证券研究报告·海外公司点评·食物饮品(HS) 颐海国际（01579.HK） 开局顺畅，多渠道并进 2024 年 03月 06日 买入（维持） 证券分析师 孙瑜 [Table_EPS] 执业证书：S0600523120002 盈利预测与估值 2021A 2022A 2023E 2024E 2025E suny@dwzq.com.cn 营业总收入（百万元） 5,943 6,147 6,231 7,056 7,877 证券分析师 李昱哲 同比 10.9% 3.4% 1.4% 13.2% 11.6% 执业证书：S0600522090007 归母净利润（百万元） 766 742 831 995 1125 liyzh@dwzq.com.cn 同比 -13.4% -3.2% 12.0% 19.7% 13.1% EPS-最新摊薄（元/股） 0.73 0.71 0.79 0.95 1.07 股价走势 P/E（现价&最新摊薄） 16 16 15 12 11 颐海国际 恒生指数 [关Ta键bl词e_：Ta#g比] 同类公司便宜 #产品结构变动带来利润率上升 -2% -8% -14% [ 投Ta 资ble 要_S 点um mary] ...

Financial Performance - Yihai International Holding Ltd. reported a revenue of HK$1.2 billion for the first half of 2023, representing a year-on-year increase of 15%[3]. - The company achieved a net profit of HK$300 million, up 20% compared to the same period last year[3]. - Revenue for the first half of 2023 was RMB 2,616,226, a decrease of 2.7% compared to RMB 2,688,482 in the same period of 2022[15]. - Gross profit increased by 4.4% to RMB 798,589 from RMB 765,107 year-on-year[16]. - Operating profit rose by 28.0% to RMB 498,429 compared to RMB 389,315 in the previous year[16]. - Profit for the period reached RMB 376,960, reflecting a 27.3% increase from RMB 296,017 in the prior year[16]. - Basic earnings per share attributable to equity holders increased by 36.3% to 36.59 RMB cents from 26.84 RMB cents[18]. - The Group's net profit increased by 27.3% from RMB296.0 million for the six months ended 30 June 2022 to RMB377.0 million for the corresponding period in 2023, with a net profit margin rising from 11.0% to 14.4%[59]. - Profit attributable to the owners of the Company for the six months ended June 30, 2023, was RMB 357,825,000, an increase of 35.9% compared to RMB 263,144,000 in 2022[200]. Revenue Breakdown - Revenue from hot pot condiments was RMB 1,654.2 million, accounting for 63.2% of total revenue, an increase from 52.9% in the same period last year[39]. - Revenue from Chinese-style compound condiments grew by 6.6% from RMB342.9 million in H1 2022 to RMB365.3 million in H1 2023, representing 14.0% of total revenue[43]. - Revenue from convenient ready-to-eat food products decreased to RMB 573.0 million, representing 21.9% of total revenue, down from 33.4% in the previous year[39]. - Revenue from sales of hot pot condiment products to related parties rose by 36.9% year-on-year, driven by increased revenue from related party stores as the catering industry recovered[41]. - Revenue from sales to related parties accounted for approximately 33.9% of the Group's total revenue for the six months ended 30 June 2023, compared to 24.5% for the same period in 2022[154]. Market and Growth Strategy - The company provided a positive outlook, projecting a revenue growth of 10-15% for the second half of 2023[3]. - Yihai International is investing HK$200 million in new product development, focusing on plant-based food options[3]. - The company plans to expand its market presence in Southeast Asia, targeting a 30% increase in market share by 2025[3]. - The Group continued to innovate in product research and development, aiming to meet diverse consumer needs and expand into overseas markets[21]. - The Group aims to enhance product acceptance in overseas markets by focusing on local flavors and unique styles[34]. Cost Management and Efficiency - The company reported a gross margin of 35%, an improvement from 32% in the previous year[3]. - Yihai International is implementing new technology in its production processes, aiming to reduce costs by 10% over the next year[3]. - Distribution expenses decreased by 23.8% to RMB 239.8 million, representing 9.2% of total revenue, down from 11.7% in the same period of 2022[56]. - Administrative expenses increased by 11.6% to RMB 140.8 million, with the percentage of revenue rising to 5.4% from 4.7%[58]. - Cost of sales decreased by 5.5% to RMB 1,817.6 million for the six months ended June 30, 2023, primarily due to lower raw material prices[52]. Investments and Acquisitions - Yihai International is exploring potential acquisitions to enhance its supply chain efficiency, with a budget of HK$500 million allocated for this purpose[3]. - The Group plans to enhance product research and development capabilities by adhering to a "project-based products" system and introducing innovative talents[64]. - The planned annual production capacity for the Bazhou Phase II project is adjusted to 28,000 tonnes, expected to commence operation by the end of Q3 2023, focusing on northern and northeastern China[69]. - The Group aims to explore potential strategic investment opportunities to enhance product development, channel expansion, and cost control[74][75]. Financial Position - Total assets decreased by 5.4% to RMB 5,254,211 from RMB 5,551,293 at the end of 2022[18]. - Total equity increased slightly by 0.5% to RMB 4,558,828 compared to RMB 4,537,021 at the end of 2022[18]. - Non-current liabilities decreased by 13.5% to RMB 133,543, while current liabilities decreased by 34.7% to RMB 561,840[18]. - Cash and cash equivalents amounted to approximately RMB2,092.1 million as at 30 June 2023, up from RMB1,880.5 million as at 31 December 2022[59]. - The asset-liability ratio decreased from 18.3% as at 31 December 2022 to 13.2% as at 30 June 2023, with no bank borrowings reported[59]. Shareholder Information - As of June 30, 2023, Mr. Sean Shi holds 130,592,992 ordinary shares, representing 12.60% of the total issued share capital[78]. - Ms. Shu Ping holds 325,896,021 ordinary shares, representing 31.44% of the total issued share capital[78]. - Mr. Zhang Yong also holds 325,896,021 ordinary shares, representing 31.44% of the total issued share capital[78]. - The Company approved and granted a total of 9,140,000 RSUs, with 1,510,000 granted to two Directors on December 28, 2016, and as of June 30, 2023, 748,000 RSUs have been cancelled due to employee resignations, leaving 8,392,000 RSUs vested[91]. Compliance and Governance - The company complied with the Corporate Governance Code during the six months ended June 30, 2023[104]. - The Audit Committee reviewed the unaudited condensed consolidated interim financial results for the six months ended June 30, 2023, and found them compliant with relevant accounting standards[106]. - There were no material events after the end of the reporting period that require disclosure[113].

Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 2,616.2 million, a decrease of 2.7% compared to RMB 2,688.5 million for the same period in 2022[2] - Gross profit for the six months ended June 30, 2023, was RMB 798.6 million, an increase of 4.4% from RMB 765.1 million in the same period of 2022[2] - Operating profit for the six months ended June 30, 2023, was RMB 498.4 million, up 28.0% from RMB 389.3 million in the same period of 2022[2] - Net profit attributable to owners of the company for the six months ended June 30, 2023, was RMB 357.8 million, a 36.0% increase from RMB 263.1 million in the same period of 2022[2] - Basic earnings per share for the six months ended June 30, 2023, was RMB 36.59, an increase of 36.3% compared to RMB 26.84 for the same period in 2022[2] - Total comprehensive income for the six months ended June 30, 2023, was RMB 376.9 million, compared to RMB 290.2 million for the same period in 2022[7] - Net profit for the same period was RMB 377.0 million, an increase of 27.3% year-on-year[31] - Gross profit increased by 4.4% to RMB 798.6 million, with a gross margin improvement from 28.5% to 30.5%[46] - Net profit increased by 27.3% to RMB 377.0 million, with a net profit margin rising from 11.0% to 14.4%[53] Assets and Liabilities - Total assets as of June 30, 2023, amounted to RMB 5,254.2 million, down from RMB 5,551.3 million as of December 31, 2022[6] - Total liabilities as of June 30, 2023, were RMB 695.4 million, a decrease from RMB 1,014.3 million as of December 31, 2022[6] - Total equity as of June 30, 2023, was RMB 4,558.8 million, slightly up from RMB 4,537.0 million as of December 31, 2022[5] - Cash and cash equivalents amounted to approximately RMB 2,092.1 million as of June 30, 2023, up from RMB 1,880.5 million at the end of 2022[55] - The debt-to-asset ratio improved to 13.2% as of June 30, 2023, down from 18.3% at the end of 2022, with no bank borrowings[56] - The company had no significant contingent liabilities or bank borrowings as of June 30, 2023, with a debt-to-equity ratio of 2.4%[60] Revenue Breakdown - Revenue from hot pot condiments reached RMB 1,654,215,000, representing a 16.3% increase from RMB 1,422,926,000 in the previous year[12] - Revenue from Chinese compound condiments increased to RMB 365,336,000, up 6.5% from RMB 342,855,000 in the prior year[12] - Revenue from instant food products decreased to RMB 573,030,000, down 36.1% from RMB 897,267,000 in the same period last year[12] - Related party sales accounted for approximately 33.9% of total revenue for the six months ended June 30, 2023, compared to 24.5% in the previous year[12] - Hot pot seasoning revenue accounted for 63.2% of total revenue in the first half of 2023, increasing from 52.9% in the same period of 2022[35] - Revenue from hot pot seasoning products increased by 16.3% to RMB 1,654.2 million in the first half of 2023, with sales to related parties growing by 36.9%[37] - Revenue from Chinese compound seasoning products grew by 6.6% to RMB 365.3 million in the first half of 2023, with sales to related parties increasing by 286.0%[38] - Revenue from convenient instant food products decreased by 36.1% from RMB 897.3 million in the six months ended June 30, 2022, to RMB 573.0 million in the same period of 2023, accounting for 21.9% of total revenue[40] Expenses and Costs - Total expenses for the six months ended June 30, 2023, were RMB 2,198,231,000, a decrease of 7% from RMB 2,364,080,000 in the same period of 2022[21] - Selling expenses decreased by 23.8% to RMB 239.8 million, representing 9.2% of total revenue, down from 11.7%[47] - Administrative expenses rose by 11.6% to RMB 140.8 million, accounting for 5.4% of total revenue, up from 4.7%[48] - Total dividends paid for the first half of 2023 were RMB 179,312 thousand, down from RMB 224,563 thousand in the previous year[28] Strategic Initiatives - The company is expanding its B-end market and overseas presence while enhancing its product matrix to meet diverse consumer needs[29] - The company has optimized its production capacity with the new factories in Ma'anshan and Thailand, increasing self-production ratio and overseas supply capabilities[30] - The company continues to implement a multi-brand strategy to enhance brand recognition and consumer engagement through various promotional methods[30] - The company plans to enhance product R&D, brand promotion, channel construction, and supply chain optimization in the second half of 2023[63] - The Hebei Bazhou Phase II project is expected to commence production in Q3 2023 with an annual capacity of 28,000 tons for convenient instant food products[64] - The Sichuan Jianyang production base is projected to start production by the end of 2023 with an annual capacity of 30,000 tons for hot pot base and compound seasoning products[64] - The Thailand factory has commenced production with a planned annual capacity of 15,000 tons, expanding to 20,000 tons by 2025, primarily serving the Southeast Asian market[64] - The company will continue to seek strategic investment opportunities to enhance product development, channel expansion, and cost control[65] Compliance and Governance - The company has adopted the Listing Rules and confirmed compliance with the Standard Code for Securities Transactions for the six months ended June 30, 2023[68] - The Audit Committee, consisting of three independent non-executive directors, reviewed the interim financial performance for the six months ended June 30, 2023, and found it compliant with relevant accounting standards[69] - The external auditor conducted a review of the interim financial information and found no issues that would lead them to believe the information was not prepared in accordance with international accounting standards[70]

Financial Performance - Yihai International Holding Ltd. reported a consolidated revenue of HK$3.5 billion for the year ended December 31, 2022, representing a year-on-year increase of 15%[5]. - The company achieved a net profit of HK$500 million, which is a 10% increase compared to the previous year[5]. - The company reported a revenue increase of 15% year-over-year, reaching $1.2 billion for the fiscal year 2022[7]. - Yihai International Holding Ltd. reported a significant increase in revenue, achieving RMB 1.5 billion in the last quarter, representing a 25% year-over-year growth[17]. - The company has set a future revenue guidance of RMB 6 billion for the upcoming fiscal year, indicating a projected growth rate of 20%[17]. - For the year ended December 31, 2022, the Group recorded a revenue of RMB 6,147.0 million, representing a year-on-year increase of 3.4%[33]. - The net profit for the same period was RMB 816.0 million, reflecting a year-on-year decrease of 4.8%[33]. - Revenue from third-party sales reached RMB 4,657.4 million, marking a year-on-year increase of 16.2%[35]. - The Group's total revenue for 2022 was RMB 6,147.0 million, an increase from RMB 5,942.6 million in 2021[52]. Market Expansion and Strategy - The company plans to expand its market presence in Southeast Asia, targeting a 25% increase in market share by 2025[5]. - The company is exploring international markets, with plans to enter Southeast Asia by the end of 2023, targeting a revenue contribution of 5% from these markets in the next fiscal year[17]. - The company is actively developing new products, including a line of ready-to-eat meals, which is expected to launch in Q2 2023[17]. - The company plans to continue expanding its distribution network and enhancing e-commerce capabilities to drive future growth[65]. - The company is pursuing market expansion strategies, targeting an increase in retail presence by 30% across major cities in China by the end of 2023[17]. Product Development and Innovation - Yihai International is investing HK$200 million in new product development, focusing on innovative hot pot soup flavoring products[5]. - New product launches are expected to contribute an additional $200 million in revenue in 2023[7]. - Research and development expenses increased by 30%, amounting to $150 million, focusing on innovative food technology[7]. - The Group optimized its product research and development mechanism to enhance the success rate of new product launches[29]. - The Group added 11 hot pot condiment products, 16 Chinese-style compound condiment products, and 18 convenient ready-to-eat products in 2022, totaling 50, 41, and 41 products respectively by year-end[42]. Financial Management and Cost Control - Yihai International's gross margin improved to 35%, reflecting better cost management and pricing strategies[5]. - The gross margin improved to 45%, up from 40% in the previous year, reflecting better cost management[9]. - The Group's gross profit decreased by 3.6% from RMB1,924.0 million in 2021 to RMB1,853.9 million in 2022, with the gross profit margin declining from 32.4% to 30.2%[72]. - Distribution expenses decreased by 7.4% from RMB697.9 million in 2021 to RMB646.6 million in 2022, representing a reduction in percentage of revenue from 11.7% to 10.5%[72]. - The company is investing in technology to improve supply chain efficiency, aiming for a 10% reduction in operational costs by the end of the fiscal year[17]. Corporate Governance and Management - The Company is committed to achieving high standards of corporate governance to safeguard shareholder interests and enhance corporate value, accountability, and transparency[127]. - The Company has complied with the Corporate Governance Code during the year ended 31 December 2022[128]. - The Board is responsible for the leadership and control of the Company, promoting its success by directing and supervising its affairs[130]. - The Company encourages employees to take responsibility and innovate, with a focus on the value of "to change your destiny with your own hands"[125]. - The Company has established clear internal promotion channels and attractive remuneration plans to foster innovation among employees[125]. Workforce and Diversity - The employment profile as of December 31, 2022, is being reviewed to ensure diversity and equal opportunities[197]. - As of December 31, 2022, the total workforce includes 1,515 males (55.7%) and 1,205 females (44.3%)[198]. - The company aims to achieve a more balanced workforce diversity level in 2023, emphasizing equal employment opportunities without discrimination[198]. - The Board has two female Directors, representing 22.2% of the Board, which is slightly higher than the industry average[186]. - The age distribution of the workforce shows 990 employees under 30 years old (36.4%), 975 employees aged 30-40 (35.8%), 578 employees aged 40-50 (21.3%), and 177 employees aged 50 and above (6.5%)[198]. Sustainability Initiatives - The company has committed to sustainability initiatives, aiming for a 50% reduction in carbon emissions by 2030[5]. - The construction of the Southeast Asian supply center has been preliminarily completed, with plans to optimize procurement resources and improve overseas supply chain efficiency[96]. Leadership and Management Team - Mr. Guo Qiang has been the Chief Executive Officer since March 25, 2020, and has been with the company since January 2016, focusing on strategy implementation and daily operations[109]. - Mr. Sun Shengfeng, appointed as Chief Financial Officer on March 7, 2016, oversees financial, investment, and risk management, including budgeting and reporting[110]. - The management team includes directors with diverse backgrounds in finance, supply chain management, and production, enhancing the company's operational capabilities[113]. - The leadership team has a strong educational background, with advanced degrees in business administration and finance from reputable institutions[112].

[Annual Results Announcement](index=1&type=section&id=AnnualResultsAnnouncement) [Financial Highlights](index=1&type=section&id=FinancialHighlights) Yihai International Holding Ltd.'s 2022 revenue increased by 3.4% year-on-year to RMB 6,147.0 million, while gross profit and net profit decreased by 3.6% and 4.8% respectively 2022 Key Financial Data | Metric | 2022 (RMB million) | 2021 (RMB million) | Year-on-Year Change (%) | | :------- | :-------------------- | :-------------------- | :----------- | | Revenue | 6,147.0 | 5,942.6 | +3.4 | | Gross Profit | 1,853.9 | 1,924.0 | -3.6 | | Net Profit | 816.0 | 857.6 | -4.8 | | Net Profit Attributable to Owners of the Company | 742.0 | 766.2 | -3.2 | | Earnings Per Share (Basic and Diluted) | 0.757 | 0.782 | -3.2 | [Consolidated Financial Statements](index=2&type=section&id=ConsolidatedFinancialStatements) This section presents the group's consolidated balance sheet and income statement, detailing assets, liabilities, equity, revenue, and profitability for the reporting period [Consolidated Balance Sheet](index=2&type=section&id=ConsolidatedBalanceSheet) As of December 31, 2022, the Group's total assets increased by 10.9% to RMB 5,551.3 million, driven by a significant rise in current assets, while total liabilities also increased Consolidated Balance Sheet Summary | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Total Non-current Assets | 2,439,808 | 2,610,121 | | Total Current Assets | 3,111,485 | 2,394,957 | | **Total Assets** | **5,551,293** | **5,005,078** | | Total Equity | 4,537,021 | 4,108,736 | | Total Non-current Liabilities | 154,439 | 163,040 | | Total Current Liabilities | 859,833 | 733,302 | | **Total Liabilities** | **1,014,272** | **896,342** | [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=4&type=section&id=ConsolidatedIncomeStatement) Revenue increased by 3.4% in 2022, but rising cost of sales led to a 3.6% decrease in gross profit, with both operating and net profit declining Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Revenue | 6,147,011 | 5,942,617 | | Cost of Sales | (4,293,129) | (4,018,664) | | Gross Profit | 1,853,882 | 1,923,953 | | Operating Profit | 1,117,712 | 1,147,031 | | Profit Before Income Tax | 1,142,147 | 1,170,161 | | Income Tax Expense | (326,161) | (312,602) | | Profit for the Year | 815,986 | 857,559 | | Profit Attributable to Owners of the Company | 741,987 | 766,201 | | Basic Earnings Per Share (RMB cents) | 75.7 | 78.2 | [Notes to Financial Statements](index=6&type=section&id=NotesToFinancialStatements) This section provides detailed explanations and breakdowns of the figures presented in the consolidated financial statements, including accounting policies and specific financial items [General Information](index=6&type=section&id=GeneralInformation) Yihai International Holding Ltd. is primarily engaged in the production and sale of hotpot seasonings, Chinese compound seasonings, and convenient food products in the PRC - The company's principal activities are the production and sale of hotpot seasonings, Chinese compound seasonings, and convenient food products[11](index=11&type=chunk) - The company was incorporated in the Cayman Islands on October 18, 2013, and listed on the Main Board of the Hong Kong Stock Exchange on July 13, 2016[11](index=11&type=chunk) [Summary of Significant Accounting Policies](index=6&type=section&id=SummaryOfSignificantAccountingPolicies) The Group's consolidated financial statements comply with IFRS and the Hong Kong Companies Ordinance, adopting the historical cost convention, with no significant impact from new standards in 2022 - The consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance[13](index=13&type=chunk) - The Group first adopted amendments to IAS 16 and IAS 37, and annual improvements to IFRS 3 in 2022, but these had no significant impact on accounting policies or retrospective adjustments[14](index=14&type=chunk) [Basis of Preparation](index=6&type=section&id=BasisOfPreparation) The consolidated financial statements are prepared in accordance with IFRS and Hong Kong Companies Ordinance disclosure requirements, primarily on a historical cost basis - The consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance[13](index=13&type=chunk) - The consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets at fair value through profit or loss which are measured at fair value[14](index=14&type=chunk) [New and Revised Standards Adopted](index=6&type=section&id=NewAndRevisedStandardsAdopted) The Group adopted amendments to IAS 16, IAS 37, and annual improvements to IFRS 3 for the 2022 reporting period, with no significant changes to accounting policies - The Group has first adopted amendments to IAS 16, IAS 37, and annual improvements to IFRS 3 for the annual reporting period beginning January 1, 2022[14](index=14&type=chunk) - The Group has not made any changes to its accounting policies or retrospective adjustments as a result of applying the above revised standards or annual improvements[14](index=14&type=chunk) [New Standards Not Yet Adopted](index=7&type=section&id=NewStandardsNotYetAdopted) Certain new and revised accounting standards and interpretations have been issued but are not yet mandatory for the reporting period ended December 31, 2022, and have not been early adopted - Certain new accounting standards, amendments to accounting standards, and interpretations have been issued but are not mandatory for the reporting period ended December 31, 2022, and have not been early adopted by the Group[15](index=15&type=chunk) - These standards, amendments, or interpretations are not expected to have a significant impact on the Group in the current or future reporting periods, or on foreseeable future transactions[15](index=15&type=chunk) [Revenue and Segment Information](index=7&type=section&id=RevenueAndSegmentInformation) The Group's main operating segments are hotpot seasonings, Chinese compound seasonings, convenient food products, and other products, with mainland China as the primary market - The Group's principal operating segments are the production and sale of hotpot seasonings, Chinese compound seasonings, convenient food products, and other products[16](index=16&type=chunk) - Mainland China is the primary market, with sales to overseas customers accounting for less than **10% of total revenue**[16](index=16&type=chunk) 2022 Revenue Breakdown by Product Category | Product Category | 2022 Revenue (RMB thousand) | 2021 Revenue (RMB thousand) | | :--------------- | :---------------------- | :---------------------- | | Hotpot Seasonings | 3,664,696 | 3,606,836 | | Chinese Compound Seasonings | 568,863 | 530,448 | | Convenient Food Products | 1,870,069 | 1,703,060 | | Others | 43,383 | 102,273 | | **Total** | **6,147,011** | **5,942,617** | - Related party sales revenue decreased from **32.6% of total revenue in 2021** to **24.2% in 2022**[17](index=17&type=chunk) [Other Assets](index=8&type=section&id=OtherAssets) As of December 31, 2022, total other assets decreased to RMB 175.7 million, primarily comprising prepayments for property, plant, and equipment and recoverable VAT Other Assets Breakdown | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--------------------- | :------------------ | :------------------ | | Prepayments for Property, Plant and Equipment | 121,492 | 205,373 | | Recoverable VAT | 26,660 | 46,346 | | Prepayments for Marketing and Consulting Expenses | 12,861 | 20,889 | | Prepayments for Raw Material Purchases | 7,383 | 90,579 | | Prepayments for Short-term Leases of Warehouses and Staff Dormitories | 1,215 | 3,283 | | Others | 6,105 | 5,587 | | **Total** | **175,716** | **372,057** | [Trade Receivables](index=8&type=section&id=TradeReceivables) Net trade receivables significantly decreased to RMB 155.6 million as of December 31, 2022, primarily due to reduced related party revenue, with credit terms typically ranging from 30 to 90 days - Net trade receivables decreased from **RMB 236.5 million in 2021** to **RMB 155.6 million in 2022**, primarily due to a decrease in related party revenue[20](index=20&type=chunk)[64](index=64&type=chunk) - Most third-party sales require prepayment, with a few customers having credit terms of **30 to 90 days**; related party customers are granted **30-day credit terms**[18](index=18&type=chunk) Trade Receivables Aging Analysis | Aging | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--------- | :------------------ | :------------------ | | Within 3 Months | 155,815 | 236,732 | | Over 3 Months | – | – | | **Total** | **155,815** | **236,732** | [Share Capital](index=9&type=section&id=ShareCapital) As of December 31, 2022, the authorized share capital was USD 50 million, with 1,046,900,000 issued and fully paid ordinary shares, equivalent to RMB 68 thousand, unchanged from 2021 Share Capital Structure | Item | Number of Shares | Amount (USD) | Equivalent Par Value (RMB thousand) | | :--------------- | :-------------- | :---------- | :-------------------- | | Authorized Ordinary Shares | 5,000,000,000 | 50 | N/A | | Issued and Fully Paid Ordinary Shares | 1,046,900,000 | 10,469 | 68 | [Trade Payables](index=9&type=section&id=TradePayables) Total trade payables increased to RMB 396.3 million as of December 31, 2022, primarily due to raw material purchases, with credit terms typically ranging from 30 to 90 days - Trade payables increased from **RMB 294.3 million in 2021** to **RMB 396.3 million in 2022**, primarily due to raw material purchases[24](index=24&type=chunk)[65](index=65&type=chunk) - Credit terms granted by suppliers for trade payables are typically **30 to 90 days**[24](index=24&type=chunk) Trade Payables Aging Analysis | Aging | 2022 (RMB thousand) | 2021 (RMB thousand) | | :----------- | :------------------ | :------------------ | | Within 3 Months | 394,221 | 292,197 | | 3 to 6 Months | 1,599 | 1,737 | | 6 Months to 1 Year | 434 | 326 | | **Total** | **396,254** | **294,260** | [Expenses by Nature](index=10&type=section&id=ExpensesByNature) Total expenses increased to RMB 5,167.5 million in 2022, with raw materials and consumables used, and employee benefit expenses being the largest components Analysis of Expenses by Nature | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--------------------------- | :------------------ | :------------------ | | Raw Materials and Consumables Used | 3,801,383 | 3,570,057 | | Employee Benefit Expenses | 545,352 | 521,595 | | Transportation and Related Expenses | 211,013 | 199,568 | | Advertising and Other Marketing Expenses | 135,783 | 224,145 | | Depreciation of Property, Plant and Equipment | 118,073 | 82,098 | | Utilities | 71,424 | 52,473 | | Warehousing Fees | 54,636 | 60,088 | | Taxes and Surcharges | 40,786 | 38,095 | | Depreciation of Right-of-Use Assets | 40,777 | 34,881 | | Travel and Entertainment Expenses | 29,464 | 32,190 | | Technical Support Fees, Professional Fees and Other Service Fees | 24,350 | 25,169 | | Expenses Related to Short-term Leases | 13,735 | 16,486 | | Amortization of Intangible Assets | 6,735 | 6,221 | | Auditor's Remuneration | 3,330 | 3,260 | | Inventory Write-off | 2,533 | 8,180 | | Other Expenses | 74,573 | 64,193 | | **Total** | **5,167,513** | **4,963,253** | [Other Income and Gains, Net](index=11&type=section&id=OtherIncomeAndGainsNet) Other income and gains, net, decreased by 17.6% to RMB 138.2 million in 2022, primarily due to lower government grants and fair value changes of financial assets - Other income and gains, net, decreased by **17.6% year-on-year** to **RMB 138.2 million**, primarily due to lower government grants and fair value changes of financial assets[26](index=26&type=chunk)[55](index=55&type=chunk) Other Income and Gains, Net Breakdown | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :------------------------------- | :------------------ | :------------------ | | Government Grants | 83,704 | 113,939 | | Fair Value Changes of Financial Assets at Fair Value Through Profit or Loss | 9,794 | 64,050 | | Scrap Sales | 9,896 | 10,228 | | Net Foreign Exchange Gains/(Losses) | 36,462 | (18,810) | | Loss on Disposal of Property, Plant and Equipment | (6,679) | (3,069) | | Loss on Disposal of Intangible Assets | (100) | – | | Donations | (532) | (6,140) | | Others | 5,669 | 7,469 | | **Total** | **138,214** | **167,667** | [Finance Income, Net](index=11&type=section&id=FinanceIncomeNet) Net finance income increased by 5.6% to RMB 24.4 million in 2022, primarily driven by higher interest income from fixed deposits - Net finance income increased by **5.6% year-on-year** to **RMB 24.4 million**, primarily due to increased interest income from fixed deposits[27](index=27&type=chunk)[56](index=56&type=chunk) Finance Income, Net Breakdown | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Interest Income | 30,291 | 28,605 | | Interest on Lease Liabilities | (5,856) | (5,475) | | **Net Finance Income** | **24,435** | **23,130** | [Income Tax Expense](index=12&type=section&id=IncomeTaxExpense) Income tax expense increased by 4.3% to RMB 326.2 million in 2022, with the effective tax rate rising to 28.6% due to increased withholding tax on profit distributions - Income tax expense increased by **4.3% year-on-year** to **RMB 326.2 million**, with the effective tax rate rising from **26.7% to 28.6%**[28](index=28&type=chunk)[58](index=58&type=chunk) - The increase in the effective tax rate was primarily due to increased withholding tax on profit distributions from the Group's PRC subsidiaries to overseas subsidiaries[58](index=58&type=chunk) - The PRC corporate income tax rate is **25%**, Hong Kong profits tax rate is **16.5%**, and overseas income tax rates range from **10% to 30%**[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) Income Tax Expense Breakdown | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Current Income Tax | 321,366 | 328,972 | | Deferred Income Tax Expense/(Credit) | 4,795 | (16,370) | | **Income Tax Expense** | **326,161** | **312,602** | [Earnings Per Share](index=13&type=section&id=EarningsPerShare) Basic earnings per share decreased to RMB 75.7 cents in 2022 from RMB 78.2 cents in 2021, with diluted EPS being the same due to no potential dilutive ordinary shares Basic Earnings Per Share | Metric | 2022 (RMB thousand/cents) | 2021 (RMB thousand/cents) | | :------------------- | :--------------------- | :--------------------- | | Profit Attributable to Owners of the Company | 741,987 | 766,201 | | Weighted Average Number of Ordinary Shares Issued | 980,332 | 980,332 | | Basic Earnings Per Share | 75.7 cents | 78.2 cents | - Diluted earnings per share for 2022 and 2021 were the same as basic earnings per share, as there were no potential dilutive ordinary shares[35](index=35&type=chunk) [Dividends](index=13&type=section&id=Dividends) Total dividends paid in 2022 amounted to RMB 224.6 million (21.9563 cents per share), with a proposed final dividend of RMB 17.72 cents per share for 2022 Dividends Paid | Year | Total Amount (RMB) | Per Share (RMB cents) | | :--- | :-------------- | :-------------- | | 2022 | 224,563,000 | 21.9563 | | 2021 | 243,529,000 | 25.003 | - The Board recommends a final dividend of **RMB 17.72 cents per share** for 2022, totaling approximately **RMB 185,511,000**, to be proposed for approval at the Annual General Meeting on May 18, 2023[37](index=37&type=chunk)[76](index=76&type=chunk) [Performance Review and Analysis](index=14&type=section&id=PerformanceReviewAndAnalysis) This section reviews the Group's operational and financial performance in 2022, analyzing revenue by channel and product, and key financial metrics [2022 Annual Performance Review](index=14&type=section&id=2022AnnualPerformanceReview) Despite the significant impact of the pandemic, the consumer market showed signs of recovery in 2022, prompting the Group to strengthen channel expansion, product R&D, multi-brand strategy, and production capacity - The consumer market generally showed a trend of recovery in 2022, though the pandemic still had a significant impact on economic operations[38](index=38&type=chunk) - The Group's key business focuses include strengthening channel expansion and management, optimizing product R&D mechanisms, continuing to implement a multi-brand strategy, and adding proprietary production capacity to optimize supply capabilities[38](index=38&type=chunk) - In channel development, the Group strengthened refined and standardized management, optimized the "partner" assessment system, and increased coverage in lower-tier markets[38](index=38&type=chunk) - In product R&D, the Group optimized the "product project system," combined with "methodology" guidance, focused on long-term category and product planning, and strengthened listing standards[38](index=38&type=chunk) - The multi-brand strategy continued, enhancing brand awareness through combined promotion of "Kuaishou Xiaochu" and "Haidilao" brands[38](index=38&type=chunk) - Production capacity was expanded, with rice, vermicelli, dipping sauce, and meal kit production lines successively commencing operations, increasing self-production ratio and intelligent manufacturing levels[38](index=38&type=chunk) [Business Review](index=15&type=section&id=BusinessReview) In 2022, the Group's revenue grew by 3.4% to RMB 6,147.0 million, while net profit decreased by 4.8% to RMB 816.0 million, with third-party sales increasing and related party sales declining - **2022 revenue** increased by **3.4% year-on-year** to **RMB 6,147.0 million**, while net profit decreased by **4.8% year-on-year** to **RMB 816.0 million**[39](index=39&type=chunk) - The Group serves as a supplier of hotpot seasoning products to Haidilao Group, Tehai International Group, and their respective subsidiaries, while also serving Chinese home cooking customers, catering service providers, and food industry companies[39](index=39&type=chunk) [Sales Channels](index=15&type=section&id=SalesChannels) The Group prioritized third-party sales, achieving a 16.2% increase in revenue through refined management, while e-commerce sales grew by 3.4% and related party sales decreased by 23.0% due to the pandemic - Third-party sales revenue was **RMB 4,657.4 million**, a **16.2% year-on-year increase**, primarily through distributors, e-commerce, and catering customers[39](index=39&type=chunk) - E-commerce channel sales revenue was **RMB 332.1 million**, a **3.4% year-on-year increase**, with **9 flagship stores** on platforms such as Tmall, JD.com, and Pinduoduo[39](index=39&type=chunk) - Related party sales revenue was **RMB 1,489.7 million**, a **23.0% year-on-year decrease**, mainly due to the impact of the pandemic causing Haidilao Group restaurants to suspend operations or dine-in services[39](index=39&type=chunk) [Products](index=16&type=section&id=Products) The Group enhanced product R&D and methodology to innovate new categories and products, continued its multi-brand strategy, and launched 45 new hotpot seasonings, Chinese compound seasonings, and convenient food products in 2022 - Optimized product R&D system, combining "innovation committee overall planning with product team leader detailed research" to seek breakthroughs in new categories and products[40](index=40&type=chunk) - Continuously implemented a multi-brand strategy, enhancing "Kuaishou Xiaochu" brand awareness through joint promotion with "Haidilao" brand[40](index=40&type=chunk) - In 2022, a total of **11 new hotpot seasonings**, **16 new Chinese compound seasonings**, and **18 new convenient food products** were launched, with some product specifications integrated[40](index=40&type=chunk) [Revenue, Sales Volume and Average Selling Price by Product Category and Distribution Channel](index=17&type=section&id=RevenueSalesVolumeAndAverageSellingPriceByProductAndChannel) This section details the 2022 and 2021 revenue, sales volume, and average selling price per kilogram, categorized by product (hotpot seasonings, Chinese compound seasonings, convenient food, others) and distribution channel (third-party, related party) 2022 Revenue, Sales Volume and Average Selling Price by Product Category and Distribution Channel | Product Category/Channel | Revenue (RMB thousand) | Sales Volume (tons) | Average Selling Price per kg (RMB) | | :------------ | :---------------- | :-------- | :------------------------ | | **Hotpot Seasonings**| **3,664,696** | **148,048** | **24.8** | | Third-party | 2,263,898 | 77,625 | 29.2 | | Related Party | 1,400,798 | 70,423 | 19.9 | | **Chinese Compound Seasonings**| **568,863** | **22,279** | **25.5** | | Third-party | 558,449 | 21,878 | 25.5 | | Related Party | 10,414 | 401 | 26.0 | | **Convenient Food Products** | **1,870,069** | **47,690** | **39.2** | | Third-party | 1,791,639 | 45,752 | 39.2 | | Related Party | 78,430 | 1,938 | 40.5 | | **Others** | **43,383** | **12,930** | **3.4** | | **Total** | **6,147,011** | **230,947** | **26.6** | [Revenue by Product](index=18&type=section&id=RevenueByProduct) In 2022, hotpot seasonings accounted for 59.6% of revenue, Chinese compound seasonings 9.3%, and convenient food products 30.4%, with third-party sales growing for hotpot seasonings and convenient food, while related party sales generally declined 2022 Revenue and Proportion by Product Category | Product Category | 2022 Revenue (RMB thousand) | Percentage of Revenue | | :--------------- | :---------------------- | :----------- | | Hotpot Seasonings Revenue | 3,664,696 | 59.6% | | Chinese Compound Seasonings Revenue | 568,863 | 9.3% | | Convenient Food Products Revenue | 1,870,069 | 30.4% | | Other Revenue | 43,383 | 0.7% | | **Total Revenue** | **6,147,011** | **100%** | [Hotpot Seasonings Revenue](index=18&type=section&id=HotpotSeasoningsRevenue) Hotpot seasonings revenue increased by 1.6% year-on-year to RMB 3,664.7 million, with third-party sales growing by 23.6% and related party sales decreasing by 21.1% due to pandemic impacts - Total hotpot seasonings product revenue increased by **1.6% year-on-year** to **RMB 3,664.7 million**, accounting for **59.6% of total revenue**[44](index=44&type=chunk) - Revenue from third-party sales of hotpot seasonings products increased by **23.6% year-on-year**, mainly due to increased sales volume after terminal price adjustments for some hotpot base products[44](index=44&type=chunk) - Revenue from related party sales of hotpot seasonings products decreased by **21.1% year-on-year**, mainly due to the impact of the COVID-19 pandemic causing related party restaurants to suspend operations or dine-in services and reduced customer traffic[44](index=44&type=chunk) [Chinese Compound Seasonings Revenue](index=19&type=section&id=ChineseCompoundSeasoningsRevenue) Chinese compound seasonings revenue increased by 7.2% year-on-year to RMB 568.9 million, with third-party sales growing by 15.7% and related party sales significantly decreasing by 78.2% due to reduced in-store retail - Total Chinese compound seasonings revenue increased by **7.2% year-on-year** to **RMB 568.9 million**, accounting for **9.3% of total revenue**[45](index=45&type=chunk) - Revenue from third-party sales of Chinese compound seasonings increased by **15.7%**, mainly due to product upgrades and new product launches[45](index=45&type=chunk) - Revenue from related party sales of Chinese compound seasonings decreased by **78.2%**, mainly due to reduced retail product sales at related party company stores impacted by the COVID-19 pandemic[45](index=45&type=chunk) [Convenient Food Products Revenue](index=19&type=section&id=ConvenientFoodsRevenue) Convenient food products revenue increased by 9.8% year-on-year to RMB 1,870.1 million, with third-party sales growing by 12.6% due to increased demand during the pandemic, while related party sales decreased by 30.0% - Total convenient food products revenue increased by **9.8% year-on-year** to **RMB 1,870.1 million**, accounting for **30.4% of total revenue**[47](index=47&type=chunk) - Revenue from third-party sales of convenient food products increased by **12.6%**, attributed to increased demand influenced by the COVID-19 pandemic outbreak[47](index=47&type=chunk) - Revenue from related party sales of convenient food products decreased by **30.0%**[47](index=47&type=chunk) [Revenue by Distribution Network](index=20&type=section&id=RevenueByDistributionNetwork) In 2022, distributor sales revenue increased by 17.9% to RMB 4,300.5 million, accounting for 70.0% of total revenue, while e-commerce sales grew by 3.4% and related party sales decreased by 23.0% 2022 Revenue and Proportion by Distribution Network | Distribution Network | 2022 Revenue (RMB thousand) | Percentage of Total Revenue | 2021 Revenue (RMB thousand) | Percentage of Total Revenue | | :--------------- | :---------------------- | :------------- | :---------------------- | :------------- | | Related Party Customers | 1,489,651 | 24.2% | 1,935,018 | 32.6% | | Distributors | 4,300,513 | 70.0% | 3,648,339 | 61.4% | | E-commerce | 332,091 | 5.4% | 321,291 | 5.4% | | Third-party Catering Enterprises | 24,756 | 0.4% | 37,360 | 0.6% | | One-off Sales Activities | – | 0.0% | 609 | 0.0% | | **Total Revenue** | **6,147,011** | **100%** | **5,942,617** | **100%** | - Related party sales revenue decreased by **23.0% year-on-year**, primarily due to the impact of the pandemic causing Haidilao Group's restaurants to suspend operations or dine-in services[48](index=48&type=chunk) - Distributor sales revenue increased by **17.9% year-on-year**, and e-commerce channel sales revenue increased by **3.4% year-on-year**[49](index=49&type=chunk) [Revenue by Geographical Region](index=21&type=section&id=RevenueByGeographicalRegion) In 2022, South China accounted for 50.2% of revenue, North China 44.1%, and other markets 5.7%, with North China revenue increasing and South China slightly decreasing 2022 Revenue and Proportion by Geographical Region | Region | 2022 Revenue (RMB thousand) | Percentage of Revenue | 2021 Revenue (RMB thousand) | Percentage of Revenue | | :------- | :---------------------- | :----------- | :---------------------- | :----------- | | North China | 2,707,534 | 44.1% | 2,494,343 | 42.0% | | South China | 3,088,220 | 50.2% | 3,145,006 | 52.9% | | Other Markets | 351,257 | 5.7% | 303,268 | 5.1% | | **Total** | **6,147,011** | **100%** | **5,942,617** | **100%** | [Financial Review](index=18&type=section&id=FinancialReview) In 2022, the Group's revenue grew by 3.4%, but a 6.8% increase in cost of sales led to a 3.6% decrease in gross profit and a decline in gross margin to 30.2% - **2022 revenue** increased by **3.4% year-on-year** to **RMB 6,147.0 million**[42](index=42&type=chunk) - Net profit decreased by **4.8% year-on-year** to **RMB 816.0 million**, and basic earnings per share decreased to **RMB 75.7 cents**[59](index=59&type=chunk) [Revenue](index=18&type=section&id=Revenue) The Group's revenue increased by 3.4% to RMB 6,147.0 million for the year ended December 31, 2022, compared to RMB 5,942.6 million in the prior year - The Group's revenue increased by **3.4%** from **RMB 5,942.6 million** for the year ended December 31, 2021, to **RMB 6,147.0 million** for the same period in 2022[42](index=42&type=chunk) [Cost of Sales](index=21&type=section&id=CostOfSales) Cost of sales increased by 6.8% to RMB 4,293.1 million for the year ended December 31, 2022, primarily due to rising raw material prices - Cost of sales increased by **6.8%** from **RMB 4,018.7 million** for the year ended December 31, 2021, to **RMB 4,293.1 million** for 2022, primarily due to rising prices of certain raw materials[51](index=51&type=chunk) [Gross Profit and Gross Margin](index=22&type=section&id=GrossProfitAndGrossMargin) Gross profit decreased by 3.6% to RMB 1,853.9 million in 2022, with the gross margin declining from 32.4% to 30.2%, mainly due to increased raw material costs - Gross profit decreased by **3.6%** from **RMB 1,924.0 million** for the year ended December 31, 2021, to **RMB 1,853.9 million** for 2022, with the gross margin declining from **32.4% to 30.2%**[52](index=52&type=chunk) - The primary reason for the decline in gross margin was the increase in cost of sales due to rising prices of raw materials such as oils and fats, and beef meal kits[52](index=52&type=chunk) Gross Profit and Gross Margin by Product Category | Product Category | 2022 Gross Profit (RMB thousand) | 2022 Gross Margin (%) | 2021 Gross Profit (RMB thousand) | 2021 Gross Margin (%) | | :--------------- | :---------------------- | :--------------- | :---------------------- | :--------------- | | Hotpot Seasonings | 1,273,682 | 34.8% | 1,304,891 | 36.2% | | Third-party | 1,092,304 | 48.2% | 929,346 | 50.7% | | Related Party | 181,378 | 12.9% | 375,545 | 21.2% | | Chinese Compound Seasonings | 183,381 | 32.2% | 182,572 | 34.4% | | Third-party | 181,519 | 32.5% | 173,178 | 35.9% | | Related Party | 1,862 | 17.9% | 9,394 | 19.7% | | Convenient Food Products | 396,019 | 21.2% | 435,083 | 25.5% | | Third-party | 379,354 | 21.2% | 403,056 | 25.3% | | Related Party | 16,665 | 21.2% | 32,027 | 28.6% | | Others | 800 | 1.8% | 1,407 | 1.4% | | **Total** | **1,853,882** | **30.2%** | **1,923,953** | **32.4%** | [Distribution Expenses](index=22&type=section&id=DistributionExpenses) Distribution expenses decreased by 7.4% to RMB 646.6 million in 2022, representing 10.5% of the Group's revenue, primarily due to lower advertising and marketing costs - Distribution expenses decreased by **7.4%** from **RMB 697.9 million** for the year ended December 31, 2021, to **RMB 646.6 million** for 2022, with the percentage of the Group's revenue decreasing from **11.7% to 10.5%**[53](index=53&type=chunk) - The primary reason for the decrease in distribution expenses was lower advertising and marketing costs[53](index=53&type=chunk) [Administrative Expenses](index=22&type=section&id=AdministrativeExpenses) Administrative expenses decreased by 7.6% to RMB 227.8 million in 2022, representing 3.7% of the Group's revenue, mainly due to lower management personnel salaries - Administrative expenses decreased by **7.6%** from **RMB 246.7 million** for the year ended December 31, 2021, to **RMB 227.8 million** for 2022, with the percentage of the Group's revenue decreasing from **4.2% to 3.7%**[54](index=54&type=chunk) - The primary reason for the decrease in administrative expenses was lower management personnel salaries[54](index=54&type=chunk) [Other Income and Gains, Net](index=23&type=section&id=OtherIncomeAndGainsNet_FinancialReview) Other income and gains, net, decreased by 17.6% to RMB 138.2 million in 2022, primarily due to lower government grants and fair value changes of financial assets - Other income and gains, net, decreased by **17.6%** from **RMB 167.7 million** for the year ended December 31, 2021, to **RMB 138.2 million** for 2022, primarily due to lower government grants and fair value changes of financial assets[55](index=55&type=chunk) [Finance Income, Net](index=23&type=section&id=FinanceIncomeNet_FinancialReview) Net finance income increased by 5.6% to RMB 24.4 million in 2022, primarily due to higher interest income from fixed deposits - Net finance income increased by **5.6%** from **RMB 23.1 million** for the year ended December 31, 2021, to **RMB 24.4 million** for 2022, primarily due to increased interest income from fixed deposits[56](index=56&type=chunk) [Profit Before Income Tax](index=23&type=section&id=ProfitBeforeIncomeTax) Profit before income tax decreased by 2.4% to RMB 1,142.1 million for the year ended December 31, 2022, compared to RMB 1,170.2 million in the prior year - Profit before income tax decreased by **2.4%** from **RMB 1,170.2 million** for the year ended December 31, 2021, to **RMB 1,142.1 million** for 2022[57](index=57&type=chunk) [Income Tax Expense](index=23&type=section&id=IncomeTaxExpense_FinancialReview) Income tax expense increased by 4.3% to RMB 326.2 million in 2022, with the effective tax rate rising to 28.6% due to increased withholding tax on profit distributions from PRC subsidiaries - Income tax expense increased by **4.3%** from **RMB 312.6 million** for the year ended December 31, 2021, to **RMB 326.2 million** for 2022[58](index=58&type=chunk) - The effective tax rate increased from **26.7%** for the year ended December 31, 2021, to **28.6%** for the year ended December 31, 2022, primarily due to increased withholding tax on expected profit distributions from the Group's PRC subsidiaries to its overseas subsidiaries[58](index=58&type=chunk) [Profit for the Year](index=23&type=section&id=ProfitForTheYear) Profit for the year decreased by 4.8% to RMB 816.0 million in 2022, with the net profit margin declining to 13.3% due to higher raw material prices, lower gross margin, and increased income tax expense - Profit for the year decreased by **4.8%** from **RMB 857.6 million** for the year ended December 31, 2021, to **RMB 816.0 million** for 2022[59](index=59&type=chunk) - Net profit margin decreased from **14.4%** for the year ended December 31, 2021, to **13.3%** for 2022, primarily due to rising raw material prices, lower gross margin, and increased income tax expense[59](index=59&type=chunk) [Liquidity and Financial Resources](index=23&type=section&id=LiquidityAndFinancialResources) As of year-end 2022, the Group primarily funded operations through cash generated from operations, with increased cash and cash equivalents, a slight rise in gearing ratio, and no bank borrowings - For the year ended December 31, 2022, the Group primarily funded its operations through cash generated from operations[60](index=60&type=chunk) [Cash and Cash Equivalents](index=24&type=section&id=CashAndCashEquivalents) As of December 31, 2022, the Group's cash and cash equivalents increased to approximately RMB 1,880.5 million, primarily denominated in RMB, HKD, and USD - As of December 31, 2022, cash and cash equivalents amounted to approximately **RMB 1,880.5 million** (December 31, 2021: **RMB 1,573.6 million**)[61](index=61&type=chunk) - Cash and cash equivalents primarily consist of RMB, HKD, and USD[61](index=61&type=chunk) [Gearing Ratio](index=24&type=section&id=GearingRatio) As of December 31, 2022, the Group's gearing ratio slightly increased to 18.3% from 17.9% in 2021, with no bank borrowings - As of December 31, 2022, the Group's gearing ratio was **18.3%** (December 31, 2021: **17.9%**)[62](index=62&type=chunk) - The Group had no bank borrowings[62](index=62&type=chunk) [Inventories](index=24&type=section&id=Inventories) As of December 31, 2022, inventories were approximately RMB 387.5 million, with inventory turnover days decreasing from 35.9 days in 2021 to 33.3 days in 2022, reflecting improved inventory efficiency - As of December 31, 2022, inventories amounted to approximately **RMB 387.5 million** (December 31, 2021: **RMB 395.3 million**)[63](index=63&type=chunk) - Inventory turnover days decreased from **35.9 days** for the year ended December 31, 2021, to **33.3 days** for the year ended December 31, 2022, primarily due to the Group's improved control over inventory efficiency[63](index=63&type=chunk) [Trade Receivables](index=24&type=section&id=TradeReceivables_Liquidity) As of December 31, 2022, trade receivables decreased to approximately RMB 155.6 million, primarily due to lower related party revenue, with turnover days reducing from 12.9 to 11.6 - As of December 31, 2022, trade receivables amounted to approximately **RMB 155.6 million** (December 31, 2021: **RMB 236.5 million**), with the change primarily due to a decrease in related party revenue[64](index=64&type=chunk) - Trade receivables turnover days decreased from **12.9 days** for the year ended December 31, 2021, to **11.6 days** for the year ended December 31, 2022[64](index=64&type=chunk) [Trade Payables](index=24&type=section&id=TradePayables_Liquidity) As of December 31, 2022, trade payables increased to approximately RMB 396.3 million, with turnover days rising from 25.7 to 29.4, influenced by seasonal production and procurement cycles - As of December 31, 2022, trade payables amounted to approximately **RMB 396.3 million** (December 31, 2021: **RMB 294.3 million**)[65](index=65&type=chunk) - Trade payables turnover days increased from **25.7 days** for the year ended December 31, 2021, to **29.4 days** for the year ended December 31, 2022, influenced by peak and off-peak production and sales seasons and seasonal procurement cycles[65](index=65&type=chunk) [Contingent Liabilities](index=25&type=section&id=ContingentLiabilities) As of December 31, 2022, the Company had no significant contingent liabilities - As of December 31, 2022, the Company had no significant contingent liabilities[66](index=66&type=chunk) [Pledge of Assets](index=25&type=section&id=PledgeOfAssets) As of December 31, 2022, the Company had not pledged any fixed assets as security for borrowings - As of December 31, 2022, the Company had not pledged any fixed assets as security for borrowings[66](index=66&type=chunk) [Borrowings](index=25&type=section&id=Borrowings) As of December 31, 2022, the Company had no bank borrowings - As of December 31, 2022, the Company had no bank borrowings[66](index=66&type=chunk) [Capital Gearing Ratio](index=25&type=section&id=CapitalGearingRatio) As of December 31, 2022, the Company's capital gearing ratio decreased to 2.5% from 3.4% in 2021 - As of December 31, 2022, the Company's capital gearing ratio was **2.5%** (2021: **3.4%**)[66](index=66&type=chunk) [Foreign Exchange Risk and Hedging](index=25&type=section&id=ForeignExchangeRiskAndHedging) The Group primarily operates in China with most transactions in RMB, but holds HKD and USD cash, exposing it to foreign exchange risk, which is currently not hedged but closely monitored - The Group primarily operates in China, with most transactions denominated and settled in RMB; however, it holds certain cash denominated in HKD and USD, exposing it to foreign exchange risk, which is currently not hedged but will be closely monitored[66](index=66&type=chunk) - The Group does not hedge foreign exchange risk; however, it will closely monitor the situation and take necessary measures to ensure foreign exchange risk is within a controllable range[66](index=66&type=chunk) [Employees and Remuneration Policy](index=25&type=section&id=EmployeesAndRemunerationPolicy) As of December 31, 2022, the Group had 2,720 employees with a total staff cost of RMB 545.4 million, continuously optimizing its incentive system and implementing competitive remuneration policies - As of December 31, 2022, the Group had a total of **2,720 employees** (including temporary staff), with a total employee cost of **RMB 545.4 million**[66](index=66&type=chunk) - The Group continuously optimizes its incentive system and implements competitive remuneration policies in line with business development needs[66](index=66&type=chunk) [Major Acquisitions and Disposals](index=25&type=section&id=MajorAcquisitionsAndDisposals) As of December 31, 2022, the Group had no major acquisitions or disposals of subsidiaries, associates, or joint ventures - As of December 31, 2022, the Group had no major acquisitions or disposals of subsidiaries, associates, or joint ventures[67](index=67&type=chunk) [Future Outlook and Investments](index=26&type=section&id=FutureOutlookAndInvestments) This section outlines the Group's future prospects and strategic investments, focusing on market recovery, product development, brand promotion, channel expansion, and supply chain optimization [Future Prospects](index=26&type=section&id=FutureProspects) Looking ahead to 2023, with pandemic prevention and control entering a new phase, the consumer market is expected to recover, and the Group will focus on product R&D, brand promotion, channel, and supply chain development - The consumer market is expected to recover in 2023, and the Group will continue to prioritize product R&D, brand promotion, channel development, and supply chain construction as key company strategies[68](index=68&type=chunk) - In product development, the Group will continue to introduce differentiated new products, optimize and upgrade existing products, expand B-end catering customer demand, and focus on overseas markets[68](index=68&type=chunk) - In brand strategy, the "multi-brand" strategy will continue to be implemented, enhancing brand awareness for "Haidilao," "Kuaishou Xiaochu," and "Wa'ao" brands[68](index=68&type=chunk) - In channel development, the Group will improve operational efficiency through segmented channels and standardized process management, cover lower-tier markets, and enhance intelligent management levels[68](index=68&type=chunk) - In supply chain construction, the Group will build and improve domestic and international factories, invest in lean production and equipment R&D, optimize supply technology division, enhance automation, and has initially completed the construction of a Southeast Asian supply center[68](index=68&type=chunk) [Industry and Business Outlook](index=26&type=section&id=IndustryAndBusinessOutlook) The consumer market is expected to stabilize and recover in 2023, with the Group focusing on enhancing R&D capabilities, introducing differentiated new products, and expanding into overseas markets - The foundation for stable recovery in the consumer market will be more solid in 2023, with the consumer market expected to improve[68](index=68&type=chunk) - The Group will continue to adhere to the optimized "product project system," combining "methodology" with practice to continuously enhance product developers' R&D capabilities, break through product innovation stalemates, continuously introduce differentiated new products, and improve product success rates and overall competitiveness[68](index=68&type=chunk) - The Group will focus on overseas markets, leveraging its R&D and market exploration capabilities to enrich the overseas product matrix, guided by unique local flavors and exotic styles[68](index=68&type=chunk) [Major Investments and Prospects](index=27&type=section&id=MajorInvestmentsAndProspects) The Group is undertaking several capacity expansion projects, including phases two in Bazhou and Ma'anshan, new production bases in Luohe and Jianyang, and an overseas factory in Thailand, to optimize production and sales layout and enhance supply capabilities - The Phase II project in Bazhou, Hebei Province, commenced construction in June 2022, with an estimated production start in Q3 2023, planning an annual capacity of **82,000 tons of convenient food products**, primarily covering North and Northeast China[69](index=69&type=chunk) - The main factory building for Phase II in Ma'anshan, Anhui Province, has been completed and commenced production in February 2023, planning an annual capacity of **15,000 tons of seasonings**, primarily to enrich the production lines for meal kits and meat buns[69](index=69&type=chunk) - Phase I of the Luohe production base in Henan Province has a planned annual capacity of **150,000 tons**, with the dipping sauce production line commencing operation in September 2022 and the spice production line in Q1 2023[69](index=69&type=chunk) - The Jianyang production base in Sichuan Province has a planned annual capacity of **25,000 tons**, expected to commence production by the end of 2023, focusing on covering demand for hotpot bases and compound seasonings in Southwest China[69](index=69&type=chunk) - Phase I of the Thailand factory has a planned annual capacity of **16,000 tons**, commenced construction at the end of February 2021, and is expected to start production in April 2023, primarily serving the Southeast Asian market[69](index=69&type=chunk) [Future Major Investment Plans](index=27&type=section&id=FutureMajorInvestmentPlans) The Group will continue to actively seek potential strategic investment opportunities that can bring synergistic effects in product R&D, product portfolio, channel expansion, or cost control - The Group will continue to broadly seek potential strategic investment opportunities, continuously looking for high-quality targets that can bring synergistic effects to the Group in terms of product R&D, product portfolio, channel expansion, or cost control[70](index=70&type=chunk) [Corporate Governance and Other Information](index=28&type=section&id=CorporateGovernanceAndOtherInformation) This section covers the Company's adherence to corporate governance codes, compliance with trading standards, audit committee activities, and other relevant post-reporting period events [Compliance with Corporate Governance Code](index=28&type=section&id=ComplianceWithCorporateGovernanceCode) The Company has complied with the code provisions in Part 2 of the Corporate Governance Code of The Stock Exchange of Hong Kong Limited for the year ended December 31, 2022 - The Company has complied with the code provisions in Part 2 of the Corporate Governance Code of The Stock Exchange of Hong Kong Limited for the year ended December 31, 2022[71](index=71&type=chunk) [Compliance with Model Code](index=28&type=section&id=ComplianceWithModelCode) The Company adopted the Model Code for Securities Transactions by Directors of Listed Issuers, with all directors confirming compliance for 2022, and no non-compliance incidents reported for employees with inside information - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors have confirmed their compliance with the Model Code for the year ended December 31, 2022, following specific inquiries[72](index=72&type=chunk) - Employees of the Company who may possess inside information are also required to comply with the Model Code, and no incidents of non-compliance by employees were reported in 2022 to the Company's knowledge[72](index=72&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=28&type=section&id=PurchaseSaleOrRedemptionOfListedSecurities) For the year ended December 31, 2022, neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities - For the year ended December 31, 2022, neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities[72](index=72&type=chunk) [Audit Committee](index=28&type=section&id=AuditCommittee) The Board's Audit Committee, composed of three independent non-executive directors, reviewed accounting principles, internal controls, and financial reporting, confirming compliance and appropriate disclosure for the 2022 annual financial results - The Board's Audit Committee comprises three members, including all independent non-executive directors[73](index=73&type=chunk) - The Audit Committee has considered and reviewed the accounting principles and practices adopted by the Company and the Group, and has discussed internal controls and financial reporting matters with management, including the Group's audited consolidated results for the year ended December 31, 2022[73](index=73&type=chunk) - The Audit Committee believes that the annual financial results for the year ended December 31, 2022, have complied with relevant accounting standards, rules, and regulations, and have been appropriately disclosed[73](index=73&type=chunk) [Auditor's Scope of Work](index=29&type=section&id=AuditorsScopeOfWork) The figures in this announcement for the Group's 2022 consolidated balance sheet, income statement, and related notes have been agreed by PwC, the Company's auditor, to be consistent with the audited consolidated financial statements, but their work does not constitute an assurance engagement - The figures in this announcement for the Group's consolidated balance sheet, consolidated statement of profit or loss and other comprehensive income, and related notes for the year ended December 31, 2022, have been agreed by PricewaterhouseCoopers, the Company's auditor, to be consistent with the amounts in the Group's audited consolidated financial statements for the year[74](index=74&type=chunk) - The work performed by PricewaterhouseCoopers in this regard does not constitute an assurance engagement conducted in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements, or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants[74](index=74&type=chunk) [Restricted Share Unit Scheme](index=29&type=section&id=RestrictedShareUnitScheme) The Company adopted a Restricted Share Unit Scheme, approved by shareholders and the Board, and will comply with the revised Chapter 17 of the Listing Rules effective from the financial year beginning January 1, 2023, with no units granted in 2022 - The Company has approved and adopted a Restricted Share Unit Scheme pursuant to resolutions of its shareholders and the Board on February 24, 2016[75](index=75&type=chunk) - The Company will comply with the requirements set out in the newly revised Chapter 17 of the Listing Rules, effective from the financial year commencing January 1, 2023[75](index=75&type=chunk) - The Company did not grant any restricted share units in 2022[75](index=75&type=chunk) [Events After Reporting Period](index=29&type=section&id=EventsAfterReportingPeriod) To the best knowledge of the Directors, no material events requiring disclosure have occurred after December 31, 2022, and up to the date of this announcement, other than those disclosed herein - Save as disclosed in this announcement, to the best knowledge of the Directors, no material events requiring disclosure have occurred after December 31, 2022, and up to the date of this announcement[76](index=76&type=chunk) [Final Dividend](index=29&type=section&id=FinalDividend) The Board resolved to recommend a final dividend of RMB 17.72 cents per share for the year ended December 31, 2022, totaling approximately RMB 185.5 million, payable in HKD around June 14, 2023, subject to shareholder approval - The Board resolved to recommend a final dividend of **RMB 17.72 cents per share** for the year ended December 31, 2022, amounting to **RMB 185,510,680**, to be paid to shareholders at the upcoming Annual General Meeting on May 18, 2023[76](index=76&type=chunk) - The final dividend is expected to be paid on or about June 14, 2023, to shareholders whose names appear on the Company's register of members on May 25, 2023, and will be converted into HKD at the average benchmark exchange rate of RMB to HKD announced by the People's Bank of China on March 30, 2023[76](index=76&type=chunk) - The proposed final dividend is subject to the shareholders' consideration and approval at the Annual General Meeting[76](index=76&type=chunk) [Closure of Register of Members and Record Date](index=30&type=section&id=ClosureOfRegisterOfMembersAndRecordDate) The Company will close its register of members from May 15 to May 18, 2023, to determine eligibility for attending and voting at the AGM, and again from May 24 to May 25, 2023, to determine entitlement to the final dividend - The Company's register of members will be closed from Monday, May 15, 2023, to Thursday, May 18, 2023 (both days inclusive), to determine shareholders' eligibility to attend and vote at the Annual General Meeting to be held on Thursday, May 18, 2023[77](index=77&type=chunk) - The Company's register of members will also be closed from Wednesday, May 24, 2023, to Thursday, May 25, 2023 (both days inclusive), to determine shareholders' entitlement to the final dividend[77](index=77&type=chunk) [Publication of Annual Results Announcement and Annual Report](index=30&type=section&id=PublicationOfAnnualResultsAnnouncementAndAnnualReport) This announcement is published on the HKEX and Company websites, and the annual report for the year ended December 31, 2022, containing all Listing Rules required information, will be dispatched to shareholders and published online in due course - This announcement is published on the HKEX website (www.hkexnews.hk) and the Company's website (www.yihchina.com)[77](index=77&type=chunk) - The annual report for the year ended December 31, 2022, which includes all information required by the Listing Rules, will be dispatched to shareholders and published on the HKEX and Company websites in due course[77](index=77&type=chunk) [Acknowledgement](index=30&type=section&id=Acknowledgement) The Board extends its sincere gratitude to the Company's shareholders, management team, employees, business partners, and customers for their support and contributions to the Group - The Board hereby expresses its sincere gratitude to the Company's shareholders, management team, employees, business partners, and customers for their support and contributions to the Group[77](index=77&type=chunk)

Financial Performance - Yihai International Holding Ltd. reported a revenue of approximately HKD 2.5 billion for the interim period, reflecting a year-on-year increase of 15%[3]. - The company reported a net profit of HKD 500 million, representing a 25% increase compared to the same period last year[3]. - Revenue for the first half of 2022 was RMB 2,688,482, representing a 2.2% increase compared to RMB 2,630,804 in the same period of 2021[14]. - Profit for the period was RMB 296,017, down 24.6% from RMB 392,393 in the first half of 2021[14]. - Basic earnings per share attributable to equity holders decreased by 24.5% to RMB 26.84 from RMB 35.56[14]. - The Group's net profit decreased by 24.6% from RMB 392.4 million for the six months ended 30 June 2021 to RMB 296.0 million for the corresponding period of 2022, with a net profit margin decline from 14.9% to 11.0%[58]. - Total revenue for the six months ended June 30, 2022, was RMB 2,688,482,000, an increase from RMB 2,630,804,000 in the same period of 2021, representing a growth of approximately 2.2%[136]. Profitability Metrics - The company achieved a gross profit margin of 35%, which is a slight improvement compared to the previous year's margin of 33%[3]. - Gross profit decreased by 11.1% to RMB 765,107 from RMB 860,973 year-on-year[14]. - Operating profit fell by 24.5% to RMB 389,315 compared to RMB 515,778 in the previous year[14]. - The decline in gross profit margin was mainly attributed to increasing raw material prices and a higher sales proportion of low gross profit products[54]. - The Group's cost of sales increased by 8.7% from RMB 1,769.8 million for the six months ended June 30, 2021, to RMB 1,923.4 million for the corresponding period of 2022, primarily due to price increases in certain raw materials[50]. Revenue Breakdown - Revenue from hot pot condiments was RMB 1,422.9 million, accounting for 52.9% of total revenue, while revenue from Chinese-style compound condiments was RMB 342.9 million, representing 12.8%[36]. - Revenue from convenient ready-to-eat food products was RMB 897.3 million, accounting for 33.4% of total revenue[36]. - Revenue from sales of hot pot condiment products decreased by 5.7% from RMB 1,509.4 million in 2021 to RMB 1,422.9 million in 2022, accounting for 52.9% of total revenue[39]. - Revenue from Chinese-style compound condiments increased by 6.5% from RMB 322.0 million in 2021 to RMB 342.9 million in 2022, accounting for 12.8% of total revenue[41]. - Revenue from convenient ready-to-eat food products increased by 19.9% from RMB 748.5 million in 2021 to RMB 897.3 million in 2022, accounting for 33.4% of total revenue[43]. Market Expansion and Strategy - User data indicated that the active customer base grew by 20% year-on-year, reaching 1.2 million users[3]. - The company plans to launch three new product lines in the next quarter, targeting a 10% increase in market share[3]. - Future outlook includes an expected revenue growth of 12% for the next fiscal year, driven by market expansion strategies[3]. - Market expansion efforts will focus on Southeast Asia, with a target of opening 50 new outlets by the end of the fiscal year[3]. - The Group focused on expanding channel penetration and improving product research and development mechanisms[16]. Research and Development - The company has invested approximately HKD 100 million in R&D for new technologies aimed at improving product quality and customer experience[3]. - An innovation committee was established to guide product research and development, aiming to increase the success rate of new product launches[18]. - The Group's product development strategy emphasized long-term planning and consumer experience to improve the success rate of new product launches[29]. Financial Position and Assets - Total assets as of June 30, 2022, were RMB 4,908,531, a decrease of 1.9% from RMB 5,005,078 at the end of 2021[15]. - Total equity decreased by 2.3% to RMB 4,014,388 from RMB 4,108,736 at the end of 2021[15]. - Cash and cash equivalents as of June 30, 2022, amounted to approximately RMB 1,586.1 million, an increase from RMB 1,573.6 million as of December 31, 2021[58]. - The company reported total non-current assets of RMB 2,637,182, an increase from RMB 2,610,121 as of December 31, 2021, reflecting a growth of approximately 1.04%[92]. Shareholding Structure - As of June 30, 2022, substantial shareholders include UBS Trustees (B.V.I.) Limited with 325,436,021 shares, representing 31.09% of the total issued share capital[76]. - The company has a significant concentration of ownership, with the top three shareholders holding over 70% of the total issued share capital[76]. - The shareholding structure reflects a high level of control by a few key individuals and entities, which may impact corporate governance and decision-making[76]. Cash Flow and Financing - Net cash generated from operating activities for the six months ended June 30, 2022, was RMB 337,167,000, an increase of 45.5% compared to RMB 231,759,000 for the same period in 2021[101]. - Cash flows from investing activities resulted in a net cash outflow of RMB 96,865,000, significantly improved from a net outflow of RMB 723,244,000 in the previous year[101]. - The company paid dividends of RMB 224,563,000 to shareholders, slightly lower than RMB 243,529,000 in the previous year, reflecting a strategic decision in capital allocation[101]. Governance and Compliance - The company has adopted the Model Code for securities transactions and confirmed compliance by all Directors during the six months ended June 30, 2022[87]. - The company has complied with the Corporate Governance Code provisions during the six months ended June 30, 2022[89]. - The Audit Committee reviewed the unaudited condensed consolidated interim financial results for the six months ended June 30, 2022, ensuring compliance with relevant accounting standards[90].

Financial Performance - Yihai International Holding Ltd. reported a revenue of approximately HKD 3.5 billion for the fiscal year 2021, representing a year-on-year increase of 25%[2]. - The company achieved a net profit of around HKD 600 million in 2021, which is a 30% increase compared to the previous year[2]. - The company reported a significant increase in revenue, achieving RMB 1.5 billion for the year ended December 31, representing a growth of 25% compared to the previous year[28]. - In 2021, Yihai International's revenue reached RMB 5,942,617, an increase of 10.8% from RMB 5,360,021 in 2020[29]. - The Group's total revenue for 2021 was RMB 5,942.6 million, reflecting effective pandemic control measures[98]. - The Group's net profit declined by 12.7% from RMB 982.9 million in 2020 to RMB 857.6 million in 2021, with a net profit margin dropping from 18.3% to 14.4%[129]. Customer Growth and Market Expansion - User data indicated that the number of active customers increased by 15% year-on-year, reaching approximately 2 million[2]. - User data showed a rise in active customers, with a total of 3 million users, marking a 15% increase year-over-year[28]. - The company plans to expand its market presence by opening 50 new stores in 2022, targeting key urban areas in China[2]. - The company plans to enter new international markets, specifically targeting Southeast Asia by the end of the next fiscal year[28]. - Future outlook includes plans for market expansion and the introduction of new products to enhance customer experience[10]. Product Development and Innovation - Yihai International is investing HKD 200 million in research and development for new product lines, including innovative hotpot flavoring products[2]. - The company is focused on research and development of new technologies to improve product offerings and operational efficiency[10]. - The Group launched a total of 39 new products in 2021, including 8 hot pot condiments, 18 Chinese-style compound condiments, and 13 convenient ready-to-eat food products[68]. - New product launches included self-heating hot pot products, which are expected to contribute an additional RMB 200 million in sales[28]. - The Group's management emphasized continuous product innovation and optimization of the product project system to improve market responsiveness[64]. E-commerce and Sales Channels - Yihai International's e-commerce sales grew by 40% in 2021, contributing significantly to overall revenue growth[2]. - The Group's e-commerce channel sales revenue was RMB 321.3 million, representing a year-on-year growth of 11.8%[63]. - Future strategies include enhancing online sales channels, with a goal to increase e-commerce revenue by 40%[28]. - The Group aims to enhance market share through segmented channel operations and improve sales efficiency on e-commerce platforms[170]. Financial Challenges and Operational Efficiency - The company reported a gross margin of 35% for 2021, reflecting improved operational efficiency and cost management[2]. - Gross profit for 2021 was RMB 1,923,953, down 8.0% from RMB 2,090,110 in 2020, indicating challenges in maintaining profitability[29]. - The company faced operational challenges due to the pandemic, affecting raw material procurement and sales operations, leading to a decline in gross profit margins[32][34]. - The Group's cost of sales increased by 22.9% from RMB 3,269.9 million in 2020 to RMB 4,018.7 million in 2021[105]. - Distribution expenses rose by 23.9% from RMB 563.5 million in 2020 to RMB 697.9 million in 2021, increasing as a percentage of revenue from 10.5% to 11.7%[112]. Strategic Partnerships and Acquisitions - Yihai International is exploring potential acquisitions to enhance its supply chain and product offerings, with a focus on complementary food brands[2]. - The company entered into a Master Sales Agreement with Haidilao on December 7, 2020, for the supply of customized and retail products[9]. - A strategic acquisition of a local competitor was announced, expected to enhance market share by 10%[28]. - The company has established strategic partnerships to enhance supply chain management and product distribution[10]. Leadership and Management - Mr. Guo Qiang was appointed as the Chief Executive Officer on March 25, 2020, and is responsible for implementing the Board's strategy and managing daily operations[190]. - The company has a diverse leadership team with directors holding positions in various subsidiaries across different countries, including Singapore, the US, and Canada[187][191]. - The executive team has a strong educational background, with several members holding advanced degrees in business administration[193][194]. - Mr. Zhao Xiaokai was appointed as an executive Director on August 25, 2020, and is currently the director of the supply system[198].

Financial Performance - Yihai International Holding Ltd. reported a revenue of HK$1.2 billion for the first half of 2021, representing a year-on-year increase of 25%[3]. - The company achieved a net profit of HK$300 million, up 30% compared to the same period last year[3]. - The Group's revenue for the first half of 2021 was RMB 2,630.8 million, representing a year-on-year increase of 18.6%[20]. - Operating profit for the same period amounted to RMB 515.8 million, reflecting a year-on-year decrease of 10.2%[20]. - Gross profit was RMB 860.973 million, showing a slight decline of 2.1% compared to the previous year[17]. - The Group's basic earnings per share attributable to equity holders decreased by 12.6% to 35.56 RMB cents[17]. - Total comprehensive income for the period was RMB 387,701, a decrease of 11.6% compared to RMB 438,586 in the previous year[112]. - Profit for the period attributable to owners of the Company was RMB 348,836, down 12.6% from RMB 398,919 in the same period of 2020[112]. Revenue Breakdown - Revenue from hot pot condiments reached RMB 1,509.4 million, accounting for 57.4% of total revenue, with a 24.2% increase compared to RMB 1,215.5 million in the same period of 2020[41]. - Revenue from Chinese-style compound condiments rose by 7.5% to RMB 322.0 million, representing 12.2% of total revenue for the six months ended June 30, 2021[43]. - Total revenue from convenient ready-to-eat food products was RMB 748.5 million, making up 28.5% of total revenue, with a significant increase from RMB 668.2 million in the previous year[41]. - Revenue from sales to related parties reached RMB 893.3 million, a year-on-year increase of 79.0% compared to the same period in 2020[32]. - E-commerce sales revenue amounted to RMB 177.5 million, representing a year-on-year increase of 11.4%[30]. Market Expansion and Strategy - The company plans to expand its market presence in Southeast Asia, targeting a 20% increase in market share by the end of 2022[3]. - Yihai International is investing HK$500 million in new product development, focusing on plant-based food options[3]. - The Group's focus on innovation and product lifecycle management aims to reinforce the market position of core products[34]. - The Group emphasized data-based assessment and follow-up supervision for channel development, enhancing the satisfaction of distributors[28]. Production and Capacity - The Yihai factory in Kaifeng, Henan commenced operations in June 2021, enhancing supply capacity[24]. - The construction of a new production base in Luohe is expected to commence operations in August 2021[24]. - The Luohe production base has a total designed production capacity of 300,000 tonnes, with Phase I expected to commence production in the second half of 2021[82]. - The Thailand factory's Phase I has a planned capacity of 20,000 tonnes, with production expected to commence in 2022[83]. Financial Position and Assets - Total assets as of June 30, 2021, were RMB 4,243.4 million, a decrease of 1.0% from the end of 2020[18]. - Total equity increased by 4.1% to RMB 3,657.8 million compared to the end of 2020[18]. - The asset-liability ratio decreased to 13.8% as at June 30, 2021 from 18.0% as of December 31, 2020[67]. - As of June 30, 2021, the Group's cash and cash equivalents amounted to approximately RMB 1,218.3 million, down from RMB 1,986.9 million as of 31 December 2020[66]. Expenses and Costs - The cost of sales increased by 32.2% from RMB 1,338.4 million in the first half of 2020 to RMB 1,769.8 million in the first half of 2021, primarily due to rising raw material prices[52]. - Distribution expenses increased by 54.7% from RMB 210.9 million for the six months ended 30 June 2020 to RMB 326.3 million for the corresponding period of 2021, representing an increase in percentage of revenue from 9.5% to 12.4%[58]. - Administrative expenses decreased by 12.4% from RMB 153.7 million for the six months ended 30 June 2020 to RMB 134.7 million for the corresponding period of 2021, with a percentage of revenue decline from 6.9% to 5.1%[59]. Shareholder Information - As of June 30, 2021, UBS Trustees (B.V.I.) Limited holds 372,547,021 shares, representing 35.59% of the total issued share capital[95]. - ZYSP YIHAI Ltd owns 283,925,275 shares, accounting for 27.12% of the total issued share capital[95]. - The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2021[104]. Governance and Compliance - The Audit Committee reviewed the unaudited condensed consolidated interim financial results for the six months ended June 30, 2021, confirming compliance with relevant accounting standards[103]. - All Directors confirmed compliance with the Model Code for securities transactions during the six months ended June 30, 2021[102]. - The Company has adopted the Corporate Governance Code and complied with its mandatory provisions during the six months ended June 30, 2021[102].

Financial Performance - Yihai International Holding Ltd. reported a consolidated revenue of HK$1.5 billion for the year ended December 31, 2020, representing a year-on-year increase of 20%[5]. - The company achieved a net profit of HK$300 million, which is a 15% increase compared to the previous year[5]. - Yihai International Holding Ltd. reported a revenue increase of 25% year-over-year, reaching approximately RMB 3.5 billion in the latest fiscal year[8]. - The company achieved a gross profit margin of 35%, reflecting a 5% improvement compared to the previous year[9]. - For the year ended December 31, 2020, the Group's revenue was RMB 5,360.0 million, representing a year-on-year increase of 25.2%[38]. - The net profit for the same period was RMB 982.9 million, reflecting a year-on-year increase of 23.6%[38]. - The gross profit increased by 27.3% to RMB 2,090.1 million in 2020, with a gross profit margin of 39.0%, up from 38.3% in 2019[81]. Customer Growth and Market Expansion - User data indicated that the number of active customers increased by 25% to 2 million in 2020[5]. - User data indicated a 40% increase in active customers, totaling around 1.2 million users[9]. - The company plans to expand its market presence by opening 50 new stores in the next fiscal year, targeting a 30% growth in retail sales[5]. - The company plans to expand its market presence in Southeast Asia, targeting a 15% market share within the next two years[8]. - Future guidance estimates a revenue growth of 25% for the upcoming fiscal year, driven by new product launches and market expansion[5]. Product Development and Innovation - Yihai International is investing HK$200 million in research and development for new product lines, including innovative hot pot flavoring products[5]. - Yihai International is investing RMB 200 million in new product development, focusing on innovative food technology solutions[9]. - The Group developed a total of 55 new products throughout 2020, focusing on research and development[38]. - The Group launched 15 new Chinese-style compound condiment products, 23 hot pot condiment products, and 13 convenient ready-to-eat food products in 2020[61]. Strategic Partnerships and Acquisitions - The company has entered into a strategic partnership with Haidilao to enhance product distribution, aiming for a 40% increase in sales through this channel[5]. - The company is exploring potential acquisitions to diversify its product offerings and strengthen its market position[5]. - The company is exploring potential acquisitions to strengthen its supply chain and distribution network, with a budget of RMB 300 million allocated for this purpose[9]. - A joint venture with Fuhai (Shanghai) Food Technology Co., Ltd. was established, with Yihai holding a 60% stake, aimed at enhancing product offerings[8]. Operational Efficiency and Cost Management - The company reported a gross margin of 35%, reflecting improved operational efficiency and cost management[5]. - The Group's automated production lines in Bazhou significantly enhanced efficiency and strengthened food safety standards[40]. - The Group's management structure was optimized to enhance efficiency and improve incentive mechanisms, contributing to stable growth in third-party sales[38]. - The Group plans to continue expanding its supply chain and product offerings while focusing on brand marketing and multi-brand strategies in 2021[39]. Digital Marketing and E-commerce - Yihai International has implemented new digital marketing strategies, resulting in a 50% increase in online sales[5]. - Sales revenue from e-commerce channels reached RMB 287.3 million, marking a year-on-year increase of 4.5%[50]. - The company continued to enhance consumer interaction through flagship stores on e-commerce platforms, with 5 flagship stores established by December 31, 2020[53]. Corporate Governance and Leadership - The Company is committed to achieving high standards of corporate governance to safeguard shareholder interests and enhance corporate value, accountability, and transparency[133]. - The Company has applied the principles set out in the Corporate Governance Code and the corporate governance report contained in Appendix 14 to the Listing Rules[133]. - The Company has established three committees: Audit, Remuneration, and Nomination, primarily composed of independent non-executive Directors[162]. - The Company emphasizes the importance of corporate governance practices based on principles and code provisions[135]. - The leadership team collectively brings extensive experience from various sectors, contributing to the company's competitive advantage in the food industry[119][120][121][122]. Future Outlook and Strategic Goals - Looking ahead to 2021, the company plans to enhance organizational structure, improve evaluation mechanisms, and pursue proactive brand marketing promotions[34]. - The Group will continue to carry out online and offline promotions to improve terminal sales efficiency and distributor relationships[108]. - The Group aims to optimize sales channels through both organic growth and external development to enhance market share and industry position[110]. - The Group plans to adopt a "multi-brand" strategy to enhance brand popularity and deepen the business development of Chinese-style compound condiments[105].

Financial Performance - Yihai International Holding Ltd. reported a significant increase in revenue, achieving a total of HK$1.2 billion, representing a year-on-year growth of 25%[5]. - For the six months ended June 30, 2020, the Group's revenue reached RMB 2,218.1 million, representing a year-on-year increase of 34.0%[21]. - Net profit for the same period amounted to RMB 445.8 million, reflecting a year-on-year increase of 52.5%[21]. - The Group's operating profit for the first half of 2020 was RMB 574.14 million, a 51.7% increase year-on-year[19]. - Basic earnings per share increased by 45.9% to RMB 40.67 compared to the previous year[19]. - Gross profit increased by 41.0% to RMB 879.8 million for the six months ended June 30, 2020, compared to RMB 624.1 million in 2019[60]. - Profit before income tax increased by 51.9% from RMB 385.5 million for the six months ended June 30, 2019, to RMB 585.7 million for the corresponding period of 2020[63]. - Profit attributable to owners of the Company for the six months ended June 30, 2020, was RMB 398,919,000, an increase of 47.5% compared to RMB 270,368,000 for the same period in 2019[191]. Revenue Breakdown - Revenue from hot pot condiments was RMB 1,215,469,000, accounting for 54.8% of total revenue, while revenue from Chinese-style compound condiments was RMB 299,498,000, contributing 13.5%[42]. - Revenue from convenient ready-to-eat food products surged by 95.9% from RMB 341.1 million in the first half of 2019 to RMB 668.2 million in the first half of 2020, making up 30.1% of total revenue[50]. - Revenue from e-commerce channels reached RMB 159.4 million, marking a year-on-year increase of 35.4%[33]. - Revenue from third-party sales of hot pot condiment products increased by 89.5%, while sales to related parties decreased by 32.4% due to the impact of COVID-19 on restaurant operations[46]. Market Expansion and Product Development - Future outlook indicates a projected revenue growth of 20% for the next fiscal year, driven by new product launches and market expansion strategies[5]. - The company plans to expand its market presence by entering two new regions in China, aiming for a 10% market share in these areas within the next two years[5]. - The Group developed 26 new products in the first half of 2020, focusing on hot pot condiments, Chinese-style compound condiments, and convenient ready-to-eat food products[24]. - The Group launched a total of 2 Chinese-style compound condiment products, 9 hot pot condiment products, 11 convenient ready-to-eat food products, and 4 snack food products in the first half of 2020[38]. Financial Position and Cash Flow - Total assets increased by 4.5% to RMB 3,460.96 million compared to the end of last year[19]. - Total equity rose by 8.9% to RMB 2,969.89 million compared to the end of last year[19]. - Yihai International's cash flow from operations increased by 40%, reaching HK$400 million, providing a solid foundation for future investments[5]. - The company’s cash flows from financing activities showed a net cash outflow of RMB 203,587,000, compared to RMB 154,764,000 in the previous year[119]. Strategic Initiatives - The company is investing in R&D, allocating HK$150 million towards the development of new technologies and products in the upcoming year[5]. - The company is considering strategic acquisitions to enhance its supply chain efficiency and product offerings, with a budget of up to HK$300 million for potential deals[5]. - The Group aims to enhance logistics cost control and manage peak season pressure through the strategic location of its factories in northern China[78]. - The Group will continue to seek strategic investment opportunities to create synergies in product R&D, product portfolio, channel expansion, and cost control[84]. Shareholder Information - As of June 30, 2020, Mr. Shi Yonghong holds 177,703,492 shares, representing 16.97% of the total issued share capital[86]. - Ms. Shu Ping and Mr. Zhang Yong each hold 373,007,021 shares, accounting for 35.63% of the total issued share capital[86]. - UBS Trustees (B.V.I.) Limited is a substantial shareholder with 372,547,021 shares, which is 35.59% of the total issued share capital[92]. - The company has a diverse shareholder base with significant interests held by trusts and controlled corporations[92]. Corporate Governance - The Company has complied with the mandatory code provisions in the Corporate Governance Code during the six months ended June 30, 2020[100]. - The Audit Committee reviewed the unaudited condensed consolidated interim financial results for the six months ended June 30, 2020, and found them compliant with relevant accounting standards[105]. - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2020[106].