Group 1: Industry Overview - In 2024, the apparent consumption of crude steel in China decreased by 5.4% year-on-year, with export volumes reaching a historical high but prices dropping over 19%, severely squeezing profit margins for enterprises [1] - The demand for high-end and special steel is gradually increasing due to the ongoing transformation and upgrading of domestic manufacturing, providing new growth points for the steel industry [1] Group 2: Company Performance - Daming International (01090.HK) reported a revenue of RMB 46.453 billion in 2024, with a loss of RMB 385 million, reflecting the severe external environment rather than a lack of internal momentum [1] - The company achieved significant sales in 2024, with stainless steel sales reaching 2.057 million tons and carbon steel sales reaching 5.059 million tons, showing resilience against industry trends [2] - The processing business generated approximately RMB 43.69 billion in revenue, while the manufacturing business contributed about RMB 1.46 billion, highlighting Daming International's leadership in one-stop metal processing services [2] Group 3: Infrastructure and Logistics - The Daming Yangtze River Terminal commenced operations in 2024, designed to handle 1.053 million tons annually, enhancing logistics services and expanding the service capacity of the Daming Jingjiang base [3] Group 4: International Expansion - Daming International is actively expanding its overseas business, with products sold to major countries and regions, and reported overseas revenue of RMB 1.48 billion in 2024, remaining stable year-on-year [4] - Successful overseas projects include the export of condenser equipment to Spain and support for major projects in South America and Australia, enhancing the company's global brand recognition [4] Group 5: Technological Innovation - The company is increasing investments in advanced processing equipment and technology to enhance service capabilities and operational efficiency, including exploring AI applications in manufacturing [5] - Analysts suggest that ongoing investments in infrastructure and high-end manufacturing will sustain demand for high-quality steel products, providing Daming International with opportunities for recovery [5][6]

Financial Performance - Total revenue for the year ended December 31, 2024, was RMB 46,453,309 thousand, a decrease of 8.1% compared to RMB 50,560,063 thousand in 2023[2] - Gross profit for the same period was RMB 685,686 thousand, reflecting a decline of 25.6% from RMB 921,534 thousand in the previous year[3] - The company reported a total annual loss of RMB 385,139 thousand, which is an increase of 102.2% compared to a loss of RMB 190,493 thousand in 2023[3] - The basic and diluted loss per share for the year was RMB 0.33, compared to RMB 0.17 in 2023[3] - The net loss attributable to shareholders for the year ended December 31, 2024, was RMB 414,579 thousand, compared to a loss of RMB 219,068 thousand in 2023, indicating a significant increase in losses[26] - The group reported a total segment loss of RMB 258,406,000 for the year ended December 31, 2024, compared to a loss of RMB 27,267,000 for the year ended December 31, 2023[19] - The company recorded a net loss of approximately RMB 385,100,000 for the year ending December 31, 2024, a 102.2% increase compared to a net loss of approximately RMB 190,500,000 in 2023[45] Revenue Breakdown - Sales revenue from the processing segment was RMB 43,686,749,000 for the year ended December 31, 2024, compared to RMB 47,265,587,000 for the previous year, a decline of about 7.5%[18] - The manufacturing segment reported sales revenue of RMB 1,455,604,000 for the year ended December 31, 2024, an increase from RMB 1,204,642,000 in the previous year, reflecting a growth of approximately 20.8%[18] - Stainless steel sales volume increased by 0.7% to 2,056,957 tons, while carbon steel sales volume rose by 4.2% to 5,059,186 tons[2] - Stainless steel processing sales volume increased by 0.7% to approximately 2,057,000 tons in 2024 from 2,043,000 tons in 2023, while processing volume decreased by 1.9% to approximately 3,180,000 tons[45] - Carbon steel processing sales volume rose by 4.2% to approximately 5,059,000 tons in 2024 from 4,855,000 tons in 2023, with processing volume decreasing by 1.6% to approximately 4,785,000 tons[45] Cash Flow and Assets - The operating cash flow for the year was RMB 439,462 thousand, significantly higher than RMB 67,280 thousand in 2023[8] - Cash and cash equivalents at year-end decreased to RMB 153,891 thousand from RMB 265,311 thousand at the beginning of the year[8] - Total assets decreased to RMB 12,970,475 thousand from RMB 13,188,882 thousand in the previous year[4] - Total liabilities increased to RMB 10,105,677 thousand, up from RMB 9,907,634 thousand in 2023[6] - Current liabilities exceeded current assets by approximately RMB 1,270,595,000 as of December 31, 2024, compared to RMB 562,329,000 as of December 31, 2023[10] - Cash and cash equivalents decreased from RMB 265,311,000 as of December 31, 2023, to RMB 153,891,000 as of December 31, 2024[10] Expenses and Costs - The total expenses for the year ended December 31, 2024, amounted to RMB 46,711,715 thousand, a decrease of 7.4% from RMB 50,587,330 thousand in 2023[20] - The cost of raw materials consumed was RMB 44,411,966 thousand, down from RMB 48,311,029 thousand, representing a reduction of 6.0%[20] - Distribution costs increased from approximately RMB 493.3 million in 2023 to approximately RMB 506.4 million in 2024, primarily due to rising transportation costs[59] Financial Position - The company’s debt-to-equity ratio was 71.42% as of December 31, 2024, compared to 68.37% in 2023, indicating an increase in financial leverage[67] - As of December 31, 2024, accounts payable increased to RMB 1,082,057,000 from RMB 707,959,000 in 2023, representing a growth of approximately 52.8%[32] - The aging analysis of trade payables shows that payables within 6 months rose to RMB 972,012,000 in 2024 from RMB 688,721,000 in 2023, an increase of about 41.3%[33] Strategic Initiatives - The group plans to improve operational performance and cash flow by increasing sales volume and enhancing inventory management[12] - The company aims to enhance profitability through improved customer service, operational efficiency, and technological innovation, with increased investment in advanced processing equipment and technology[36] - A strategic cooperation agreement was signed with China CRRC and Anomi Marine Technology to develop a strong supply system for clean energy market products[43] - The company successfully exported condenser equipment to Spain, showcasing its competitive edge in the condenser manufacturing sector[37] - A new processing base will be established in Chongqing through a tripartite joint venture agreement, enhancing service capabilities in the southwestern region[42] - The opening of the Yangtze River terminal marks a significant milestone in the company's development, enhancing its high-end manufacturing service capabilities[44] Governance and Compliance - The company has adhered to the Corporate Governance Code as per the Hong Kong Stock Exchange's Listing Rules throughout the year[70] - The audit committee reviewed the audited consolidated annual results for the year ending December 31, 2024, confirming compliance with applicable accounting standards[74] - The company did not purchase, sell, or redeem any of its listed securities during the year[71] Employment and Workforce - As of December 31, 2024, the company employed 6,738 staff, a decrease of approximately 6.8% from 7,231 in 2023[68] - The workforce comprised 4,993 production and technical personnel (74.1%), 1,114 sales personnel (16.5%), and 631 management and finance personnel (9.4%)[68] Dividends - The company did not declare any dividends for the year ended December 31, 2024, consistent with the previous year[28] - No interim dividend was declared for the year, consistent with 2023, and no final dividend is recommended for the year ending December 31, 2024[69] Future Outlook - The company anticipates continued growth in overseas business revenue and stable income from stainless steel processing services[46] - The company plans to enhance its service network and improve processing capabilities through advanced automation equipment and digital transformation of existing production facilities[46]

Financial Performance - Total revenue for the six months ended June 30, 2024, was RMB 22,800,874 thousand, a decrease of 7.0% compared to RMB 24,504,930 thousand in 2023[3]. - Comprehensive income for the period decreased by 19.0% to RMB 9,424 thousand from RMB 11,628 thousand in 2023[3]. - For the six months ended June 30, 2024, the company recorded a net profit of approximately RMB 9.4 million, a decrease of about 19.0% compared to RMB 11.6 million for the same period in 2023[16]. - Revenue for the six months ended June 30, 2024, was approximately RMB 22,800,874 thousand, a decrease from RMB 24,504,930 thousand for the same period in 2023, representing a decline of 6.9%[32]. - The company reported a net profit of RMB 9,424 thousand for the period, down from RMB 11,628 thousand in the same period of 2023[46]. - Basic and diluted earnings per share were both RMB 0.35, compared to RMB 0.57 in the previous year[46]. - The income tax expense for the six months ended June 30, 2024, was RMB 20,798 thousand, an increase from RMB 13,520 thousand in the same period of 2023, representing a growth of 53.4%[16]. Sales and Production - Stainless steel sales volume increased by 0.9% to 965,145 tons, while processing volume decreased by 1.5% to 1,524,910 tons[6]. - Carbon steel sales volume rose by 7.1% to 2,382,729 tons, with processing volume decreasing by 1.8% to 2,292,416 tons[6]. - The stainless steel processing business sales volume increased from approximately 957,000 tons for the six months ended June 30, 2023, to approximately 965,000 tons for the same period in 2024, representing a growth of about 0.9%[21]. - The carbon steel processing business sales volume rose from approximately 2,225,500 tons for the six months ended June 30, 2023, to approximately 2,382,729 tons for the same period in 2024, reflecting an increase of about 7.1%[21]. Costs and Expenses - Other income decreased from approximately RMB 41,300 thousand in the first half of 2023 to approximately RMB 27,900 thousand in the first half of 2024, primarily due to a reduction in government subsidies received[34]. - Distribution costs slightly increased from approximately RMB 225,400 thousand in the first half of 2023 to approximately RMB 228,300 thousand in the first half of 2024, mainly due to higher employee benefit expenses[35]. - Administrative expenses rose from approximately RMB 140,600 thousand in the first half of 2023 to approximately RMB 176,400 thousand in the first half of 2024, attributed to increased employee benefit expenses[36]. - Financing costs increased from approximately RMB 119,300 thousand in the first half of 2023 to approximately RMB 122,300 thousand in the first half of 2024, mainly due to a decrease in interest income received[37]. - The company's cost of sales, distribution costs, and administrative expenses totaled RMB 22,691,071 thousand for the six months ended June 30, 2024, a decrease of 7.0% from RMB 24,406,674 thousand in the same period of 2023[14]. Assets and Liabilities - The total asset value of the group as of June 30, 2024, was approximately RMB 16.33 billion, with equity attributable to shareholders amounting to approximately RMB 2.97 billion[20]. - Total liabilities increased to RMB 13,039,051 thousand, up 31.5% from RMB 9,907,634 thousand as of December 31, 2023[45]. - As of June 30, 2024, the company's total borrowings were approximately RMB 10,266,000 thousand, with a debt-to-equity ratio of 75.15% compared to 68.37% as of December 31, 2023[41]. - The company's trade payables rose to RMB 885,479 thousand as of June 30, 2024, compared to RMB 707,959 thousand as of December 31, 2023, representing an increase of approximately 25.0%[68]. - The total borrowings as of June 30, 2024, reached RMB 10,265,931 thousand, up from RMB 7,358,725 thousand as of December 31, 2023, indicating a significant increase of around 39.0%[67]. Strategic Initiatives - The company has expanded its production capacity in key regions to enhance regional competitive advantages and support overall performance growth strategies[11]. - The company has invested in advanced processing equipment and technology to improve processing and manufacturing service capabilities, which also helps to increase product premiums[11]. - The company aims to enhance profitability through continuous improvement in customer service, operational efficiency, and technological innovation[11]. - The company has initiated strategic collaborations, including partnerships with 兰石重装 and 东方电机, to enhance manufacturing capabilities[15]. - A significant order for tank prefabrication was received from a client in the Democratic Republic of the Congo, showcasing the international competitiveness of Chinese manufacturing[13]. Risk Management - The company faced foreign exchange risks due to transactions denominated in foreign currencies, primarily USD, EUR, HKD, and JPY, and management is monitoring exchange rate fluctuations closely[40]. - The company continues to assess the impact of market risks, including currency risk and fair value interest rate risk, on its operations[58]. - The company has not made any changes to its risk management policies since the end of the last fiscal year, maintaining its approach to financial risk factors[58]. Employment and Shareholding - As of June 30, 2024, the company employed 7,011 staff, an increase from 6,719 in 2023, with production and technical personnel making up 73.4% of the workforce[90]. - Major shareholders include Lianhao Group Limited with 788,435,000 shares, representing 61.86% of the issued share capital, and China Baowu Steel Group Co., Ltd. with 207,500,000 shares, representing 16.28%[95]. - The company’s shareholding structure indicates a strong concentration of ownership, with the top three shareholders holding over 86% of the total shares[96]. - The company has a compensation policy that includes discretionary bonuses based on individual performance, skills, and market trends[90].

Related Party Transactions - The company confirmed that related party transactions disclosed in the 2023 annual report constitute financial assistance provided to the group, qualifying as related transactions[1] - Financial assistance received by the group was conducted on normal commercial terms or better, with no assets of the group being pledged as collateral[1] - The company has complied with the relevant provisions of the Listing Rules regarding continuing connected transactions as detailed in the 2023 annual report[1]

Revenue and Profitability - Revenue for the six months ended June 30, 2024, was RMB 22,800,874, a decrease of 7.0% compared to RMB 24,504,930 in the same period of 2023[1] - Total comprehensive income for the period was RMB 9,424, a decline of 19.0% from RMB 11,628 in the previous year[2] - Operating profit for the period was RMB 136,390, slightly down from RMB 137,645 in the previous year[2] - Basic and diluted earnings per share for the period were both RMB 0.35, down from RMB 0.57 in the previous year[2] - The net profit for the six months ended June 30, 2024, was RMB 9,424, compared to RMB 11,628 for the same period in 2023, reflecting a decrease of about 18.9%[20] - Profit for the period decreased from approximately RMB 116.0 million for the six months ended June 30, 2023, to approximately RMB 9.4 million for the six months ending June 30, 2024[54] Sales Volume and Processing - Stainless steel sales volume increased by 0.9% to 965,145 tons, while processing volume decreased by 1.5% to 1,524,910 tons[1] - Carbon steel sales volume rose by 7.1% to 2,382,729 tons, with processing volume declining by 1.8% to 2,292,416 tons[1] - Stainless steel processing sales volume increased from approximately 957,000 tons for the six months ending June 30, 2023, to approximately 965,000 tons for the same period in 2024, representing a growth of about 0.9%[37] - Carbon steel processing sales volume rose from approximately 2,226,000 tons for the six months ending June 30, 2023, to approximately 2,383,000 tons for the same period in 2024, reflecting an increase of about 7.1%[37] Financial Position - Total assets as of June 30, 2024, amounted to RMB 16,329,723, an increase from RMB 13,188,882 at the end of 2023[3] - Total liabilities increased to RMB 13,039,051 from RMB 9,907,634 at the end of 2023[4] - As of June 30, 2024, the company's current liabilities exceeded current assets by approximately RMB 499,276 thousand, raising concerns about liquidity[10] - The company reported a net current liability of approximately RMB 499 million as of June 30, 2024[56] - As of June 30, 2024, the company's total borrowings amounted to approximately RMB 10.26 billion, with a debt-to-equity ratio of 75.15%, up from 68.37% as of December 31, 2023[56] Cash Flow and Financing - For the six months ended June 30, 2024, the company's operating cash flow was RMB (46,620) thousand, a significant decrease from RMB (392,600) thousand in the same period of 2023, indicating a decline of approximately 88.1%[7] - The net cash used in operating activities for the first half of 2024 was RMB (179,584) thousand, compared to RMB (555,773) thousand in the prior year, reflecting a reduction of about 67.7%[7] - The financing activities generated a net cash inflow of RMB 514,536 thousand for the first half of 2024, compared to RMB 768,642 thousand in the previous year, indicating a decrease of approximately 33.1%[7] - The company has confidence in its ability to refinance its bank loans and credit lines based on its past experience and good credit standing, which supports its going concern assumption[10] Expenses and Costs - The cost of raw materials consumed was RMB 21,515,055 for the six months ended June 30, 2024, compared to RMB 23,263,492 in the same period of 2023, showing a decrease of about 7.5%[21] - The company reported a significant increase in employee benefits expenses, which rose to RMB 512,020 for the six months ended June 30, 2024, from RMB 479,615 in the same period of 2023, an increase of approximately 6.8%[21] - The depreciation and amortization expense for the six months ended June 30, 2024, was RMB 223,093, compared to RMB 211,130 for the same period in 2023, reflecting an increase of about 5.7%[21] - Distribution costs increased from approximately RMB 225.4 million for the six months ended June 30, 2023, to approximately RMB 228.3 million for the six months ending June 30, 2024, primarily due to increased employee benefits expenses[50] - Administrative expenses rose from approximately RMB 140.6 million for the six months ended June 30, 2023, to approximately RMB 176.4 million for the six months ending June 30, 2024, mainly driven by higher employee benefits expenses[51] - Financing costs increased from approximately RMB 119.3 million for the six months ended June 30, 2023, to approximately RMB 122.3 million for the six months ending June 30, 2024, primarily due to a decrease in interest income[52] Dividends and Shareholder Information - The company did not declare any interim dividend for the six months ended June 30, 2024, consistent with the previous year[28] - The board of directors did not recommend the payment of an interim dividend for the six months ended June 30, 2024, compared to no dividend declared for the same period in 2023[59] Operational Developments - The company has established ten processing centers and one manufacturing base, serving over 70,000 customers across various industries[31] - The global apparent consumption of steel in 2023 reached 1.763 billion tons, with China accounting for nearly 896 million tons, providing a solid market foundation for the company’s services[32] - The company is enhancing its operational efficiency and service quality through investments in advanced processing equipment and technology[32] - The successful delivery of significant projects, such as the CE-certified cooling kiln to Finland, demonstrates the company's growing capabilities in high-end equipment manufacturing[33] Compliance and Reporting - The audit committee reviewed the unaudited interim results for the six months ended June 30, 2024, and confirmed compliance with applicable accounting standards and regulations[61] - The interim report for the six months ended June 30, 2024, will be sent to shareholders and made available on the Hong Kong Stock Exchange website and the company's website[62]

Sales and Processing Volumes - Stainless steel sales volume reached 2,043,000 tons in 2023, an increase of 9.9% from 1,858,780 tons in 2022[16] - Carbon steel sales volume increased by 21.6% to 4,855,332 tons in 2023, up from 3,992,889 tons in 2022[16] - The processing volume of stainless steel rose to 3,241,597 tons, reflecting a 13.7% increase from 2,849,891 tons in the previous year[16] - The processing ratio for stainless steel improved to 1.59 in 2023, compared to 1.53 in 2022[16] - Carbon steel processing volume also increased by 15.0% to 4,863,370 tons from 4,230,227 tons in 2022[16] - The processing ratio for carbon steel decreased to 1.00 in 2023, down from 1.06 in 2022[16] Financial Performance - Revenue for the year ended December 31, 2023, was RMB 50,560,063, representing a 0.9% increase from RMB 50,122,319 in the previous year[135] - Gross profit for the same period was RMB 921,534, up 1.4% from RMB 908,633[135] - The total comprehensive loss for the year was RMB (190,493), an increase of 19.9% compared to RMB (158,833) in the prior year[135] - The company's distributable reserves as of December 31, 2023, amounted to approximately RMB 1,889,000,000, compared to RMB 1,880,600,000 in 2022[61] - The board does not recommend the payment of a final dividend for the year ended December 31, 2023, consistent with the previous year[60] Shareholder and Governance Information - The company has no predetermined dividend payout ratio, with dividends being decided at the discretion of the board[4] - The company emphasizes regular communication with shareholders to ensure they are informed about its strategies and financial performance[9] - Major shareholders include Lianhao Group Limited, holding 62.25% of the issued share capital, and China Baowu Steel Group Co., Ltd., with a combined holding of 16.28%[143] - The public float of the company is approximately 20.71%, which is below the minimum requirement of 25% as per Hong Kong listing rules[151] - The company has a significant public shareholding issue and is considering measures to restore it to the minimum required percentage[167] Risk Management and Internal Controls - The company has implemented various measures to enhance risk management and internal control systems[40] - The company is committed to identifying, assessing, and managing significant risks that may affect its main operational processes[40] - The audit committee reviewed the consolidated financial statements for the year ended December 31, 2023, and confirmed compliance with applicable accounting standards[168] - The group evaluated the inherent risk of material misstatement related to inventory valuation due to subjectivity and management bias[197] Employee and Incentive Plans - A total of 228,000 reward shares were granted to an employee on January 5, 2023, under the share incentive plan[75] - The company has adopted stock option and share incentive plans to reward employees based on their contributions[165] - The total number of options granted and exercised during the year was 12,800,000, with an exercise price of HKD 2.364[72] - As of December 31, 2023, there are 12,800,000 stock options granted to directors and employees that remain unexercised[92] Strategic Initiatives and Market Position - The company aims to enhance profitability through continuous improvement in customer service, operational efficiency, technological innovation, inventory management, and higher-level processing and manufacturing support services[35] - Recent investments in advanced processing equipment and technology have improved processing and manufacturing capabilities, contributing to product premiumization[35] - The company is expanding production capacity in key regions to strengthen regional competitive advantages and support overall performance growth strategies[35] - The company focuses on providing customized metal processing and manufacturing services, emphasizing efficiency and cost-effectiveness for downstream customers[116] - The company is positioned as a leading provider of metal materials and components processing, linking upstream metal producers with downstream end-users[116] Customer and Supplier Relationships - A broad customer base and increasing customer loyalty, along with stable long-term relationships with upstream suppliers, support the company's leading performance in the industry[38] - The group’s top five customers accounted for less than 30% of total revenue, indicating a diversified customer base[86] - The largest supplier accounted for approximately 42% of total procurement, highlighting reliance on key suppliers[86] Audit and Compliance - The independent auditor's report confirms the consolidated financial statements as of December 31, 2023[156] - The audit firm confirmed that sufficient and appropriate audit evidence was obtained to support their audit opinion[194] - The audit procedures included testing the internal controls and estimates related to the net realizable value of inventory, considering market conditions and historical sales data[197] - The independent auditor's report indicates that the financial statements were prepared in accordance with the Hong Kong Financial Reporting Standards[193]

Financial Performance - Total revenue for the year ended December 31, 2023, was RMB 50,560,063 thousand, representing a 0.9% increase from RMB 50,122,319 thousand in 2022[2] - Gross profit for the same period was RMB 921,534 thousand, up 1.4% from RMB 908,633 thousand in the previous year[2] - The annual loss and total comprehensive loss amounted to RMB (190,493) thousand, a 19.9% increase compared to RMB (158,833) thousand in 2022[3] - The basic loss per share for the year was RMB (0.17), compared to RMB (0.14) in the previous year[3] - The company reported a loss attributable to shareholders of RMB 219,068,000 for the year ended December 31, 2023, compared to a loss of RMB 178,302,000 in 2022, reflecting an increase in losses[51] - The company’s employee benefits expenses, including directors' remuneration, were RMB 1,089,907,000 in 2023, slightly down from RMB 1,107,825,000 in 2022[44] - The company recorded a loss of approximately RMB 190.5 million for the year ended December 31, 2023, compared to a loss of approximately RMB 158.8 million for the year ended December 31, 2022, representing an increase of about 19.9%[136] Sales and Production - Stainless steel sales volume increased by 9.9% to 2,043,000 tons from 1,858,780 tons in 2022[2] - Carbon steel sales volume rose by 21.6% to 4,855,332 tons compared to 3,992,889 tons in the previous year[2] - The company's stainless steel processing business annual sales volume increased from approximately 1,859,000 tons for the year ended December 31, 2022, to approximately 2,043,000 tons for the year ended December 31, 2023, representing a growth of about 9.9%[65] - The annual sales volume of carbon steel processing increased from approximately 3,993,000 tons for the year ended December 31, 2022, to approximately 4,855,000 tons for the year ended December 31, 2023, representing a growth of about 21.6%[89] Assets and Liabilities - The total assets as of December 31, 2023, were RMB 13,188,882 thousand, an increase from RMB 12,778,027 thousand in 2022[10] - Total liabilities increased to RMB 9,907,634 thousand from RMB 9,273,342 thousand in the previous year[10] - As of December 31, 2023, the group recorded a net current liability of approximately RMB 562.3 million, with a debt-to-equity ratio of 68.37%, up from 65.05% in 2022[102] - Trade payables in RMB increased from RMB 402,831,000 as of December 31, 2022, to RMB 679,517,000 as of December 31, 2023[58] Cash Flow and Financing - Operating cash flow for the year was RMB 67,280,000, a decrease from RMB 272,276,000 in the previous year[32] - The net cash flow from financing activities was RMB 444,394,000, down from RMB 635,902,000 in the previous year[32] - The net financing cost for the year was RMB (237,845) thousand, slightly higher than RMB (233,330) thousand in 2022[3] - The group has sufficient available bank financing and believes it has adequate resources to continue operations for at least the next twelve months[35] - The group continues to manage long-term and short-term bank borrowings, with most short-term borrowings being refinanced based on historical renewal rates[13] Income and Expenses - The company reported an increase in other income to RMB 69,224 thousand from RMB 47,790 thousand in 2022[3] - The distribution costs rose from approximately RMB 484.9 million for the year ended December 31, 2022, to approximately RMB 493.3 million for the year ended December 31, 2023, primarily due to increased transportation costs[98] - The administrative expenses increased from approximately RMB 443.2 million for the year ended December 31, 2022, to approximately RMB 455.5 million for the year ended December 31, 2023, mainly due to higher taxes[98] Governance and Compliance - The audit committee has reviewed the audited consolidated annual results for the year ended December 31, 2023, and confirmed compliance with applicable accounting standards and regulations[136] - The company plans to update its existing articles of association to align with the latest regulatory requirements regarding electronic communication and the paperless system[133] - The proposed amendments to the articles of association require approval from shareholders at the upcoming annual general meeting[134] - The company maintains a strong governance framework to enhance shareholder value and protect the interests of stakeholders[129] - The board of directors includes both executive and independent non-executive members, ensuring diverse governance[145] Future Outlook - The group expects to generate positive cash inflows from operations for the year ending December 31, 2024[34] - The company aims to enhance profitability through continuous improvements in customer service, operational efficiency, and technological innovation[84] - The group plans to enhance its service network and production efficiency through advanced automation and digital transformation of existing equipment[115] - The group aims to expand its overseas service network to support international business growth, expecting continued revenue growth from overseas operations[115]

Financial Performance - In the first half of 2023, the company recorded a net profit of approximately RMB 11.6 million, a significant decrease of about 92.7% compared to RMB 158.5 million in the same period of 2022 due to falling steel prices [17]. - Total revenue for the first half of 2023 was approximately RMB 24.55 billion, slightly down by about 1.2% from RMB 24.81 billion in the same period of 2022, with RMB 23.89 billion from processing business and RMB 608 million from manufacturing [20]. - The company reported a net profit of RMB 11,628 thousand for the period, compared to RMB 158,486 thousand in the previous year, indicating a significant decrease [74]. - The net profit for the six months ended June 30, 2023, was approximately RMB 11.6 million, down from approximately RMB 158.5 million for the same period in 2022, mainly due to reduced gross profit [53]. - The gross profit decreased from approximately RMB 709 million to approximately RMB 464.2 million, primarily due to a decline in steel prices during the period [50]. - Revenue for the six months ended June 30, 2023, was RMB 24,504,930 thousand, a decrease of 1.2% compared to RMB 24,800,954 thousand for the same period in 2022 [80]. - Gross profit for the same period was RMB 464,229 thousand, down 33.7% from RMB 700,880 thousand in 2022 [80]. - Operating profit decreased to RMB 137,645 thousand, a decline of 54.3% from RMB 300,851 thousand in the previous year [80]. - Net profit attributable to equity holders was RMB 7,323 thousand, significantly lower than RMB 149,114 thousand for the same period last year, representing a decrease of 95.1% [80]. - Basic and diluted earnings per share for the period were RMB 0.01, down from RMB 0.12 in the previous year [80]. Sales and Processing Volumes - Stainless steel sales volume increased by 10.5% to 956,613 tons in 2023, while carbon steel sales volume rose by 26.8% to 2,225,500 tons [3]. - The processing volume of stainless steel reached 1,547,745 tons, reflecting a growth of 12.2%, while carbon steel processing volume increased by 21.3% to 2,333,674 tons [3]. - The sales volume of carbon steel processing increased from approximately 1,756,000 tons for the six months ended June 30, 2022, to approximately 2,226,000 tons for the six months ended June 30, 2023, representing a growth of about 26.8% [41]. - The processing volume of carbon steel rose from approximately 1,924,000 tons to approximately 2,334,000 tons, reflecting an increase of about 21.3% [46]. Cost and Expenses - Distribution costs decreased from approximately RMB 231.5 million to approximately RMB 225.4 million, attributed to reduced employee bonus expenses [51]. - Administrative expenses fell from approximately RMB 175.2 million to approximately RMB 140.6 million, also due to decreased employee bonus expenses [51]. - Financing costs increased from approximately RMB 81.5 million to approximately RMB 119.3 million, mainly due to a reduction in foreign exchange gains during the period [51]. - Employee benefits expenses, including director remuneration, decreased to RMB 479,615 thousand from RMB 528,828 thousand year-on-year, reflecting a cost control measure [162]. - The total financing costs, including interest income, amounted to RMB 151,615 thousand, compared to RMB 108,170 thousand in the previous year, indicating an increase in financing activities [162]. Assets and Liabilities - The total assets of the group as of June 30, 2023, were approximately RMB 14.446 billion, with equity attributable to equity holders amounting to approximately RMB 3.173 billion [45]. - Total assets increased to RMB 14,446,128 thousand as of June 30, 2023, up from RMB 12,778,027 thousand as of December 31, 2022, representing a growth of 13.1% [58]. - Current assets rose to RMB 8,606,255 thousand, compared to RMB 7,024,564 thousand in the previous year, marking an increase of 22.5% [58]. - Total liabilities reached RMB 10,925,671 thousand, an increase from RMB 9,273,342 thousand, which is a rise of 17.8% [72]. - The debt-to-equity ratio as of June 30, 2023, was 70.54%, compared to 65.05% at the end of 2022, indicating a higher leverage position [69]. - The company's current liabilities exceeded current assets by approximately RMB 317,918,000, indicating reliance on bank borrowings for operational funding [110]. Inventory and Raw Materials - Inventory significantly increased to RMB 4,183,374 thousand, up from RMB 3,518,438 thousand, reflecting a growth of 18.9% [58]. - The cost of raw materials increased to RMB 3,300,284,000 in the first half of 2023, up from RMB 2,380,025,000 in the same period of 2022 [101]. - The company reported a total of RMB 4,183,374,000 in inventory as of June 30, 2023, an increase from RMB 3,518,438,000 at the end of 2022 [101]. - The company's inventory recorded a loss of approximately RMB 9,163,000 due to inventory write-downs to net realizable value, compared to a loss of RMB 122,411,000 in the previous year [124]. Corporate Governance and Shareholder Information - The company continues to focus on maintaining high standards of corporate governance to enhance shareholder value and protect the interests of shareholders and other stakeholders [149]. - The company maintained compliance with the corporate governance code as per the Hong Kong Stock Exchange regulations during the reporting period [171]. - There were no share buybacks or repurchases during the six months ended June 30, 2023, indicating a focus on maintaining capital structure [174]. - The company holds 62.26% of the issued share capital, with significant ownership by key individuals [187]. - The major shareholders include Mr. Zhou Keming and Ms. Xu Xia, each holding 793,551,000 shares [187]. Future Outlook and Strategic Initiatives - The company aims to enhance profitability through improved customer service, operational efficiency, and technological innovation, alongside investments in advanced processing equipment [11]. - The company is expanding production capacity in key regions to strengthen regional competitive advantages and support overall performance growth strategies [11]. - Strategic cooperation agreements have been signed with major companies, including Luoyang Molybdenum and LiuGong, to foster growth and innovation [39]. - The company has successfully completed overseas engineering projects, including processing for a nickel-cobalt smelting equipment system in Indonesia, enhancing its international collaboration [14]. - The company maintains confidence in its ability to continue as a going concern for at least the next twelve months [86].

Financial Performance - For the six months ended June 30, 2023, the company's revenue was RMB 24,504,930 thousand, a decrease from RMB 24,800,954 thousand for the same period in 2022, representing a decline of approximately 1.2%[3] - The gross profit for the same period in 2023 was RMB 464,229 thousand, down from RMB 700,880 thousand in 2022, indicating a decrease of about 33.7%[3] - Operating profit for the six months ended June 30, 2023, was RMB 137,645 thousand, compared to RMB 300,851 thousand in 2022, reflecting a decline of approximately 54.3%[3] - The net profit attributable to equity holders for the period was RMB 7,323 thousand, significantly lower than RMB 149,114 thousand in the previous year, marking a decrease of around 95.1%[3] - The company's earnings per share (EPS) for the six months ended June 30, 2023, was RMB 0.01, down from RMB 0.12 in the same period of 2022, a decline of 91.7%[3] - The company's net profit for the six months ended June 30, 2023, was approximately RMB 11,600 thousand, down from RMB 158,500 thousand for the same period in 2022, primarily due to a decrease in gross profit[49] - The company reported a comprehensive income of RMB 11.63 million for the period, a significant decrease of 92.7% compared to RMB 158.49 million in the same period last year[93] Accounts and Liabilities - Accounts payable increased to RMB 580,018 thousand as of June 30, 2023, from RMB 429,690 thousand at the end of 2022, representing an increase of approximately 35.0%[2] - The aging analysis of trade payables shows that RMB 599,004 thousand (98.2%) of payables were due within 6 months as of June 30, 2023, compared to RMB 451,200 thousand (96.1%) in the previous year[2] - The debt-to-asset ratio increased to 70.54% as of June 30, 2023, from 65.05% as of December 31, 2022[62] - The total liabilities increased to approximately RMB 10.93 billion, up from RMB 9.27 billion in the previous year[102] - The group's current liabilities exceeded current assets by approximately RMB 317,918 thousand as of June 30, 2023, indicating potential liquidity concerns[108] - As of June 30, 2023, the company recorded a net current liability of approximately RMB 318,000 thousand[151] Revenue and Sales Volume - The stainless steel processing business saw sales volume increase from approximately 865,358 tons for the six months ended June 30, 2022, to approximately 956,613 tons for the same period in 2023, representing a growth of about 10.5%[72] - The carbon steel processing business experienced a sales volume increase from approximately 1,755,596 tons for the six months ended June 30, 2022, to approximately 2,225,500 tons for the same period in 2023, marking a growth of about 26.8%[72] - The total processing volume for stainless steel rose from approximately 1,379,928 tons in the first half of 2022 to approximately 1,547,745 tons in the first half of 2023, an increase of about 12.2%[72] - The total processing volume for carbon steel increased from approximately 1,924,192 tons in the first half of 2022 to approximately 2,333,674 tons in the first half of 2023, reflecting a growth of about 21.3%[72] - Revenue for the six months ended June 30, 2023, was approximately RMB 24.55 billion, slightly down by about 1.2% from approximately RMB 24.81 billion for the same period in 2022[72] Corporate Governance and Strategy - The company has adhered to the corporate governance code as per the Hong Kong Stock Exchange regulations[51] - The company aims to maintain high standards of corporate governance to enhance shareholder value and protect the interests of shareholders and other stakeholders[76] - The company is committed to providing low-cost, fast delivery, and high-quality materials and manufacturing services to downstream customers[82] - The company aims to enhance profitability through improved customer service, operational efficiency, and technological innovation[84] - Significant investments in advanced processing equipment and technology have been made to boost manufacturing capabilities and product premium[84] - The company is expanding production capacity in key regions to strengthen regional competitive advantages[84] Cash Flow and Financial Management - Operating cash flow for the six months ended June 30, 2023, was RMB (392,600) thousand, compared to RMB (197,148) thousand for the same period in 2022, indicating a significant increase in cash outflow[107] - Net cash used in operating activities was RMB (555,773) thousand for the six months ended June 30, 2023, compared to RMB (412,724) thousand in the previous year, reflecting a worsening cash position[107] - Total financing cash flow net amount was RMB 768,642 thousand for the six months ended June 30, 2023, down from RMB 816,284 thousand in the same period of 2022[107] - The cost of financing increased to RMB 151,615 thousand for the six months ended June 30, 2023, compared to RMB 108,170 thousand in the same period of 2022, reflecting higher interest expenses[131] - Interest income increased to RMB (32,304) thousand for the six months ended June 30, 2023, compared to RMB (26,655) thousand in the previous year, indicating improved financial management[131] Inventory and Employee Expenses - Inventory changes showed a positive shift with a change of RMB 60,003 thousand for the six months ended June 30, 2023, compared to a negative change of RMB (222,911) thousand in the previous year[130] - The company reported a decrease in employee benefits expenses, which totaled RMB 479,615 thousand for the six months ended June 30, 2023, down from RMB 528,828 thousand in the same period of 2022[130] Shareholder Returns - The company does not recommend any interim dividend for the six months ended June 30, 2023, consistent with the previous year[23] - The company did not recommend the distribution of an interim dividend for the six months ended June 30, 2023[64] - The weighted average number of ordinary shares issued remained constant at 1,274,528 thousand shares for both 2023 and 2022[145] - The diluted earnings per share for the six months ended June 30, 2023, was RMB 0.01, down from RMB 0.12 in 2022, indicating a decrease of 91.7%[145]

Sales and Processing Volume - The annual sales volume of the carbon steel processing business increased from approximately 3,123,000 tons for the year ended December 31, 2021, to approximately 3,993,000 tons for the year ended December 31, 2022, representing a growth of approximately 27.9%[5] - The annual processing volume rose from approximately 3,606,000 tons for the year ended December 31, 2021, to approximately 4,230,000 tons for the year ended December 31, 2022, reflecting an increase of approximately 17.3%[5] Revenue and Income - Revenue from the East China region accounted for 66.6% of total revenue, while North China contributed 16.0% and Central China contributed 3.6%[11] - Other income slightly increased from approximately RMB 47.3 million for the year ended December 31, 2021, to approximately RMB 47.8 million for the year ended December 31, 2022[13] Expenses and Financial Management - Administrative expenses rose from approximately RMB 434.7 million for the year ended December 31, 2021, to approximately RMB 443.2 million for the year ended December 31, 2022, primarily due to increased employee costs[14] - The group's inventory as of December 31, 2022, amounted to RMB 3,518,438,000, recorded at the lower of cost and net realizable value[87] - The company’s borrowing details are outlined in the consolidated financial statements, indicating a focus on managing financial leverage[120] Corporate Governance - The company aims to maintain high standards of corporate governance to enhance shareholder value and protect the interests of shareholders and other stakeholders[16] - The board of directors held six meetings during the fiscal year ended December 31, 2022, ensuring effective oversight and governance[21] - The company has established three board committees: the Remuneration Committee, the Nomination Committee, and the Audit Committee, to oversee specific areas of the business[34] - The company is committed to continuous professional development for its directors, ensuring they are well-equipped to fulfill their roles effectively[23] - The company has complied with the corporate governance code as detailed in the annual report[103] Board Composition and Diversity - The board of directors includes one female member, representing 8% of the total board composition[46] - The company aims to maintain its current level of gender diversity on the board[46] - The company emphasizes the importance of board diversity, considering factors such as gender, age, and professional experience[66] - As of the end of 2022, the workforce consisted of 81% male and 19% female employees[46] - The company is committed to creating an inclusive work environment where all employees are treated with respect and equality[46] Audit and Compliance - The audit committee held three meetings during the fiscal year ending December 31, 2022[64] - The audit committee reviewed the audited consolidated financial statements for the year ended December 31, 2022, and confirmed compliance with applicable accounting standards and regulations[104] - The company has engaged PwC for audit and non-audit services, with fees paid during the year being disclosed[68] - The independent auditor issued an unqualified opinion regarding the ongoing related transactions, confirming compliance with listing rules[158] - The independent auditor maintained professional skepticism and assessed internal controls relevant to the audit[200] Shareholder and Dividend Information - The company has no predetermined dividend payout ratio or rate, with dividends being decided at the discretion of the board[48] - The board will regularly review the dividend policy to adapt to the company's operational and capital needs[48] - The company did not declare or pay any interim dividends during the year, compared to HKD 0.06 per share in 2021[114] Employee and Stock Options - A total of 12,800,000 stock options were granted to directors and certain employees, which remain unexercised as of December 31, 2022[124] - The stock option plan allows for a maximum of 100,000,000 shares to be issued, representing 10% of the shares in issue at the time of listing[122] - The company granted a total of 228,000 reward shares to a selected employee during the year, with these shares vesting on January 5, 2023[148] - The company’s workforce consists of 73.0% production and technical personnel, 15.8% sales personnel, and 11.2% management and finance personnel[132] Major Transactions and Relationships - The company sold goods and services to its five largest customers, which accounted for less than 30% of total revenue, while the five largest suppliers accounted for approximately 79% of total procurement[119] - For the fiscal year ending December 31, 2022, the total amount paid to China Baowu Steel Group for steel procurement was approximately RMB 15.9 billion, remaining below the annual cap of RMB 35 billion[156] - The company provided metal processing products and services to China Baowu Steel Group amounting to approximately RMB 170 million, which did not exceed the annual limit of RMB 600 million[156] - The new framework agreement with China Baowu Steel Group, approved by independent shareholders, spans from January 1, 2021, to December 31, 2023, with a total expected payment for steel procurement capped at RMB 22.4 billion, RMB 28 billion, and RMB 35.4 billion for each of the three years[179] - The expected maximum total payments for metal processing products and services from China Baowu Steel Group are capped at RMB 250 million, RMB 300 million, and RMB 350 million for each of the three years ending December 31, 2023[179] Ownership and Control - The company’s major shareholder, Zhou Keming, holds 62.26% of the issued share capital, indicating a strong control over the company[165] - The ownership structure of Lianhao Group Limited shows that Zhou Keming holds 77.2% and Xu Xia holds 22.8% of the interests[194] - The company has no significant contracts with directors that would allow them to hold shares or interests in the company or its affiliates[169] Changes in Board and Management - The company’s board of directors underwent changes, with several resignations and appointments noted during the fiscal year[159] - The board of directors will see the rotation of Lu Jian, Zhu Baomin, Professor Hua Min, and Hu Xuefa at the 2023 annual general meeting[185]