Group 1 - As of May 26, a total of 88 stocks reached their 52-week highs, with Tianbao Energy (01671), China Nuclear International (02302), and Honghui Group (00183) leading the high rate at 141.60%, 93.92%, and 21.34% respectively [1] - Tianbao Energy closed at 0.700 and reached a peak of 1.510, marking a significant increase of 141.60% [1] - China Nuclear International closed at 4.090 with a highest price of 5.100, reflecting a rise of 93.92% [1] Group 2 - Other notable stocks that reached their 52-week highs include Century International (00959) with an increase of 18.64%, and Junjie Group Holdings (08188) with a rise of 17.95% [1] - The list also includes Haotian Financial Group (01260) with a 13.70% increase and Dechang Electric Holdings (00179) with a 10.96% rise [1] - The overall trend indicates a strong performance in the market, with multiple stocks achieving significant gains [1] Group 3 - The report also highlights stocks that reached their 52-week lows, with Sipai Health (00314) showing the largest decline at -11.65% [3] - Other stocks experiencing declines include Feitian Yundong (06610) at -9.05% and Hengrui Medicine (01276) at -4.81% [3] - The presence of stocks reaching both highs and lows suggests a volatile market environment [3]

Product Performance - The company achieved significant growth in its core product "Walnut Sesame Black Bean Powder," which has been recognized as the top-selling item in the functional grain powder category for several consecutive years[8]. - The "Health Gift Box" product line saw encouraging results, with tailored products developed for different consumer channels, enhancing brand recognition[8]. - The ancient formula product "Moisture-Free Traces" experienced multiple sales growth compared to the same period in 2023, indicating strong consumer demand[8]. Sales and Distribution - In the first three quarters of 2024, offline sales in the fast-moving consumer goods sector grew by 1.8% year-on-year, while e-commerce channels saw a decline of 0.6%[9]. - The company's direct sales strategy focuses on improving operational efficiency and enhancing the shopping experience in its direct-operated counters[10]. - The company is actively expanding its presence on traditional and interest-based e-commerce platforms, establishing flagship and specialty stores to increase market penetration[11]. - The company participated in nine major marketing events throughout the year, including "618" and "Double Eleven," to boost brand awareness and sales[11]. Financial Performance - For the fiscal year ending December 31, 2024, the company reported revenue of RMB 2,060.4 million, an increase of 11.7% compared to RMB 1,845.3 million in 2023[15]. - Offline sales accounted for 55.3% of total revenue in 2024, up from 54.2% in 2023, while online sales decreased slightly to 44.7% from 45.8%[17]. - Gross profit increased from approximately RMB 1,181.5 million in 2023 to about RMB 1,356.3 million in 2024, with the gross margin rising from 64.0% to 65.8%[18]. - The company's net profit for the year ended December 31, 2024, was approximately RMB 187.9 million, representing a growth of about 23.2% from RMB 152.4 million in 2023[27]. - Sales and distribution expenses rose from approximately RMB 897.1 million in 2023 to about RMB 1,043.4 million in 2024, primarily due to increased promotional expenses related to sales growth[20]. Assets and Liabilities - The company’s trade receivables increased to RMB 223.7 million in 2024 from RMB 217.8 million in 2023, with trade receivables turnover days improving to 39 days from 40 days[29]. - The company’s inventory remained stable at approximately RMB 94.6 million in 2024, compared to RMB 93.5 million in 2023, with a slight increase attributed to sales growth[29]. - The company’s current assets net value as of December 31, 2024, was RMB 1,182.7 million, compared to RMB 1,033.5 million as of December 31, 2023[33]. - The company had no contingent liabilities as of December 31, 2024, consistent with the previous year[36]. - The company had no pledged assets as of December 31, 2024, consistent with the previous year[37]. Corporate Governance - The company has adopted the principles and code provisions of the corporate governance code as its own corporate governance code[53]. - The board believes that the company has complied with the applicable code provisions of the corporate governance code for the year ending December 31, 2024[54]. - The company emphasizes the importance of good corporate governance elements in its management structure, internal controls, and risk management procedures[51]. - The company has independent non-executive directors overseeing the board and providing independent opinions and judgments[47]. - The board consists of seven members, including two executive directors, two non-executive directors, and three independent non-executive directors[57]. Risk Management - The company has a risk management and internal control system that includes a clearly defined organizational structure with specified authority and responsibility[101]. - The company has committed to reviewing its risk management and internal control systems annually to ensure their effectiveness[103]. - The board is responsible for evaluating and determining the nature and extent of risks acceptable to the company in achieving its strategic objectives, ensuring the establishment and maintenance of effective risk management and internal control systems[100]. Employee and Shareholder Engagement - The company has a strong team of independent non-executive directors with extensive experience in finance and corporate governance[48]. - The total number of employees as of December 31, 2024, is 670, with a gender ratio of approximately 1:2 (193 male employees and 477 female employees)[68]. - The company emphasizes the importance of a diverse workforce, considering it a key element for maintaining long-term competitive advantage[68]. - The company encourages shareholders to submit inquiries and suggestions via email to enhance engagement and feedback[117]. Stock Options and Incentives - The company has a stock option plan approved on November 19, 2018, aimed at incentivizing eligible participants for their contributions to the group[159]. - The total number of shares available for issuance under the stock option plan is capped at 222,100,000 shares, which is 10% of the total shares issued as of the listing date and the report date[162]. - The stock options granted but not yet exercised are subject to the total issuance cap of 222,100,000 shares[162]. - The stock reward plan was adopted by the board on March 28, 2022, to recognize employee contributions and attract suitable personnel for further development[175][176]. Environmental and Social Responsibility - The company aims to create sustainable value by integrating economic growth, environmental protection, and social responsibility into its business strategy[119]. - The company has a dedicated team to handle environmental compliance and implements strict waste management procedures at its manufacturing bases[136].

Summary of Conference Call Records Company and Industry Overview - The conference call pertains to a health food company focusing on the development of health-oriented products and traditional herbal food ingredients. The company emphasizes its commitment to the health food sector and the integration of traditional and modern nutritional science. Key Financial Metrics - The company reported a revenue of 1.88 billion, a year-on-year increase of 23% from 1.52 billion [1] - Basic earnings per share increased to 8.7 cents, up 23% from 7.1 cents [1] - Dividend per share rose to 3.69 cents, a 14% increase from 3.23 cents [1] - Gross margin improved to 65.8%, an increase of 1.8 percentage points from the previous year [1][2] - Net profit margin increased to 9.1%, up 0.8 percentage points from 8.3% [1][2] - The annual payout ratio was 42.4%, an increase of 3.1 percentage points year-on-year [1] Revenue Growth and Channel Performance - Overall revenue growth was reported at 11.7%, with a 7.6% increase in the second half compared to the first half of the year [1] - New channel revenue share increased from 14.4% to 17.3% year-on-year, indicating rapid growth in this segment [1] - E-commerce revenue grew by 9% year-on-year, with a 1.6% increase in the second half compared to the first half [1][5] - Specialty stores saw a year-on-year growth of 6.5%, with a 2.7% increase in the second half compared to the first half [2] Cost and Profitability Analysis - The increase in gross margin was attributed to a decrease in product costs [2] - Selling expenses rose from 48.6% to 50.6% of revenue, indicating increased promotional costs associated with online channels [2][42] - Administrative expenses remained stable, decreasing slightly from 5.4% to 5.2% of revenue [2] Business Strategy and Future Outlook - The company is focusing on three main areas: health food, the development of traditional herbal ingredients, and the "谷方" series, which combines classic recipes with modern nutritional science [3][4] - The company aims to enhance sales efficiency and organizational effectiveness, with a 7% increase in specialty store sales efficiency [5] - The health food industry in China is projected to grow at a compound annual growth rate (CAGR) of 8%, driven by factors such as aging population, rising income, and increased health awareness [6] Market Trends and Consumer Behavior - The company noted a shift in consumer behavior towards health-oriented products, with a focus on traditional herbal ingredients [6][7] - There is a growing trend towards smaller, specialized retail channels, such as convenience stores and snack shops, which are gaining traction [8] - The online channel is experiencing fragmentation, with traditional e-commerce and content-driven platforms emerging [8] Risks and Challenges - The company highlighted potential risks related to changes in retail channel strategies, particularly concerning a major client [10][18] - The competitive landscape is evolving, with more brands entering the health food sector, which could impact market share [16][18] Additional Insights - The company is exploring opportunities for mergers and acquisitions to enhance growth and shareholder value [19][28] - There is a focus on maintaining a balance between product quality and cost management, emphasizing the use of high-quality raw materials [35] - The company is cautious about expanding into new markets, preferring to strengthen its presence in existing markets first [20] This summary encapsulates the key points discussed during the conference call, providing insights into the company's financial performance, strategic direction, market trends, and potential risks.

Financial Performance - Revenue for the year ended December 31, 2024, was RMB 2,060,367 thousand, representing a 12% increase from RMB 1,845,275 thousand in 2023[4] - Gross profit increased by 15% to RMB 1,356,287 thousand in 2024, compared to RMB 1,181,484 thousand in 2023[4] - Profit before tax rose by 18% to RMB 219,561 thousand, up from RMB 185,934 thousand in the previous year[4] - Net profit attributable to owners of the company increased by 23% to RMB 187,858 thousand, compared to RMB 152,375 thousand in 2023[4] - Basic earnings per share for 2024 was RMB 0.087, up from RMB 0.071 in 2023[6] - Revenue from customer contracts for 2024 reached RMB 2,060,367 thousand, an increase of 11.6% compared to RMB 1,845,275 thousand in 2023[18] - Other income and gains totaled RMB 20,274 thousand in 2024, up from RMB 19,494 thousand in 2023, representing a growth of 4.0%[18] - The company reported a pre-tax profit of RMB 219,561,000 for 2024, up from RMB 185,934,000 in 2023, indicating a growth of 18.1%[25] - The company's net profit attributable to equity holders for 2024 is RMB 187,858,000, compared to RMB 152,375,000 in 2023, representing an increase of 23.3%[27] - Net profit for the year ending December 31, 2024, was approximately RMB 187.9 million, representing an increase of about 23.2% from approximately RMB 152.4 million for the year ended December 31, 2023[56] Dividends - The board proposed a final dividend of HKD 0.04 per share, equivalent to approximately RMB 0.0369, compared to RMB 0.0323 in 2023[4] - The proposed final dividend for 2024 is HKD 0.0400 per share, an increase from HKD 0.0356 per share in 2023, totaling RMB 80,398,000[27] - The board proposed a final dividend of HKD 0.04 per ordinary share, totaling approximately RMB 80.4 million, which represents about 42.8% of the net profit for the year ending December 31, 2024[71] - The final dividend is subject to approval at the annual general meeting scheduled for May 30, 2025[71] Assets and Liabilities - Total assets less current liabilities amounted to RMB 1,540,674 thousand as of December 31, 2024, compared to RMB 1,408,986 thousand in 2023[8] - Non-current assets totaled RMB 357,938 thousand, a decrease from RMB 375,506 thousand in the previous year[7] - Current assets increased to RMB 1,479,449 thousand from RMB 1,305,850 thousand in 2023[7] - Trade receivables increased to RMB 224,079,000 in 2024 from RMB 215,877,000 in 2023, reflecting a growth of 3.9%[28] - Trade payables rose to RMB 114,035,000 in 2024, up from RMB 97,346,000 in 2023, marking a 17.0% increase[30] - Cash and unrestricted bank deposits increased by approximately 18.0% to RMB 1,111.6 million as of December 31, 2024, from RMB 942.0 million as of December 31, 2023[59] - The net cash flow from operating activities for 2024 was RMB 271.5 million, compared to RMB 185.9 million for 2023[62] - The group had no interest-bearing borrowings as of December 31, 2024, consistent with the previous year[60] Expenses - Research and development expenses for the year amounted to RMB 19,119 thousand, a significant increase of 60.5% from RMB 11,918 thousand in 2023[19] - The cost of goods sold for 2024 was RMB 704,080 thousand, compared to RMB 663,791 thousand in 2023, reflecting an increase of 6.1%[19] - Sales and distribution expenses rose from approximately RMB 897.1 million for the year ended December 31, 2023, to approximately RMB 1,043.4 million for the year ending December 31, 2024, attributed to increased promotional expenses corresponding to sales growth[48] - Administrative expenses increased from approximately RMB 100.4 million for the year ended December 31, 2023, to approximately RMB 106.1 million for the year ending December 31, 2024, due to higher office and R&D expenses[50] - The group’s employee costs (excluding directors' remuneration and R&D costs) totaled RMB 147.2 million for the year ending December 31, 2024, up approximately 5.0% from RMB 140.2 million in 2023[68] Taxation - The income tax expense for the year ending December 31, 2024, is RMB 31,703,000, a decrease of 5.5% from RMB 33,559,000 in 2023[23] - The effective tax rate for 2024 is 14.4%, compared to 18.0% in 2023, reflecting a reduction in taxable income[25] Business Operations - The company operates primarily in the processing and sales of natural health foods in mainland China[9] - The company focused on product upgrades and development around core categories, achieving significant sales growth in the "Ancient Formula" series, with sales increasing several times compared to the same period in 2023[34] - The company implemented a strategy of "differentiated products" for gift boxes, leading to improved brand recognition and sales performance in the gift segment[33] - The offline direct sales channel generated RMB 782.1 million in revenue, accounting for 38.0% of total revenue, while new channel business contributed RMB 357.4 million, representing 17.3%[43] - Offline channel sales accounted for 55.3% of total revenue in 2024, up from 54.2% in 2023, while online channel sales decreased slightly to 44.7% from 45.8%[45] - The company is leveraging big data to develop customized products for members, enhancing the consumer experience and meeting individual health needs[34] - The company actively expanded its e-commerce presence, participating in major marketing events and optimizing content to enhance brand awareness and product value perception[38] Governance and Compliance - The company has not purchased, sold, or redeemed any of its listed securities during 2024[78] - The company confirmed compliance with the corporate governance code throughout the year ending December 31, 2024[75] - The audit committee, consisting of three independent non-executive directors, reviewed the company's financial statements for the year ending December 31, 2024[84] - The board of directors includes both executive and non-executive members, ensuring a diverse governance structure[89] Environmental Responsibility - The company has a dedicated team for environmental compliance and has implemented strict waste management procedures at its manufacturing facilities[76] Future Outlook - The company plans to continue building brand assets and enhancing product value, focusing on efficiency and consumer experience to achieve sustainable long-term growth[41] - As of December 31, 2024, the company has utilized a total of HKD 563.5 million from the net proceeds of the global offering, with remaining unutilized funds of HKD 50.3 million expected to be used by the end of 2028[81] - The company maintained sufficient public float throughout the year 2024[79] - The annual performance announcement will be published on the Hong Kong Stock Exchange's website and the company's website, covering all information required by listing rules for the year ending December 31, 2024[87] Miscellaneous - The company has not reported any significant events related to its business or financial performance since December 31, 2024[80]

Business Strategy and Product Development - The company aims to become the leading brand in new Chinese dietary nutrition, focusing on traditional Chinese dietary principles combined with modern nutrition science[7]. - The flagship product "Walnut Sesame Black Bean Powder" has gained significant consumer popularity, emphasizing quality ingredients and health benefits[8]. - The company launched several gift box products for major festivals, achieving strong sales performance during the 2024 Chinese New Year[8]. - The summer product "Moisture-Free Trace" (Probiotic Job's Tears Meal Replacement Powder) received enthusiastic consumer response, achieving impressive sales results[8]. - The company is collaborating with membership-based supermarkets to provide customized products, leveraging brand and supply chain advantages[11]. - The company has upgraded its brand strategy to "Wheat Grinding House, Dietary Nutrition with Method," enhancing consumer communication through various marketing channels[7]. - The company is actively developing high-potential distributors to expand product distribution to a wider consumer base[11]. E-commerce and Retail Channels - E-commerce channels have rapidly developed, with a focus on both traditional platforms like Taobao and social e-commerce platforms like Douyin and Kuaishou[10]. - The offline retail sector is evolving, with a focus on experiential shopping to differentiate from online retail growth[9]. - The company emphasizes precise marketing strategies tailored to diverse consumer needs across various e-commerce platforms[10]. Financial Performance - For the six months ended June 30, 2024, total revenue reached RMB 992.4 million, a 13.6% increase from RMB 873.9 million in the same period of 2023[13]. - Gross profit rose to approximately RMB 650.0 million, up from RMB 558.5 million, with gross margin improving to 65.5% from 63.9%[15]. - Net profit for the period was approximately RMB 90.1 million, reflecting an increase of about 8.3% from RMB 83.2 million in 2023[24]. - Operating profit before tax was approximately RMB 105.8 million, compared to RMB 101.0 million in the same period of 2023[22]. - Selling and distribution expenses increased to approximately RMB 512.2 million from RMB 426.4 million, primarily due to higher advertising and promotion costs[17]. - Other income and gains decreased to approximately RMB 9.1 million from RMB 10.8 million, mainly due to reduced income from bank financial products and government subsidies[16]. Cash Flow and Assets - The net cash flow from operating activities for the reporting period was RMB 142.2 million, compared to RMB 102.7 million in the same period of 2023, reflecting a significant increase[27]. - The net cash flow from investing activities was RMB 89.7 million, a substantial rise from RMB 3.8 million in the same period of 2023[27]. - As of June 30, 2024, the group's cash and bank deposits amounted to RMB 999.1 million, an increase of approximately 5.9% from RMB 943.8 million as of December 31, 2023[27]. - The group's current asset net value as of June 30, 2024, was RMB 1,063.4 million, up from RMB 1,033.5 million as of December 31, 2023[27]. - The company’s total equity as of June 30, 2024, was RMB 1,327,147,000, reflecting a slight increase from RMB 1,238,055,000 as of January 1, 2024[89]. Shareholder Information and Stock Options - As of June 30, 2024, the company’s major shareholders include 恒泰信託（香港）有限公司, holding 930,000,000 shares, representing 42.49% of the total issued share capital[41]. - PepsiCo, Inc. holds 566,506,000 shares, accounting for 25.88% of the total issued share capital[41]. - The company has a stock option plan approved on November 19, 2018, allowing the issuance of up to 222,100,000 shares, which is 10% of the total issued shares as of the report date[46]. - The total number of shares held by the major shareholders represents a significant portion of the company’s equity, with the top two shareholders holding over 68% combined[41]. - The stock option plan aims to incentivize eligible participants for their contributions to the group and align their interests with the company[44]. - The total number of unexercised share options under the company's share option plan as of June 30, 2024, was 61,892,503[127]. Expenses and Liabilities - Administrative expenses slightly decreased to approximately RMB 40.3 million from RMB 41.3 million, attributed to organizational restructuring[18]. - The employee costs for the reporting period totaled RMB 76.5 million, an increase of approximately 4.1% from RMB 73.5 million in the same period of 2023[33]. - The interest-bearing debt ratio as of June 30, 2024, was approximately 0.8%, up from 0.3% as of December 31, 2023[32]. - The company had no interest-bearing borrowings as of June 30, 2024, consistent with the previous reporting period[27]. - The company did not have any supplier financing arrangements, thus the recent accounting standards did not impact the financial statements[99]. Research and Development - Research and development costs for the six months ended June 30, 2024, were RMB 3,473 thousand, an increase of 38.3% compared to RMB 2,511 thousand for the same period in 2023[103]. Dividends and Share Incentive Plans - No interim dividend was recommended for the six months ending June 30, 2024, compared to no dividend for the same period in 2023[73]. - The company adopted a share incentive plan on March 28, 2022, aimed at recognizing employee contributions and retaining talent[58]. - The maximum number of reward shares under the share incentive plan cannot exceed 10% of the company's issued share capital at any time[61]. Compliance and Governance - The audit committee has reviewed the financial statements and confirmed compliance with applicable accounting standards and listing rules[78]. - The interim financial statements for the six months ended June 30, 2024, were approved by the board on August 28, 2024[133].

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 992,383,000, representing a 13.56% increase from RMB 873,853,000 in the same period of 2023[1] - Gross profit for the same period was RMB 650,013,000, up 16.39% from RMB 558,493,000 year-on-year[2] - Profit before tax increased by 4.76% to RMB 105,785,000 compared to RMB 100,979,000 in the previous year[2] - Net profit attributable to owners of the company was RMB 90,149,000, an 8.39% increase from RMB 83,170,000 in 2023[2] - Basic and diluted earnings per share were both RMB 0.042, reflecting a 7.69% increase from RMB 0.039 in the prior year[2] - Total comprehensive income for the period was RMB 90,767,000, compared to RMB 86,610,000 in the same period last year[3] - The group's total revenue for the six months ended June 30, 2024, was approximately RMB 992.4 million, an increase from RMB 873.9 million for the same period in 2023, representing a growth of about 13.6%[26] - Net profit for the six months ended June 30, 2024, was approximately RMB 90.1 million, an increase of about 8.3% from RMB 83.2 million in 2023[38] Assets and Liabilities - Non-current assets as of June 30, 2024, totaled RMB 375,172,000, slightly down from RMB 375,506,000 at the end of 2023[4] - Current assets amounted to RMB 1,294,289,000, a slight decrease from RMB 1,305,850,000 at the end of 2023[4] - Total equity attributable to owners of the parent was RMB 1,416,980,000, up from RMB 1,395,767,000 at the end of 2023[5] - Trade receivables decreased to RMB 187,322 thousand as of June 30, 2024, down from RMB 215,877 thousand as of December 31, 2023, reflecting a decline of about 13.3%[18] - The net value of trade receivables after impairment was RMB 190,265 thousand as of June 30, 2024, compared to RMB 217,818 thousand as of December 31, 2023, indicating a decrease of approximately 12.7%[18] - Trade payables decreased to RMB 51,553 thousand as of June 30, 2024, down from RMB 75,621 thousand as of December 31, 2023, a reduction of about 31.8%[19] - The group had no interest-bearing borrowings as of June 30, 2024, consistent with December 31, 2023[41] - The interest-bearing debt ratio was approximately 0.8% as of June 30, 2024, compared to 0.3% as of December 31, 2023[45] Cash Flow and Expenses - Cash and bank deposits increased by approximately 5.9% to RMB 999.1 million as of June 30, 2024, from RMB 943.8 million as of December 31, 2023[41] - Net cash flow from operating activities for the period was RMB 142.2 million, up from RMB 102.7 million in the same period of 2023[41] - Employee costs totaled RMB 76.5 million, an increase of approximately 4.1% from RMB 73.5 million in the same period of 2023[46] - The group's selling and distribution expenses rose to approximately RMB 512.2 million from RMB 426.4 million in the previous year, primarily due to increased advertising and promotional costs[31] Taxation and Other Income - The total income tax expense for the six months ended June 30, 2024, was RMB 15,636 thousand, a decrease from RMB 17,809 thousand in the same period of 2023, representing a decline of approximately 12.2%[14] - Other income and gains for the six months ended June 30, 2024, totaled RMB 9,142 thousand, a decrease from RMB 10,784 thousand in the same period of 2023, reflecting a decline of about 15.2%[11] - The company has not been subject to income tax in the British Virgin Islands and the Cayman Islands for the reporting period[14] Product and Market Strategy - The company launched the "Nuts and Sesame Black Bean Powder" as a flagship product, which has gained significant consumer popularity[21] - The company introduced several gift box products for the 2024 Chinese New Year, achieving strong sales performance across online and offline channels[21] - The company is focusing on enhancing its offline retail experience to capture the growing demand for experiential shopping, despite the challenges posed by online retail growth[22] - The company has upgraded its brand strategy in collaboration with a well-known brand strategy firm, emphasizing the core value of "Food Nourishment"[20] - The company reported a significant increase in sales for the "Moisture-Free" product during the summer season, indicating strong consumer demand[21] - The group aims to expand its distribution channels and enhance brand recognition in the health food sector, which is increasingly gaining consumer attention[25] Inventory and Receivables Management - Inventory turnover days improved to 43 days in 2024 from 48 days in 2023, indicating better inventory management[38] - Trade receivables turnover days decreased to 37 days in 2024 from 40 days in 2023, reflecting improved collection efficiency[38] - Trade receivables decreased due to good collection, with a turnover period of 37 days compared to 40 days for the year ended December 31, 2023[40] - Inventory value decreased to approximately RMB 69.1 million as of June 30, 2024, from RMB 93.5 million as of December 31, 2023, reflecting strict inventory control measures[40] Capital and Investments - Capital commitments amounted to approximately RMB 0.6 million related to the purchase of properties and equipment for a new production facility in Nansha, Guangzhou[42] - The net proceeds from the global offering amounted to approximately HKD 636.8 million, with a remaining balance of HKD 66.47 million as of June 30, 2024[52] - The company has utilized HKD 563.5 million of the net proceeds, with HKD 6.83 million used during the reporting period[52] - The planned application of the net proceeds includes strengthening the integrated distribution platform and optimizing channel mix, with a budget of HKD 222.9 million fully utilized[52] - The company has upgraded several existing direct-operated counters to health supplement collection stores and plans to increase the number of direct-operated counters[52] - The company has established a new production base in Nansha, Guangzhou, with a budget of HKD 133.7 million fully utilized for introducing existing and/or new products[52] Corporate Governance - The company did not recommend any interim dividend for the six months ended June 30, 2024, consistent with the previous year[1] - The interim financial statements for the reporting period have been reviewed by the audit committee and the external auditor, Ernst & Young[56] - The company has no significant acquisitions, disposals, or investments during the reporting period[47] - The group had no contingent liabilities or asset pledges as of June 30, 2024, consistent with December 31, 2023[44] - The company has no stock holdings as of June 30, 2024, and has not engaged in any purchases, sales, or redemptions of its listed securities during the reporting period[51] - The company has no significant post-balance sheet events or changes related to its business or financial performance since June 30, 2024[51]

Summary of the Conference Call for Wugu Mofang Company Overview - **Company**: Wugu Mofang - **Event**: Mid-Year Investment Strategy Meeting - **Date**: June 25, 2024 - **Speaker**: Jin Na, Investor Relations General Manager Key Points Industry and Company Developments 1. **Brand Development**: Wugu Mofang is celebrating its 18th anniversary and has undergone a brand upgrade in collaboration with professional branding agencies like Huayu and Hua. The company is repositioning itself as a "functional food" brand focused on health and wellness [3][4] 2. **Product Focus**: The company emphasizes the health benefits of its products, supported by scientific experiments, including studies on hypertension and hair growth [5][6] 3. **Product Launch**: A new product, "Sanxiang Powder," aimed at middle-aged consumers for lowering blood pressure, has shown promising results in scientific tests [6] Sales Channels Performance 1. **Sales Channels**: The company operates three main sales channels: specialty stores, new distribution channels, and e-commerce [8] 2. **Specialty Stores**: Revenue from specialty stores has shown a single-digit growth, despite a reduction in the number of physical locations [9][10] 3. **New Distribution Channels**: This segment has experienced a revenue growth of 30% to 40% year-over-year [11] 4. **E-commerce Growth**: E-commerce sales are expected to grow by 10% to 15% in the first half of the year, with significant growth during the 618 shopping festival, particularly on Tmall, which saw over 30% growth [12][29] Product Strategy 1. **Core Products**: The flagship product, "Walnut Black Bean Sesame Powder," continues to perform well, contributing significantly to overall sales [20] 2. **Gift Products**: The company is focusing on gift packaging products, which saw sales exceed 100 million during the Spring Festival, indicating strong market potential [21][22] 3. **Seasonal Products**: A new product, "Wet No Trace," has gained popularity, particularly during the summer season, with sales exceeding 10 million during the 618 period [24][25] Market Trends and Consumer Behavior 1. **Consumer Trends**: The company acknowledges a trend of consumer downgrade, where consumers seek better value for money. However, Wugu Mofang aims to maintain its focus on functional foods rather than competing on price [38][41] 2. **Promotional Strategy**: The company is strict about its promotional activities, limiting discounts to major sales events like 618 and Double Eleven, to maintain brand value [42][43] Financial Performance 1. **Gross Margin**: The gross margin has seen slight improvements, attributed to changes in channel structure, with specialty stores contributing around 40% of sales and e-commerce also at 40% [64][65] 2. **Channel Profitability**: Specialty stores have a gross margin of approximately 78%, while e-commerce margins are between 65% and 70%, and new channels are around 33% [65][66] Strategic Adjustments 1. **Channel Strategy**: The company is adjusting its channel strategy to focus on high-end membership supermarkets and smaller local stores, which are experiencing growth [46][47] 2. **Distribution Expansion**: Wugu Mofang is expanding its reach through various distribution methods, including direct sales and partnerships with local distributors [48][49] Conclusion - Wugu Mofang is strategically positioning itself in the health food market with a focus on brand value, product functionality, and selective channel growth. The company is navigating market challenges while aiming to enhance consumer engagement and maintain profitability through disciplined pricing and promotional strategies.

Summary of the Conference Call Company and Industry Involved - The conference call is related to Anxin International and its investment strategy for 2024, focusing on the company's development and future plans [1] Core Points and Arguments - Anxin International is hosting a mid-year investment strategy meeting for 2024, featuring a special session with Gina, the company's representative, to discuss the company's development status and future plans [1] Other Important but Possibly Overlooked Content - The call is structured as an interactive session aimed at engaging investors and providing insights into the company's strategic direction [1]

Financial Performance and Cash Flow - Net cash flow from operating activities in 2023 was RMB 185.9 million, compared to RMB 168.5 million in 2022[22] - Net cash used in investing activities in 2023 was RMB 121.1 million, compared to RMB 18.6 million in 2022[22] - Net cash used in financing activities in 2023 was RMB 7.1 million, compared to RMB 25.1 million in 2022[22] - Net current assets as of December 31, 2023, were RMB 1,033.5 million, up from RMB 839.2 million in 2022[22] - Profit before tax increased from RMB 137.3 million in 2022 to RMB 185.9 million in 2023[111] - Net profit grew by 30.8% from RMB 116.5 million in 2022 to RMB 152.4 million in 2023[113] - Income tax expenses increased from RMB 20.8 million in 2022 to RMB 33.6 million in 2023, reflecting higher profitability[112] Revenue and Sales Channels - Offline channel sales revenue increased to RMB 1,000,172 thousand, accounting for 54.2% of total revenue, up from 53.6% in 2022[70] - Online channel sales revenue increased to RMB 845,103 thousand, accounting for 45.8% of total revenue, down from 46.4% in 2022[70] - New channel business revenue grew to RMB 265,874 thousand, up from RMB 179,488 thousand in 2022[70] - E-commerce business grew by 6.1% year-on-year, contributing 45.8% of the company's total revenue (2022: 46.4%)[85] - New channel business surged by 48.1% year-on-year, accounting for 14.4% of total revenue (2022: 10.4%)[88] - The company's offline counter business declined by 1.1% year-on-year, but the rate of decline narrowed, showing a stable development trend[90] Costs and Expenses - Sales cost increased by 6.9% to RMB 663.8 million, mainly due to higher raw material, labor, and production costs[94] - Sales and distribution expenses increased from RMB 891.0 million in 2022 to RMB 897.1 million in 2023, primarily due to increased promotional expenses and travel costs related to business expansion[106] - Administrative expenses rose from RMB 79.0 million in 2022 to RMB 100.4 million in 2023, driven by increased depreciation and amortization of factory assets and higher property and value-added taxes[106] - Financial asset impairment increased from RMB 6.0 million in 2022 to RMB 16.2 million in 2023, mainly due to higher overdue trade receivables and extended aging[108] Assets and Liabilities - Trade payables increased due to higher purchases of raw materials and packaging materials for production, with the trade payables turnover days remaining stable at around 50 days as of December 31, 2023[1] - The company's cash and bank deposits increased by 20.7% to RMB 942.0 million as of December 31, 2023, compared to RMB 781.3 million as of December 31, 2022[3] - Inventory value as of December 31, 2023, was RMB 93.5 million, up from RMB 81.9 million in 2022, mainly due to sales growth[39] - The company had no interest-bearing borrowings as of December 31, 2023[40] - The company had no contingent liabilities or asset pledges as of December 31, 2023[26][27] - Trade receivables and bills increased to RMB 217.8 million, with trade receivables turnover days remaining stable at around 40 days[99][100] Corporate Governance and Board Structure - The Board of Directors consists of seven members, including two executive directors, two non-executive directors, and three independent non-executive directors[117] - The Audit Committee is composed of three independent non-executive directors, with Mr. Zhang Senquan serving as the chairman[131] - The company has implemented a Board Diversity Policy and reviews its effectiveness annually[127] - The company held 7 board meetings in 2023, including 1 written resolution, discussing and approving overall strategies, annual reports, and quarterly operating results[141] - The board is scheduled to meet 4 times annually, with at least 14 days' notice for regular meetings and reasonable notice for other meetings[143] - The company has 3 independent non-executive directors, meeting the requirement of at least one-third of the board and having appropriate professional qualifications[137] - The chairman held 1 meeting with independent non-executive directors without other directors present in 2023, as required by corporate governance code[138] - The company has 2 female directors, with plans to maintain gender diversity in board appointments and employee recruitment[144] - The roles of chairman and CEO are separated, with clear written definitions of their respective responsibilities[146] - The audit committee oversees financial reporting, risk management, and internal control systems, and reviews external auditor appointments[147][150][151] - Directors participated in professional development courses and seminars to stay updated on listing rules and corporate governance practices[139][141] Directors and Key Personnel - Xie Chang'an, a non-executive director since September 30, 2019, serves as the CEO of PepsiCo Greater China and has extensive experience in strategy and e-commerce roles within PepsiCo and other companies[6] - Wang Duo, a non-executive director since September 30, 2019, is the founding partner of Fengyuan Capital, focusing on investments in cloud computing, big data, and fintech[8] - Zhang Senquan, an independent non-executive director since November 19, 2018, has over a decade of experience in accounting and auditing, holding roles at major firms like EY and KPMG[9][11] - Hu Peng, an independent non-executive director since November 19, 2018, has extensive experience in capital markets and investment banking, including roles at UBS and Citigroup[14] - Ouyang Liangyi, an independent non-executive director since November 19, 2018, is an associate professor of finance at Peking University HSBC Business School, specializing in private equity and derivatives[15] - Xiong Xinsheng, the group's financial manager since August 2015, oversees financial planning, accounting, auditing, and internal controls, with prior experience in tax administration[16] Product and Brand Development - The company successfully promoted brands such as "Hei Zhi Yang" and "Xiao Tian Cai," contributing to online sales growth[71] - The company topped Tmall's Double 11 sales ranking in the beverage/supplement powder category[63] - The company focuses on traditional Chinese "food as medicine" concepts combined with modern nutrition to create healthy food products[59] - The company's flagship product "Walnut Black Sesame Powder" maintained its position as the top-selling natural powder product on Tmall for seven consecutive years[101] - The company collaborated with the Chinese Academy of Agricultural Sciences to develop a new high-sesamin sesame variety "Heizhiyang No. 1"[82] - The company partnered with celebrity influencers and KOLs to enhance brand image and attract a broader consumer base[83] - The company's "Black Sesame Ball" series won awards, including the iSEE Innovation Brand Top 100 and the Superior Taste Award from the International Taste Institute[91] Sustainability and Corporate Responsibility - The company collaborates with environmental organizations to protect the Yangtze River source and promote sustainability[61] Financial Reporting and Accounting Policies - The company evaluates potential impairment losses at each reporting period end and may reverse them if conditions improve[155] - New accounting standards on supplier financing arrangements require additional disclosures but are not expected to significantly impact financial statements[153] - Depreciation is calculated using the straight-line method over the estimated useful lives of property, plant, and equipment, with major annual rates specified[157] - Intangible assets acquired through business combinations are measured at fair value at the acquisition date, with finite useful lives amortized over their economic lives[159] - Deferred development costs are amortized on a straight-line basis over a commercial period of 5 to 7 years from the date of commercial production[161] - The group applies the short-term lease recognition exemption for leases with a term of 12 months or less and low-value asset leases[165] - Financial assets are classified and measured at amortized cost, fair value through other comprehensive income, or fair value through profit or loss[166] - Financial assets are considered in default when contract payments are overdue by 90 days, and are written off when there is no reasonable expectation of recovering contractual cash flows[170] - The group's financial liabilities include trade payables, amounts due to directors and related parties, dividends payable, convertible and redeemable preferred shares, and interest-bearing borrowings[200] - Contract assets are recognized when the group transfers goods or services to customers before being entitled to unconditional consideration, and are reclassified as trade receivables when the right to consideration becomes unconditional[185] - The group's reserves changes during the reporting period are detailed in the financial statements note 29[184] - The group's financial liabilities are derecognized when the obligation is discharged, canceled, or expired[195] Employee and Workforce Management - Employee costs in 2023 totaled RMB 140.2 million, a decrease of approximately 8% from RMB 156.3 million in 2022[29] - The company's total number of employees decreased from 697 in 2022 to 682 in 2023, with a stable gender ratio of approximately 1:2 (male to female)[128] Capital and Investments - Capital commitments as of December 31, 2023, were RMB 5.0 million, primarily for property, plant, and equipment for a new production facility in Guangzhou Nansha[23] - The interest-bearing debt ratio as of December 31, 2023, was 0.3%, down from 0.7% in 2022[28] Other Income and Gains - Other income and gains increased by RMB 3 million to RMB 19.5 million, mainly due to higher bank interest income[73]

Financial Performance - The company's revenue for 2023 was RMB 1,845,275 thousand, representing a 7% increase from RMB 1,719,074 thousand in 2022[10] - Gross profit for 2023 reached RMB 1,181,484 thousand, an 8% increase compared to RMB 1,098,384 thousand in 2022[10] - Profit before tax increased by 35% to RMB 185,934 thousand from RMB 137,253 thousand in the previous year[10] - Net profit attributable to the owners of the company was RMB 152,375 thousand, up 31% from RMB 116,462 thousand in 2022[10] - Basic earnings per share for 2023 was RMB 0.071, compared to RMB 0.054 in 2022[10] - Diluted earnings per share for 2023 was RMB 0.070, an increase from RMB 0.053 in 2022[10] - Total comprehensive income for the year was RMB 153,843 thousand, compared to RMB 127,028 thousand in 2022[12] Dividends - The company proposed a final dividend of RMB 0.0323 per share for the year ended December 31, 2023, compared to no dividend in 2022[36] - The board proposed a final dividend of RMB 0.0323 per ordinary share, totaling approximately RMB 70 million, which represents about 45.70% of the group's net profit for the year ended December 31, 2023[188] Assets and Liabilities - Total non-current assets as of December 31, 2023, were RMB 375,506 thousand, down from RMB 413,539 thousand in 2022[39] - Current assets increased to RMB 1,305,850 thousand in 2023 from RMB 1,105,315 thousand in 2022, representing a growth of 18.1%[39] - Total liabilities for 2023 were RMB 272,370 thousand, slightly up from RMB 266,091 thousand in 2022[39] - The company's total equity as of December 31, 2023, was RMB 1,395,767 thousand, an increase from RMB 1,238,055 thousand in 2022[40] - The group's net current assets as of December 31, 2023, were RMB 1,033.5 million, compared to RMB 839.2 million as of December 31, 2022[180] Taxation - The group's taxable profit in mainland China is subject to a corporate income tax rate of 25% for the years ending December 31, 2022, and 2023[57] - The actual tax expense for 2023 is RMB 33,559, which is 18.0% of the pre-tax profit, compared to RMB 20,791 or 15.2% in 2022[59] - The group reported a total tax expense of RMB 33,559 thousand in 2023, up from RMB 20,791 thousand in 2022, indicating a significant increase of 61.4%[88] Revenue Sources - Revenue from customer contracts for 2023 reached RMB 1,845,275 thousand, an increase of 7.35% from RMB 1,719,074 thousand in 2022[33] - E-commerce business grew by 6.1% year-on-year, contributing 45.8% to the group's overall revenue in the current fiscal year[72] - New channel business grew by 48.1% year-on-year, contributing 14.4% to total revenue in 2023, compared to 10.4% in 2022[132] - Offline channel sales accounted for 54.2% of total revenue in 2023, up from 53.6% in 2022, while online channel sales decreased to 45.8% from 46.4%[111] Expenses - Cost of goods sold increased to RMB 663,791 thousand in 2023 from RMB 620,690 thousand in 2022, representing an increase of 6.2%[83] - Research and development expenses rose to RMB 11,918 thousand in 2023, up from RMB 11,456 thousand in 2022, marking a growth of 4.0%[83] - The group's sales and distribution expenses increased from approximately RMB 891.0 million for the year ended December 31, 2022, to approximately RMB 897.1 million for the year ended December 31, 2023, primarily due to increased promotional expenses corresponding to sales growth and increased travel expenses related to business expansion[144] - Administrative expenses rose from approximately RMB 79.0 million for the year ended December 31, 2022, to approximately RMB 100.4 million for the year ended December 31, 2023, attributed to increased depreciation and additional taxes related to property and value-added tax[144] Employee and Operational Metrics - Employee costs (excluding directors' remuneration) totaled RMB 140.2 million for the year ended December 31, 2023, a decrease of about 8% from RMB 156.3 million in 2022[185] - Trade receivables turnover days remained stable at approximately 40 days for the year ended December 31, 2023[177] - Trade payables turnover days increased to approximately 50 days for the year ended December 31, 2023, compared to 43 days for the previous year[176] Product Development and Marketing - The group has established a modern dietary research center in collaboration with the Chinese Nutrition Society to enhance product formulation accuracy and nutritional value[69] - The group has partnered with various celebrities and KOLs to enhance brand visibility and attract a broader consumer base[70] - The company successfully launched the "Walnut Black Bean Sesame Powder," which has been recognized as the top-selling natural powder product on Tmall for six consecutive years[106] - The company has expanded its product offerings with health gift boxes for festive occasions, catering to the growing consumer demand for health products[107] - The company aims to establish a strong brand presence in the health food sector, leveraging distribution channel changes and consumer awareness to drive future growth[108] Financial Health - The group's interest-bearing debt ratio was approximately 0.3% as of December 31, 2023, down from 0.7% as of December 31, 2022[185] - The group's cash and bank deposits increased by approximately 20.7% to RMB 942.0 million in 2023 from RMB 781.3 million in 2022[124] - Operating cash flow net amount for 2023 was RMB 185.9 million, compared to RMB 168.5 million in 2022[125] Inventory and Trade Receivables - Trade receivables increased to RMB 215,877 thousand in 2023 from RMB 195,685 thousand in 2022, an increase of 10.3%[95] - Trade receivables within one month increased to RMB 215,651 in 2023 from RMB 185,901 in 2022, reflecting a growth of 16.0%[65] - Inventory increased to RMB 93.5 million as of December 31, 2023, from RMB 81.9 million as of December 31, 2022[176]