling business decreased to RMB 996,495, down 20.73% from RMB 1,257,127 in the previous year[27]. - Revenue from mainland China was RMB 3,662,189, an increase of 9.39% from RMB 3,347,229 in the previous year[29]. - Revenue from the Americas decreased to RMB 805,290, down 31.73% from RMB 1,179,691 in the previous year[29]. - The backup battery business contributed 47.5% to total sales, with revenue of RMB 2,853.2 million, a decrease of 3.1% from RMB 2,945.4 million in the same period last year[82]. - The starting battery business accounted for 24.5% of total sales, with revenue of RMB 1,469.1 million, an increase of 4.4% from RMB 1,406.9 million in the same period last year[90]. - The power battery segment achieved revenue of RMB 621.8 million, a 16.3% increase from RMB 534.6 million in the same period last year[91]. Expenses and Costs - Research and development costs rose to RMB 160.7 million, up from RMB 122.2 million in the previous year, reflecting the company's strategy for further growth[9]. - The company reported a significant increase in administrative expenses, which rose to RMB 195.0 million from RMB 152.1 million[9]. - The total employee benefits expenses increased to RMB 533,088, up 9.16% from RMB 487,994 in the previous year[39]. - Financial costs increased to RMB 98,058, up 32.23% from RMB 74,120 in the previous year[42]. - Selling and distribution expenses decreased by 29.0% from RMB 301.7 million to RMB 214.3 million, attributed to the reclassification of transportation costs[112]. - Administrative expenses increased by 28.2% from RMB 152.1 million to RMB 195.0 million, mainly due to rising employee costs[113]. - Research and development expenses grew by 31.5% from RMB 122.2 million to RMB 160.7 million, focused on enhancing product performance and developing new products[122]. Assets and Liabilities - Non-current assets totaled RMB 3,756.9 million as of June 30, 2023, compared to RMB 3,704.9 million at the end of 2022[13]. - Current assets increased to RMB 7,503.8 million from RMB 6,789.5 million at the end of the previous year[13]. - Current liabilities increased to RMB 6,517,476 thousand as of June 30, 2023, compared to RMB 6,208,599 thousand as of December 31, 2022, reflecting a growth of 4.98%[15]. - Net current assets rose significantly to RMB 986,275 thousand from RMB 580,883 thousand, marking an increase of 69.5%[15]. - Total assets minus current liabilities reached RMB 4,743,238 thousand, up from RMB 4,285,796 thousand, indicating a growth of 10.67%[15]. - Non-current liabilities totaled RMB 483,480 thousand, a substantial increase from RMB 249,561 thousand, representing a growth of 93.8%[15]. - Equity attributable to owners of the parent company increased to RMB 4,022,229 thousand from RMB 3,822,278 thousand, reflecting a growth of 5.23%[15]. - The company’s total liabilities increased to RMB 2,489,171,000 as of June 30, 2023, from RMB 2,361,044,000 as of December 31, 2022, marking an increase of 5.4%[64]. Market and Strategic Initiatives - The company is engaged in power solutions and lead recycling, indicating a focus on sustainable and innovative business practices[17]. - The company plans to strengthen cooperation with telecom operators and invest in research and development to capture opportunities in the energy storage market[94]. - The company aims to expand into new segments such as solar and wind energy while continuing to grow its replacement market[94]. - The sales of start-stop batteries are expected to benefit from the growing demand for new energy vehicles, with a projected global market size increase from USD 70.6 billion in 2022 to USD 273.4 billion by 2032, reflecting a compound annual growth rate of 14.5%[96]. - The home energy storage market is anticipated to grow from approximately USD 4.38 billion in 2023 to USD 16.75 billion by 2028, at a compound annual growth rate of 24.4%[98]. - The company plans to enhance its production capacity in its flagship factory in Anhui, focusing on lithium battery production, and aims to establish a battery assembly plant in Mexico to expand its North American presence[99]. Other Financial Information - The company recognized foreign exchange gains of RMB 74,189, compared to gains of RMB 54,159 in the previous year[39]. - The total income tax expense for the six months ended June 30, 2023, was RMB 33,034,000, a decrease of 31.3% from RMB 48,060,000 in the same period of 2022[8][9]. - The group recorded a profit before tax of RMB 265.7 million, compared to RMB 144.5 million for the previous period[117]. - The group had no impairment losses recognized for the six months ended June 30, 2023[56]. - The group recognized a net loss of RMB 2,101,000 from the sale of assets with a carrying amount of RMB 8,392,000 during the six months ended June 30, 2023[49].

Stock Options - The number of stock options available for grant under the new stock option plan decreased from 115,314,466 shares at the beginning of the period to 77,814,466 shares at the end of the period[6]. - The total number of shares available for issuance under the 2010 stock option plan and the new stock option plan is 24,095,000 shares and 131,297,466 shares, respectively, which represent approximately 1.70% and 9.28% of the total shares issued as of the date of the annual report[10]. - The number of new stock options granted during the period was 37,500,000 shares, calculated against the weighted average number of shares issued during the period of 1,357,854,935 shares, resulting in a ratio of 0.0276[3].

Financial Performance - For the year ended December 31, 2022, the Group's revenue increased by 13.6% to approximately RMB12,845.9 million compared to RMB11,303.1 million in 2021[14]. - Gross profit for the same period rose by 5.6% to RMB1,594.8 million, up from RMB1,509.7 million in 2021[14]. - Profit attributable to owners of the parent surged by 225.3% to RMB442.8 million, compared to RMB136.1 million in the previous year[14]. - Basic earnings per share increased to RMB0.33 from RMB0.10 in 2021, based on a weighted average of 1,357,854,935 shares issued during the year[17]. - The Group's overall revenue for the year reached RMB12,845.9 million, a 13.6% increase from RMB11,303.1 million in 2021[41]. - Profit for the period amounted to RMB464.4 million, compared to RMB166.7 million for the year ended December 31, 2021, with profit attributable to owners of the parent at RMB442.8 million[123]. Dividends and Shareholder Returns - The Board recommended a final dividend of 10 HK cents per share for the year ended December 31, 2022, compared to no dividend in 2021[18]. - The Group did not declare or pay any interim or special dividends during the year ended December 31, 2022[19]. Revenue Breakdown - Revenue from the battery business amounted to RMB10,432.8 million, a 12.8% increase from RMB9,249.2 million in the same period of 2021, driven by a 25.8% growth in overseas markets and 1.9% in the PRC market[39]. - Sales of reserve power batteries reached RMB6,006.1 million, representing a 26.2% increase compared to RMB4,758.9 million in 2021, accounting for approximately 57.6% of total battery sales revenue[44]. - Revenue from recycled lead products was RMB2,413.0 million, an increase of 17.5% from RMB2,053.9 million in 2021, despite higher collection costs impacting profit margins[56]. - SLI battery sales decreased by 4.9% to RMB2,860.1 million from RMB3,006.0 million in 2021, representing 27.4% of total battery sales revenue[46]. - Motive power batteries recorded sales revenue of RMB1,258.3 million, a 2.9% increase from RMB1,223.1 million in 2021, accounting for approximately 12.1% of total battery sales revenue[51]. Market Expansion and Strategy - The Group plans to expand its business with key accounts and strengthen its distribution sales network in various battery segments, with a focus on the aftermarket as a driving engine for sales and profit[28]. - The lithium battery and Energy Storage System applications are identified as another key growth driver for the company[28]. - The Group's sales network spans over 100 countries and regions, with more than 80 sales offices and centers globally, employing over 700 dedicated sales and marketing staff[57]. - The Group anticipates that the APAC region will be a major contributor to overseas business growth in 2023, driven by China's economic recovery[112]. - The Group aims to expand its market share in China by investing sufficient resources in the new energy vehicle segment, which includes partnerships with major domestic brands[100]. Research and Development - The company is investing more in technology and product development, with a R&D team of 1,000 engineers, enabling the production of over 3,000 different battery models and holding more than 900 patents[29]. - R&D expenses surged by 59.9% to RMB 382.9 million, focusing on enhancing existing products and developing new ones[144]. - The battery R&D team consists of over 350 researchers and technicians, focusing on new models of lead-acid and lithium-ion batteries[62][64]. Economic and Market Conditions - The global economic growth is projected to fall to 2.9% in 2023, with inflation expected to decrease to 6.6%[78][81]. - The automobile market in China is expected to grow at a rate of approximately 3% in 2023, supported by economic stabilization policies and alleviation of chip supply shortages[96]. - The demand for reserve power batteries for 5G applications in the PRC market is increasing, with expectations for further growth due to infrastructure development[89][92]. Operational Efficiency - The Group's cost of sales increased by 14.9% to RMB 11,251.1 million, primarily due to increased sales volume[136]. - Gross profit rose by 5.6% to RMB 1,594.8 million, but the overall gross profit margin decreased from 13.4% in 2021 to 12.4% in 2022[137]. - The Group's factory has maintained full capacity operations despite industry-wide challenges, contributing to sustained growth in recycled lead output[118]. Employee and Workforce Management - Employee benefit expenses totaled RMB1,053.1 million for the period, an increase from RMB1,020.2 million in 2021, covering wages, bonuses, and retirement benefits[191]. - The Group has established a share option scheme for selected participants to incentivize and reward contributions[193]. - The Group encourages continuous education and training for employees to enhance their skills and personal development[193]. Future Outlook - The Group plans to invest in a battery assembly plant in Mexico in 2023 to enhance competitiveness in the Americas[67]. - The establishment of a lithium battery recycling business is planned for 2023, following a careful evaluation of the industry's future prospects[119].