Financial Performance - For the six months ended June 30, 2024, the revenue reached approximately $585.93 million, an increase of about 59.8% compared to $366.73 million for the same period in 2023[2] - The net profit attributable to equity shareholders for the six months ended June 30, 2024, was approximately $16.04 million, a decrease from $18.03 million for the same period in 2023[4] - Basic earnings per share for the six months ended June 30, 2024, were $0.019, down from $0.021 for the same period in 2023[4] - The gross profit for the six months ended June 30, 2024, was $71.53 million, compared to $50.85 million for the same period in 2023[4] - Total comprehensive income for the six months ended June 30, 2024, was $11.90 million, compared to a loss of $0.40 million for the same period in 2023[5] - The company reported a financing cost of $8.17 million for the six months ended June 30, 2024, compared to $3.19 million for the same period in 2023[4] - The company's revenue for the reporting period was approximately $585.9 million, representing a 59.8% increase compared to $366.7 million in the same period of 2023[28] - The net profit for the reporting period was approximately $16.6 million, slightly down from $17.5 million in the first half of 2023[28] Assets and Liabilities - The total assets less current liabilities as of June 30, 2024, were $482.31 million, an increase from $427.48 million as of December 31, 2023[6] - Non-current assets as of June 30, 2024, amounted to $290.38 million, up from $195.41 million as of December 31, 2023[7] - Inventory as of June 30, 2024, was $209.10 million, compared to $133.90 million as of December 31, 2023[8] - The total equity attributable to equity shareholders as of June 30, 2024, was $423.46 million, an increase from $409.66 million as of December 31, 2023[10] - Trade receivables at the end of the reporting period were 172,117,000 HKD, an increase from 152,813,000 HKD at the end of 2023[25] - Trade payables amounted to 212,598,000 HKD, slightly up from 209,195,000 HKD at the end of 2023[26] - The net current assets were approximately $191.9 million, down from $232.1 million as of December 31, 2023[32] - The group reported approximately $182.1 million in unencumbered cash and cash equivalents as of June 30, 2024[32] Customer and Market Insights - The largest customer contributed 547,773,000 HKD, accounting for 93.5% of total revenue, compared to 353,925,000 HKD and 96.5% in the previous year[14] - Revenue from the People's Republic of China (including Hong Kong) was 502,951,000 HKD, up 47.8% from 340,222,000 HKD in 2023[15] - The global economic outlook for 2024 is projected to grow by 2.7%, although challenges such as high interest rates and geopolitical risks persist[29] - The company recognizes the growing demand for high-precision optical sensors driven by the rapid development of applications in autonomous driving, biomedical, and smart cities[30] - The global market for head-mounted display devices is expected to grow by 7.5% in 2024, with a compound annual growth rate (CAGR) of 43.9% from 2024 to 2028[30] Research and Development - Research and development costs (excluding depreciation and amortization) increased to 36,361,000 HKD from 20,323,000 HKD year-over-year[17] - The company plans to enhance collaboration with existing customers, expand its customer base, and increase R&D investment to create maximum value for shareholders[30] - The integration of AI technology with AR and VR is expected to enhance user experience and provide new application scenarios across various industries[29] Employee and Operational Insights - The total employee cost during the reporting period was approximately $52.0 million, up from $23.7 million for the six months ended June 30, 2023[36] - The group has approximately 6,869 full-time employees as of June 30, 2024, an increase from 5,764 employees as of December 31, 2023[36] - The company acquired property, plant, and equipment at a cost of 112,090,000 HKD, significantly higher than 45,804,000 HKD in the same period last year[23] - Capital expenditures during the reporting period amounted to $105.3 million, significantly higher than $44.0 million for the six months ended June 30, 2023[34] - The group plans to fund future capital expenditures through a combination of operating cash flow, bank loans, and potential fundraising activities[34] Dividends and Share Options - The company has not declared any interim dividends for the reporting period, consistent with the previous year[27] - A total of 5,059,000 stock options were exercised during the reporting period, compared to 10,302,000 in the same period of 2023[27] - The board did not recommend any interim dividend for the reporting period, maintaining a focus on market changes and new product development[38] - A total of 5,059,000 share options were exercised during the reporting period, with 149,000 options cancelled and 150,000 options expired[37] Taxation - The effective corporate income tax rate in China was reduced to 15% for 2024 and 2023, compared to the standard rate of 25% for other subsidiaries[19]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for its long-term growth potential [1][2]. Core Insights - The company has established a leading position in the optical module market, with a focus on expanding into new sectors such as automotive lidar and mixed reality (MR) [1][5]. - In 2022, the company achieved revenue of $1.116 billion, a year-on-year increase of 39.7%, and a net profit of $84 million, up 69.27% year-on-year. However, in 2023, revenue decreased to $924 million, a decline of 17.2%, with net profit dropping to $47 million, down 44.74% year-on-year, primarily due to a downturn in global economic conditions and reduced customer orders [1][12]. - The company is deeply integrated with major clients, particularly in the smartphone sector, and is expected to benefit from the ongoing innovation in optical technologies [1][6]. Summary by Sections Business Overview - The company has been focused on camera modules for 20 years, expanding its business into AR/VR and lidar sectors to create long-term growth opportunities [5][6]. - The company has a stable client base, with over 90% of its revenue coming from major clients, particularly Apple [7][12]. Financial Performance - The company forecasts revenues of $1.709 billion, $2.820 billion, and $3.807 billion for 2024, 2025, and 2026, respectively, with corresponding net profits of $87 million, $151 million, and $206 million [1][2]. - The projected growth rates for revenue are 85%, 65%, and 35% for the years 2024 to 2026 [1][2]. Market Trends - The global smartphone camera module market is expected to grow steadily, with a projected market size of $39.82 billion by 2024 and $49.24 billion by 2029, reflecting a CAGR of 4.34% [1][25]. - The company is also entering the automotive lidar market, which is projected to grow at a CAGR of 103.2% from 2022 to 2030, reaching a market size of approximately $10 billion [1][40]. Investment Recommendations - The report suggests that the company is well-positioned for long-term growth due to its strong ties with major clients and its expansion into new markets [1][56]. - The company is expected to maintain a competitive edge through its technological capabilities and partnerships, particularly with Apple and other leading firms in the industry [1][27].

Financial Performance - The company's revenue for the fiscal year ending December 31, 2023, was $923.8 million, reflecting a negative growth compared to the previous year[10]. - Net profit for 2023 decreased by 44.7% to $46.4 million, impacted by macroeconomic downturns, although performance was better than industry peers[10]. - In 2023, the company's revenue decreased to $923.8 million from $1,116.2 million in 2022, representing a decline of approximately 17.3%[23]. - The company's profit also fell from $83.8 million in 2022 to $46.4 million in 2023, a decrease of about 44.7%[23]. - Gross profit for the year was $127.8 million, down 26.7% from $174.4 million in 2022, resulting in a gross margin of 13.8% compared to 15.6% in the previous year[34]. - Net profit decreased by 44.6% to $46.4 million, with net profit margin dropping to 5.0% from 7.5% in 2022[34]. - Total revenue for the fiscal year ended December 31, 2023, decreased by 17.2% to $923.8 million, down from $1,116.2 million in 2022[195]. - Profit for the year decreased by approximately 44.6% to about $46.4 million, compared to $83.8 million in 2022[195]. - Earnings per share for the fiscal year was $0.06, compared to $0.10 in 2022[195]. Research and Development - Research and development expenses increased by 11% compared to 2022, with R&D expenses as a percentage of revenue rising from 4.7% in 2022 to 5.9% in 2023[11]. - The company plans to expand R&D investment and high-end talent reserves, with new products expected to be mass-produced in 2024[22]. - The company plans to continue investing in R&D and expanding its customer base to create maximum value for shareholders[29]. Market Outlook - The company is optimistic about growth in the precision optics industry, particularly in augmented reality (AR), virtual reality (VR), mixed reality (MR), smart driving, micro-displays, and medical applications[11]. - The global AR/VR market is projected to grow from $13.8 billion in 2023 to $50.9 billion by 2026, with a CAGR of 32.3%[19]. - The automotive LiDAR market is expected to grow from $333 million in 2022 to $4.65 billion by 2028, with a CAGR of 69% for passenger cars[20]. - The company remains optimistic about future growth despite macroeconomic challenges, focusing on innovation in optical technology and emerging applications[21]. Economic Environment - The global economic outlook for 2023 was revised by the IMF to a growth rate of 3.1%, down from 3.5% in the previous year, indicating ongoing economic uncertainty[17]. - The company acknowledges the support of its employees, shareholders, and partners in achieving its current results and aims to continue collaborative efforts for future success[14]. - The management remains focused on steady growth and maximizing shareholder value despite external challenges[14]. Sustainability Initiatives - The company is committed to sustainability initiatives, including the introduction of green energy and storage solutions, aiming for carbon neutrality and reduced plastic usage[12]. - The company is committed to environmental sustainability, focusing on reducing its environmental impact through energy conservation and recycling[192]. Shareholder and Management Information - The company will not declare dividends for the fiscal year ending December 31, 2023, to ensure continued leadership in the optical field[23]. - The company has implemented a new share award plan, with a limit of 10% of the total issued shares as of the adoption date, which was 853,124,800 shares[84]. - The company has adopted a new share option plan to provide greater flexibility in granting options to eligible participants, aiming to reward contributions to the group[116]. - The company has established a long-term incentive plan for employee compensation, which is based on performance and market statistics[82]. - The company’s management team consists of seven directors, including two executive directors and three independent non-executive directors[88]. Financial Position - Total assets increased from $631.2 million in 2022 to $943.3 million in 2023, showing a growth of approximately 49.3%[23]. - The company's total assets increased by 49.5% to $943.3 million, while total liabilities rose by 95.2% to $528.1 million[32]. - The company's return on equity decreased from 23.2% in 2022 to 11.2% in 2023 due to a decline in net profit[38]. - Current ratio declined from 1.90 in 2022 to 1.45 in 2023, reflecting increased short-term bank loans[39]. - The company generated positive operating cash flow of $113.4 million for the year ended December 31, 2023, compared to $97.1 million in 2022[196]. Inventory and Receivables Management - The group's inventory balance decreased by approximately 3.2% or about $4.4 million from approximately $138.3 million on December 31, 2022, to approximately $133.9 million on December 31, 2023, primarily due to an increase in raw material inventory offset by a corresponding decrease in finished goods inventory[53]. - Trade and other receivables decreased by approximately 10.6% or about $20.8 million from approximately $195.8 million on December 31, 2022, to approximately $175.1 million on December 31, 2023[57]. - The average trade receivables turnover days improved from 66.1 days in 2022 to 47.5 days in 2023[58]. - The average inventory turnover days increased to 62.4 days in 2023 from 53.7 days in 2022[196]. Procurement and Supplier Relationships - The largest customer accounted for approximately 93.5% of the group's revenue, while the top five customers together represented about 99.8% for the fiscal year ending December 31, 2023[149]. - The largest supplier contributed approximately 46.7% of the group's procurement, with the top five suppliers accounting for about 63.2% for the same fiscal year[149]. - The company has established a new procurement framework agreement with Guangzhou Lijing to supply materials related to production, including circuit board assemblies[169]. Audit and Compliance - The audit committee reviewed the accounting standards and policies adopted by the group for the fiscal year ended December 31, 2023[189]. - The company plans to retain KPMG as its auditor, with no objections from the audit committee regarding the reappointment[190]. - The independent non-executive directors have reviewed the ongoing connected transactions and confirmed their compliance with the relevant regulations[175].

Investment Rating - The report maintains a "Buy" rating for the company [2]. Core Views - The company is expected to enter the iPhone rear camera market in 2024, with a clearer long-term development logic. The anticipated market share may exceed previous expectations [2]. - The company's 2023 performance was slightly below expectations, primarily due to pressure on the iPad business, with a revenue decline of 17.2% year-on-year [2]. - The company has a stable long-term partnership with a major client in the front camera sector, which is expected to facilitate entry into the rear camera market [2]. - The iPad business is projected to see growth in both volume and price in 2024, driven by the release of new models and ongoing optical upgrades [2]. - The LiDAR market is expanding, with significant growth expected in automotive applications, and the company has a strong order outlook due to its partnership with a leading LiDAR firm [2]. - The company is well-positioned in the MR supply chain, with expectations for growth driven by the upcoming launch of Vision Pro [2]. Summary by Sections Financial Performance - In 2023, the company achieved revenue of $924 million, a year-on-year decrease of 17.2%, with first half and second half revenues of $367 million and $557 million respectively [2]. - Gross profit for 2023 was $128 million, with a gross margin decline of 1.8 percentage points to 13.8% [2]. - The net profit for 2023 was $47 million, a year-on-year decline of 44.7%, with a net profit margin of 5.0% [2]. Future Projections - For 2024, the company is expected to achieve a net profit of $90 million, with a projected growth rate of 91% [3]. - The revenue forecast for 2024 is $1.618 billion, reflecting a growth rate of 75.1% [3]. - The company anticipates a significant increase in the unit value of its rear camera business, estimated to be around seven times that of the front camera [2]. Market Position - The company has a unique position in the MR supply chain, with expectations for growth as the consumer MR market expands [2]. - The global automotive LiDAR market is projected to grow from $330 million in 2022 to $4.65 billion by 2028, with a compound annual growth rate (CAGR) of 55% [2].

Investment Rating - The investment rating for the company is "Buy" (maintained) [2]. Core Views - The company is seen as a rare high-growth opportunity, benefiting from market share gains and optical upgrades from major clients. The net profit forecast for 2024 is set at $93 million, with adjustments made for capital expenditure impacts on depreciation leading to a revised 2025 net profit forecast of $172 million, down from $186 million. A new forecast for 2026 net profit is $232 million, with corresponding year-on-year growth rates of 101.5%, 84.9%, and 34.6% for 2024, 2025, and 2026 respectively. The current stock price corresponds to P/E ratios of 21.0, 11.4, and 8.5 for 2024-2026 [2][3]. Summary by Relevant Sections Financial Performance - In 2023, the company's net profit was $46 million, aligning with expectations, primarily due to bank interest income and better-than-expected gross margins from the lidar business, offset by underperformance in the tablet segment. The revenue for H2 2023 was $560 million, a 22% year-on-year decline, mainly due to inventory adjustments in the tablet business. The gross margin for H2 2023 was stable at 13.8%, slightly above expectations, while bank interest income contributed $11 million, exceeding forecasts [2][3]. Future Outlook - For H1 2024, net profit is expected to stabilize or slightly increase, driven by the conclusion of inventory adjustments in the tablet business and potential market share gains. The introduction of new camera module components for major clients is anticipated to enhance revenue in H2 2024 and beyond. The trend of optical upgrades from overseas major clients is expected to accelerate, contributing to growth [3][4]. Key Financial Metrics - The company's projected financial metrics are as follows: - Revenue (in million USD): 2022A: 1,116, 2023A: 924, 2024E: 1,901, 2025E: 3,320, 2026E: 4,140 - Net Profit (in million USD): 2022A: 84, 2023A: 46, 2024E: 93, 2025E: 172, 2026E: 232 - Gross Margin (%): 2022A: 15.6, 2023A: 13.8, 2024E: 12.3, 2025E: 11.4, 2026E: 11.3 - P/E Ratios: 2022A: 23.3, 2023A: 42.7, 2024E: 21.0, 2025E: 11.4, 2026E: 8.5 [4].

Financial Performance - The company's revenue for the year ended December 31, 2023, was approximately $923.846 million, a decrease of about 17.23% compared to the previous year[3] - The net profit attributable to equity shareholders for the year ended December 31, 2023, was approximately $46.589 million, a decrease of about 44.74% from the previous year[3] - Basic earnings per share for the year ended December 31, 2023, were $0.055, down approximately 45.54% compared to $0.101 in the previous year[3] - The gross profit for the year ended December 31, 2023, was $127.766 million, compared to $174.447 million in the previous year[4] - Total comprehensive income for the year ended December 31, 2023, was $39.269 million, compared to $46.276 million in the previous year[5] - Total revenue from external customers across all regions was 923,846 thousand HKD in 2023, down from 1,116,210 thousand HKD in 2022, a decrease of about 17.3%[14] - Profit fell from $83.8 million in 2022 to $46.4 million in 2023, a decrease of about 44.7%[29] - Gross profit, operating profit, and net profit for 2023 were approximately $127.8 million, $59.7 million, and $46.4 million, respectively, compared to $174.4 million, $106.0 million, and $83.8 million in 2022[32] - Gross margin, operating margin, and net margin for 2023 were approximately 13.8%, 6.5%, and 5.0%, respectively, down from 15.6%, 9.5%, and 7.5% in 2022[32] Assets and Liabilities - The company's total assets less current liabilities as of December 31, 2023, were $427.476 million, an increase from $378.839 million in the previous year[7] - Non-current assets, including property, plant, and equipment, increased to $176.819 million in 2023 from $130.253 million in 2022[6] - The company's cash and cash equivalents as of December 31, 2023, were $96.726 million, up from $44.508 million in the previous year[7] - The total equity attributable to equity shareholders increased to $409.655 million in 2023 from $359.989 million in 2022[8] - Total assets increased from $631.2 million in 2022 to $943.3 million in 2023, showing a growth of approximately 49.3%[29] - The company had approximately $96.7 million in cash and cash equivalents as of December 31, 2023, sufficient to meet current operational needs[33] Customer Concentration - The company had a significant customer contributing 93% of total revenue in 2023, down from 99% in 2022, with sales to this customer amounting to $863.786 million[12] - Revenue from external customers in China decreased to 852,619 thousand HKD in 2023 from 1,095,619 thousand HKD in 2022, representing a decline of approximately 22.2%[14] Operational Metrics - The company recognized a foreign exchange gain of 1,049 thousand HKD in 2023, down from 11,202 thousand HKD in 2022, a decrease of approximately 90.6%[15] - The company's employee costs, including salaries and wages, totaled 59,901 thousand HKD in 2023, slightly down from 60,327 thousand HKD in 2022[16] - Trade receivables decreased to 152,813 thousand HKD in 2023 from 181,674 thousand HKD in 2022, indicating a reduction of about 15.9%[26] - Trade payables increased to 209,195 thousand HKD in 2023 from 196,146 thousand HKD in 2022, marking an increase of approximately 6.7%[27] - Financing costs rose by approximately 87.0% to about $9.6 million in 2023, attributed to increased bank loan interest expenses[32] Future Outlook and Strategy - The global AR/VR market is projected to grow from $13.8 billion in 2023 to $50.9 billion in 2026, with a CAGR of 32.3%[30] - The automotive LiDAR market is expected to grow from $333 million in 2022 to $4.65 billion by 2028, with a CAGR of 69% for passenger vehicles[31] - The company plans to increase R&D investment and enhance talent acquisition to meet diverse customer demands and market challenges[30] - The company recognizes the importance of AI technology and its integration with AR/VR for future business opportunities[30] - The management emphasizes the need for a culture of innovation, openness, and collaboration to drive continuous development[31] - The company aims to solidify its market position through technological innovation and talent development amidst competitive pressures[31] Capital Expenditures and Dividends - Capital expenditures for 2023 were approximately $80.8 million, down from $92.7 million in 2022, primarily for purchasing additional machinery and equipment[34] - The company will not pay dividends for the year ending December 31, 2023, to ensure continued investment in optical technology development[29] - The company did not declare any dividends for the year, consistent with 2022[37] Miscellaneous - The net loss from the sale of properties, plants, and equipment improved to (1,286) thousand HKD in 2023 from (11,617) thousand HKD in 2022[15] - The company reported a pre-tax profit of 66,751 thousand HKD in 2023, slightly up from 66,090 thousand HKD in 2022[17] - The depreciation expense for owned properties, plants, and equipment increased to 25,543 thousand HKD in 2023 from 18,861 thousand HKD in 2022, reflecting a rise of approximately 35.5%[18] - Other income increased by approximately 122.9% from about $5.7 million in 2022 to about $12.8 million in 2023, mainly due to an increase in bank interest income[32] - The workforce increased to approximately 5,764 full-time employees in 2023, up from 3,405 in 2022[36] - No significant events occurred after the reporting period that would require disclosure by the company or its subsidiaries[42] - The annual performance announcement and annual report for 2023 will be published on the company's website and the Hong Kong Stock Exchange website[42]

Financial Performance - Revenue for the reporting period was $366.7 million, a decrease of 9.4% compared to $404.6 million in the first half of 2022, primarily due to reduced customer orders[5] - Net profit for the reporting period was $17.5 million, down from $31.2 million in the first half of 2022[5] - Revenue for the six months ended June 30, 2023, was $366.725 million, a decrease from $404.552 million in the same period in 2022[31] - Gross profit for the six months ended June 30, 2023, was $50.853 million, down from $60.084 million in the same period in 2022[31] - Operating profit for the six months ended June 30, 2023, was $22.391 million, compared to $35.993 million in the same period in 2022[31] - Net profit attributable to equity shareholders for the six months ended June 30, 2023, was $18.034 million, down from $31.391 million in the same period in 2022[31] - Basic earnings per share for the six months ended June 30, 2023, were $0.021, compared to $0.038 in the same period in 2022[31] - The company's comprehensive income for the six months ended June 30, 2023, was a loss of $398,000, compared to a gain of $8.833 million in the same period in 2022[32] - The company's exchange differences on translation of financial statements resulted in a loss of $17.887 million for the six months ended June 30, 2023[32] - Total revenue for the 12 months ending June 30, 2023, was $1.078 billion, up from $906.214 million in the same period in 2022[43] - Gross profit for the 12 months ending June 30, 2023, was $165.216 million, compared to $135.302 million in the same period in 2022[43] - Basic earnings per share (EPS) of $0.0214 for the six months ended June 30, 2023, based on a profit attributable to ordinary equity shareholders of $18,034,000 and a weighted average number of ordinary shares of 842,680,000[47] - Diluted EPS of $0.0206 for the six months ended June 30, 2023, based on a profit attributable to ordinary equity shareholders of $18,034,000 and a weighted average number of ordinary shares of 877,205,000[48] Market and Industry Outlook - The company expects the global economy to remain turbulent in 2023, with challenges in the operating environment, but remains optimistic about the growth opportunities in the optical industry, particularly in smart driving, AR, and VR[6] - The LiDAR market is projected to grow from $1.4 billion in 2023 to $3.7 billion in 2028, with a CAGR of 19.4%, and the company plans to continue investing in this area to capture market opportunities[6] - AR/VR device shipments are expected to reach 10.35 million units in 2023, with a year-on-year growth rate of 20.6%, and the company aims to strengthen its position in this segment[7] Assets and Liabilities - Total assets as of June 30, 2023, were $697.9 million, up from $631.2 million at the end of 2022, with net current assets of $219.9 million and total equity of $373.3 million[8] - The company reported $245.9 million in unencumbered cash and cash equivalents as of June 30, 2023, down from $287.0 million a year earlier, but management believes this is sufficient to support operational needs[8] - Total bank financing as of June 30, 2023, was approximately $396.5 million, with $209.3 million utilized, and the company had no other significant outstanding liabilities[9] - The company's debt-to-equity ratio increased to 77.0% as of June 30, 2023, up from 42.0% at the end of 2022[9] - The company had no contingent liabilities as of June 30, 2023, except for the guarantees provided for subsidiary bank financing[12] - Total assets increased to $387,805 thousand as of June 30, 2023, compared to $378,839 thousand at the end of 2022[33] - Cash and cash equivalents surged to $245,886 thousand, up from $44,508 thousand at the end of 2022[33] - Inventory decreased significantly to $52,820 thousand from $138,339 thousand at the end of 2022[33] - Bank deposits increased to $142,545 thousand from $101,944 thousand at the end of 2022[33] - Net current assets stood at $219,892 thousand, slightly down from $228,322 thousand at the end of 2022[33] - Total equity increased to $373,266 thousand as of June 30, 2023, compared to $360,597 thousand at the end of 2022[34] - Retained earnings grew to $314,001 thousand from $298,284 thousand at the start of 2023[36] - Non-controlling interests increased significantly to $4,938 thousand from $608 thousand at the end of 2022[34] - Profit for the period was $18,034 thousand, contributing to the overall equity increase[36] - Other comprehensive income showed a loss of $17,435 thousand, primarily due to exchange rate fluctuations[36] - Trade receivables (net of impairment allowance) decreased to $72,648,000 as of June 30, 2023, from $181,674,000 as of December 31, 2022[53] - Trade payables decreased to $74,036,000 as of June 30, 2023, from $196,146,000 as of December 31, 2022[56] Capital Expenditure and Investments - The company's capital expenditure for the reporting period was $44.0 million, compared to $51.3 million for the six months ended June 30, 2022, primarily for purchasing additional equipment to produce more advanced flip-chip camera modules[10] - Acquisition of property, plant, and equipment with a cost of $45,804,000 for the six months ended June 30, 2023, compared to $55,088,000 for the same period in 2022[50] - Capital commitments of $17,085,000 as of June 30, 2023, compared to $13,877,000 as of December 31, 2022[58] Shareholder and Equity Information - The company's major shareholder, LiJing Innovation Technology Co., Ltd., holds a 72.25% beneficial interest and 64.89% controlled corporate interest in the company's shares as of June 30, 2023[18] - The company has issued a total of 849,486,800 ordinary shares as of June 30, 2023[19] - 551,229,760 shares, representing approximately 64.89% of the total issued share capital, were pledged as collateral for bank financing[19] - The total number of shares available for issuance under the share option plan is 83,436,880, accounting for 9.82% of the total issued shares[20] - 10,302,000 share options were exercised during the six months ended June 30, 2023, compared to 822,000 in the same period last year[23] - The weighted average closing price of shares before the exercise date for the 10,302,000 share options was HKD 17.7799[23] - The total number of shares available for issuance under the share option plan, after deducting exercised, canceled, and expired options, is 60,628,880, representing approximately 7.14% of the issued share capital[23] - The potential number of shares to be issued under the share option plan divided by the weighted average number of issued shares during the period is 4.76%[23] - The company's directors and CEO hold beneficial interests in the company's shares, with the largest being 0.37% held by the Executive Chairman, Mr. Meng Yan[15] Cash Flow - Operating cash flow increased to $98.523 million in H1 2023, up from $83.795 million in H1 2022[37] - Net cash used in investing activities rose to $86.335 million in H1 2023, compared to $50.052 million in H1 2022[37] - Net cash generated from financing activities surged to $193.106 million in H1 2023, up from $70.424 million in H1 2022[37] Revenue and Market Segments - Revenue from the largest customer accounted for 96.5% of total revenue in H1 2023, down from 99.7% in H1 2022[41] - Revenue from China (including Hong Kong) decreased to $340.222 million in H1 2023, compared to $402.448 million in H1 2022[42] - Revenue from India reached $21.414 million in H1 2023, a new market entry compared to no revenue in H1 2022[42] - Sales of goods to non-controlling interests amounted to $10,962,000 for the six months ended June 30, 2023, compared to $0 for the same period in 2022[60] Research and Development - Research and development costs (excluding depreciation and amortization) increased to $20.323 million in H1 2023, up from $18.726 million in H1 2022[44] Taxation - Income tax expense decreased to $1.673 million in H1 2023, down from $3.109 million in H1 2022[45] - Hong Kong profits tax provision calculated at an estimated annual effective tax rate of 16.5% for the six months ended June 30, 2023, with a subsidiary subject to a two-tiered profits tax rate system (8.25% for the first HK$2 million and 16.5% for the remainder)[46] Employee and Compensation - The company had 2,906 full-time employees as of June 30, 2023, down from 3,405 as of December 31, 2022, with total employee costs (excluding directors' remuneration) of $23.7 million for the reporting period, compared to $26.0 million for the same period in 2022[13] - The company terminated its share option plan adopted on February 4, 2015, and adopted a new share option plan on May 5, 2021, to incentivize employees[13] Corporate Governance and Compliance - The company did not hold any significant investments, make major acquisitions, or sell subsidiaries or associates during the six months ended June 30, 2023[11] - The company did not use any forward foreign exchange contracts or other derivative instruments to hedge currency fluctuations as of June 30, 2023[11] - The company did not recommend any interim dividend for the reporting period, citing the need to retain more cash for future expansion plans[24] - The company did not purchase, sell, or redeem any of its listed securities during the reporting period[24] - The company's audit committee reviewed the unaudited consolidated financial statements and was satisfied that they were prepared in accordance with applicable accounting standards[25]

Financial Performance - For the fiscal year ending December 31, 2022, Cowell Electronics reported a revenue increase to $1,116.2 million, achieving positive growth despite challenging market conditions[10]. - The net profit for 2022 rose by 69.27% to $83.8 million compared to 2021, reflecting strong financial performance[10]. - In the fiscal year 2022, the company's revenue increased from $799.3 million in 2021 to $1,116.2 million, representing a growth of approximately 39.6%[24]. - The net profit attributable to equity shareholders rose from $49.8 million in 2021 to $84.3 million in 2022, marking an increase of about 69.0%[24]. - Gross profit, operating profit, and net profit for 2022 were $174.4 million, $106.0 million, and $83.8 million respectively, representing increases of 44.8%, 80.8%, and 68.3% compared to 2021[35]. - The net profit margin for the year was 7.5%, compared to 6.2% in 2021[195]. - Operating cash flow generated was $97.1 million, an increase from $64.5 million in 2021[196]. Market Trends - The global camera module market size was approximately $39.7 billion in 2022, projected to reach $64.1 billion by 2028, with a compound annual growth rate (CAGR) of 8%[11]. - The global smartphone sales volume in 2022 decreased by 11.3% year-on-year, dropping from 1.35 billion units in 2021 to 1.21 billion units, marking the lowest level in nearly a decade[19]. - The high-end smartphone market, with prices over $600, saw a 1% increase in global sales in 2022, contributing over 55% to the total smartphone market revenue[19]. - The advanced driver assistance systems (ADAS) market is projected to grow from $30.9 billion in 2022 to $65.1 billion by 2030, with a compound annual growth rate (CAGR) of 9.7%[22]. - The LiDAR market is expected to expand from $1.4 billion in 2023 to $3.7 billion by 2028, with a CAGR of approximately 19.4%[22]. - The AR/VR device shipment is forecasted to reach 10.35 million units in 2023, representing a year-on-year growth rate of 20.6%[20]. Company Strategy - The company is focusing on technological innovation and sustainability, aiming for carbon neutrality and reducing plastic usage in its operations[12]. - Cowell Electronics anticipates that the demand for optical components will increase in new fields such as augmented reality (AR), virtual reality (VR), and smart driving applications[11]. - The company emphasizes the importance of enhancing core competitiveness to provide differentiated services and add value in a challenging economic environment[12]. - The management team is committed to expanding the company's operational scale and diversifying its product offerings[15]. - The company aims to leverage the favorable conditions in the optical industry to drive future business growth and expansion[11]. - The company plans to continue increasing R&D investment and promoting production innovation to enhance customer value and maintain competitive differentiation[28]. Employee and Compensation - As of December 31, 2022, the group employed approximately 3,405 full-time employees, an increase from 2,885 employees as of December 31, 2021[86]. - The total employee cost for the year ended December 31, 2022, was approximately $64.3 million, compared to $51.0 million in 2021, reflecting a year-over-year increase of about 26%[86]. - The company emphasizes employee development and offers competitive compensation and stock option plans[197]. Shareholder Information - The company will not declare dividends for the fiscal year ending December 31, 2022, to manage capital needs for future expansions[24]. - The board does not recommend the payment of a final dividend at the end of the reporting period[106]. - The company reported a reserve available for distribution to shareholders of approximately $66.18 million as of December 31, 2022, compared to $65.18 million in 2021[113]. Corporate Governance - The company has established a corporate governance framework, detailed in the annual report[187]. - The independent non-executive directors have reviewed the ongoing related party transactions and confirmed their compliance with the relevant regulations[173]. - The audit committee has reviewed the accounting standards and policies adopted by the group for the fiscal year ending December 31, 2022[188]. Related Party Transactions - The company did not enter into any significant transactions or arrangements with shareholders that would constitute related party transactions for the year ended December 31, 2022[163]. - The company’s related party transactions are reported in the consolidated financial statements[177]. - The company has complied with the regulatory requirements regarding related party transactions, ensuring fairness and reasonableness[176]. Capital Expenditures and Assets - The total assets of the company increased from $552.1 million in 2021 to $631.2 million in 2022, reflecting a growth of approximately 14.3%[24]. - Capital expenditures for the year ended December 31, 2022, were $92.7 million, significantly higher than $26.3 million in 2021, reflecting investments in additional machinery and equipment[70]. - The total assets increased by 14.3% to $631.1 million in 2022, while total liabilities rose by 11.1% to $270.5 million[35]. Stock Options and Shareholder Rights - The total number of stock options available for issuance under the stock option plan as of December 31, 2022, was 71,740,880 shares, representing approximately 8.55% of the company's issued shares[87]. - The maximum number of shares that can be issued upon the exercise of options under the share option plan is capped at 83,436,880 shares, representing 10% of the issued shares at the time of shareholder approval[122]. - The options granted are personal to the grantee and cannot be transferred or assigned to any third party[132]. - No stock options were granted under the stock option plan for the year ended December 31, 2022, compared to 62,650,000 options granted in 2021[136].

Financial Performance - The company's revenue for the year ended December 31, 2022, reached approximately $1,116,210,000, an increase of about 39.65% compared to the previous year[3] - The net profit attributable to the company's owners for the year ended December 31, 2022, was approximately $84,305,000, representing an increase of about 69.27% from the previous year[3] - Basic earnings per share for the year ended December 31, 2022, were $0.101, an increase of approximately 68.3% compared to the previous year[4] - The gross profit for the year ended December 31, 2022, was $174,447,000, compared to $120,498,000 in the previous year[4] - The operating profit for the year ended December 31, 2022, was $105,953,000, up from $58,609,000 in the previous year[4] - The total comprehensive income for the year ended December 31, 2022, was $46,276,000, compared to $57,337,000 in the previous year[5] - The company's revenue for the fiscal year 2022 increased to $1,116.2 million, a 39.7% rise from $799.3 million in 2021[33] - Net profit for the fiscal year 2022 rose to $83.8 million, up from $49.8 million in 2021, reflecting a significant improvement in profitability[33] - Operating profit for the fiscal year 2022 was approximately $106.0 million, up from $58.6 million in 2021, showcasing improved operational efficiency[33] Assets and Equity - The company's total assets less current liabilities as of December 31, 2022, amounted to $378,839,000, compared to $325,152,000 in the previous year[7] - The company's equity attributable to owners was $359,989,000 as of December 31, 2022, compared to $308,669,000 in the previous year[8] - Total assets as of December 31, 2022, were $631.2 million, compared to $552.1 million at the end of 2021, indicating strong asset growth[34] - The company's total equity as of December 31, 2022, was $360.6 million, compared to $308.7 million at the end of 2021, reflecting a solid financial position[34] Customer Concentration - The largest customer accounted for 99% of total revenue in both 2022 and 2021, with sales to this customer amounting to $1,102,487,000 in 2022[12] Research and Development - The company plans to continue investing in R&D and production innovation to enhance customer value and maintain competitive differentiation in a challenging operating environment[31] - Research and development costs, excluding depreciation and amortization, surged to 50,079 thousand HKD in 2022 from 23,407 thousand HKD in 2021, reflecting an increase of about 113.5%[18] Employee and Operational Metrics - The company employed approximately 3,405 full-time employees as of December 31, 2022, an increase from 2,885 employees in 2021, indicating workforce expansion[37] - The total employee costs increased to 66,090 thousand HKD in 2022 from 51,893 thousand HKD in 2021, reflecting a rise of approximately 27.4%[16] Dividends and Stock Options - The company did not declare any dividends for the year, consistent with the previous year[28] - The company did not declare any final dividends for the year ended December 31, 2022, consistent with the previous year[38] - A total of 4,816,000 stock options were exercised during the year, while 230,000 were canceled and 1,650,000 expired[38] - As of December 31, 2022, the total number of shares available for issuance under the stock option plan was 71,740,880 shares, representing approximately 8.55% of the company's issued share capital[38] - The company has adopted a new stock option plan on May 5, 2021, replacing the previous plan from February 4, 2015[38] Compliance and Governance - The company has complied with the corporate governance code during the financial year ended December 31, 2022[40] - The audit committee reviewed the accounting principles and policies adopted by the group and confirmed that the financial statements fairly present the group's financial position and performance[41] - There were no significant events after the reporting period that would require disclosure[43] Market Outlook - The advanced driver assistance systems (ADAS) market is projected to grow from $30.9 billion in 2022 to $65.1 billion by 2030, with a compound annual growth rate (CAGR) of 9.7%[31] - The LiDAR market is expected to expand from $1.4 billion in 2023 to $3.7 billion by 2028, with a CAGR of approximately 19.4%[31]

Financial Performance - For the six months ended June 30, 2022, the company's revenue was $404.6 million, a 35.9% increase from $297.6 million in the same period of 2021[6]. - The net profit for the reporting period was $31.2 million, compared to $22.5 million in the first half of 2021[7]. - Revenue for the six months ended June 30, 2022, was $404,552 thousand, representing a 36% increase from $297,629 thousand in the same period of 2021[45]. - Gross profit for the same period was $60,084 thousand, up 33% from $45,280 thousand year-over-year[45]. - Operating profit increased to $35,993 thousand, a 42% rise compared to $25,369 thousand in the previous year[45]. - Net profit for the period was $31,155 thousand, reflecting a 38% increase from $22,502 thousand in 2021[45]. - The company reported a total comprehensive income of $8,833 thousand for the period, down from $25,377 thousand in the previous year[46]. - The company reported a net profit of $31,391,000 for the six months ended June 30, 2022, compared to a profit of $22,502,000 for the same period in 2021, representing an increase of approximately 39.5%[54]. - Total comprehensive income for the six months ended June 30, 2022, was $9,069,000, down from $25,377,000 in the previous year, indicating a decrease of about 64.3%[54]. Assets and Liabilities - Total assets as of June 30, 2022, were $608.2 million, up from $552.1 million on December 31, 2021[10]. - The asset-liability ratio as of June 30, 2022, was -65.3%, compared to -53.9% on December 31, 2021, indicating a strong equity position[11]. - The company's net assets amounted to $319,971 thousand, an increase from $308,669 thousand at the end of 2021[50]. - Total liabilities increased to $288,236 thousand, compared to $226,950 thousand at the end of 2021[49]. - Trade receivables (net of loss provisions) decreased to $79,441,000 as of June 30, 2022, from $108,532,000 as of December 31, 2021, representing a decline of approximately 26.8%[78]. - Trade payables decreased to $99,157,000 as of June 30, 2022, from $129,158,000 as of December 31, 2021, indicating a reduction of approximately 23.3%[80]. Cash Flow and Investments - The company reported $287.0 million in cash and cash equivalents as of June 30, 2022, indicating a strong financial position[10]. - Cash generated from operating activities was $90,746,000 for the six months ended June 30, 2022, compared to cash used of $(12,506,000) in the same period of 2021, showing a significant turnaround[57]. - The company invested $51,309,000 in property, plant, and equipment during the six months ended June 30, 2022, compared to $6,061,000 in the prior year, reflecting a substantial increase in capital expenditure[57]. - The company secured new bank loans amounting to $91,973,000 during the reporting period, contributing to a net cash inflow from financing activities of $69,327,000[57]. - Cash and cash equivalents increased to $287,007,000 as of June 30, 2022, compared to $188,243,000 as of December 31, 2021, reflecting a growth of about 52.5%[79]. Shareholder Information - Major shareholders hold 617,048,760 shares, representing approximately 73.88% of the total equity[22]. - As of June 30, 2022, the total number of issued ordinary shares was 835,190,800 shares[25]. - A total of 551,229,760 shares, representing approximately 66.00% of the issued share capital, were pledged to a licensed bank as collateral for bank financing[25]. - The board of directors decided not to declare an interim dividend for the reporting period, considering the uncertain economic outlook due to the COVID-19 pandemic[28]. Employee Information - The total number of full-time employees increased to 3,505 as of June 30, 2022, compared to 2,885 as of December 31, 2021, with total employee costs approximately $26.0 million for the reporting period[17]. - The total employee costs for the six months ended June 30, 2021, were $22.0 million, indicating an increase of approximately 18.2% year-over-year[17]. - Key management personnel compensation increased to $353,000 during the six months ended June 30, 2022, compared to $295,000 for the same period in 2021, marking an increase of about 19.7%[84]. Research and Development - The company plans to increase R&D investment and accelerate automation to enhance customer value and maintain stable partnerships[9]. - The company is focusing on new technologies and applications in the optical industry, particularly in smart driving and AR/VR sectors[8]. Market Opportunities - The company aims to leverage opportunities in the growing LiDAR market, projected to expand from $2.1 billion in 2021 to $3.4 billion by 2026, with a CAGR of approximately 22%[8]. Share Option Scheme - The company has adopted a new share option scheme on May 5, 2021, but did not grant any options under this scheme during the reporting period[24]. - The new share option plan aims to provide greater flexibility in granting options and incentivizing contributions to the group[24]. - The total number of shares available for issuance under the share option scheme as of June 30, 2022, was 75,209,880 shares, equivalent to about 9.00% of the issued shares[27]. - The company issued 822,000 share options during the six months ended June 30, 2022, compared to 150,000 share options in the same period of 2021[81]. - The company has no share options granted during the six months ended June 30, 2022, compared to 45,450,000 options granted in the same period of 2021[81].