Corporate Information [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) The Board comprises executive, non-executive, and independent non-executive directors, with committees ensuring a sound corporate governance structure - The Board of Directors includes executive directors such as Mr Luo Fei (Chairman) and Mr Wang Yidong, along with several non-executive and independent non-executive directors[4](index=4&type=chunk) - The company has an Audit Committee, Nomination Committee, Remuneration Committee, and Environmental, Social and Governance Committee, each with a designated chairman and members[4](index=4&type=chunk) [Corporate Contact Information and Professional Services](index=3&type=section&id=Corporate%20Contact%20Information%20and%20Professional%20Services) The company is registered in the Cayman Islands, with its head office in Hong Kong, and employs Ernst & Young as its auditor - The company's registered office is in the Cayman Islands, with its head office and principal place of business located at One Island East, Taikoo Place, 18 Westlands Road, Quarry Bay, Hong Kong[4](index=4&type=chunk) - **Ernst & Young** serves as the company's auditor, and Computershare Hong Kong Investor Services Limited is the Hong Kong branch share registrar[5](index=5&type=chunk) Financial Highlights [Key Financial Indicators](index=5&type=section&id=Key%20Financial%20Indicators) For the six months ended June 30, 2025, revenue grew by 4.9% to RMB 7,019.2 million, while net profit significantly decreased by 76.8% Key Financial Indicators for the Six Months Ended June 30 | Indicator | 2025 (RMB million) | 2024 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Revenue | 7,019.2 | 6,692.1 | +4.9% | | Gross Profit | 4,389.1 | 4,072.3 | +7.8% | | EBITDA* | 1,033.1 | 1,098.4 | –5.9% | | Adjusted Comparable EBITDA* | 1,100.7 | 1,139.8 | –3.4% | | Adjusted Comparable EBITDA Margin | 15.7% | 17.0% | –1.3 ppts | | Net Profit | 71.0 | 305.8 | –76.8% | | Adjusted Comparable Net Profit** | 363.0 | 347.2 | +4.6% | | Adjusted Comparable Net Profit Margin | 5.2% | 5.2% | – | - EBITDA refers to earnings before interest, income tax expense, depreciation, and amortization, while adjusted comparable figures exclude non-cash and non-recurring items[6](index=6&type=chunk) [Revenue Composition Analysis](index=6&type=section&id=Revenue%20Composition%20Analysis) Nutritional supplements remain the primary revenue source at 65.6%, with Mainland China being the largest market, contributing 70.3% of total revenue Revenue by Product Segment | Product Segment | 2025 Share | 2024 Share | | :--- | :--- | :--- | | Nutritional Supplements | 65.6% | 66.1% | | Infant Formulae | 28.1% | 26.9% | | Others | 6.3% | 7.0% | Revenue by Business Segment | Business Segment | 2025 Share | 2024 Share | | :--- | :--- | :--- | | Adult Nutrition and Care Products (ANC) | 49.0% | 49.0% | | Pet Nutrition and Care Products (PNC) | 15.4% | 14.7% | | Baby Nutrition and Care Products (BNC) | 35.6% | 36.3% | Revenue by Geography | Geography | 2025 Share | 2024 Share | | :--- | :--- | :--- | | Mainland China | 70.3% | 67.9% | | Australia and New Zealand | 11.4% | 14.6% | | North America | 12.3% | 12.2% | | Other regions | 6.0% | 5.3% | Chairman's Statement [Overall Performance and Strategic Highlights](index=7&type=section&id=Overall%20Performance%20and%20Strategic%20Highlights) The Group's total revenue grew 5.2% on a like-for-like basis in the first half, driven by a focus on high-margin growth segments - Total revenue grew **5.2% on a like-for-like basis** in the first half, with all business segments returning to growth[14](index=14&type=chunk) - High-margin nutritional supplements accounted for **65.6% of revenue**, with vitamins, herbs and mineral supplements (VHMS) growing 5.8% and pet nutrition growing 14.3%[16](index=16&type=chunk) - The company achieved an **adjusted comparable EBITDA margin of 15.7%**, improved adjusted comparable net profit, and successfully refinanced its 2026 senior notes[16](index=16&type=chunk) - An interim dividend of **HK$0.19 per ordinary share** was declared, representing approximately 30% of adjusted comparable net profit[18](index=18&type=chunk) [Adult Nutrition and Care Products](index=8&type=section&id=Adult%20Nutrition%20and%20Care%20Products) The Adult Nutrition and Care Products segment achieved mid-single-digit growth, driven by strong performance in Mainland China, particularly in beauty and anti-aging - The Adult Nutrition and Care Products (ANC) segment achieved **mid-single-digit growth** in the first half, with double-digit growth in Mainland China[19](index=19&type=chunk) - **Swisse ranked No. 1** in Mainland China's overall VHMS market, with cross-border e-commerce sales growing by 18.1%[16](index=16&type=chunk)[20](index=20&type=chunk)[22](index=22&type=chunk) - Sales through the **Douyin channel grew by 80.3%**, with market share ranking fourth in the industry[20](index=20&type=chunk) - The ANZ local market saw solid growth, but total revenue declined by 16.2% on a like-for-like basis due to a downturn in the corporate daigou business[22](index=22&type=chunk) [Baby Nutrition and Care Products](index=9&type=section&id=Baby%20Nutrition%20and%20Care%20Products) The Baby Nutrition and Care Products segment resumed growth after the new "GB" standard transition, with Mainland China infant formula sales up 10.0% - The Baby Nutrition and Care Products (BNC) segment resumed growth, with Mainland China infant formulae sales **increasing by 10.0%**[16](index=16&type=chunk)[24](index=24&type=chunk) - **Biostime's market share** in Mainland China's super premium infant formulae segment reached a record high of **15.9%**[16](index=16&type=chunk)[24](index=24&type=chunk) - During the 618 online shopping festival, GMV for Stage 1 and 2 infant formulae **grew by 103%**[24](index=24&type=chunk) [Pet Nutrition and Care Products](index=10&type=section&id=Pet%20Nutrition%20and%20Care%20Products) The Pet Nutrition and Care Products segment achieved high-single-digit growth, with high-margin pet nutrition products growing 14.3% on a like-for-like basis - The Pet Nutrition and Care Products (PNC) segment achieved **high-single-digit growth**, with high-margin pet nutrition products growing 14.3% on a like-for-like basis[16](index=16&type=chunk)[26](index=26&type=chunk) - **Zesty Paws** delivered strong like-for-like growth of **13.4% in North America**, while **Solid Gold** sales in Mainland China grew by **17.5%**[16](index=16&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - Solid Gold's sales in North America decreased by 23.3%, reflecting a strategic shift towards higher-margin channels and premium products[26](index=26&type=chunk) [Optimising Capital Structure](index=10&type=section&id=Optimising%20Capital%20Structure) The company successfully refinanced its 2026 USD senior notes by issuing new 3.5-year US$300 million senior notes, reducing financing costs - Successfully issued new **3.5-year US$300 million senior notes** to refinance the 2026 USD senior notes, lowering overall financing costs[16](index=16&type=chunk)[28](index=28&type=chunk) - As of June 30, 2025, cash reserves stood at **RMB 1.83 billion**, with RMB-denominated and hedged RMB debt accounting for 75.7% of total borrowings[28](index=28&type=chunk) [Outlook](index=11&type=section&id=Outlook) The company will continue to drive growth in high-margin VHMS and pet nutrition, accelerate business expansion, and maintain a healthy profitability level - The ANC segment is expected to maintain growth momentum in the second half, while infant formulae sales are projected to accelerate[29](index=29&type=chunk) - The PNC business will continue its growth trajectory, with Zesty Paws executing its omni-channel strategy and Solid Gold gaining traction in Mainland China[30](index=30&type=chunk) - The company is committed to maintaining ample liquidity, pursuing deleveraging, and steadily reducing its net gearing ratio to enhance financial resilience[30](index=30&type=chunk) [Appreciation](index=11&type=section&id=Appreciation) The Chairman expresses sincere gratitude to all stakeholders and reaffirms the company's commitment to creating long-term value - Chairman Luo Fei extends sincere thanks to stakeholders, including shareholders, employees, business partners, and creditors[31](index=31&type=chunk) - The company will continue to create long-term value for all it serves and is dedicated to inspiring people globally to live healthier and happier lives[31](index=31&type=chunk) Management Discussion and Analysis [Operating Results](index=12&type=section&id=Operating%20Results) For the six months ended June 30, 2025, Group revenue grew 4.9% on a reported basis and 5.2% on a like-for-like basis to RMB 7,019.2 million - For the six months ended June 30, 2025, Group revenue increased by **4.9% on a reported basis** (5.2% on a like-for-like basis) to **RMB 7,019.2 million**[33](index=33&type=chunk) - Revenue from high-margin nutritional supplements grew by **4.6% year-on-year** on a like-for-like basis, accounting for **65.6% of total Group revenue**[33](index=33&type=chunk) Revenue by Product Segment (RMB million) | Product Segment | 2025 | 2024 | Reported Change | Like-for-like Change | 2025 Share | 2024 Share | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Nutritional Supplements | 4,606.0 | 4,425.2 | 4.1% | 4.6% | 65.6% | 66.1% | | - Vitamins, herbs and mineral supplements | 3,418.3 | 3,258.2 | 4.9% | 5.8% | 48.7% | 48.7% | | - Pet nutrition | 760.5 | 658.4 | 15.5% | 14.3% | 10.8% | 9.8% | | - Infant probiotics and nutritional supplements | 427.2 | 508.6 | -16.0% | -16.0% | 6.1% | 7.6% | | Infant Formulae | 1,970.9 | 1,798.4 | 9.6% | 9.6% | 28.1% | 26.9% | | Others | 442.3 | 468.5 | -5.6% | -5.8% | 6.3% | 7.0% | Revenue by Business Segment (RMB million) | Business Segment | 2025 | 2024 | Reported Change | Like-for-like Change | 2025 Share | 2024 Share | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Adult Nutrition and Care Products (ANC) | 3,438.7 | 3,275.6 | 5.0% | 5.9% | 49.0% | 49.0% | | Baby Nutrition and Care Products (BNC) | 2,501.3 | 2,431.5 | 2.9% | 2.9% | 35.6% | 36.3% | | Pet Nutrition and Care Products (PNC) | 1,079.2 | 985.0 | 9.6% | 8.6% | 15.4% | 14.7% | Revenue by Geography (RMB million) | Geography | 2025 | 2024 | Reported Change | Like-for-like Change | 2025 Share | 2024 Share | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mainland China | 4,936.0 | 4,541.4 | 8.7% | 8.7% | 70.3% | 67.9% | | ANZ | 800.7 | 975.9 | -18.0% | -15.6% | 11.4% | 14.6% | | North America | 862.2 | 815.8 | 5.7% | 4.6% | 12.3% | 12.2% | | Other regions | 420.3 | 359.0 | 17.1% | 18.8% | 6.0% | 5.3% | | **Total** | **7,019.2** | **6,692.1** | **4.9%** | **5.2%** | **100.0%** | **100.0%** | - Revenue from Mainland China increased by **8.7% year-on-year** to **RMB 4,936.0 million**, accounting for 70.3% of total Group revenue[37](index=37&type=chunk) - Revenue from the ANZ market decreased by **15.6% on a like-for-like basis**, mainly due to the decline in the corporate daigou business[41](index=41&type=chunk) - Revenue from North America grew by **4.6% on a like-for-like basis**, driven by premiumisation and channel expansion in pet nutrition[42](index=42&type=chunk) - Revenue from other regions increased by **18.8% on a like-for-like basis**, with strong performance in Asian expansion markets[43](index=43&type=chunk) [Gross Profit and Gross Profit Margin](index=14&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) Gross profit increased by 7.8% to RMB 4,389.1 million, with the gross profit margin rising from 60.9% to 62.5% due to favorable product mix - Gross profit for the first half was **RMB 4,389.1 million**, an increase of **7.8%** from the same period last year[44](index=44&type=chunk) - The gross profit margin increased from **60.9%** in 1H 2024 to **62.5%** in 1H 2025[44](index=44&type=chunk) - The gross profit margin for the ANC segment rose to **67.5%**, the PNC segment's margin rose to **58.7%**, while the BNC segment's margin decreased to **57.3%**[45](index=45&type=chunk) [Other Income and Gains](index=15&type=section&id=Other%20Income%20and%20Gains) For the six months ended June 30, 2025, other income and gains amounted to RMB 61.8 million, mainly from foreign exchange gains - Other income and gains were **RMB 61.8 million**, primarily including net foreign exchange gains of **RMB 24.4 million**[46](index=46&type=chunk)[47](index=47&type=chunk) [Selling and Distribution Costs](index=15&type=section&id=Selling%20and%20Distribution%20Costs) Selling and distribution costs rose 12.4% to RMB 2,883.9 million, increasing as a percentage of revenue from 38.3% to 41.1% - Selling and distribution costs increased by **12.4% to RMB 2,883.9 million**, representing **41.1% of revenue** compared to 38.3% previously[48](index=48&type=chunk) - The ANC business's selling and distribution costs rose by **19.2%**, increasing to **41.9%** of its revenue[49](index=49&type=chunk) - The BNC business's selling and distribution costs remained broadly stable, decreasing to **38.1%** of its revenue[51](index=51&type=chunk) - The PNC business's selling and distribution costs increased by **21.6%**, rising to **45.4%** of its revenue[52](index=52&type=chunk) [Administrative Expenses](index=16&type=section&id=Administrative%20Expenses) Administrative expenses slightly decreased by 1.8% to RMB 398.5 million, reflecting efforts in operational efficiency and cost management - Administrative expenses slightly decreased by **1.8% to RMB 398.5 million**[53](index=53&type=chunk) - As a percentage of revenue, administrative expenses decreased from **6.1% to 5.7%**, benefiting from improved operational efficiency and cost management[53](index=53&type=chunk) [Other Expenses](index=16&type=section&id=Other%20Expenses) Other expenses amounted to RMB 181.7 million, primarily comprising R&D expenses of RMB 95.9 million and a net fair value loss on financial instruments - Other expenses were **RMB 181.7 million**, of which R&D expenses were **RMB 95.9 million**, a year-on-year decrease of 7.8%[54](index=54&type=chunk) - A non-cash net fair value loss on derivative financial instruments of **RMB 74.1 million** was recorded, mainly due to losses on cross-currency swaps[54](index=54&type=chunk) [EBITDA and Adjusted Comparable EBITDA](index=17&type=section&id=EBITDA%20and%20Adjusted%20Comparable%20EBITDA) Adjusted comparable EBITDA decreased by 3.4% to RMB 1,100.7 million, with the margin declining by 1.3 percentage points to 15.7% - Adjusted comparable EBITDA was **RMB 1,100.7 million**, a decrease of **3.4%** from the same period last year[55](index=55&type=chunk) - The adjusted comparable EBITDA margin decreased from **17.0% to 15.7%**, mainly due to a higher investment base, unfavorable channel mix, and strategic investments[55](index=55&type=chunk) Reconciliation of EBITDA and Adjusted Comparable EBITDA (RMB million) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | EBITDA | 1,033.1 | 1,098.4 | | Adjustments for the following items: | | | | Non-cash items: | | | | (1) Net foreign exchange (gains)/losses | (24.4) | 40.9 | | (2) Net fair value losses/(gains) on derivative financial instruments and other non-current financial assets | 68.5 | (59.1) | | (3) Share of losses of an associate | 13.5 | 12.7 | | Non-recurring items: | | | | (4) One-off advisory fees related to Group entity structure optimisation | 10.0 | – | | (5) One-off restructuring costs for Solid Gold business in North America | – | 46.9 | | **Adjusted Comparable EBITDA** | **1,100.7** | **1,139.8** | [Finance Costs](index=17&type=section&id=Finance%20Costs) Finance costs increased by 33.8% to RMB 579.5 million, primarily due to a one-off premium for the refinancing of the 2026 senior notes - Finance costs increased by **33.8% to RMB 579.5 million**[57](index=57&type=chunk) - Costs included **RMB 351.5 million** in interest on loans and notes, and a **RMB 224.4 million** one-off premium and non-cash write-off for the 2026 senior notes refinancing[57](index=57&type=chunk) - The implied annual interest expense rate (including hedging benefits) decreased from **7.07% to 6.63%**[58](index=58&type=chunk) [Income Tax Expense](index=18&type=section&id=Income%20Tax%20Expense) Income tax expense rose by 7.9% to RMB 235.3 million, with the effective tax rate on a reported basis increasing from 41.6% to 76.8% - Income tax expense increased by **7.9% to RMB 235.3 million**[59](index=59&type=chunk) - On a reported basis, the effective tax rate increased from **41.6% to 76.8%**[59](index=59&type=chunk) [Net Profit and Adjusted Comparable Net Profit](index=18&type=section&id=Net%20Profit%20and%20Adjusted%20Comparable%20Net%20Profit) Net profit was RMB 71.0 million, a 76.8% decrease, while adjusted comparable net profit was RMB 363.0 million, a 4.6% increase Reconciliation of Net Profit and Adjusted Comparable Net Profit (RMB million) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Net Profit | 71.0 | 305.8 | | Adjustments for the following items: | | | | EBITDA adjusted comparable items listed above | 67.6 | 41.4 | | Non-cash item*: | | | | One-off premium and non-cash write-off of related unamortised transaction costs for tender offer and early redemption of 2026 Senior Notes | 224.4 | – | | **Adjusted Comparable Net Profit** | **363.0** | **347.2** | - Adjusted comparable net profit increased by **4.6% year-on-year** to **RMB 363.0 million**[60](index=60&type=chunk) [Non-IFRS Financial Measures](index=18&type=section&id=Non-IFRS%20Financial%20Measures) The company uses adjusted comparable EBITDA and net profit as non-IFRS measures to eliminate non-cash or non-recurring items for better comparison - The company uses adjusted comparable EBITDA and adjusted comparable net profit as non-IFRS financial measures to eliminate the impact of non-cash or non-recurring items[61](index=61&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a solid liquidity position with net cash from operating activities of RMB 998.0 million and a net gearing ratio of 3.89x - Net cash from operating activities was **RMB 998.0 million**, net cash used in investing activities was **RMB 31.4 million**, and net cash used in financing activities was **RMB 706.5 million**[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - As of June 30, 2025, cash and bank balances amounted to **RMB 1,812.0 million**[67](index=67&type=chunk) Net Gearing Ratio | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Total Debt | 9,259.6 | 9,403.3 | | Less: Cash and cash equivalents | 1,812.0 | 1,603.9 | | Net Debt | 7,447.6 | 7,799.4 | | Divided by: Adjusted Comparable EBITDA | 1,913.2 | 1,952.3 | | **Net Gearing Ratio** | **3.89x** | **3.99x** | [Working Capital](index=20&type=section&id=Working%20Capital) The average turnover days for trade and bills receivables slightly decreased to 27 days, while inventory turnover days improved to 131 days - The average turnover days for trade and bills receivables slightly decreased from **28 days to 27 days**[69](index=69&type=chunk) - Inventory turnover days decreased from **146 days to 131 days**, with BNC product inventory turnover days decreasing to 122 days[70](index=70&type=chunk) [Interim Dividend](index=21&type=section&id=Interim%20Dividend) The Board resolved to declare an interim dividend of HK$0.19 per ordinary share, representing approximately 30% of adjusted comparable net profit - The Board declared an interim dividend of **HK$0.19 per ordinary share**, representing approximately 30% of adjusted comparable net profit[72](index=72&type=chunk) [Material Business Development Subsequent to the End of the Reporting Period](index=21&type=section&id=Material%20Business%20Development%20Subsequent%20to%20the%20End%20of%20the%20Reporting%20Period) The company's subsidiary, BHA, has formally objected to an amended assessment from the Australian Taxation Office and paid a cash deposit of A$104 million - BHA has objected to the Australian Taxation Office's demand for **A$234.5 million** in primary tax, **A$55.2 million** in interest, and **A$117.3 million** in penalties[73](index=73&type=chunk) - BHA paid a cash deposit of **A$104 million** on July 15, 2025, which will be recognised as an asset on the balance sheet[74](index=74&type=chunk) - The company believes the probability of a future outflow of funds is low and is prepared to pursue further legal action[74](index=74&type=chunk)[75](index=75&type=chunk) Corporate Governance and Other Information [Corporate Governance Code](index=22&type=section&id=Corporate%20Governance%20Code) The company has complied with all code provisions of the Corporate Governance Code as set out in the Listing Rules of The Stock Exchange of Hong Kong Limited - The company has complied with all code provisions of the Corporate Governance Code that were in effect as of June 30, 2025[76](index=76&type=chunk) [Model Code for Securities Transactions](index=22&type=section&id=Model%20Code%20for%20Securities%20Transactions) The company has adopted its own code of conduct for directors' securities transactions on terms no less exacting than the required standard - The company has adopted its own code of conduct for directors' securities transactions on terms no less exacting than the Model Code[78](index=78&type=chunk) - All directors have confirmed compliance with the company's code and the Model Code, and no violations by employees were found[78](index=78&type=chunk)[80](index=80&type=chunk) [Audit Committee](index=22&type=section&id=Audit%20Committee) The Audit Committee, comprising three non-executive directors, is primarily responsible for overseeing financial reporting and internal controls - The Audit Committee, chaired by Professor Ding Yuan, is primarily responsible for the appointment of external auditors and monitoring financial reporting and internal controls[82](index=82&type=chunk) [Remuneration Committee](index=23&type=section&id=Remuneration%20Committee) The Remuneration Committee's main objective is to make recommendations on the remuneration policy and structure for directors and senior management - The Remuneration Committee, chaired by Mr Chan Wai Cheng, is primarily responsible for making recommendations on the remuneration policy for directors and senior management[83](index=83&type=chunk) [Nomination Committee](index=23&type=section&id=Nomination%20Committee) The Nomination Committee is responsible for reviewing the Board's composition, developing nomination procedures, and assessing the independence of directors - The Nomination Committee, chaired by Mr Luo Fei, is responsible for reviewing Board composition, establishing nomination procedures, and assessing the independence of INEDs[84](index=84&type=chunk) - The committee considers diversity factors such as gender, race, language, cultural background, and industry experience when assessing Board composition[84](index=84&type=chunk) [Environmental, Social and Governance Committee](index=24&type=section&id=Environmental,%20Social%20and%20Governance%20Committee) The ESG Committee aims to effectively manage sustainability matters and enhance the quality of related disclosures - The Environmental, Social and Governance Committee, chaired by Ms Laetitia Albertini, aims to more effectively manage sustainability matters[86](index=86&type=chunk) - The committee's duties include assisting the Board in overseeing the development of sustainability vision, goals, and strategies, and managing related risks[86](index=86&type=chunk) [Shareholder Communication and Investor Relations](index=25&type=section&id=Shareholder%20Communication%20and%20Investor%20Relations) The company maintains effective communication with shareholders through various channels, including general meetings and investment conferences - The company maintains effective communication with shareholders through general meetings, investment conferences, and one-on-one meetings[87](index=87&type=chunk) - In the first half of the year, the company participated in **18 investment conferences** and held approximately **290 meetings** with analysts and institutional investors[87](index=87&type=chunk) - The company's website, www.hh.global, provides the latest business, financial, and corporate governance information[88](index=88&type=chunk) [Review of Interim Financial Statements](index=26&type=section&id=Review%20of%20Interim%20Financial%20Statements) The financial information in this interim report has been reviewed by the independent auditor, Ernst & Young, in accordance with HKSRE 2410 - The interim condensed consolidated financial statements are unaudited but have been reviewed by the independent auditor, Ernst & Young, in accordance with HKSRE 2410[89](index=89&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=26&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) The company repurchased and redeemed a total principal amount of US$297,000,000 of its 13.5% senior notes due 2026 to optimize its capital structure - The company repurchased and redeemed a total principal amount of **US$297,000,000** of its 13.5% senior notes due 2026[90](index=90&type=chunk) - This repurchase was funded by the issuance of 9.125% senior notes due 2028, aiming to reduce financing costs and optimize the capital structure[90](index=90&type=chunk) [Share Schemes](index=26&type=section&id=Share%20Schemes) The company has adopted six share schemes, with the 2022 Share Award Scheme and the 2024 Share Scheme remaining in effect - The company has adopted six share schemes, with the **2022 Share Award Scheme** and the **2024 Share Scheme** remaining in full force and effect[91](index=91&type=chunk) - As of June 30, 2025, the total number of shares available for issue under the 2024 Share Scheme was **64,556,135**, representing approximately 10% of the issued share capital[94](index=94&type=chunk) - As of June 30, 2025, the total number of shares available for issue under the 2022 Share Award Scheme was **57,808,894**, representing approximately 8.95% of the issued share capital[101](index=101&type=chunk) - The 2020 Share Option Scheme and 2010 Share Option Scheme have been terminated for new grants, but outstanding options remain valid[102](index=102&type=chunk)[105](index=105&type=chunk) [Interests and Short Positions of Directors and Chief Executives in Shares, Underlying Shares and Debentures of the Company](index=32&type=section&id=Interests%20and%20Short%20Positions%20of%20Directors%20and%20Chief%20Executives%20in%20Shares,%20Underlying%20Shares%20and%20Debentures%20of%20the%20Company) As of June 30, 2025, Mr Luo Fei held a 66.92% interest in the company's shares and underlying shares through beneficial ownership and as a trust founder Interests and Short Positions of Directors and Chief Executives in Shares, Underlying Shares and Debentures of the Company | Director's Name | Capacity/Nature of interest | Long/Short Position | Shares or Underlying Shares | Approx. % of interest in the Company | | :--- | :--- | :--- | :--- | :--- | | Mr Luo Fei | Beneficial owner | Long | 1,185,196 | 0.18% | | | Beneficial owner | Long | 493,002 | 0.08% | | | Founder of a discretionary trust | Long | 432,000,000 | 66.92% | | Mr Wang Yidong | Beneficial owner | Long | 640,470 | 0.10% | | | Beneficial owner | Long | 594,731 | 0.09% | | Ms Laetitia Albertini | Beneficial owner | Long | 1,305,367 | 0.20% | | | Beneficial owner | Long | 893,027 | 0.14% | | Mr Luo Yun | Beneficiary of a trust | Long | 432,000,000 | 66.92% | | Ms Mingshu Zhao Wiggins | Beneficial owner | Long | 40,000 | 0.006% | | Mr Chan Wai Cheng | Beneficial owner | Long | 180,000 | 0.03% | | | Beneficial owner | Long | 200,000 | 0.03% | | Ms Luo Liu Yanqing | Beneficial owner | Long | 120,000 | 0.02% | | | Beneficial owner | Long | 100,000 | 0.02% | | Professor Ding Yuan | Beneficial owner | Long | 80,000 | 0.01% | - The Luo Fei Family Trust and the Luo Yun Family Trust indirectly hold a **66.92% interest** in the company through UBS Trustees (BVI) Limited[112](index=112&type=chunk) [Interests and Short Positions of Substantial Shareholders](index=34&type=section&id=Interests%20and%20Short%20Positions%20of%20Substantial%20Shareholders) As of June 30, 2025, Coliving Holdings Limited and its controlled corporations were substantial shareholders, each holding a 66.92% interest Interests and Short Positions of Substantial Shareholders | Name | Capacity/Nature of interest | Long/Short Position | Number of Shares | Approx. % of shareholding | | :--- | :--- | :--- | :--- | :--- | | Coliving Holdings Limited | Beneficial owner | Long | 432,000,000 | 66.92% | | Flying Company Limited | Interest of controlled corporation | Long | 432,000,000 | 66.92% | | Coliving Limited | Interest of controlled corporation | Long | 432,000,000 | 66.92% | | UBS Trustees (BVI) Limited | Trustee | Long | 432,000,000 | 66.92% | - Coliving Holdings Limited is owned 57.25% by Coliving Limited, which is 100% owned by Flying Company Limited[114](index=114&type=chunk)[115](index=115&type=chunk) [Changes in Directors' Information](index=35&type=section&id=Changes%20in%20Directors'%20Information) No changes in directors' information were disclosed in this interim report - There were no changes in directors' information required to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules in this interim report[118](index=118&type=chunk) [Change in Composition of Board Committees](index=35&type=section&id=Change%20in%20Composition%20of%20Board%20Committees) Ms Pascale Laborde resigned from the ESG Committee, and Ms Yang Wenyun was appointed as her replacement, effective August 26, 2025 - Ms Pascale Laborde resigned as a member of the Environmental, Social and Governance Committee, and Ms Yang Wenyun was appointed to succeed her, effective August 26, 2025[119](index=119&type=chunk) [Continuing Disclosure Obligations under the Listing Rules](index=35&type=section&id=Continuing%20Disclosure%20Obligations%20under%20the%20Listing%20Rules) The company disclosed refinancing credit agreements containing a clause linked to the shareholding of Mr Luo Fei and his family members - The June and August 2024 refinancing credit agreements stipulate that the facilities will be cancelled if Mr Luo Fei and his family members cease to beneficially own the largest percentage of the company's voting share capital[120](index=120&type=chunk)[122](index=122&type=chunk) - The June 2024 refinancing term loan facility of **US$150,000,000 equivalent** was fully drawn down on July 10, 2024[121](index=121&type=chunk) - The August 2024 refinancing credit facility of **US$540,000,000 equivalent** was drawn down on November 13, 2024[122](index=122&type=chunk) [Interim Dividend](index=36&type=section&id=Interim%20Dividend) The Board declared an interim dividend of HK$0.19 per ordinary share, representing approximately 30% of adjusted comparable net profit - The Board declared an interim dividend of **HK$0.19 per ordinary share** (2024: HK$0.30), representing approximately 30% of adjusted comparable net profit[124](index=124&type=chunk) - The interim dividend will be paid on October 17, 2025, to shareholders on the register of members as of September 15, 2025[124](index=124&type=chunk) [Closure of Register of Members](index=36&type=section&id=Closure%20of%20Register%20of%20Members) The register of members will be closed from September 11 to September 15, 2025, to determine eligibility for the interim dividend - The register of members will be closed from September 11 to September 15, 2025, with the record date being September 15, 2025[125](index=125&type=chunk) Report on Review of Interim Condensed Consolidated Financial Statements [Conclusion](index=37&type=section&id=Conclusion) The independent auditor, Ernst & Young, found no matters suggesting the interim financial information was not prepared in accordance with IAS 34 - Ernst & Young has reviewed the interim financial information and has not become aware of any matter that causes it to believe that the interim financial information is not prepared, in all material respects, in accordance with IAS 34[130](index=130&type=chunk) Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income [Statement of Profit or Loss Overview](index=38&type=section&id=Statement%20of%20Profit%20or%20Loss%20Overview) For the six months ended June 30, 2025, the company's revenue was RMB 7,019,234 thousand, with a profit for the period of RMB 71,017 thousand Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (RMB'000) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | 7,019,234 | 6,692,132 | | Cost of sales | (2,630,154) | (2,619,838) | | Gross profit | 4,389,080 | 4,072,294 | | Other income and gains | 61,751 | 118,231 | | Selling and distribution costs | (2,971,278) | (2,653,763) | | Administrative expenses | (398,526) | (405,868) | | Other expenses | (181,731) | (161,035) | | Finance costs | (579,542) | (433,251) | | Share of losses of an associate | (13,462) | (12,669) | | Profit before tax | 306,292 | 523,939 | | Income tax expense | (235,275) | (218,136) | | **Profit for the period** | **71,017** | **305,803** | | Total comprehensive income for the period | 225,394 | 265,231 | | Basic earnings per share attributable to ordinary equity holders of the parent | 0.11 | 0.48 | | Diluted earnings per share attributable to ordinary equity holders of the parent | 0.11 | 0.48 | Interim Condensed Consolidated Statement of Financial Position [Statement of Financial Position Overview](index=39&type=section&id=Statement%20of%20Financial%20Position%20Overview) As of June 30, 2025, total non-current assets were RMB 14,331,162 thousand, and total current assets were RMB 5,064,338 thousand, with net assets of RMB 6,009,377 thousand Interim Condensed Consolidated Statement of Financial Position (RMB'000) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Non-current assets** | | | | Property, plant and equipment | 338,327 | 318,506 | | Right-of-use assets | 178,627 | 118,734 | | Goodwill | 7,666,645 | 7,603,641 | | Intangible assets | 5,293,238 | 5,295,021 | | Deferred tax assets | 525,578 | 530,681 | | Other non-current financial assets | 194,298 | 174,164 | | **Total non-current assets** | **14,331,162** | **14,219,781** | | **Current assets** | | | | Inventories | 1,932,804 | 1,906,675 | | Trade and bills receivables | 1,143,936 | 927,179 | | Cash and cash equivalents | 1,812,024 | 1,603,920 | | **Total current assets** | **5,064,338** | **4,622,641** | | **Current liabilities** | | | | Trade and bills payables | 941,105 | 907,383 | | Other payables and accruals | 2,084,435 | 1,937,772 | | Interest-bearing bank and other borrowings | 858,981 | 860,905 | | Senior notes | 84,996 | 2,247 | | **Total current liabilities** | **4,227,508** | **3,872,369** | | **Non-current liabilities** | | | | Senior notes | 2,106,195 | 2,117,248 | | Interest-bearing bank loans and other borrowings | 6,123,880 | 6,304,559 | | Deferred tax liabilities | 724,978 | 684,455 | | **Total non-current liabilities** | **9,158,615** | **9,156,682** | | **Net assets** | **6,009,377** | **5,813,371** | | **Total equity** | **6,009,377** | **5,813,371** | Interim Condensed Consolidated Statement of Changes in Equity [Statement of Changes in Equity Overview](index=41&type=section&id=Statement%20of%20Changes%20in%20Equity%20Overview) As of June 30, 2025, total equity increased to RMB 6,009,377 thousand from RMB 5,813,371 thousand at the end of 2024 Interim Condensed Consolidated Statement of Changes in Equity (RMB'000) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Issued capital | 5,519 | 5,519 | | Share premium account | 694,991 | 694,991 | | Shares held for share award scheme | (33,229) | (37,680) | | Retained profits | 6,533,049 | 6,460,019 | | Total equity | 6,009,377 | 5,813,371 | | Profit for the period | 71,017 | 305,803 | | Other comprehensive income/(loss) for the period | 154,377 | (40,572) | | Total comprehensive income for the period | 225,394 | 265,231 | Interim Condensed Consolidated Statement of Cash Flows [Statement of Cash Flows Overview](index=43&type=section&id=Statement%20of%20Cash%20Flows%20Overview) For the six months ended June 30, 2025, net cash from operating activities was RMB 998,033 thousand, with cash and cash equivalents at period end of RMB 1,812,024 thousand Interim Condensed Consolidated Statement of Cash Flows (RMB'000) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Net cash flows from operating activities | 998,033 | 1,052,540 | | Net cash flows (used in)/from investing activities | (31,385) | 8,389 | | Net cash flows used in financing activities | (706,534) | (86,704) | | Net increase in cash and cash equivalents | 260,114 | 974,225 | | Cash and cash equivalents at beginning of period | 1,603,920 | 1,364,283 | | Net effect of foreign exchange rate changes | (52,010) | 40,586 | | **Cash and cash equivalents at end of period** | **1,812,024** | **2,379,094** | Notes to the Interim Condensed Consolidated Financial Statements [Corporate and Group Information](index=45&type=section&id=Corporate%20and%20Group%20Information) H&H International Holdings Limited is incorporated in the Cayman Islands and primarily engages in the production and sale of nutrition and care products - The Company is incorporated in the Cayman Islands and is principally engaged in the production and sale of premium infant nutrition and care products, adult nutrition and care products, and pet nutrition and care products[140](index=140&type=chunk) - The Company's holding company and ultimate holding company is Coliving Holdings Limited[141](index=141&type=chunk) [Basis of Preparation and Accounting Policies](index=45&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) The interim financial statements are prepared in accordance with IAS 34 and presented in RMB, using accounting policies consistent with the 2024 annual statements - The interim condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 and are presented in RMB[142](index=142&type=chunk) - The accounting policies used are the same as those used in the annual consolidated financial statements for the year ended December 31, 2024, except for the adoption of amended IFRSs[142](index=142&type=chunk) [Changes in Accounting Policies and Disclosures](index=46&type=section&id=Changes%20in%20Accounting%20Policies%20and%20Disclosures) The Group adopted the amendment to IAS 21, "Lack of Exchangeability," which had no impact on the interim financial information - The Group adopted the amendment to IAS 21, "Lack of Exchangeability," for the first time during this period[143](index=143&type=chunk) - The amendment had no impact on the interim condensed consolidated financial information as the currencies used by the Group are exchangeable[143](index=143&type=chunk) [Operating Segment Information](index=46&type=section&id=Operating%20Segment%20Information) The Group is managed across five operating segments, with Mainland China being the largest geographical source of revenue - The Group has five reportable operating segments: Adult nutrition and care products, Infant formulae, Probiotics and nutritional supplements, Other infant products, and Pet nutrition and care products[144](index=144&type=chunk) Operating Segment Revenue for the Six Months Ended June 30, 2025 (RMB'000) | Segment | Sales to external customers | | :--- | :--- | | Adult nutrition and care products | 3,438,722 | | Infant formulae | 1,970,973 | | Probiotics and nutritional supplements | 427,224 | | Other infant products | 103,113 | | Pet nutrition and care products | 1,079,202 | | **Total** | **7,019,234** | Revenue from External Customers by Location (RMB'000) | Region | 2025 | 2024 | | :--- | :--- | :--- | | Mainland China | 4,936,033 | 4,541,353 | | Australia and New Zealand | 800,718 | 975,933 | | North America | 862,155 | 815,837 | | Other regions | 420,328 | 359,009 | | **Total revenue** | **7,019,234** | **6,692,132** | [Revenue, Other Income and Gains](index=50&type=section&id=Revenue,%20Other%20Income%20and%20Gains) Revenue from contracts with customers totaled RMB 7,019,234 thousand, while other income and gains amounted to RMB 61,751 thousand Revenue Analysis (RMB'000) | For the six months ended June 30 | 2025 | 2024 | | :--- | :--- | :--- | | Revenue from contracts with customers - Sales of goods | 7,019,234 | 6,692,132 | Other Income and Gains (RMB'000) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Bank interest income | 6,335 | 6,911 | | Foreign exchange gains | 24,361 | – | | Net fair value gains on derivative financial instruments | – | 56,530 | | Fair value gains on other non-current financial assets | 5,524 | 2,566 | | Government grants | 363 | 2,606 | | Gain on sale of raw materials | 13,940 | 37,467 | | Others | 11,228 | 11,753 | | **Total** | **61,751** | **118,231** | [Finance Costs](index=52&type=section&id=Finance%20Costs) Finance costs for the period were RMB 579,542 thousand, a significant increase due to the loss on repurchase and redemption of senior notes Finance Costs (RMB'000) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Interest on interest-bearing bank loans and senior notes | 351,508 | 429,618 | | Interest on lease liabilities | 3,641 | 2,847 | | Loss on repurchase and redemption of senior notes | 224,393 | – | | **Total** | **579,542** | **433,251** | [Profit Before Tax](index=52&type=section&id=Profit%20Before%20Tax) The Group's profit before tax was RMB 306,292 thousand, with major deductions including cost of inventories sold and R&D costs Major Items Charged/(Credited) to Profit Before Tax (RMB'000) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Cost of inventories sold | 2,423,640 | 2,537,072 | | Research and development costs | 95,913 | 104,035 | | Net foreign exchange (gains)/losses | (24,361) | 40,854 | | Net fair value losses/(gains) on derivative financial instruments | 74,053 | (56,530) | | Write-down of inventories to net realisable value | 206,514 | 82,766 | [Income Tax Expense](index=53&type=section&id=Income%20Tax%20Expense) Income tax expense was RMB 235,275 thousand, with certain subsidiaries in Mainland China benefiting from a preferential 15% tax rate Income Tax Expense (RMB'000) | Region | 2025 | 2024 | | :--- | :--- | :--- | | Mainland China | 91,490 | 55,221 | | Hong Kong | 58,873 | 53,904 | | Australia | 51,834 | 61,002 | | Other regions | 382 | 518 | | Deferred | 34,312 | 47,491 | | **Total** | **235,275** | **218,136** | - Biostime (Guangzhou) Health Products Co, Ltd and Guangzhou Heai Information Technology Co, Ltd are entitled to a preferential tax rate of **15%** as High and New Technology Enterprises[157](index=157&type=chunk) - The Group does not expect to face significant Pillar Two income tax risk[165](index=165&type=chunk) [Dividends](index=55&type=section&id=Dividends) The Board declared an interim dividend of HK$0.19 per ordinary share, totaling approximately RMB 108,893 thousand Dividends (RMB'000) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Final dividend declared | 29,732 | 104,949 | | Interim dividend declared | 108,893 | 173,581 | [Earnings Per Share Attributable to Ordinary Equity Holders of the Parent](index=56&type=section&id=Earnings%20Per%20Share%20Attributable%20to%20Ordinary%20Equity%20Holders%20of%20the%20Parent) For the six months ended June 30, 2025, basic and diluted earnings per share were both RMB 0.11, a decrease from the prior year Calculation of Basic and Diluted Earnings Per Share (RMB) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit attributable to ordinary equity holders of the parent | 71,017 | 305,803 | | Basic earnings per share | 0.11 | 0.48 | | Diluted earnings per share | 0.11 | 0.48 | [Property, Plant and Equipment](index=57&type=section&id=Property,%20Plant%20and%20Equipment) During the period, the Group acquired property, plant and equipment at a cost of RMB 48,925 thousand and charged depreciation of RMB 33,082 thousand - During the period, the Group acquired property, plant and equipment at a cost of **RMB 48,925 thousand** (2024: RMB 22,029 thousand)[169](index=169&type=chunk) - Depreciation of **RMB 33,082 thousand** was charged (2024: RMB 34,117 thousand)[169](index=169&type=chunk) [Leases](index=57&type=section&id=Leases) The Group recognised right-of-use assets totaling RMB 76,593 thousand and new lease liabilities of the same amount during the period - During the period, the Group recognised right-of-use assets with a total cost of **RMB 76,593 thousand** (2024: RMB 12,642 thousand)[170](index=170&type=chunk) - The Group recognised new lease liabilities of **RMB 76,593 thousand** (2024: RMB 12,642 thousand)[171](index=171&type=chunk) [Goodwill](index=58&type=section&id=Goodwill) As of June 30, 2025, the net carrying amount of goodwill was RMB 7,666,645 thousand, a slight increase due to exchange realignment Net Carrying Amount of Goodwill (RMB'000) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net carrying amount | 7,666,645 | 7,603,641 | | Exchange realignment | 63,004 | (108,538) | [Intangible Assets](index=59&type=section&id=Intangible%20Assets) During the period, the Group acquired intangible assets at a cost of RMB 16,951 thousand and charged amortisation of RMB 100,517 thousand - During the period, the Group acquired intangible assets at a cost of **RMB 16,951 thousand** (2024: RMB 9,403 thousand)[173](index=173&type=chunk) - Amortisation of **RMB 100,517 thousand** was charged (2024: RMB 94,209 thousand)[173](index=173&type=chunk) [Other Non-current Financial Assets](index=59&type=section&id=Other%20Non-current%20Financial%20Assets) As of June 30, 2025, other non-current financial assets totaled RMB 194,298 thousand, mainly comprising unlisted equity investments Other Non-current Financial Assets (RMB'000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Financial assets at fair value through profit or loss | 190,127 | 170,774 | | Equity investments designated at fair value through other comprehensive income | 4,171 | 3,390 | | **Total** | **194,298** | **174,164** | [Inventories](index=60&type=section&id=Inventories) As of June 30, 2025, total inventories amounted to RMB 1,932,804 thousand, with finished goods accounting for RMB 1,116,037 thousand Composition of Inventories (RMB'000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Raw materials | 304,160 | 441,988 | | Goods in transit | 508,722 | 318,500 | | Work in progress | 3,885 | 188 | | Finished goods | 1,116,037 | 1,145,999 | | **Total** | **1,932,804** | **1,906,675** | [Trade and Bills Receivables](index=60&type=section&id=Trade%20and%20Bills%20Receivables) As of June 30, 2025, trade and bills receivables totaled RMB 1,143,936 thousand, with the majority due within one month Ageing Analysis of Trade and Bills Receivables (RMB'000) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 1 month | 647,806 | 623,546 | | 1 to 3 months | 437,505 | 245,038 | | Over 3 months | 58,625 | 58,595 | | **Total** | **1,143,936** | **927,179** | [Prepayments, Other Receivables and Other Assets](index=60&type=section&id=Prepayments,%20Other%20Receivables%20and%20Other%20Assets) As of June 30, 2025, prepayments, other receivables and other assets totaled RMB 158,205 thousand, with prepayments being the largest component Composition of Prepayments, Other Receivables and Other Assets (RMB'000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Prepayments | 113,782 | 59,164 | | Other receivables | 36,814 | 92,899 | | **Total** | **158,205** | **177,215** | [Trade and Bills Payables](index=61&type=section&id=Trade%20and%20Bills%20Payables) As of June 30, 2025, trade and bills payables totaled RMB 941,105 thousand, with the majority due within one month Ageing Analysis of Trade and Bills Payables (RMB'000) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 1 month | 737,775 | 775,760 | | 1 to 3 months | 148,803 | 85,340 | | Over 3 months | 54,527 | 46,283 | | **Total** | **941,105** | **907,383** | [Other Payables and Accruals](index=61&type=section&id=Other%20Payables%20and%20Accruals) As of June 30, 2025, other payables and accruals totaled RMB 2,089,255 thousand, primarily consisting of accruals and refund liabilities Composition of Other Payables and Accruals (RMB'000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Payroll and welfare payables | 167,294 | 175,346 | | Accruals | 1,071,037 | 943,369 | | Other tax payables | 86,814 | 42,105 | | Other payables | 192,841 | 223,360 | | Refund liabilities | 571,269 | 555,395 | | **Total** | **2,089,255** | **1,939,575** | [Derivative Financial Instruments](index=62&type=section&id=Derivative%20Financial%20Instruments) As of June 30, 2025, derivative financial instrument assets were RMB 14,060 thousand and liabilities were RMB 95,092 thousand Derivative Financial Instruments (RMB'000) | Item | June 30, 2025 Assets | June 30, 2025 Liabilities | Dec 31, 2024 Assets | Dec 31, 2024 Liabilities | | :--- | :--- | :--- | :--- | :--- | | Early redemption options embedded in senior notes | 14,060 | – | 5,517 | – | | Cross-currency swaps and cross-currency interest rate swaps (designated as hedges) | – | 13,864 | 11,332 | 266 | | Cross-currency swaps and cross-currency interest rate swaps (not designated as hedges) | – | 81,228 | 3,718 | – | | **Total** | **14,060** | **95,092** | **20,567** | **266** | - During the period, a net loss of **RMB 13,245 thousand** arising from fair value changes was recognised for swaps designated as hedging instruments[182](index=182&type=chunk) [Interest-bearing Bank Loans and Other Borrowings](index=63&type=section&id=Interest-bearing%20Bank%20Loans%20and%20Other%20Borrowings) As of June 30, 2025, total interest-bearing bank loans and other borrowings amounted to RMB 6,982,861 thousand, denominated in USD, HKD, and RMB Interest-bearing Bank Loans and Other Borrowings (RMB'000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Current** | | | | Current portion of long-term bank loans - unsecured | 483,005 | 532,315 | | Current portion of long-term bank loans - secured | 367,461 | 320,026 | | Current portion of secured bonds | 8,515 | 8,564 | | **Total - Current** | **858,981** | **860,905** | | **Non-current** | | | | Long-term bank loans - unsecured | 1,344,264 | 1,356,821 | | Long-term bank loans - secured | 4,380,173 | 4,550,890 | | Secured bonds | 399,443 | 396,848 | | **Total - Non-current** | **6,123,880** | **6,304,559** | | **Total** | **6,982,861** | **7,165,464** | - Certain interest-bearing bank loans are jointly and severally guaranteed by the Company and certain of its subsidiaries and are secured by assets[185](index=185&type=chunk) - The borrowings are denominated in USD, HKD, and RMB, with total amounts of **RMB 2,518,115 thousand**, **RMB 1,157,712 thousand**, and **RMB 3,307,034 thousand**, respectively[185](index=185&type=chunk) [Senior Notes](index=65&type=section&id=Senior%20Notes) The company issued US$300,000,000 of 9.125% senior notes due 2028 to refinance its 2026 notes, which have now been fully repaid - On January 24, 2025, the company issued **US$300,000,000** of senior notes due July 24, 2028, with a coupon rate of **9.125% per annum**[186](index=186&type=chunk) - The net proceeds from the 2028 notes were used to fund the repayment of the 2026 notes, which were fully repaid as of June 30, 2025[186](index=186&type=chunk) Movement of Senior Notes (RMB'000) | Item | Total | | :--- | :--- | | As at January 1, 2024 | 1,660,600 | | Redemption and repurchase of senior notes | (2,334,058) | | Loss on repurchase and redemption of senior notes | 224,393 | | Proceeds from issuance of senior notes | 2,111,651 | | **As at June 30, 2025** | **2,191,191** | | Less: Current portion | (84,996) | | Non-current portion | 2,106,195 | [Deferred Tax](index=67&type=section&id=Deferred%20Tax) As of June 30, 2025, total deferred tax assets were RMB 816,471 thousand, and total deferred tax liabilities were RMB 1,015,871 thousand Movement of Deferred Tax Assets (RMB'000) | Item | Jan 1, 2025 | Credited/(charged) to profit or loss | Exchange realignment | June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | Provision for impairment of assets | 40,521 | 1,015 | – | 41,536 | | Accrued liabilities and future deductible expenses | 359,447 | 33,221 | 1,300 | 393,968 | | Recognised tax losses | 270,812 | (5,876) | 51 | 264,987 | | **Total** | **794,043** | **19,948** | **2,480** | **816,471** | Movement of Deferred Tax Liabilities (RMB'000) | Item | Jan 1, 2025 | (Credited)/charged to profit or loss | Exchange realignment | June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | Fair value adjustments arising from acquisition of subsidiaries | 726,390 | 127,890 | 13,519 | 867,799 | | **Total** | **947,817** | **54,260** | **13,794** | **1,015,871** | [Share Capital](index=69&type=section&id=Share%20Capital) As of June 30, 2025, the company's issued and fully paid-up share capital consisted of 645,561,354 ordinary shares of HK$0.01 each Share Capital Information | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Authorised share capital (shares) | 10,000,000,000 | 10,000,000,000 | | Issued and fully paid-up share capital (shares) | 645,561,354 | 645,561,354 | | Equivalent to (RMB'000) | 5,519 | 5,519 | [Reserves](index=69&type=section&id=Reserves) The Group's contributed surplus arose from the Group reorganisation, while the capital surplus relates to a capital contribution from the ultimate shareholder - The contributed surplus represents the excess of the par value of shares of subsidiaries acquired over the par value of the Company's shares issued in exchange[194](index=194&type=chunk) - The capital surplus represents a 1% equity interest in Biostime Health contributed by the ultimate shareholder, Coliving Holdings Limited[194](index=194&type=chunk) - Subsidiaries registered in China are required to transfer 10% of their annual statutory post-tax profit to a statutory reserve until the balance reaches 50% of the registered capital[194](index=194&type=chunk) [Contingent Liabilities](index=70&type=section&id=Contingent%20Liabilities) The company's subsidiary, BHA, is in a dispute with the Australian Taxation Office and has paid a cash deposit of A$104 million - BHA has objected to the Australian Taxation Office's demand for **A$234.5 million** in primary tax, **A$55.2 million** in interest, and **A$117.3 million** in penalties[195](index=195&type=chunk) - BHA paid a cash deposit of **A$104 million** on July 15, 2025, which will be recognised as an asset on the balance sheet[196](index=196&type=chunk) - The company believes the probability of a future outflow of funds is low and is prepared to pursue further legal action[196](index=196&type=chunk)[197](index=197&type=chunk) [Commitments](index=70&type=section&id=Commitments) As of the reporting date, the Group's total contractual commitments amounted to RMB 10,467 thousand Contractual Commitments (RMB'000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Intangible assets | 5,437 | 3,415 | | Property, plant and equipment | 5,030 | 5,675 | | **Total** | **10,467** | **9,090** | [Related Party Balances and Transactions](index=71&type=section&id=Related%20Party%20Balances%20and%20Transactions) Total compensation for the Group's key management personnel amounted to RMB 28,478 thousand, a decrease from the prior year period Key Management Personnel Compensation (RMB'000) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Fees | 3,588 | 3,750 | | Short-term employee benefits | 24,138 | 42,127 | | Pension scheme contributions | 409 | 454 | | Equity-settled share award expenses | 343 | 3,904 | | **Total compensation paid to key management personnel** | **28,478** | **50,235** | [Fair Value and Fair Value Hierarchy of Financial Instruments](index=71&type=section&id=Fair%20Value%20and%20Fair%20Value%20Hierarchy%20of%20Financial%20Instruments) As of June 30, 2025, the total fair value of financial assets was RMB 208,358 thousand, and financial liabilities was RMB 2,280,662 thousand Carrying Amounts and Fair Values of Financial Instruments (RMB'000) | Item | June 30, 2025 Carrying amount | Dec 31, 2024 Carrying amount | June 30, 2025 Fair value | Dec 31, 2024 Fair value | | :--- | :--- | :--- | :--- | :--- | | **Financial assets** | | | | | | Derivative financial instruments | 14,060 | 20,567 | 14,060 | 20,567 | | Other non-current financial assets | 194,298 | 174,164 | 194,298 | 174,164 | | **Total** | **208,358** | **194,731** | **208,358** | **194,731** | | **Financial liabilities** | | | | | | Derivative financial instruments | (95,092) | (266) | (95,092) | (266) | | Senior notes | (2,191,191) | (2,119,495) | (2,185,570) | (2,273,947) | | **Total** | **(2,286,283)** | **(2,119,761)** | **(2,280,662)** | **(2,274,213)** | - Fair value is estimated using techniques such as discounted cash flow models, market approach, and recent transaction prices[202](index=202&type=chunk) Hierarchy of Assets Measured at Fair Value (RMB'000) | Item | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **As at June 30, 2025** | | | | | | Derivative financial instruments | – | – | 14,060 | 14,060 | | Other non-current financial assets | 2,774 | – | 191,524 | 194,298 | | **Total** | **2,774** | **–** | **205,584** | **208,358** | Hierarchy of Liabilities Measured at Fair Value (RMB'000) | Item | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **As at June 30, 2025** | | | | | | Derivative financial instruments | – | – | 95,092 | 95,092 | [Approval of these Interim Condensed Consolidated Financial Statements](index=77&type=section&id=Approval%20of%20these%20Interim%20Condensed%20Consolidated%20Financial%20Statements) These interim condensed consolidated financial statements were approved and authorised for issue by the Board of Directors on August 26, 2025 - These interim condensed consolidated financial statements were approved and authorised for issue by the Board of Directors on August 26, 2025[208](index=208&type=chunk)

Core Insights - The overall domestic dairy industry is under significant pressure, with over 60% of companies experiencing a decline in revenue year-on-year, while net profits show mixed results [1][2] Group 1: Financial Performance - The 28 listed dairy companies achieved a total revenue of 190.15 billion yuan, a year-on-year decrease of 1.05%, and a net profit of 12.40 billion yuan, down 14.83% [2] - Cash flow from operating activities totaled 4.94 billion yuan, down 31.72%, while R&D expenses increased by 14.99% to 0.70 billion yuan [2] - Five companies reported revenues exceeding 10 billion yuan, with Yili and Mengniu dominating the market, accounting for 54% of total revenue and 74.6% of net profit among the 28 companies [2] Group 2: Trends and Challenges - Among the 28 companies, 17 reported a decline in revenue, with only 2 companies achieving over 10% growth [3] - The industry faces challenges such as supply-demand imbalances and changes in consumer demand and retail channels, prompting companies to innovate and optimize product structures [3][4] - Yili's liquid milk business saw an 11.22% revenue decline, while other segments like ice cream and cheese experienced double-digit growth [3] Group 3: Raw Milk Sector - The raw milk sector remains in a loss adjustment phase, but leading companies are showing resilience through cost control and strategic adjustments [5][6] - Modern Dairy maintained stable cash flow with a 23.3% increase in net cash flow, while costs for milk sales and feed decreased by 10.1% and 11.4%, respectively [5] - China Shengmu Organic Milk's revenue fell by 3.11%, but losses narrowed by 66.37% due to a focus on organic milk and cost reduction strategies [5] Group 4: Product Segments - The milk powder segment showed signs of recovery, with Yili's milk powder and dairy products revenue increasing by 14.26% [7] - Mengniu's milk powder revenue grew slightly, while H&H International's baby nutrition business reported 2.5 billion yuan in revenue, marking a strong performance [7] - The ice cream market thrived due to high temperatures, with Mengniu's ice cream revenue growing by 15% and Yili leading the market with 8.23 billion yuan in revenue [8] Group 5: Future Outlook - The dairy industry is expected to see a recovery trend, with leading companies leveraging full-chain layouts and technological innovations to stabilize their positions [8] - Analysts suggest that companies need to balance value cultivation and differentiated competition to build long-term competitiveness in changing consumer landscapes [8]

Core Insights - The core viewpoint of the article highlights the financial performance of Jianhe Group in the first half of 2025, showcasing a revenue growth of 5.2% year-on-year to 7.02 billion yuan [1] Revenue Performance - The total revenue for Jianhe Group reached 7.02 billion yuan, with a year-on-year increase of 5.2% [1] - The Chinese market contributed the most to the revenue, with an increase of 8.7%, accounting for 70.3% of total revenue [1] Business Segment Analysis - Among the three major business segments, the pet nutrition and care products segment experienced the highest revenue growth [1] - The adult nutrition and care products segment had the largest revenue share, amounting to 3.44 billion yuan [1] - For the infant nutrition and care segment, Jianhe Group anticipates steady growth in sales of infant formula in the second half of the year [1]

Core Viewpoint - The company reported a revenue increase of 4.9% year-on-year for H1 2025, with adjusted comparable net profit rising by 4.6%, indicating stable performance in line with guidance despite a decline in apparent profit due to one-time expenses and currency fluctuations [1][5]. Financial Performance - H1 2025 revenue reached 7.019 billion yuan, up 4.9% year-on-year, aligning with guidance; net profit was 71 million yuan, down 76.8%, below previous forecasts; adjusted comparable net profit was 363 million yuan, up 4.6%, meeting prior expectations; adjusted comparable net profit margin was 5.2%, stable year-on-year; adjusted comparable EBITDA was 1.101 billion yuan, down 3.4% year-on-year, with an adjusted EBITDA margin of 15.7%, down 1.3 percentage points [2][5]. Business Segment Performance - ANC business showed steady growth with a 5.0% year-on-year increase; adjusted EBITDA margin decreased by 1.2 percentage points to 20.9%, primarily due to increased marketing expenses in Douyin and overseas market expansion; domestic ANC revenue grew by 13.1%, driven by strong performance of Swisse's new product categories and channels like Douyin and new retail, with LittleSwisse series revenue up 32.9% [2][3]. - BNC business improved with a 2.9% year-on-year increase; EBITDA margin decreased by 2.6 percentage points to 12.4%; domestic infant formula revenue rose by 10%, significantly outpacing overall market growth, achieving a historical high market share of 15.9% in the ultra-premium segment [3]. - PNC business advanced with a 9.6% year-on-year increase; adjusted EBITDA margin improved by 1.6 percentage points to 6.7%, driven by margin improvements; domestic PNC revenue grew by 17.5%, aided by the successful restructuring of SolidGold [3]. Capital Structure and Outlook - The company is optimizing its capital structure and financial resilience; adjusted comparable EBITDA decreased by 3.4%, but the EBITDA margin remained robust at 15.7%, consistent with overall guidance; refinancing of $297 million in senior notes due in 2026 positively impacted apparent profit, extending debt maturity and reducing financing costs; cash balance stood at approximately 1.83 billion yuan, indicating solid liquidity [4]. - Looking ahead to H2 2025, growth is expected to continue with Swisse focusing on product innovation and online channel expansion; the Australian and New Zealand markets are anticipated to maintain steady growth, while Southeast Asia will continue to be explored; BNC sales are projected to grow steadily, supported by e-commerce and maternal and infant channel marketing experience [4]. Investment Recommendation - The company maintains a "buy" rating, supported by rapid growth in the Swisse brand in China and an increase in infant formula market share; EPS estimates for 2025-2027 are projected at 0.56, 1.03, and 1.26 yuan respectively [5].

Market Overview - The retail market size for infant formula in China was 161.9 billion yuan in 2018, with a projected decline to 136.7 billion yuan by 2024, reflecting a negative growth trend in recent years [2] - The market is expected to recover slightly in 2025, with a forecasted growth of 5.2% to reach 143.8 billion yuan [2] Market Segmentation - In 2024, the market segmentation for maternal and infant products shows that infant formula accounts for 50.4% of the total market, followed by maternal and infant cleaning products at 19.4% and infant skincare at 9.8% [2][3] Sales Channels - In the first four months of 2025, the overall sales of infant formula across all channels grew by 2.3%, with online channels experiencing a significant increase of 12.3%, while offline channels saw a decline of 1.4% [4] - Specific offline channels such as brand specialty stores and maternal and infant stores reported substantial growth rates of 49.5% and 48.7%, respectively [5] Company Performance - Companies like健合集团 (Jianhe Group) and 澳优乳业 (Aoyou Dairy) reported revenue and profit growth in their infant formula segments for the first half of 2025, with Jianhe Group's revenue increasing by 5.2% to 70.2 billion yuan and Aoyou's revenue rising by 5.6% to approximately 38.87 billion yuan [8][10] - Jianhe Group's infant nutrition business saw a 2.9% increase in revenue, while Aoyou's self-owned brand infant formula business generated approximately 28.26 billion yuan in revenue [8][10] Market Trends - The infant formula market is undergoing significant changes, with a shift towards high-end and ultra-high-end products despite overall market demand shrinking [12] - The report indicates that the market is expected to enter a new growth phase due to factors such as a rebound in birth rates and supportive government policies, with a projected growth rate of around 5% for the infant formula retail market in 2025 [13] Consumer Behavior - There is a noticeable trend of consumption upgrading in the infant formula market, with consumers willing to pay higher prices for quality products, particularly among the younger generation [14] - The proportion of consumers purchasing infant formula priced above 300 yuan increased to 26% in 2024, up from 21% in 2023 [14]

Investment Rating - The report maintains a "Buy" rating for H&H International Holdings (1112.HK) [1][4] Core Views - The company's performance in the first half of 2025 met previous forecasts, with revenue of HKD 7.02 billion, a year-on-year increase of 4.9% [4] - The report highlights the continuous market share growth of the company's infant formula brand, with a significant increase in the ultra-premium segment in mainland China [4] - The report projects total revenue for 2025-2027 to be HKD 14.37 billion, HKD 15.49 billion, and HKD 16.44 billion respectively, with net profit estimates of HKD 676 million, HKD 845.5 million, and HKD 952.9 million [1][4] Revenue and Profit Analysis - In the first half of 2025, the revenue from the ANC (Adult Nutrition and Care) business was HKD 3.44 billion, up 5.0% year-on-year, with mainland China contributing HKD 4.94 billion, a growth of 8.7% [4] - The BNC (Baby Nutrition and Care) segment achieved revenue of HKD 2.50 billion, a 2.9% increase, with a notable 10.0% growth in mainland China [4] - The PNC (Pet Nutrition and Care) business reported revenue of HKD 1.08 billion, reflecting a 9.6% increase, driven by a successful high-end strategy [4] Financial Forecasts - The report forecasts total revenue for 2024A at HKD 13.05 billion, with a projected growth rate of -6.3% [5] - The estimated diluted earnings per share for 2025E is HKD 1.05, with a P/E ratio of 13.27 based on the current price [5] - The report maintains the target price at HKD 16.9, indicating potential upside from the current market price [4][5]

Core Viewpoint - The infant formula industry is experiencing a rebound in performance despite a backdrop of reduced market demand and intensified competition, with several companies reporting growth in both revenue and profit for the first half of 2025 [1][9]. Group 1: Company Performance - Health and Nutrition Group (健合集团) reported a revenue increase of 5.2% to RMB 7.02 billion and a net profit growth of 4.6% in the first half of 2025, reversing the decline seen in 2024 [2]. - The three main business segments of Health and Nutrition Group all showed revenue growth, with Adult Nutrition and Care (ANC) at RMB 3.44 billion (up 5.9%), Infant Nutrition and Care (BNC) at RMB 2.50 billion (up 2.9%), and Pet Nutrition and Care (PNC) at RMB 1.08 billion (up 8.6%) [2]. - Aoyou Dairy (澳优乳业) achieved a revenue of approximately RMB 3.887 billion, a 5.6% increase, and a net profit of RMB 181 million, up 24.1% for the same period [6]. - Aoyou's own brand infant formula business generated approximately RMB 2.826 billion, with a 3.1% growth in goat milk formula [6]. Group 2: Market Trends - The sales of infant formula in mainland China grew by 10.0%, significantly outpacing the overall market's retail growth of 0.2% [4]. - The market share of Health and Nutrition Group in the ultra-premium infant formula segment increased from 12.9% to 15.9%, reaching a historical high [4]. - The infant formula market is expected to see a growth rate of around 5% in retail market size by 2025, driven by a rebound in birth rates and supportive policies [11]. - The implementation of a new subsidy policy for families with children under three years old is anticipated to provide structural benefits to the infant formula market [11][12]. Group 3: Consumer Behavior - There is a noticeable trend of consumption upgrading in the infant formula market, with consumers willing to pay higher prices for high-quality or specialized products [12]. - The proportion of consumers purchasing infant formula priced above RMB 300 increased to 26% in 2024, up from 21% in 2023 [12]. - The lower-tier cities and rural markets are showing significant consumption upgrades, releasing potential in the down-market segment and contributing to the expansion of the high-end and ultra-high-end infant formula market [12].

Core Insights - The pet industry continues to experience significant growth, with pet food companies reporting strong performance in the first half of the year, particularly in staple food revenue [1][2] Industry Overview - The domestic pet food market is undergoing a functional and health-oriented upgrade, with industry benefits still ongoing [2][3] - The market for pet food in urban areas is projected to reach 300.2 billion yuan in 2024, reflecting a year-on-year growth of 7.5% [3] Company Performance - Guibao Pet (301498.SZ) reported total revenue of 3.22 billion yuan, a year-on-year increase of 32.72%, and a net profit of 380 million yuan, up 22.6% [2] - Tianyuan Pet (301335.SZ) and Zhongchong Co. (002891.SZ) also achieved double-digit growth in revenue and net profit [2] - The main food business of Guibao Pet saw revenue of 1.88 billion yuan, a remarkable growth of 57.1% [2] - The main food products of Lusi Co. generated revenue of 59.46 million yuan, increasing by 40% [2] - Tianyuan Pet's pet food business revenue reached 670 million yuan, growing by 16.7% [2] - Zhongchong Co. reported main food revenue of 780 million yuan, a significant increase of 85.8% [2] Market Dynamics - The concentration ratio of the pet food market in China is relatively low, with CR5 at 25.4% and CR10 at 32.7%, indicating potential for market consolidation [4] - Marketing expenses for major pet companies have increased significantly, with Guibao Pet at 47.3%, Tianyuan Pet at 48.5%, and Zhongchong Co. at 35.8% [4] - The shift in consumer spending towards preventive care for pets is driving demand for functional pet food products [3][4]

Core Viewpoint - The pet food industry in China is experiencing significant growth, with companies reporting strong performance in the first half of the year, particularly in staple food revenue, amidst a backdrop of national policies encouraging population growth [1][2]. Group 1: Industry Performance - Several pet-related listed companies have shown notable growth in their financial results for the first half of the year, with Guobao Pet (301498.SZ) achieving a total revenue of 3.22 billion yuan, a year-on-year increase of 32.72%, and a net profit of 380 million yuan, up 22.6% [2]. - Tianyuan Pet (301335.SZ) and Zhongchong Co., Ltd. (002891.SZ) also reported double-digit growth in both revenue and net profit during the same period [2]. - The staple food segment has been particularly strong, with Guobao Pet's staple food revenue reaching 1.88 billion yuan, a 57.1% increase, and Zhongchong's staple food revenue growing by 85.8% to 780 million yuan [2][3]. Group 2: Market Trends - The demand for pet health and companionship is driving consumer investment in staple foods, especially among younger pet owners [3]. - The pet food market in urban areas is projected to reach a consumption scale of 300.2 billion yuan in 2024, reflecting a year-on-year growth of 7.5%, with pet food accounting for 52.8% of total pet-related expenditures [3]. - The shift in consumer attitudes from "treatment" to "prevention" is prompting companies to produce more functional pet food products, which is contributing to revenue growth [3]. Group 3: Market Structure and Competition - The concentration of the pet food market in China remains low, with CR5 and CR10 at 25.4% and 32.7% respectively, indicating significant potential for market consolidation [4]. - Major pet companies are increasing their marketing expenditures, with Guobao Pet and Tianyuan Pet reporting increases of 47.3% and 48.5% respectively [4]. - The industry is undergoing a transformation from primarily OEM operations to a focus on R&D and product innovation, driven by the demand for functional and specialized pet food [4].

Core Insights - The company reported a 5.2% year-on-year revenue growth for the first half of 2025, reaching RMB 7.02 billion [1] - The Chinese market contributed significantly, with an 8.7% growth, accounting for 70.3% of total revenue [1] Revenue Breakdown - Nutritional supplements are the largest revenue contributor, making up 65.6% of total revenue, with adult nutrition and care (ANC), infant nutrition and care (BNC), and pet nutrition and care (PNC) being the three main business segments [1] - ANC business grew by 5.9% year-on-year, with a notable 13.1% growth in the Chinese market [1] - BNC business saw a 2.9% increase, with infant formula sales in mainland China rising by 10.0% [1] - PNC revenue reached RMB 1.08 billion, reflecting an 8.6% year-on-year growth, with high-end pet supplements growing by 14.3% [1] Market Positioning - The company demonstrated a leading advantage in product mix and market layout, particularly in the Chinese market where Solid Gold successfully optimized channels and adjusted product offerings [1] - Solid Gold's targeted approach in the Chinese market included the introduction of a unique cat food product for aging cats in Sam's Club, contributing to a 17.5% year-on-year growth in PNC [1]