Financial Performance - The company reported a revenue of HKD 4,686.8 million for 2024, reflecting a growth rate of 1.8%[18] - The company's revenue for the year ended December 31, 2024, was HKD 4,686.8 million, an increase of 1.8% compared to HKD 4,604.4 million in 2023[53] - The profit attributable to shareholders increased by 10.1% to HKD 644.3 million, up from HKD 585.1 million in the previous year[53] - Adjusted profit attributable to shareholders rose by 15.7% to HKD 615.5 million, compared to HKD 532.0 million in 2023[53] - Basic earnings per share increased to HKD 34.1, up from HKD 31.0, reflecting a growth of 10.0%[53] - The EBITDA for the year was HKD 1,390.9 million, representing a 13.6% increase from HKD 1,224.9 million in 2023[53] - Gross profit rose by 7.7% to HKD 1,269.1 million, with a gross margin of 27.1%, up from 25.6% in the previous year[91][95] - Operating profit increased by 22.0% to HKD 888.2 million, resulting in an operating margin of 19.0%, compared to 15.8% in 2023[91] - The net profit for the year was HKD 645.8 million, reflecting a 10.1% increase from HKD 586.8 million in 2023, with a net profit margin of 13.8%[91] Business Segments - The revenue breakdown by business segment shows investment casting at 23.5%, surface treatment at 1.3%, precision machining at 38.5%, and other segments at 36.7%[18] - The investment casting segment is the largest business division, accounting for 38.5% of the group's revenue for the year ending December 31, 2024[24] - Precision machining and others represent the second largest business division, contributing 36.7% to the group's revenue for the same period[28] - Sand casting is the third largest business division, making up 23.5% of the group's revenue for the year ending December 31, 2024[31] - Surface treatment is the smallest business division, accounting for 1.3% of the group's revenue for the same period[35] Market Performance - The high-power engine end market experienced strong revenue growth, with expectations to surpass the passenger vehicle end market by 2025 due to increased demand from AI data centers[81] - The aviation segment saw a sales increase of 26.8%, contributing to a total revenue of HKD 786.3 million, with a year-on-year growth of 13.0%[67] - The automotive segment experienced a slight decline of 3.2%, with total revenue of HKD 1,640.5 million, impacted by weak demand in the commercial vehicle market[69] - Revenue from diversified industrial markets rose slightly by 2.1% to HKD 2,260.0 million, driven by the demand for AI-related data centers[66] - The Chinese market showed robust growth, with revenue increasing by 11.0% to HKD 817.9 million, contributing to the overall performance[79] Operational Highlights - The company operates 21 production facilities across China, Turkey, Germany, the Czech Republic, and Mexico, with 19 currently operational[21] - The group manufactures investment casting components in four countries, with over half of the products sold to the Americas, followed by Europe and Asia[25] - The company has established long-term strategic partnerships with industry leaders and sells products to over 30 countries and regions[17] - The company has developed over 1,100 new active part numbers in collaboration with customers in 2024[20] - The company holds a total of 562 registered patents, with 111 new patent applications submitted in 2024[20] Sustainability Initiatives - The greenhouse gas emissions intensity decreased by 0.2% year-on-year in 2024, excluding the new factories in Nantong and Zhenjiang, China[143] - The company achieved a waste recycling rate of 87.8% in 2024, up from 76.9% in 2023[143] - The company has committed to achieving a 40% reduction in greenhouse gas emissions intensity and a 55.9% reduction in water consumption intensity by 2030 compared to the 2020 baseline[146] - The company launched a new energy storage station in December 2024 with a maximum output power of 20MWh and a storage capacity of 40MWh, enhancing energy cost efficiency and supporting green transformation[143] - The company received the Standard Chartered Corporate Achievement Award 2024 for "Sustainable Enterprise (Environment) - Outstanding Award"[144] Employee and Governance - The company employs over 7,700 staff, including approximately 600 engineers from around the world[20] - The board consists of 4 executive directors and 3 independent non-executive directors, ensuring a balance of skills and diverse perspectives[152] - The company has a total of 7,778 employees, with 5,640 male employees and 2,138 female employees, reflecting gender diversity within the workforce[160] - The board has established a formal and transparent nomination policy for selecting and appointing new directors, with all directors required to retire and seek re-election at least every three years[162] - The company is committed to enhancing gender diversity in its senior management and board positions, with ongoing efforts to identify suitable candidates[158] Financial Position - Cash and cash equivalents decreased by 4.6% to HKD 601.7 million from HKD 630.9 million in 2023[56] - Total debt decreased by 2.7% to HKD 2,196.1 million, down from HKD 2,257.8 million[56] - The adjusted return on equity improved to 12.8% from 11.5% in the previous year[56] - Total assets decreased by 1.6% to HKD 8,171.8 million, while total equity decreased by 3.2% to HKD 4,742.9 million[110] - The current ratio improved to 1.63 from 1.55, mainly due to a reduction in short-term bank borrowings[110] Future Outlook - The company expects a mid-to-high single-digit sales growth rate for 2025, despite facing potential downturn risks in some end markets[86] - The company plans to continue expanding into diversified industrial and aviation, energy, and medical end markets while optimizing its automotive product portfolio[88] - The integration of the Foshan Meizhuan factory into the Nantong No. 12 factory is expected to enhance operational efficiency, with significant synergies anticipated by 2026[87] - The company aims to achieve positive EBITDA in the SLP park by 2025, despite current losses, with ongoing construction of five factories[87]

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Financial Performance - For the fiscal year ending December 31, 2024, the company's revenue was HKD 4,686.8 million, representing a year-on-year increase of 1.8%[4] - Gross profit rose by 7.7% to HKD 1,269.1 million, with a gross profit margin of 27.1% compared to 25.6% in the previous year[4] - The profit attributable to shareholders increased to HKD 644.3 million, a year-on-year rise of 10.1%, while the adjusted profit attributable to shareholders was HKD 615.5 million, up 15.7%[4] - Basic earnings per share were HKD 0.341, compared to HKD 0.310 for the fiscal year ending December 31, 2023[6] - The company reported operating cash flow of HKD 1,146.2 million, with net debt decreasing by HKD 32.5 million, indicating strong cash flow performance[6] - Other income increased significantly by 527.5% to HKD 125.5 million, contributing positively to overall financial performance[39] - The net profit attributable to shareholders increased by 10.1% to HKD 644.3 million, with a net profit margin of 13.8%[39] - Adjusted EBITDA for the year ending December 31, 2024, was HKD 1,318.6 million, compared to HKD 1,214.9 million in the previous year[46] - The company reported a net profit attributable to shareholders of HKD 615.5 million for the year ending December 31, 2024, compared to HKD 532.0 million in the previous year[46] Revenue Breakdown - The revenue from the large-capacity engine terminal market grew significantly by 58.6%, while the aviation terminal market saw a 26.8% increase[4] - Revenue from recreational vessels and vehicles, agricultural machinery, and construction machinery terminal markets declined by 31.8%, 23.0%, and 6.7% respectively, primarily due to economic weakness in the US and Europe[11] - The aviation, energy, and medical terminal markets maintained strong growth, with revenue rising to HKD 786.3 million, up 13.0% year-on-year[15] - The automotive terminal market saw a slight decline in revenue, down 3.2% to HKD 1,640.5 million, with passenger vehicle revenue increasing by 2.0%[14] - Revenue from the Americas region grew by 4.3%, totaling HKD 2,328.5 million, while European revenue decreased by 5.4%[21] Market Challenges and Strategies - The company faced challenges in the Mexican region, recording significant net losses, although EBITDA losses decreased year-on-year[9] - The group operates 21 factories across China, Germany, Turkey, the Czech Republic, and Mexico, adhering to a "regional manufacturing" and "dual-source production" strategy to mitigate supply chain risks[27] - The company maintained a strategy of "global layout," "diversified terminal markets," and "dual-engine growth" to navigate economic challenges[23] - Despite facing downward risks in some end markets due to geopolitical conflicts and high inflation, the group maintains confidence in its business performance for 2025, forecasting a year-on-year sales growth rate of approximately mid to high single digits[31] Future Outlook - The aerospace end market continues to show strong performance, with significant revenue growth expected as Boeing aircraft production gradually recovers, leading to increased demand in the aerospace supply chain by 2025[24] - The large horsepower engine end market experienced strong revenue growth, driven by the increasing application of artificial intelligence in data centers, with expectations of continued significant growth over the next two to three years, potentially surpassing the passenger vehicle end market by 2025[25] - The group expects significant growth in the medical terminal market by 2025, driven by new products developed for North American customers, which began to ramp up in Q4 2024[33] - The group anticipates that artificial intelligence will continue to accelerate over the next two to three years, driving demand for data centers and benefiting large horsepower engine orders, with expectations of significant product development in 2024[32] Capital Expenditures and Investments - Capital expenditures for 2025 are projected to be approximately HKD 650 million, with about two-thirds allocated to the SLP park in Mexico[36] - The group has initiated the construction of a second-phase factory in the SLP park to meet the growing demand for high-power engine components, expected to be completed by the end of 2025[36] - The company plans to continue focusing on market expansion and new product development to drive future growth[46] Corporate Governance and Compliance - The company believes that good corporate governance enhances overall efficiency and creates more value for shareholders[139] - The company has adhered to all corporate governance code provisions as of December 31, 2024, with a significant degree of compliance with best practices[140] - The chairman and CEO roles are held by the same individual, which the board believes benefits the management of the company[141] - The Audit Committee has reviewed the consolidated financial statements for the year ending December 31, 2024, confirming compliance with applicable accounting standards and regulations[150] Environmental and Social Responsibility - The company achieved a greenhouse gas emission reduction of 0.2% year-on-year for 2024, excluding new factories in Nantong and Zhenjiang[85] - Cumulative reductions in greenhouse gas emissions and water consumption density have reached 40.0% and 55.9%, respectively, compared to the baseline year of 2020[85] - The waste recycling rate improved from 76.9% in 2023 to 87.8% in 2024, demonstrating significant progress in waste management[85] - The company received the Standard Chartered Corporate Achievement Award for "Sustainable Enterprise (Environment) Excellence" for 2024, highlighting its commitment to corporate social responsibility[86]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 2.9 per share [5] Core Views - The company reported H1 2024 revenue of HKD 2,402.5 million, a slight decrease of 0.1% YoY, while net profit attributable to shareholders increased by 0.4% YoY to HKD 304.5 million [2] - Gross margin improved by 0.4 percentage points to 26.4% in H1 2024 [2] - The aerospace sector showed strong growth, with revenue increasing by 35.3% YoY, driven by global market recovery and new product launches [2] - Traditional industrial sectors faced pressure, with engineering machinery revenue down 16.9%, agricultural machinery down 14.0%, and leisure marine & vehicle revenue down 25.9% [2] - The company's new factories in Mexico are fully operational, with 3 expected to break even by end-2024 and 2 aerospace and surface treatment facilities to start mass production in H2 2025 [2] - The company's global diversification strategy is paying off, with aerospace and medical equipment sectors expected to become new growth drivers [2] Financial Performance - Revenue is projected to grow at a CAGR of 8.7% from 2024E to 2026E, reaching HKD 5,980 million by 2026E [4] - Net profit attributable to shareholders is expected to grow from HKD 613 million in 2024E to HKD 786 million in 2026E, representing a CAGR of 13.2% [4] - EPS is forecasted to increase from HKD 0.32 in 2024E to HKD 0.42 in 2026E [4] - ROE is expected to remain stable at around 11.2%-11.5% from 2024E to 2026E [4] Strategic Developments - The company's global diversification strategy is mitigating market cyclical risks, with aerospace and medical equipment sectors poised to become new growth engines [2] - The company is accelerating capacity expansion in Mexico to address tariff risks, with 5 new factories already completed in H1 2024 [2] - The US market accounted for 45.4% of total revenue in H1 2024, with Mexico contributing 10% of total capacity in 2023 [2]

Financial Performance - Revenue for the six months ended June 30, 2024, was HKD 2,402.5 million, a slight decrease of 0.1% compared to HKD 2,404.8 million in the same period of 2023[8]. - Gross profit increased by 1.7% to HKD 634.5 million, with a gross margin of 26.4%, up from 26.0%[8]. - Adjusted profit attributable to shareholders was HKD 304.5 million, reflecting a 0.4% increase from HKD 303.2 million in the previous year[8]. - Basic earnings per share rose to HKD 16.13, a 0.2% increase from HKD 16.09[8]. - Adjusted EBITDA for the period was HKD 694.3 million, representing a 3.5% increase from HKD 671.0 million[8]. - Operating profit for the first half of 2024 was HKD 432.2 million, reflecting a 1.8% increase from HKD 424.6 million in the previous year[28]. - The net profit for the period was HKD 305,458, a marginal increase from HKD 303,491 in the previous year, indicating a growth of 0.6%[81]. - The company reported a significant increase in other income, which rose by 74.3% to HKD 44.8 million[28]. Revenue Segmentation - The company reported a significant increase in revenue from the large horsepower engine market, rising by 42.9% due to increased demand in the U.S. and European markets[15]. - The aviation segment's revenue grew by 35.3%, driven by the recovery of the global aviation market and increased market share[16]. - The energy segment's revenue increased by 27.3%, benefiting from continuous market share growth[16]. - Revenue for the diversified industrial segment decreased by 3.9% to HKD 1,138.2 million, while the automotive segment revenue fell by 3.8% to HKD 866.3 million compared to the same period last year[17]. - Revenue from the aerospace, energy, and medical segments increased by 24.5% to HKD 398.0 million, with aerospace alone growing by 35.3% to HKD 255.5 million[20]. - Revenue from the United States was HKD 1,090,100, showing an increase from HKD 1,023,291 in the previous year, while European revenue decreased to HKD 739,919 from HKD 790,159[111]. Cash Flow and Financing - Free cash flow from operations decreased significantly by 43.0% to HKD 156.6 million compared to HKD 274.9 million in the prior year[8]. - Operating cash flow for the period was HKD 497.9 million, a decrease of 26.5% from HKD 677.5 million in the same period last year[45]. - Cash used in financing activities was HKD 333.6 million, an increase of 125.5% from HKD 148.0 million in the same period last year[47]. - The net financing cost for the six months ended June 30, 2024, was HKD 55,049,000, an increase of 9.3% from HKD 50,401,000 in 2023[116]. Dividends and Shareholder Information - The company declared an interim dividend of HKD 0.08 per share, consistent with the previous year[8]. - The interim dividend declared for the six months ending June 30, 2024, is HKD 0.08 per share, totaling approximately HKD 151.0 million, compared to HKD 150.8 million for the same period last year[56]. - The record date for the interim dividend is August 27, 2024, with payment expected on or before September 6, 2024[57]. - Major shareholders include Impro Development with 1,348,118,787 shares (71.43%) and Mr. Lu with 1,357,357,787 shares (71.92%) as of June 30, 2024[66]. Market Outlook and Strategic Initiatives - The company is focused on expanding its market presence and enhancing product development strategies moving forward[8]. - The company adjusted its full-year sales growth forecast for 2024 to between 3% and 8% due to global economic challenges and geopolitical tensions[26]. - The company expects strong demand for high-power engines driven by the rapid development of AI and big data centers in the US and Europe[26]. - The integration of the Nantong No. 12 factory with Foshan Meiduan is set to enhance production capacity and efficiency in the aerospace and energy components business by the end of 2024[26]. - The company plans to start the second phase of construction in the Mexico SLP area in the second half of 2024 to enhance production capabilities[26]. Compliance and Governance - The company has adopted the corporate governance code and has complied with all relevant provisions, except for the separation of the chairman and CEO roles[58]. - All directors confirmed compliance with the standard code of conduct for securities trading during the six months ending June 30, 2024[60]. - The board consists of four executive directors and three independent non-executive directors, ensuring strong independence[58]. Asset and Liability Management - The total debt decreased to HKD 2,124.8 million from HKD 2,257.8 million, reflecting a reduction of 5.9%[10]. - The net asset value of the company was HKD 4,841,537,000, down from HKD 4,900,956,000, indicating a decrease of approximately 1.2%[85]. - The total liabilities decreased to HKD 1,800,810,000 from HKD 1,924,267,000, reflecting a reduction of about 6.4%[85]. - The company's liquidity ratio was 1.62 as of June 30, 2024, slightly up from 1.55 as of December 31, 2023[43]. Research and Development - Research and development expenses for the six months ended June 30, 2024, were HKD 82,895,000, up 15.9% from HKD 71,489,000 in the previous year[117].

香 港 交 易 及 結 算 所 有 限 公 司 及 香 港 聯 合 交 易 所 有 限 公 司 對 本 公 告 的 內 容 概 不 負 責，對 其 準 確 性 或 完 備 性 亦 無 發 表 聲 明，並 表 明 不 會 就 本 公 告 全 部 或 任 何 部 分 內 容 而 產 生 或 因 倚 賴 該 等 內 容 而 引 致 的 任 何 損 失 承 擔 任 何 責 任。 IMPRO PRECISION INDUSTRIES LIMITED 鷹普精密工業有限公司 （於開曼群島註冊成立的有限公司） （股份代號：1286） 截 至 二 零 二 四 年 六 月 三 十 日 止 六 個 月 中 期 業 績 公 告 鷹 普 精 密 工 業 有 限 公 司（「本 公 司」）董 事 會（「董 事 會」）欣 然 宣 佈 本 公 司 及 其 附 屬 公 司 截 至 二 零 二 四 年 六 月 三 十 日 止 六 個 月 的 中 期 業 績。本 公 告 列 載 本 公 司 二 零 二 四 年 度 中 期 報 告 全 文，並 符 合 香 港 聯 合 交 易 所 有 限 公 司 證 券 上 市 規 則（「上 市 規 則」）中 有 關 ...

Financial Performance - The total revenue for 2023 was HKD 4,604.4 million, representing a growth rate of 5.7%[16] - Revenue for the year ended December 31, 2023, was HKD 4,604.4 million, representing a 5.7% increase from HKD 4,354.7 million in 2022[31] - The company's revenue for the year ended December 31, 2023, increased by 5.7% to HKD 4,604.4 million, compared to HKD 4,354.7 million in 2022[52] - The net profit for the year was HKD 586.8 million, with a net profit margin of 12.7%, down from 13.4%[52] - Adjusted profit attributable to shareholders was HKD 532.0 million, a decline of 18.0% compared to HKD 649.1 million in 2022[31] - Gross profit decreased by 6.6% to HKD 1,178.3 million, with a gross margin of 25.6%, down from 29.0% in the previous year[31] - EBITDA for 2023 was HKD 1,224.9 million, reflecting a 5.1% increase from HKD 1,165.5 million in 2022[31] - The net cash generated from operating activities of HKD 1,281.4 million, a significant increase of 53.0% from HKD 837.5 million in the previous year[31] - The company declared a total dividend of HKD 16.0 cents per share for the year, consistent with the previous year[39] - The company paid dividends to equity shareholders amounting to HKD 301,685,000 in 2023, compared to HKD 286,261,000 in 2022, reflecting a year-on-year increase of about 5.4%[198] Market and Operational Insights - The company serves over 1,000 customers from more than 30 countries and regions[17] - The company operates 21 production facilities globally, with 19 currently in operation and 2 undergoing equipment installation[18] - The company has established a global footprint with sales offices in China, the USA, Luxembourg, Germany, Turkey, Hong Kong, and Mexico[18] - The company is the fifth largest independent investment casting manufacturer globally and the largest in China[15] - It ranks as the third largest precision machining company in the automotive, aerospace, and hydraulic end markets[15] - The group manufactures precision machining parts in three countries: China, Turkey, and Mexico[20] - The group focuses on high-precision and high-complexity components, particularly in the aerospace, automotive, and medical sectors[19][20] Revenue Breakdown by Segment - The investment in the precision casting segment accounted for 41.6% of the group's revenue for the year ending December 31, 2023[19] - The precision machining segment contributed 39.3% to the group's revenue for the year ending December 31, 2023[20] - The sand casting segment represented 17.9% of the group's revenue for the year ending December 31, 2023[22] - Surface treatment services accounted for 1.2% of the group's revenue for the year ending December 31, 2023[23] - Over half of the precision castings were sold to the Americas, followed by Europe and Asia, including China[19] - Approximately half of the precision machining products were sold to Europe, with about one-third to the Americas[20] Awards and Recognition - The group received the "Annual Outstanding ESG Enterprise" award for three consecutive years from the Hong Kong Economic Journal[27] - The group was awarded the "Excellence Award for Listed Companies" by the Hong Kong Economic Journal for three consecutive years in December 2023[28] - The group has been awarded the "Outstanding ESG Company" by the Hong Kong Economic Journal for three consecutive years, highlighting its commitment to sustainable finance[89] - The group received the "Outstanding Green and Sustainable Loan Issuer (Precision Manufacturing) - Excellence in Sustainable Development Performance Indicators" from the Hong Kong Quality Assurance Agency[89] Financial Management and Governance - Total debt as of December 31, 2023, was HKD 2,257.8 million, slightly up from HKD 2,205.9 million in 2022[33] - Net debt decreased to HKD 1,626.9 million from HKD 1,722.6 million in the previous year[33] - The adjusted return on equity was 11.5%, down from 14.9% in 2022[33] - The interest coverage ratio decreased to 6.2 from 13.4 in the previous year[33] - The company has adopted prudent financial management practices to allocate sufficient financial resources to its subsidiaries while monitoring foreign exchange risks related to its revenue and costs denominated in multiple currencies[77] - The board believes that good corporate governance is essential for protecting shareholder interests and enhancing corporate value[91] - The company has adhered to all provisions of the Corporate Governance Code, with a significant degree of compliance with best practices[91] Sustainability and Environmental Impact - The company achieved a significant reduction in greenhouse gas emissions density by 41.1%, energy consumption density by 32.4%, and water consumption density by 57.9% compared to 2020[88] - The company is committed to sustainable development and has established strategic partnerships with industry leaders to enhance product quality and promote a safe production environment[87] - The company plans to continue optimizing production processes and investing in reusable energy to further reduce its environmental impact[88] Future Outlook and Strategic Initiatives - The company forecasts a sales growth of approximately 5% to 10% for 2024, despite potential cyclical fluctuations in some end markets[50] - The international aviation market is expected to continue its recovery, contributing to strong growth in the aviation terminal business[50] - The company plans to enhance its presence in the aviation and energy markets, which have shown significant growth potential[47] - The company is actively developing its medical terminal business, which is anticipated to significantly contribute to profit growth in the future[50] - The company plans to merge its Foshan Meitan and Nantong No. 12 factories to enhance production capacity and operational efficiency[50] Employee and Management Insights - As of December 31, 2023, the company had 7,681 full-time employees, with 5,858 from China and 1,823 from Turkey[78] - Total employee costs for the year ended December 31, 2023, amounted to HKD 1,167.0 million, an increase from HKD 1,115.3 million in 2022[78] - The company has a strong management team with extensive experience in industrial engineering and finance, including certifications such as CFA and Six Sigma[132] - The leadership team is committed to fostering innovation and sustainability within the organization, aligning with global market trends[132] Shareholder and Capital Structure - The company declared a first interim dividend of HKD 0.08 per share, totaling approximately HKD 150.9 million, paid on September 6, 2023[136] - A second interim dividend of HKD 0.08 per share is expected to be paid in April 2024, totaling around HKD 151.0 million[136] - As of December 31, 2023, the company's distributable reserves for dividends amounted to HKD 1,821.3 million, an increase from HKD 1,804.9 million in 2022[140] - The largest customer accounted for approximately 11.9% of the group's revenue, while the top five customers collectively represented about 39.5% of total revenue for the fiscal year[142]

Financial Performance - Revenue for the year 2023 was HKD 4,604.4 million, an increase of 5.7% compared to HKD 4,354.7 million in 2022[2] - Gross profit decreased by 6.6% to HKD 1,178.3 million, with a gross profit margin of 25.6% compared to 29.0% in 2022[2] - Profit attributable to shareholders increased by 0.5% to HKD 585.1 million, while adjusted profit decreased by 18.0% to HKD 532.0 million[3] - Basic earnings per share for the year were HKD 31.0, slightly up from HKD 30.9 in 2022[3] - Total revenue for the year ended December 31, 2023, was HKD 4,604.4 million, representing a 5.7% increase from HKD 4,354.7 million in the previous year[11] - Adjusted net profit attributable to shareholders was HKD 532.0 million, a decline of 18.0% from HKD 649.1 million in 2022[22] - EBITDA for the year was HKD 1,224.9 million, reflecting a 5.1% increase compared to HKD 1,165.5 million in the prior year[22] - The net profit for the year ended December 31, 2023, was HKD 586,763,000, slightly up from HKD 582,780,000 in 2022, representing a growth of 0.4%[57] Market Performance - The sales in the aviation, energy, and medical end markets showed strong growth, with an increase of 47.7%[4] - Revenue from the aerospace, energy, and medical sectors surged by 47.7% year-on-year to HKD 696.1 million, driven by the recovery of the global aerospace market and the acquisition of Foshan Meiduan[5] - The energy end market saw a remarkable increase of 134.8% in sales, primarily due to the aforementioned acquisition[5] - The agricultural machinery end market revenue rose by 19.2% to HKD 421.0 million, benefiting from sustained demand in the U.S. region[5] - The automotive sector's total revenue was HKD 1,694.7 million, a slight decrease of 0.3% compared to the previous year[8] - The commercial vehicle segment experienced a revenue decline of 4.0% to HKD 859.8 million, influenced by decreased demand in the U.S. and European markets[6] - The precision machining and other businesses achieved a significant growth of 21.7%, driven by the acquisition of hydraulic business in the second half of 2022[9] Operational Challenges - The company faced significant challenges in the second half of 2023, with a notable decline in demand in the diversified industrial end market[4] - The new factory in Mexico recorded a tax loss of over HKD 1 million due to rising operational costs and inflation[4] - The Nantong factory is still in the reconstruction phase after a fire, leading to a tax loss of over HKD 3 million for the year[4] - Interest costs for the year increased significantly, exceeding HKD 5 million, impacting overall profitability[4] Cash Flow and Financial Management - Operating cash flow increased by 53.0% to HKD 1,281.4 million, after capital expenditures of HKD 711.4 million and dividends of HKD 301.7 million were paid[12] - The company effectively managed working capital, with trade receivables and inventory levels decreasing compared to the previous year[12] - The group recorded other income of HKD 20.0 million for the year ended December 31, 2023, compared to a loss of HKD 24.6 million in 2022, primarily due to insurance compensation of HKD 17.2 million from the Nantong fire incident and net exchange gains of HKD 7.4 million[29] - The cash flow from operating activities increased mainly due to a reduction in working capital[42] Future Outlook - The group expects sales growth in 2024 to be between 5% and 10% year-on-year, driven by order backlog and new project developments[17] - The aviation terminal business is anticipated to continue strong growth due to the ongoing recovery of the international aviation market and reduced competition in the supply chain[18] - The group plans to invest approximately HKD 550 million in capital expenditures in 2024, with around HKD 260 million allocated to the Mexico SLP area[19] - The group will continue to focus on the aviation, energy, and medical sectors, leveraging its competitive advantages in the automotive terminal market[20] Corporate Governance and Compliance - The company has adhered to all corporate governance code provisions as of December 31, 2023, with a high degree of compliance to best practices[96] - The chairman and CEO roles are held by the same individual, Mr. Lu, which the board believes benefits the management of the group[97] - All directors have confirmed compliance with the standards for securities trading as of December 31, 2023[98] - The Audit Committee reviewed the annual consolidated financial statements for the year ending December 31, 2023, and confirmed compliance with applicable accounting standards and legal regulations[103]

Revenue and Profitability - Revenue for the six months ended June 30, 2023, was HKD 2,404.8 million, representing a 9.7% increase from HKD 2,192.7 million in the same period of 2022[8]. - Profit attributable to equity shareholders was HKD 267.7 million, a decrease of 7.1% compared to HKD 303.2 million in the previous year[8]. - Adjusted profit attributable to equity shareholders was HKD 311.2 million, a decrease of 7.1% year-on-year[19]. - Net profit for the period was HKD 303,491, an increase of 13.2% compared to HKD 268,027 in the same period last year[88]. - Basic earnings per share increased to HKD 16.09, up from HKD 14.22 in 2022, reflecting a growth of 13.1%[87]. Gross Profit and Margins - Gross profit decreased to HKD 624.1 million, down 3.0% from HKD 643.3 million, resulting in a gross margin of 26.0%, a decline of 3.3 percentage points[8]. - The company's gross profit for the six months ended June 30, 2023, was HKD 624,163, a slight decrease from HKD 643,339 in the same period of 2022, indicating a decline of about 3.0%[110]. Cash Flow and Financial Position - Free cash flow from operations surged to HKD 274.9 million, a significant increase of 3,096.5% from HKD 8.6 million[8]. - Cash and cash equivalents increased to HKD 610.5 million, compared to HKD 483.3 million at the end of 2022[13]. - The company reported a significant increase in cash and cash equivalents, reaching HKD 605,069, up from HKD 483,286 at the end of 2022[89]. - Cash flow from operating activities increased by HKD 234.5 million to HKD 677.5 million, driven by higher profits and effective inventory turnover[49]. Debt and Financing - Total debt rose slightly to HKD 2,253.3 million from HKD 2,205.9 million, while net debt decreased to HKD 1,642.8 million from HKD 1,722.6 million[13]. - Net financing costs rose significantly from HKD 18.6 million to HKD 50.4 million due to higher average bank loan balances and increased borrowing in USD and HKD[38]. - The company incurred a net financing cost of HKD 50,401,000 for the six months ended June 30, 2023, compared to HKD 18,627,000 in the previous year, reflecting a significant increase of approximately 170.5%[117]. Market Performance - The aerospace, energy, and medical end markets saw a strong revenue increase of 67.3%, totaling HKD 319.8 million, driven by the recovery of the global aviation market[20]. - The diversified industrial end market revenue grew by 10.5% to HKD 1,184.1 million, with significant contributions from the hydraulic cycloidal motor business acquired last year[21]. - The automotive end market revenue decreased by 11.2% due to the impact of the South Tong factory fire and a slowdown in the Chinese economy[21]. Dividends - The company declared an interim dividend of HKD 0.08 per share, consistent with the previous year[8]. - The interim dividend declared for the six months ended June 30, 2023, was HKD 150,786,000, compared to HKD 150,664,000 for the same period in 2022, showing a marginal increase[141]. Operational Efficiency - The company reported a 52.9% increase in operating cash flow, reaching HKD 677.5 million, indicating improved working capital management[28]. - Sales and distribution expenses decreased by HKD 19.4 million or 18.8% to HKD 83.9 million, representing 3.5% of revenue compared to 4.7% in the same period last year[36]. - Administrative and other operating expenses increased by HKD 2.6 million or 1.7% to HKD 156.1 million, accounting for 6.5% of revenue, down from 7.0% year-on-year[37]. Inventory and Receivables - Inventory decreased by HKD 107.5 million to HKD 1,044.6 million, with inventory turnover days improving from 135 days to 121 days[41]. - Trade receivables increased by HKD 69.7 million to HKD 1,160.9 million, with turnover days decreasing from 88 days to 86 days[41]. Shareholder Information - As of June 30, 2023, the company’s major shareholder, Mr. Lu, holds 1,293,118,787 shares, representing 68.62% of the issued share capital[65]. - The company’s major shareholder, Tongbo Capital (Hong Kong) Limited, holds 104,205,123 shares, which is 5.53% of the issued share capital[70]. Future Outlook and Strategy - The company plans to enhance its aviation technology division and is exploring the feasibility of a potential spin-off for independent listing in the future[28]. - The company plans to continue expanding its manufacturing and marketing network across Asia, Europe, and America, focusing on core business growth[31].

Financial Performance - For the six months ended June 30, 2023, the company reported revenue of HKD 2,404.8 million, representing a 9.7% increase from HKD 2,192.7 million in the same period of 2022[10]. - Gross profit decreased to HKD 624.1 million, down 3.0% from HKD 643.3 million, resulting in a gross margin of 26.0%, a decline of 3.3 percentage points[10]. - Profit attributable to equity shareholders was HKD 267.7 million, a decrease of 13.3% compared to HKD 303.2 million in the previous year[10]. - EBITDA increased by 19.2% to HKD 671.0 million, with an EBITDA margin of 27.9%, up 2.2 percentage points[10]. - The company reported a significant increase in free cash flow from operations, reaching HKD 274.9 million, a 3,096.5% increase from HKD 8.6 million[10]. - Basic earnings per share decreased to HKD 13.2 from HKD 16.09, while adjusted basic earnings per share fell to HKD 16.51 from HKD 17.79, a decrease of 7.2%[10]. - The profit attributable to equity shareholders for the same period was HKD 303.2 million, representing a growth of 13.3% year-on-year[21]. - Adjusted profit attributable to equity shareholders was HKD 311.2 million, a decrease of 7.1% compared to the previous year[21]. - The company reported a net profit of HKD 303.5 million for the first half of 2023, with a net profit margin of 12.6%[34]. - The company reported a net profit of HKD 303,233,000 for the six months ended June 30, 2023, compared to HKD 267,721,000 for the same period in 2022, representing an increase of approximately 13.3%[95]. Revenue Breakdown - The company experienced a strong growth of 67.3% in sales from the aerospace, energy, and medical end markets[21]. - The group's revenue from diversified industrial markets increased by 10.5% to HKD 1,184.1 million, driven by strong growth in engineering machinery, large horsepower engines, and agricultural machinery markets[23]. - Revenue from the aviation, energy, and medical markets surged to HKD 319.8 million, a year-on-year increase of 67.3%, primarily due to the recovery of the global aviation market and strong sales from the acquired Foshan Meichuan business[22]. - The energy market saw a remarkable growth of 230.5%, significantly influenced by the acquisition of Foshan Meichuan[24]. - Revenue from the automotive sector decreased by 3.1% to HKD 900.9 million, with passenger vehicle sales down 11.2% while commercial vehicle sales increased by 5.5%[24]. - Revenue in Europe grew by 17.5%, while the Americas recorded a 9.0% increase; however, Asian revenue remained flat, with a 2.8% decline in China[27]. - Revenue from lost wax castings was HKD 994,939,000, up from HKD 933,832,000, reflecting a growth of 6.67%[102]. - Revenue from precision machining and others increased to HKD 948,746,000, a significant rise of 25.73% from HKD 754,796,000[102]. - Sand castings revenue rose to HKD 433,796,000, compared to HKD 380,608,000, marking an increase of 13.93%[102]. - Surface treatment revenue decreased to HKD 27,362,000 from HKD 123,508,000, a decline of 77.92%[102]. Cash Flow and Liquidity - Operating cash flow increased by 52.9% to HKD 677.5 million, reflecting improved accounts receivable and inventory cycles[30]. - Cash generated from operating activities was HKD 718,749,000 for the six months ended June 30, 2023, compared to HKD 500,909,000 in the same period of 2022, reflecting a significant increase of approximately 43.6%[96]. - The company had cash outflows from financing activities of HKD 148.0 million in the first half of 2023, compared to cash inflows of HKD 191.4 million in the same period last year[53]. - The company’s cash and cash equivalents increased to HKD 605,069,000 from HKD 483,286,000, representing a growth of approximately 25.3%[91]. - The company’s financing activities resulted in a net cash outflow of HKD 147,972,000 for the six months ended June 30, 2023, compared to a net inflow of HKD 191,429,000 in the same period of 2022[96]. Dividends and Shareholder Returns - The interim dividend per share remained unchanged at HKD 0.08[10]. - The company declared an interim dividend of HKD 0.08 per share, unchanged from the previous year[21]. - The interim dividend declared for the six months ended June 30, 2023, is HKD 0.08 per share, totaling approximately HKD 150.8 million, consistent with the previous year's dividend of HKD 150.7 million[62]. - The company paid dividends amounting to HKD 150,765,000 during the six months ended June 30, 2023, compared to HKD 135,597,000 in the same period of 2022, which is an increase of about 11.2%[96]. Operational Highlights - The company has 21 factories across China, Germany, Turkey, the Czech Republic, and Mexico, enhancing its global manufacturing and service capabilities[30]. - The acquisition of Foshan Meibao in 2022 significantly boosted orders in the aviation and energy sectors, contributing positively to revenue growth[30]. - The company is exploring the feasibility of spinning off its aviation technology division for independent listing as part of its growth strategy[30]. - The company received insurance claims totaling HKD 25.7 million related to the fire incident at its Nantong factory, which is expected to resume production in Q4 2023[32]. - The company faced a loss of HKD 17.1 million from the Nantong factory due to a fire incident, compared to a profit of HKD 12.8 million in the same period last year[21]. Financial Position - The net debt as of June 30, 2023, was HKD 1,642.8 million, down from HKD 1,722.6 million a year earlier[15]. - The total equity increased to HKD 4,693.1 million from HKD 4,398.0 million year-on-year[15]. - The total assets increased by 4.9% to HKD 8,144.4 million compared to December 31, 2022[49]. - The equity attributable to shareholders rose by 6.7% to HKD 4,693.1 million, driven by continued investments in the construction of the Mexican factory[49]. - The net debt-to-equity ratio decreased to 35.0% as of June 30, 2023, down from 39.2% on December 31, 2022, reflecting improved cash position and repayment of bank loans[56]. Corporate Governance - The chairman and CEO roles are held by the same individual, Mr. Lu Ruibo, which the board believes benefits the company's management[64]. - The company has established various committees under the board, including an audit committee, nomination committee, remuneration committee, and sustainability committee, to ensure compliance with corporate governance standards[64]. - The board consists of five executive directors and three independent non-executive directors, ensuring strong independence in its composition[64]. - The company has maintained compliance with all provisions of the corporate governance code, with a few exceptions noted[64]. Share Options and Employee Incentives - The company has granted stock options under the pre-IPO stock option plan, with a total of 13,474,847 shares potentially to be issued, representing approximately 0.7% of the issued share capital[78]. - The stock options granted to employees under the pre-IPO plan include 1,000,000 options each for four individuals, with an exercise price of HKD 2.4[77]. - The company has a post-IPO stock option plan aimed at incentivizing eligible participants to enhance performance and retain talent[79]. - The post-IPO stock option plan allows for the granting of options to various stakeholders, including employees and directors, to align their interests with the company's long-term development[79].