Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 13.41, up from a previous target of HKD 8.13 [6][5][7] Core Views - The company reported a revenue of RMB 2.687 billion in 1H25, a decrease of 23% year-over-year, and a net profit of RMB 338 million, down 10.1% year-over-year, primarily due to order disruptions at the end of 2024 and confirmed impairment losses on trade receivables, although other income related to subsidies increased [1][6] - New orders signed in 1H25 reached RMB 6 billion, representing a significant increase of 89.5% year-over-year, with a backlog of RMB 10.6 billion, up 20.4% year-over-year, marking a historical high [1][6] - The report anticipates a slight increase in net profit for 2025, driven by a reduction in impairment losses and a potential significant increase in new orders [1][5] Summary by Sections Medical Device Sector - The medical device sector achieved a revenue of RMB 2.687 billion in 1H25, down 23% year-over-year, with a net profit of RMB 338 million, down 10.1% year-over-year [1] - New orders in this sector were RMB 6 billion, up 89.5% year-over-year, with a backlog of RMB 10.6 billion, up 20.4% year-over-year [1] Pharmaceutical Sector - The biopharmaceutical sector generated revenue of RMB 797 million in 1H25, an increase of 20% year-over-year, mainly due to the successful completion of orders related to the first modular factory in North Africa [2] - The report expects strong revenue growth in the second half of 2025, supported by a robust order backlog and the recovery of overseas CAPEX demand [2] Chemical and Battery Materials Sector - The battery materials sector reported revenue of RMB 404 million in 1H25, down 38% year-over-year, with a backlog of RMB 760 million and new orders of RMB 290 million [3] - The chemical sector's revenue was RMB 581 million, down 17.5% year-over-year, with a backlog of RMB 1.03 billion and new orders of RMB 130 million [3] International Expansion - The report highlights the company's ongoing international capacity expansion, including the ramp-up of production at the Nantong factory and the expansion of the Malaysian factory [4] - Plans for a new production base in Thailand are also in progress to enhance the company's global supply chain [4] Profit Forecast and Valuation - The report projects EPS of RMB 0.61, 0.76, and 0.97 for 2025-2027, respectively, with a target price set at 20 times PE for 2025 [5][10] - The target price reflects an adjustment based on the recovery of the pharmaceutical sector's order capacity [5]

Core Viewpoint - SenSong International (02155) experienced a stock price increase of over 14% following the release of its interim results, with a current price of 10.81 HKD and a trading volume of 136 million HKD. The company's revenue and profit figures showed a decline compared to the previous year, but new order growth in specific sectors was notable [1]. Financial Performance - The company reported a revenue of 2.687 billion RMB, a year-on-year decrease of 22.71% [1] - Shareholder profit stood at 338 million RMB, down 10.15% year-on-year [1] - The performance was in line with market expectations, attributed to a 9-14 month order confirmation cycle and a 23% decline in new orders signed last year, along with a 10% decrease in orders on hand [1]. Order and Market Dynamics - New signed orders in the pharmaceutical sector reached 4.372 billion RMB, representing a significant year-on-year increase of 642%, exceeding expectations [1] - Orders on hand amounted to 10.566 billion RMB, a year-on-year growth of 20.4%, marking a historical high [1]. Industry Trends - The company is advancing in high-tech industries such as AI, semiconductors, and pharmaceuticals [1] - In the pharmaceutical sector, there is a rapid increase in global capacity demand from MNCs and CXOs [1] - The AI sector is expected to see a new growth cycle in modular data centers [1] - The demand for high-end products in the wet electronic chemicals sector is driven by advancements in processes and growth in new energy requirements [1].

Core Viewpoint - SenSong International (02155) experienced a significant stock price increase of over 14% following the release of its interim results, indicating market confidence despite a decline in revenue and profit [1] Financial Performance - The company reported revenue of 2.687 billion RMB, a year-on-year decrease of 22.71% [1] - Shareholder profit was 338 million RMB, down 10.15% year-on-year [1] - The performance was in line with market expectations, attributed to a 9-14 month order confirmation cycle and a 23% decline in new orders last year, along with a 10% decrease in backlog orders [1] Order and Market Dynamics - New orders in the pharmaceutical sector reached 4.372 billion RMB, showing a remarkable year-on-year growth of 642%, exceeding expectations [1] - The backlog of orders stood at 10.566 billion RMB, reflecting a year-on-year increase of 20.4%, marking a historical high [1] Industry Trends - The company is advancing in high-tech industries such as AI, semiconductors, and pharmaceuticals [1] - In the pharmaceutical sector, there is a rapid increase in global capacity demand from MNCs and CXOs [1] - The AI sector is expected to see a new growth cycle in modular data centers [1] - The demand for high-end products in the wet electronic chemicals sector is driven by advancements in processes and growth in new energy requirements [1]

Core Viewpoint - CICC maintains an "outperform" rating for Sensong International (02155) and raises the target price by 50% to HKD 12.00, reflecting a 22.0% upside potential from the current stock price, driven by industry valuation increases and the company's long-term growth prospects in global manufacturing and high-tech sectors [2]. Financial Performance - For the first half of 2025, the company's revenue was HKD 2.687 billion, down 22.7% year-on-year, with a net profit of HKD 340 million, down 10.1% year-on-year, aligning with market expectations [3]. - The gross margin for the first half of the year was 29.4%, a slight decrease of 0.2 percentage points year-on-year, while the net profit margin improved to 12.6%, an increase of 1.8 percentage points year-on-year, indicating robust profitability [4]. Order and Backlog Performance - New orders in the first half of 2025 reached HKD 5.996 billion, a significant increase of 89.5% year-on-year, with pharmaceutical orders surging by 642% to HKD 4.372 billion [5]. - The backlog of orders reached a historical high of HKD 10.566 billion, up 20.4% year-on-year, with overseas orders accounting for 92.8% of new orders [5]. Strategic Positioning - The company is making significant strides in high-tech sectors such as AI, semiconductors, and pharmaceuticals, with increasing global demand for MNC and CXO capacities in the pharmaceutical field [6]. - The modular data center in the AI sector is expected to enter a new growth cycle, while the demand for advanced electronic chemicals is driven by the evolution of advanced processes and the growth of new energy needs [6].

Core Viewpoint - The report from CICC indicates a downward adjustment of 27.7% in the 2025 net profit forecast for Sensong International (02155) to 740 million yuan, with the introduction of a 2026 net profit estimate of 937 million yuan. The valuation has shifted to 2026 due to the time required for project revenue recognition, with the current stock price corresponding to an 11.8x P/E ratio for 2026. The target price has been raised by 50% to HKD 12.00, reflecting a 22.0% upside potential from the current stock price [1]. Group 1 - The 1H25 performance met market expectations, with revenue of 2.687 billion yuan, down 22.7% year-on-year, and a net profit of 340 million yuan, down 10.1% year-on-year. This performance is attributed to a 9-14 month order confirmation cycle and a 23% decline in new orders last year, along with a 10% decrease in orders on hand [2]. - The net profit margin continues to improve, showcasing robust profitability. The gross margin for the first half was 29.4%, down 0.2 percentage points year-on-year, while the net profit margin was 12.6%, up 1.8 percentage points year-on-year. The expense ratios for sales, management, R&D, and finance were 3.2%, 11.1%, 4.2%, and 0.2%, respectively, with year-on-year changes of +0.9 percentage points, +3.5 percentage points, -2.1 percentage points, and flat [3]. - New orders in the pharmaceutical sector exceeded expectations, with total new orders of 5.996 billion yuan, up 89.5% year-on-year. Pharmaceutical new orders reached 4.372 billion yuan, up 642% year-on-year. The backlog of orders reached a historical high of 10.566 billion yuan, up 20.4% year-on-year, with overseas orders accounting for 92.8% of new orders [4]. Group 2 - The multinational platform layout is yielding results, with continuous improvement in high-tech industry positioning. The company is advancing in AI, semiconductors, and pharmaceuticals, with rapid global demand growth in the pharmaceutical sector. The AI sector is expected to enter a new growth cycle for modular data centers, while the demand for high-end products in the wet electronic chemicals sector is driven by advanced process evolution and new energy needs [5].

Performance Summary - SF Holding reported a revenue of 146.858 billion yuan, a year-on-year increase of 9.26%, and a net profit of 5.738 billion yuan, up 19.37% year-on-year [2] - Shanghai Pharmaceuticals achieved a revenue of 141.593 billion yuan, a growth of 1.56%, with a net profit of 4.459 billion yuan, increasing by 51.56% [2] - New China Life Insurance's revenue reached 69.429 billion yuan, a 25.5% increase, and a net profit of 14.799 billion yuan, up 33.5% [2] - Huadian International Power's revenue was 59.953 billion yuan, down 8.98%, while net profit increased by 13.15% to 3.904 billion yuan [2] - China Pacific Insurance reported a revenue of 55.964 billion yuan, a slight increase of 0.2%, and a net profit of 6.764 billion yuan, up 12.2% [2] - CITIC Securities had a revenue of 46.552 billion yuan, a 16.28% increase, and a net profit of 13.719 billion yuan, up 29.79% [2] - Beijing Enterprises Holdings reported a revenue of 44.529 billion yuan, a 5.2% increase, and a net profit of 3.404 billion yuan, up 8.1% [2] - Li Auto's vehicle sales revenue for Q2 2025 was 28.9 billion yuan, down 4.7%, with a net profit of 1.093 billion yuan, a decrease of 0.9% [2] - Huishang Bank reported a revenue of 21.157 billion yuan, a 2.25% increase, and a net profit of 9.109 billion yuan, up 5.55% [2] - SMIC achieved a revenue of 4.456 billion USD, a 22% increase, with a net profit of 320 million USD, up 35.6% [2] - China Galaxy Securities reported a total revenue of 18.798 billion yuan, an 18.92% increase, and a net profit of 6.488 billion yuan, up 47.86% [2] - Zhongjun Group Holdings had a revenue of 18.521 billion yuan, down 25.4%, with a net loss of 3.48 billion yuan, a narrowing of 5.5% [2] - BeiGene reported a revenue of 2.433 billion USD, a 44.7% increase, and a net profit of 95.59 million USD, turning from a loss of 372 million USD [2] - SF Express City reported a revenue of 10.236 billion yuan, up 48.8%, and a net profit of 137 million yuan, up 120.4% [2] - China Shipbuilding Defense reported a revenue of 10.173 billion yuan, a 16.54% increase, and a net profit of 526 million yuan, up 258.46% [2] - Qingdao Port reported a revenue of 9.434 billion yuan, a 4.04% increase, and a net profit of 2.842 billion yuan, up 7.58% [2] - Shanghai Industrial Holdings reported a revenue of 9.476 billion yuan, down 8.6%, and a net profit of 1.042 billion yuan, down 13.2% [2] - Everbright Securities reported a revenue of 7.481 billion yuan, a 17.7% increase, and a net profit of 1.683 billion yuan, up 21% [2] - Baozun reported a revenue of 4.617 billion yuan, a 5.63% increase, with a net loss of 97.04 million yuan, narrowing [2] - Sichuan Chengyu Expressway reported a revenue of 4.08 billion yuan, down 23.3%, and a net profit of 838 million yuan, up 20.1% [2] - Baideli Holdings reported a revenue of approximately 3.813 billion yuan, down 10.9%, and a net profit of 7.1 million yuan, down 79.1% [2] - Tigermed reported a revenue of 3.25 billion yuan, down 3.21%, and a net profit of 383 million yuan, down 22.22% [2] - Zhengli New Energy reported a revenue of 3.172 billion yuan, a 71.9% increase, and a net profit of 220 million yuan, turning from a loss of 130 million yuan [2] - Sensong International reported a revenue of 2.687 billion yuan, down 22.7%, and a net profit of 338 million yuan, down 10.15% [2] - Dasheng Holdings reported a revenue of approximately 2.593 billion yuan, a 27% increase, and a net profit of 65.924 million yuan, up 504.4% [2] - SenseTime reported a revenue of 2.358 billion yuan, a 35.6% increase, with a gross profit of 908 million yuan, up 18.4%, and an adjusted net loss of 1.162 billion yuan, narrowing by 50% [2] - Ruian Real Estate reported a revenue of 2.074 billion yuan, flat year-on-year, with a net profit of 51 million yuan, down 29.2% [2] - Shangri-La Asia reported a revenue of 1.056 billion USD, a 0.7% increase, and a net profit of 57.9 million USD, down 38.7% [2] - Quanfeng Holdings reported a revenue of 912 million USD, an 11.9% increase, and a net profit of 95.217 million USD, up 54.8% [2] - COSCO Shipping Ports reported a revenue of 806 million USD, a 13.6% increase, and a net profit of approximately 182 million USD, up 30.6% [2] - Tianjin Development reported a revenue of 1.719 billion yuan, down 5.59%, and a net profit of 344 million yuan, up 19.57% [2] Company News - Sillodic Pharmaceuticals successfully administered the new radiolabeled drug 3D1015 to patients with PSMA-positive metastatic castration-resistant prostate cancer, demonstrating safety and preliminary efficacy [2] - Shoucheng Holdings signed a strategic cooperation framework agreement with Alter and Alrite to jointly promote breakthroughs in robotics technology, scene implementation, and industrial chain collaboration [2]

（原标题：森松国际(02155)发布中期业绩 股东应占溢利3.38亿元 同比减少10.15%） 智通财经APP讯，森松国际(02155)发布截至2025年6月30日止六个月的中期业绩，收益26.87亿元(人民 币，下同)，同比减少22.71%;股东应占溢利3.38亿元，同比减少10.15%;每股基本盈利0.28元。 ...

Group 1 - The core viewpoint of the article indicates that 森松国际 (02155.HK) experienced a significant decline in revenue, with a decrease of 22.7% to approximately RMB 2.687 billion for the six months ending June 30, 2025 [1] - The revenue decline is attributed to the impact of the macroeconomic environment and product delivery cycles on certain industries [1] - The company's gross profit margin remained stable at approximately 29.4% compared to the same period last year [1] Group 2 - For the six months ending June 30, 2025, the company recorded earnings before interest, taxes, depreciation, and amortization (EBITDA) of approximately RMB 523 million, representing a year-on-year decrease of about 5.9% [1]

森松国际(02155)发布截至2025年6月30日止六个月的中期业绩，收益26.87亿元(人民币，下同)，同比减 少22.71%;股东应占溢利3.38亿元，同比减少10.15%;每股基本盈利0.28元。 ...

[Financial Summary](index=1&type=section&id=Financial%20Summary) The Group's financial performance for the six months ended June 30, 2025, shows a decrease in revenue and net profit, with a stable gross margin and significant growth in new order intake Financial Summary for the Six Months Ended June 30, 2025 | Indicator | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Revenue | 2,687,283,000 | 3,476,752,000 | | Gross Profit | 788,786,000 | 1,028,448,000 | | Gross Margin | 29.4% | 29.6% | | Net Profit | 333,008,000 | 373,827,000 | | Net Profit Margin | 12.4% | 10.8% | | New Order Intake | 5,995,580,000 | 3,164,404,000 | | EBITDA | 523,335,000 | 556,094,000 | | Basic Earnings Per Share | 0.28 | 0.32 | | Diluted Earnings Per Share | 0.27 | 0.30 | | Total Transaction Price Allocated to Remaining Performance Obligations | 10,566,215,000 | 8,776,495,000 | [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents the Group's consolidated financial statements, including the statement of profit or loss, comprehensive income, and financial position, for the period and as of June 30, 2025 [Consolidated Statement of Profit or Loss](index=2&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2025, the Group's revenue decreased by **22.7%** year-on-year to **RMB 2.687 billion**, and net profit decreased by **10.9%** to **RMB 333 million**, with basic earnings per share at **RMB 0.28** Key Data from Consolidated Statement of Profit or Loss | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 2,687,283 | 3,476,752 | | Gross Profit | 788,786 | 1,028,448 | | Other Income | 139,997 | 60,689 | | Selling and Marketing Expenses | (86,883) | (81,158) | | General and Administrative Expenses | (298,629) | (264,573) | | Research and Development Expenses | (113,902) | (219,020) | | Profit from Operations | 407,223 | 472,655 | | Profit Before Tax | 402,223 | 467,487 | | Profit for the Period | 333,008 | 373,827 | | Basic Earnings Per Share (RMB) | 0.28 | 0.32 | | Diluted Earnings Per Share (RMB) | 0.27 | 0.30 | [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the Group's total comprehensive income for the period was **RMB 346 million**, a decrease from **RMB 369 million** in the prior year, with exchange differences positively impacting comprehensive income this period Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit for the Period | 333,008 | 373,827 | | Exchange differences on translation of the Company's financial statements | (5,602) | 809 | | Exchange differences on translation of financial statements of subsidiaries outside Mainland China | 18,375 | (6,072) | | Other comprehensive income for the period | 12,773 | (5,263) | | Total comprehensive income for the period | 345,781 | 368,564 | | Attributable to equity holders of the Company | 340,213 | 371,199 | | Attributable to non-controlling interests | 5,568 | (2,635) | [Consolidated Statement of Financial Position](index=4&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, the Group's total assets increased from December 31, 2024, driven by significant growth in current assets, while current liabilities also rose due to increases in trade and other payables and contract liabilities Key Data from Consolidated Statement of Financial Position | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Total Non-current Assets | 2,948,401 | 2,829,047 | | Total Current Assets | 6,713,785 | 6,079,286 | | Total Current Liabilities | 3,947,588 | 3,377,843 | | Net Current Assets | 2,766,197 | 2,701,443 | | Total Assets Less Current Liabilities | 5,714,598 | 5,530,490 | | Total Non-current Liabilities | 190,894 | 254,634 | | Net Assets | 5,523,704 | 5,275,856 | | Total Equity Attributable to Equity Holders of the Company | 5,289,559 | 5,048,359 | | Total Equity | 5,523,704 | 5,275,856 | [Notes to the Unaudited Interim Financial Report](index=6&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) This section details the basis of preparation, changes in accounting policies, revenue and segment reporting, other income, profit before tax, income tax, earnings per share, and key balance sheet items [Basis of Preparation](index=6&type=section&id=Basis%20of%20Preparation) This interim financial report is prepared in accordance with HKAS 34 and the HKEX Listing Rules, using consistent accounting policies with the 2024 annual financial statements, and was authorized for issue on August 28, 2025 - This interim financial report is prepared in accordance with HKAS 34 and the Listing Rules, and was authorized for issue on **August 28, 2025**[10](index=10&type=chunk) - The accounting policies used are consistent with those in the 2024 annual financial statements, except for changes expected to be reflected in the 2025 annual financial statements[10](index=10&type=chunk) [Changes in Accounting Policies](index=7&type=section&id=Changes%20in%20Accounting%20Policies) The Group adopted the amendments to HKAS 21, "The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability," which had no material impact on this interim report as no transactions involving non-exchangeable foreign currencies occurred - The Group has adopted the amendments to HKAS 21, "The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability"[12](index=12&type=chunk) - This amendment had no material impact on this interim report as the Group did not undertake transactions involving non-exchangeable foreign currencies[12](index=12&type=chunk) [Revenue and Segment Reporting](index=7&type=section&id=Revenue%20and%20Segment%20Reporting) The Group's primary business is the production and sale of pressure equipment, generating **RMB 2.687 billion** in revenue for the six months ended June 30, 2025, with modular pressure equipment being the largest contributor, and operates as a single segment focused on integrated pressure equipment sales [Revenue Breakdown](index=7&type=section&id=Revenue%20Breakdown) The Group's revenue primarily stems from product sales, with modular pressure equipment being the largest contributor despite a year-on-year decrease, while service income, though smaller, has grown, and revenue recognition mainly occurs at a point in time Revenue by Major Product or Service Line | Product/Service Line | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Core Equipment | 819,651 | 1,249,383 | | Reactors | 237,126 | 664,387 | | Heat Exchangers | 162,692 | 351,164 | | Vessels | 217,829 | 79,271 | | Towers | 202,004 | 154,561 | | Modular Pressure Equipment | 1,768,903 | 2,143,433 | | Other Product Sales | 10,872 | 11,108 | | Total Product Sales | 2,599,426 | 3,403,924 | | Pressure Equipment Design, Verification and Maintenance Services | 87,857 | 72,828 | | Total Services | 87,857 | 72,828 | | Total Revenue from Operating Activities | 2,687,283 | 3,476,752 | Revenue by Timing of Recognition | Timing of Recognition | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | At a point in time | 1,942,619 | 2,372,607 | | Over time | 744,664 | 1,104,145 | | Total | 2,687,283 | 3,476,752 | - For the six months ended June 30, 2025, transactions with **Customer A** accounted for over **10%** of the Group's revenue, compared to Customer B in the prior year[17](index=17&type=chunk) [Geographical Information](index=8&type=section&id=Geographical%20Information) The Group's revenue primarily originates from Mainland China, North America, and Asia (excluding Mainland China), with a significant year-on-year decrease in Mainland China revenue but substantial growth in Europe Revenue by Geographical Market | Region | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Mainland China | 746,294 | 1,524,316 | | North America | 550,791 | 549,514 | | Asia (excluding Mainland China) | 1,089,863 | 1,005,229 | | Europe | 240,585 | 99,951 | | Others | 59,750 | 297,742 | | Total | 2,687,283 | 3,476,752 | - The Group's property, plant and equipment, and intangible assets are primarily located in **Mainland China**[20](index=20&type=chunk) [Segment Reporting](index=9&type=section&id=Segment%20Reporting) In accordance with HKFRS 8, the Group has identified that it operates in a single operating segment: the sale of integrated pressure equipment - The Group has only one operating segment: the **sale of integrated pressure equipment**[21](index=21&type=chunk) [Other Income](index=9&type=section&id=Other%20Income) For the six months ended June 30, 2025, the Group's other income significantly increased to **RMB 140 million**, primarily driven by relocation subsidies, higher interest income, and net foreign exchange gains Other Income Breakdown | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Government grants | 4,765 | 12,761 | | Interest income | 38,764 | 25,697 | | Net realised gains on money market funds | 3,691 | 3,094 | | Net realised gains on forward foreign exchange contracts | 369 | — | | Net foreign exchange gains | 12,983 | 19,714 | | Fair value changes of financial assets and liabilities | 2,706 | 835 | | Net loss on disposal of property, plant and equipment | (1,030) | (342) | | Relocation subsidy | 65,924 | — | | Others | 11,825 | (1,070) | | Total | 139,997 | 60,689 | - The relocation subsidy of **RMB 65.924 million** primarily compensated for the relocation of leased properties by Shanghai Morimatsu Chemical Equipment Co, Ltd[22](index=22&type=chunk) [Profit Before Tax](index=10&type=section&id=Profit%20Before%20Tax) The Group's profit before tax was **RMB 402 million**, influenced by increased staff costs and depreciation expenses, while research and development costs significantly decreased Components of Profit Before Tax | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Finance costs | 4,872 | 4,966 | | Staff costs | 676,984 | 602,932 | | Amortisation of intangible assets | 12,607 | 9,884 | | Depreciation expenses (owned property, plant and equipment) | 85,211 | 68,023 | | Depreciation expenses (right-of-use assets) | 18,422 | 5,734 | | Research and development costs | 113,902 | 219,020 | | Cost of inventories | 1,898,497 | 2,448,304 | - Research and development costs decreased by approximately **RMB 105 million** year-on-year, primarily due to the adjustment of R&D project priorities and improved R&D efficiency[24](index=24&type=chunk)[80](index=80&type=chunk) [Income Tax in Consolidated Statement of Profit or Loss](index=12&type=section&id=Income%20Tax%20in%20Consolidated%20Statement%20of%20Profit%20or%20Loss) The Group's income tax expense was **RMB 69.215 million**, with an effective tax rate of approximately **17.2%**, a decrease from the prior year, as some Chinese subsidiaries benefit from a **15%** preferential tax rate for high-tech enterprises and are subject to Pillar Two income tax rules [Components of Income Tax](index=12&type=section&id=Components%20of%20Income%20Tax) The Group's income tax expense comprises current and deferred tax, with a statutory income tax rate of **25%** in China, though certain high-tech enterprises enjoy a **15%** preferential rate, and different subsidiaries are subject to varying corporate income tax rates across jurisdictions Tax in Consolidated Statement of Profit or Loss | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current tax: Provision for the year | 89,000 | 113,261 | | Deferred tax: Origination and reversal of temporary differences | (19,785) | (19,601) | | Actual tax expense | 69,215 | 93,660 | - The statutory income tax rate in China is **25%**[25](index=25&type=chunk) - Five subsidiaries, including Shanghai Morimatsu Pharmaceutical Equipment Engineering Co, Ltd and Morimatsu (Jiangsu) Heavy Industry Co, Ltd, qualify as high-tech enterprises and are subject to a **15%** preferential tax rate[27](index=27&type=chunk)[29](index=29&type=chunk) - Eligible R&D expenditures can enjoy a **200%** income tax deduction based on actual incurred amounts[29](index=29&type=chunk) [Pillar Two Income Tax](index=15&type=section&id=Pillar%20Two%20Income%20Tax) As a multinational enterprise group, the Group is subject to the OECD's Pillar Two Model Rules, with profits in Sweden and Italy subject to domestic minimum top-up tax from January 1, 2024, and profits in Hong Kong and other non-domestic minimum top-up tax jurisdictions (including Mainland China) affected from January 1, 2025 - The Group is subject to the global anti-base erosion rules legislative model ("Pillar Two Model Rules") issued by the Organisation for Economic Co-operation and Development[30](index=30&type=chunk) - Effective **January 1, 2024**, the Group's profits in Sweden and Italy are subject to domestic minimum top-up tax[30](index=30&type=chunk) - Effective **January 1, 2025**, the Group's profits in Hong Kong and certain other jurisdictions that have not implemented domestic minimum top-up tax (including Mainland China) will also be subject to Pillar Two income tax[30](index=30&type=chunk) [Earnings Per Share](index=15&type=section&id=Earnings%20Per%20Share) For the six months ended June 30, 2025, the Group's basic earnings per share were **RMB 0.28** and diluted earnings per share were **RMB 0.27**, both lower than the prior year [Basic Earnings Per Share](index=15&type=section&id=Basic%20Earnings%20Per%20Share) Basic earnings per share are calculated based on profit attributable to ordinary equity holders of the Company of **RMB 338 million** and a weighted average of **1.203 billion** ordinary shares outstanding Basic Earnings Per Share Calculation | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit attributable to equity holders (RMB thousands) | 337,743 | 375,886 | | Weighted average number of ordinary shares outstanding (shares) | 1,202,925,000 | 1,169,729,000 | | Basic Earnings Per Share (RMB) | 0.28 | 0.32 | [Diluted Earnings Per Share](index=15&type=section&id=Diluted%20Earnings%20Per%20Share) Diluted earnings per share are calculated based on profit attributable to ordinary equity holders of the Company of **RMB 338 million** and a weighted average of **1.258 billion** ordinary shares Diluted Earnings Per Share Calculation | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit attributable to equity holders (RMB thousands) | 337,743 | 375,886 | | Weighted average number of ordinary shares outstanding (shares) | 1,257,894,000 | 1,239,937,000 | | Diluted Earnings Per Share (RMB) | 0.27 | 0.30 | [Trade and Other Receivables](index=15&type=section&id=Trade%20and%20Other%20Receivables) As of June 30, 2025, the Group's total trade and other receivables amounted to **RMB 1.371 billion**, a slight increase from December 31, 2024, driven by higher bills receivable and other receivables despite a decrease in trade receivables Trade and Other Receivables Breakdown | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Bills receivable | 70,775 | 45,238 | | Trade receivables (net of loss allowance) | 947,551 | 1,035,842 | | Other receivables | 128,374 | 85,425 | | Financial assets measured at amortised cost | 1,146,700 | 1,166,505 | | Prepayments | 224,529 | 181,435 | | Total | 1,371,229 | 1,347,940 | Ageing Analysis of Trade Receivables | Ageing | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 3 months | 302,240 | 277,753 | | Over 3 months but within 1 year | 246,109 | 434,838 | | Over 1 year but within 2 years | 334,516 | 273,638 | | Over 2 years | 64,686 | 49,613 | | Total | 947,551 | 1,035,842 | - Trade receivables and bills receivable are primarily due within **30 to 120 days** from the invoice date[34](index=34&type=chunk) [Trade and Other Payables](index=16&type=section&id=Trade%20and%20Other%20Payables) As of June 30, 2025, the Group's total trade and other payables increased to **RMB 1.757 billion** from December 31, 2024, mainly driven by growth in trade payables and other payables and accrued expenses Trade and Other Payables Breakdown | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Bills payable | 121,749 | 116,775 | | Trade payables | 1,103,597 | 1,076,073 | | Other payables and accrued expenses | 531,871 | 453,735 | | Financial liabilities measured at amortised cost | 1,757,217 | 1,646,583 | Ageing Analysis of Trade Payables | Ageing | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within 3 months | 662,533 | 638,085 | | Over 3 months but within 6 months | 136,619 | 139,691 | | Over 6 months but within 12 months | 96,938 | 114,704 | | Over 1 year but within 2 years | 106,789 | 121,368 | | Over 2 years | 100,718 | 62,225 | | Total | 1,103,597 | 1,076,073 | [Capital and Reserves](index=17&type=section&id=Capital%20and%20Reserves) The Group's total capital and reserves increased to **RMB 5.524 billion** as of June 30, 2025, with no interim dividends declared for the reporting period, but the Board resolved to declare dividends for the previous financial year, alongside equity-settled share-based payment transactions and ordinary share movements [Dividends](index=17&type=section&id=Dividends) For the six months ended June 30, 2025, the Board did not declare any interim dividends, but resolved to declare a dividend of **HKD 0.15** per ordinary share for the previous financial year, totaling **HKD 183 million**, which remains unpaid - For the six months ended June 30, 2025, the Board did not declare any interim dividends[36](index=36&type=chunk) - The Board resolved to declare a dividend of **HKD 0.15** per ordinary share for the previous financial year, totaling **HKD 183 million**, which remained unpaid as of June 30, 2025[36](index=36&type=chunk) - Subsequent to the reporting period, the board of directors of a subsidiary of the Company resolved to declare an interim dividend of **RMB 100 million** to the Company[36](index=36&type=chunk) [Equity-settled Share-based Payment Transactions](index=17&type=section&id=Equity-settled%20Share-based%20Payment%20Transactions) The Group operates a Pre-IPO Share Option Scheme, a Restricted Share Unit Scheme, and a Restricted Share Scheme, recognizing related expenses during the reporting period - The Company adopted a Pre-IPO Share Option Scheme on **July 1, 2020**, granting options to **27 participants** to subscribe for a total of **132 million** ordinary shares[37](index=37&type=chunk) - The Group recognized share option expenses of **RMB 13.164 million** for the six months ended June 30, 2025[37](index=37&type=chunk) - The Group adopted a Restricted Share Unit Scheme on **December 15, 2021**, granting **29.4597 million** restricted share units to **149 eligible employees** on **January 5, 2022**[38](index=38&type=chunk) - Morimatsu Pharma, a subsidiary of the Group, adopted a Restricted Share Scheme on **September 30, 2024**, granting **12,868,710** restricted shares to **16 eligible employees**[40](index=40&type=chunk) - The Group recognized expenses of **RMB 22.886 million** for the Restricted Share Scheme for the six months ended June 30, 2025[40](index=40&type=chunk) [Share Capital](index=18&type=section&id=Share%20Capital) During the reporting period, the Company issued and repurchased ordinary shares due to the exercise of Pre-IPO share options, with capital reserves transferred to the share capital account upon the exercise of share options and restricted share units, and also cancelled some treasury shares - On **June 4, 2025**, the Company issued and repurchased **25.91 million** ordinary shares at **HKD 1.1964** per share upon the exercise of the Pre-IPO Share Option Scheme[41](index=41&type=chunk) - For the six months ended June 30, 2025, share options to subscribe for a total of **13,410,575** ordinary shares were exercised, and **RMB 30.72 million** was transferred from capital reserve to the share capital account[42](index=42&type=chunk) - **9,269,100** restricted share units vested and were exercised during the six months ended June 30, 2025, and **RMB 37.792 million** was transferred from capital reserve to the share capital account[44](index=44&type=chunk) - For the six months ended June 30, 2025, the Company cancelled a total of **2,074,000** treasury shares at prices ranging from **HKD 3.55 to HKD 4.83** per share[45](index=45&type=chunk) [Other Reserves](index=19&type=section&id=Other%20Reserves) Other reserves primarily represent the difference between the consideration paid and the relevant carrying amount of net assets of acquired subsidiaries, after offsetting intra-group transactions - Other reserves primarily represent the difference between the consideration paid and the relevant carrying amount of net assets of acquired subsidiaries (after offsetting intra-group transactions)[46](index=46&type=chunk) [Investments in Subsidiaries](index=19&type=section&id=Investments%20in%20Subsidiaries) During the reporting period, the Group established MET Malaysia as a new wholly-owned subsidiary, formed Shanghai Senhong Technology Co, Ltd as a non-wholly-owned subsidiary with independent third parties, and acquired full equity in Morimatsu Thailand - On **January 27, 2025**, Morimatsu Singapore, a subsidiary of the Company, established a new wholly-owned subsidiary, MET Malaysia, with a registered capital of **MYR 3 million**[47](index=47&type=chunk) - On **February 13, 2025**, Morimatsu Biotech, a subsidiary of the Company, established a new non-wholly-owned subsidiary, Shanghai Senhong Technology Co, Ltd, with four independent third parties, where the Company holds a **70%** stake[47](index=47&type=chunk) - On **April 30, 2025**, Lifesciences Singapore and Pharmadule Singapore agreed to acquire **80%** and **20%** of Morimatsu Thailand's shares, respectively, resulting in the Company indirectly holding **100%** equity in Morimatsu Thailand[47](index=47&type=chunk) [Management Discussion and Analysis](index=20&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the Group's performance in an uncertain environment, market strategies, customer relationships, and an outlook on key downstream industry markets [High Certainty Performance in an Uncertain Environment](index=20&type=section&id=High%20Certainty%20Performance%20in%20an%20Uncertain%20Environment) Facing global economic recovery shortfalls, geopolitical shifts, and downstream industry overcapacity, the Group leveraged its "Certainty Alpha + Dynamic Beta" strategy, diversifying market presence, customer base, and product technologies to achieve rapid order recovery and demonstrate strong resilience - The Group navigated multiple macroeconomic challenges during the reporting period, including shrinking end-market demand, geopolitical changes, downstream industry overcapacity, and global low-carbon policy adjustments[48](index=48&type=chunk) - The Group adopted a "Certainty Alpha Strategy" and "Dynamic Beta Advantage," effectively mitigating cyclical fluctuations through diversified downstream industries, market layouts, customer bases, product technology portfolios, and service model innovations[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - The Group secured abundant orders across various regions, including North America, South America, Asia, Europe, and Oceania, and in industries such as pharmaceutical and biopharmaceutical, power battery raw materials, daily chemicals, and oil and gas refining[49](index=49&type=chunk) [Market Strategy](index=21&type=section&id=Market%20Strategy) The Group's market strategy focuses on specific market demand cycles, particularly in AI computing infrastructure and data centers, by offering service-oriented solutions that balance customer CAPEX and OPEX, creating value through technology and service [Demand Cycles in Specific Markets](index=21&type=section&id=Demand%20Cycles%20in%20Specific%20Markets) With the proliferation of AI technology, global demand for computing power and infrastructure is rapidly increasing, and the Group, leveraging its intelligent engineering and micro-channel reactor technology, can quickly deliver computing infrastructure, positioning data center products as a key future growth area - The Group observed rapid growth in global demand for **AI computing power** and its infrastructure[51](index=51&type=chunk) - The Group possesses strong technical support and extensive project experience in intelligent engineering and high-efficiency heat exchange and energy consumption management for micro-channel reactors[51](index=51&type=chunk) - Data center products are expected to become one of the Group's key focus areas for promotion in the coming years[51](index=51&type=chunk) [Service-Oriented, Balancing CAPEX and OPEX](index=22&type=section&id=Service-Oriented%2C%20Balancing%20CAPEX%20and%20OPEX) The Group is committed to providing customers with high-tech, high-quality, and cost-effective products and services that meet their CAPEX budgets, while also offering front-end services like OPEX estimation and economic benefit analysis to enhance customer reliance on the Group's technology and avoid homogenized competition - The Group provides customers with high-tech, high-quality, and cost-effective products, technologies, and services to meet their **CAPEX** budgets[52](index=52&type=chunk) - The Group offers **OPEX** estimation and economic benefit analysis as front-end services, assisting customers in determining key indicators such as technology type, process flow, and energy consumption index for their investments[52](index=52&type=chunk) - This service model aims to create value for customers, using technology and experience to circumvent competition, and leveraging services and information to create opportunities[53](index=53&type=chunk) [Customer Relationships](index=23&type=section&id=Customer%20Relationships) The Group aims to be a truly multinational enterprise with global resource integration, R&D in Europe and America, manufacturing in Asia-Pacific, and local service capabilities, fostering deep cooperation with industry leaders to jointly develop cutting-edge technologies and products, continuously guiding industry development trends [Multinational Enterprise](index=23&type=section&id=Multinational%20Enterprise) The Group's operating strategy is to "long-term partner with international leading enterprises and actively serve material innovation industries," committed to building, utilizing, and serving global resources, with subsidiaries and offices in multiple countries and regions worldwide - The Group is committed to becoming a comprehensive multinational enterprise with global operations, R&D in Europe and America, manufacturing in Asia-Pacific, and local services[55](index=55&type=chunk) - The Company has subsidiaries and offices in China, Hong Kong, Japan, India, Italy, Singapore, Sweden, the United States, Mexico, Malaysia, and Thailand[55](index=55&type=chunk) [Establishment, Maintenance, and Development of Customer Relationships](index=23&type=section&id=Establishment%20Maintenance%20and%20Development%20of%20Customer%20Relationships) The Group's core competitiveness lies in deep collaborative relationships with industry leaders, enabling cross-ocean manufacturing, multinational services, and global delivery capabilities through joint R&D, global technical and service centers, and internationalized human resources and production capacity, to rapidly respond to advanced technology and product development requirements in downstream industries - The Group's core competitiveness lies in deep collaborative relationships built with industry leaders, based on mutual empowerment[56](index=56&type=chunk) - Through establishing global technical and service centers and continuously internationalizing human resources and hardware production capacity, the Group possesses comprehensive capabilities for cross-ocean manufacturing, multinational services, and global delivery[56](index=56&type=chunk) - The Group strives to advance hand-in-hand with customers, aiming to be a leader that continuously guides industry development trends[57](index=57&type=chunk) [Outlook on Key Downstream Industry Markets](index=24&type=section&id=Outlook%20on%20Key%20Downstream%20Industry%20Markets) The Group has conducted a forward-looking analysis of key downstream industry markets, including life sciences (pharmaceutical and biopharmaceutical, power battery raw materials, data centers) and electronic chemicals, anticipating new growth opportunities driven by policy support, technological innovation, and increasing market demand [Life Sciences Sector](index=24&type=section&id=Life%20Sciences%20Sector) The life sciences sector benefits from Chinese government policy support for innovative drug development, healthcare insurance payment reform, and the silver economy, with the Group actively positioning itself in sub-markets like pharmaceutical and biopharmaceutical, power battery raw materials (solid-state batteries, green energy), and data centers (new energy storage) to seize growth opportunities [Pharmaceutical and Biopharmaceutical](index=24&type=section&id=Pharmaceutical%20and%20Biopharmaceutical) China's government work report emphasizes supporting innovative drug development, optimizing drug procurement policies, and deepening healthcare insurance payment reform, which benefits pharmaceutical industry innovation and medical consumption recovery, leading the Group to undertake a modular pharmaceutical factory project in North Africa and secure CAPEX orders from leading domestic and international pharmaceutical contract service organizations and biopharmaceutical companies - China's government work report for the first time mentioned supporting innovative drug development, with more policy measures expected to broaden payment channels for innovative drugs[58](index=58&type=chunk) - Optimization of drug centralized procurement policies will shift from solely focusing on "price reduction" to also emphasizing "drug quality and price reduction"[58](index=58&type=chunk) - The Group undertook the first modular pharmaceutical factory for a leading pharmaceutical market player in North Africa and secured CAPEX project orders from several leading domestic and international pharmaceutical contract manufacturing organizations and biopharmaceutical companies[60](index=60&type=chunk) [Power Battery Raw Materials](index=26&type=section&id=Power%20Battery%20Raw%20Materials) Solid-state batteries, as the next-generation battery technology, are in high demand across various scenarios like new energy vehicles, low-altitude economy, and robotics, expected to enter GWh-scale application by 2028, and the Group, with its design and manufacturing capabilities for core equipment, process systems, and modular factories, is deeply embedded in the technology innovation value chain and actively supports downstream enterprises in investing in green energy such as "green methanol, green ammonia, and green hydrogen" - Solid-state batteries offer intrinsic safety, high energy density, and wide temperature range advantages, expected to enter **Gigawatt-hour (GWh)** scale application by **2028**[61](index=61&type=chunk) - The Group has become a key participant in the new energy lithium battery expansion wave, deeply embedding itself in the front end of the technology innovation value chain through self-research and university-enterprise collaborations[62](index=62&type=chunk) - The Chinese government has for the first time listed "green methanol, green ammonia, and green hydrogen" in parallel, supporting diversified zero-carbon fuel pathways, and the Group is actively collaborating with downstream enterprises on investments in these green energy sources[63](index=63&type=chunk)[64](index=64&type=chunk) [Data Centers](index=28&type=section&id=Data%20Centers) The digital economy drives increasing demand for data centers, with 5G and IoT technologies imposing higher requirements, and the Chinese government supports new energy storage development, aiming for large-scale deployment by 2025 and full marketization by 2030, enabling the Group's modular factories to provide one-stop delivery solutions that meet customer industrial upgrade needs and enhance the green development of new data centers - Data centers are core elements driving digital economic development, with increasing user numbers and traffic boosting demand for data centers[65](index=65&type=chunk) - The Chinese government aims for new energy storage to transition from early commercialization to large-scale development by **2025**, with an installed capacity exceeding **30 million kilowatts**, and to achieve full marketization by **2030**[66](index=66&type=chunk) - The Group's modular factories offer one-stop delivery capabilities, meeting customer industrial upgrade needs and striving to enhance the green development level of new data centers[67](index=67&type=chunk) [Electronic Chemicals Sector](index=29&type=section&id=Electronic%20Chemicals%20Sector) The semiconductor materials market benefits from AI-driven demand and an increasing proportion of advanced processes, with the global chip market projected to grow by approximately **19%** year-on-year in 2024, and the Group, leveraging its independently developed engineering and process technologies, has successfully provided one-stop solutions from laboratory to industrial mass production for leading domestic and international semiconductor material enterprises, including the successful delivery of high-end G5-grade chemical production systems - The semiconductor materials market benefits from **AI-driven** demand and an increasing proportion of advanced processes, with the global semiconductor materials market expected to see both volume and price increases[68](index=68&type=chunk) - The global chip market is projected to grow by approximately **19%** year-on-year to **USD 630 billion** in **2024**, with continued growth expected in **2025**[69](index=69&type=chunk) - The Group has successfully provided complete one-stop engineering solutions, from laboratory pilot and intermediate tests to industrial mass production, for numerous leading domestic and international semiconductor material enterprises[70](index=70&type=chunk) - The Group successfully commissioned two high-end **G5-grade** chemical production systems with annual capacities of **10,000 tons** and **30,000 tons** respectively, on their first attempt[70](index=70&type=chunk) [Financial Data Review](index=30&type=section&id=Financial%20Data%20Review) This section reviews the Group's revenue, cost of sales, gross profit, other income, operating expenses, income tax, impairment losses, and EBITDA for the period [Revenue](index=30&type=section&id=Revenue) For the six months ended June 30, 2025, the Group's revenue decreased by **22.7%** year-on-year to **RMB 2.687 billion**, primarily due to macroeconomic market conditions and product delivery cycles, with significant declines in electronic chemicals, power battery raw materials, and oil and gas refining, while daily chemicals and pharmaceutical and biopharmaceutical sectors saw growth - The Group's revenue decreased by **22.7%** from approximately **RMB 3.477 billion** in the prior year to approximately **RMB 2.687 billion** for the six months ended June 30, 2025[71](index=71&type=chunk) - The decrease in revenue was primarily due to the impact of macroeconomic market conditions and product delivery cycles on certain industries[71](index=71&type=chunk) Revenue by End Application | End Application | 2025 (RMB thousands) | % of Total | 2024 (RMB thousands) | % of Total | Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Electronic Chemicals | 91,280 | 3.4% | 660,233 | 19.0% | -86.2% | | Chemical | 581,219 | 21.6% | 704,122 | 20.3% | -17.5% | | Daily Chemicals | 312,279 | 11.6% | 91,552 | 2.6% | 241.1% | | Power Battery Raw Materials | 404,154 | 15.0% | 651,460 | 18.7% | -38.0% | | Oil and Gas Refining | 213,220 | 7.9% | 461,244 | 13.3% | -53.8% | | Pharmaceutical and Biopharmaceutical | 797,202 | 29.7% | 663,583 | 19.1% | 20.1% | | Others | 287,929 | 10.8% | 244,558 | 7.0% | 17.7% | | Total | 2,687,283 | 100.0% | 3,476,752 | 100.0% | -22.7% | [Cost of Sales](index=31&type=section&id=Cost%20of%20Sales) The Group's cost of sales decreased by **22.5%** year-on-year to **RMB 1.898 billion**, consistent with the revenue trend, with a significant drop in raw materials and consumables costs, while direct labor and installation and repair expenses increased - The Group's cost of sales decreased by **22.5%** from approximately **RMB 2.448 billion** in the prior year to approximately **RMB 1.898 billion** for the six months ended June 30, 2025[74](index=74&type=chunk) Cost of Sales Components | Item | 2025 (RMB thousands) | % of Total | 2024 (RMB thousands) | % of Total | Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Raw Materials and Consumables | 948,395 | 50.0% | 1,488,396 | 60.8% | -36.3% | | Direct Labor | 325,972 | 17.2% | 282,819 | 11.6% | 15.3% | | Subcontracting Fees | 182,653 | 9.6% | 311,156 | 12.7% | -41.3% | | Installation and Repair Fees | 229,559 | 12.1% | 189,112 | 7.7% | 21.4% | | Depreciation | 67,299 | 3.5% | 61,954 | 2.5% | 8.6% | | Asset Impairment Losses | 9,352 | 0.5% | 4,854 | 0.2% | 92.7% | | Others (Indirect Labor + Design Fees) | 135,267 | 7.1% | 110,013 | 4.5% | 23.0% | | Total | 1,898,497 | 100.0% | 2,448,304 | 100.0% | -22.5% | [Gross Profit and Gross Margin](index=31&type=section&id=Gross%20Profit%20and%20Gross%20Margin) The Group's gross profit decreased by **23.3%** year-on-year to **RMB 789 million**, while its gross margin remained stable at **29.4%** - The Group's gross profit decreased by **23.3%** from approximately **RMB 1.028 billion** in the prior year to approximately **RMB 789 million** for the six months ended June 30, 2025[76](index=76&type=chunk) - For the six months ended June 30, 2025, the Group's gross margin was approximately **29.4%**, remaining stable compared to the same period last year[76](index=76&type=chunk) [Other Income](index=32&type=section&id=Other%20Income) The Group's other income significantly increased by approximately **RMB 79.31 million** year-on-year to **RMB 140 million**, primarily due to higher interest income, relocation compensation for the Shanghai manufacturing base, and increased non-operating net income from early project termination settlements requested by customers - The Group's other income increased by approximately **RMB 79.31 million** from approximately **RMB 60.689 million** in the prior year to approximately **RMB 140 million** for the six months ended June 30, 2025[77](index=77&type=chunk) - The increase in other income was primarily due to higher interest income from higher yields on USD, EUR, and HKD time deposits[77](index=77&type=chunk) - Relocation compensation received for the Shanghai manufacturing base due to government policy was a significant reason for the increase in other income[77](index=77&type=chunk) [Selling and Marketing Expenses](index=32&type=section&id=Selling%20and%20Marketing%20Expenses) The Group's selling and marketing expenses increased by approximately **RMB 5.73 million** year-on-year to **RMB 86.883 million**, mainly due to increased remuneration and travel expenses for an expanded overseas marketing team and higher upfront technical support for overseas projects, partially offset by reduced sales commissions - The Group's selling and marketing expenses increased by approximately **RMB 5.73 million** from approximately **RMB 81.158 million** in the prior year to approximately **RMB 86.883 million** for the six months ended June 30, 2025[78](index=78&type=chunk) - The increase in expenses was primarily due to higher remuneration and travel expenses for an expanded overseas marketing team, as well as increased upfront technical support for overseas projects[78](index=78&type=chunk) - For the six months ended June 30, 2025, selling and marketing expenses accounted for approximately **3.2%** of total revenue (compared to approximately **2.3%** in the prior year)[78](index=78&type=chunk) [General and Administrative Expenses](index=32&type=section&id=General%20and%20Administrative%20Expenses) The Group's general and administrative expenses increased by approximately **RMB 34.06 million** year-on-year to **RMB 299 million**, primarily due to higher salaries and benefits, travel expenses, and consulting fees for management and administrative personnel supporting overseas business development, as well as increased depreciation expenses following the operationalization of the Suzhou manufacturing base - The Group's general and administrative expenses increased by approximately **RMB 34.06 million** from approximately **RMB 265 million** in the prior year to approximately **RMB 299 million** for the six months ended June 30, 2025[79](index=79&type=chunk) - The increase in expenses was primarily due to higher salaries and benefits, travel expenses, and consulting fees for management and administrative personnel to support overseas business development[79](index=79&type=chunk) - Depreciation expenses increased after the Suzhou manufacturing base officially commenced operations[79](index=79&type=chunk) - For the six months ended June 30, 2025, general and administrative expenses accounted for approximately **11.1%** of total revenue (compared to approximately **7.6%** in the prior year)[79](index=79&type=chunk) [Research and Development Expenses](index=33&type=section&id=Research%20and%20Development%20Expenses) The Group's research and development expenses decreased by approximately **RMB 105 million** year-on-year to **RMB 114 million**, primarily due to the adjustment of R&D project priorities and improved R&D efficiency - The Group's research and development expenses decreased by approximately **RMB 105 million** from approximately **RMB 219 million** in the prior year to approximately **RMB 114 million** for the six months ended June 30, 2025[80](index=80&type=chunk) - The decrease in expenses was primarily due to the adjustment of R&D project priorities and continuous resource integration to enhance R&D efficiency[80](index=80&type=chunk) [Income Tax Expense](index=33&type=section&id=Income%20Tax%20Expense) The Group's income tax expense decreased by approximately **RMB 24.45 million** year-on-year to **RMB 69.215 million**, with an effective tax rate of approximately **17.2%**, a **2.8%** reduction from the prior year, mainly due to a decrease in withholding tax expenses resulting from an anticipated reduction in dividends from Chinese subsidiaries - The Group's income tax expense decreased by approximately **RMB 24.45 million** from approximately **RMB 93.66 million** in the prior year to approximately **RMB 69.215 million** for the six months ended June 30, 2025[81](index=81&type=chunk) - For the six months ended June 30, 2025, the Group's effective income tax rate was approximately **17.2%**, a decrease of approximately **2.8%** compared to the prior year[81](index=81&type=chunk) - The decrease in expenses was primarily due to a reduction in anticipated withholding tax expenses resulting from a decrease in expected dividends from the Company's Chinese subsidiaries[81](index=81&type=chunk) [Impairment Losses on Trade Receivables and Contract Assets](index=33&type=section&id=Impairment%20Losses%20on%20Trade%20Receivables%20and%20Contract%20Assets) The Group's impairment losses on trade receivables and contract assets decreased by approximately **RMB 29.59 million** year-on-year to **RMB 22.146 million**, primarily due to strengthened risk control measures and the implementation of a strict accounts receivable early warning mechanism, which reduced the amount of high-risk trade receivables - The Group's impairment losses on trade receivables and contract assets decreased by approximately **RMB 29.59 million** from approximately **RMB 51.731 million** in the prior year to approximately **RMB 22.146 million** for the six months ended June 30, 2025[82](index=82&type=chunk) - The decrease was primarily due to the Group strengthening risk control measures and implementing a strict accounts receivable early warning mechanism, which reduced the amount of high-risk trade receivables requiring full bad debt provision[82](index=82&type=chunk) [Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA)](index=34&type=section&id=Earnings%20Before%20Interest%2C%20Tax%2C%20Depreciation%20and%20Amortization%20(EBITDA)) For the six months ended June 30, 2025, the Group recorded EBITDA of approximately **RMB 523 million**, a decrease of approximately **5.9%** from the prior year - The Group recorded EBITDA of approximately **RMB 523 million**, a decrease of approximately **5.9%** compared to the prior year[84](index=84&type=chunk) EBITDA Calculation | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Net Profit | 333,008 | 373,827 | | Add: Income Tax Expense | 69,215 | 93,660 | | Interest Expense | 4,872 | 4,966 | | Depreciation | 103,633 | 73,757 | | Amortisation | 12,607 | 9,884 | | EBITDA | 523,335 | 556,094 | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Group's inventories, contract assets and liabilities, cash balances, bank facilities, borrowings, gearing ratio, and any asset pledges or contingent liabilities [Inventories](index=34&type=section&id=Inventories) The Group's inventories increased by **28.3%** from approximately **RMB 797 million** as of December 31, 2024, to approximately **RMB 1.023 billion** as of June 30, 2025, primarily due to several large orders with control transferred at a point in time remaining in production and not yet delivered at the end of the reporting period - The Group's inventories increased by **28.3%** from approximately **RMB 797 million** as of December 31, 2024, to approximately **RMB 1.023 billion** as of June 30, 2025[87](index=87&type=chunk) - The increase was primarily due to several large orders, for which control is transferred at a point in time, remaining in production and not yet delivered at the end of the reporting period[87](index=87&type=chunk) [Contract Assets](index=35&type=section&id=Contract%20Assets) The Group's contract assets increased by **18.9%** from approximately **RMB 939 million** as of December 31, 2024, to approximately **RMB 1.116 billion** as of June 30, 2025, primarily because several ongoing large orders had recognized partial revenue but had not yet reached the agreed payment milestones - The Group's contract assets increased by **18.9%** from approximately **RMB 939 million** as of December 31, 2024, to approximately **RMB 1.116 billion** as of June 30, 2025[88](index=88&type=chunk) - The increase was primarily due to several ongoing large orders having recognized partial revenue but not yet reaching the agreed payment milestones[88](index=88&type=chunk) [Contract Liabilities](index=35&type=section&id=Contract%20Liabilities) The Group's contract liabilities increased by **29.9%** from approximately **RMB 1.476 billion** as of December 31, 2024, to approximately **RMB 1.918 billion** as of June 30, 2025, primarily due to receiving prepayments for several large orders according to contractual payment milestones during the reporting period - The Group's contract liabilities increased by **29.9%** from approximately **RMB 1.476 billion** as of December 31, 2024, to approximately **RMB 1.918 billion** as of June 30, 2025[89](index=89&type=chunk) - The increase was primarily due to receiving prepayments for several large orders according to contractual payment milestones during the reporting period[89](index=89&type=chunk) [Cash and Bank Balances](index=35&type=section&id=Cash%20and%20Bank%20Balances) As of June 30, 2025, the Group's cash and bank balances amounted to approximately **RMB 2.585 billion**, a slight decrease from December 31, 2024, and the Group also held restricted cash, short-term wealth management products, and forward foreign exchange contracts - As of June 30, 2025, the Group's cash and bank balances amounted to approximately **RMB 2.585 billion**, a decrease of approximately **RMB 10.88 million** from December 31, 2024[90](index=90&type=chunk) - Cash and bank balances are primarily denominated in RMB, USD, HKD, SGD, JPY, and EUR[90](index=90&type=chunk) - The Group had pledged restricted bank deposits of approximately **RMB 30.36 million** and held outstanding short-term wealth management products and forward foreign exchange contracts of approximately **RMB 589 million**[90](index=90&type=chunk) [Bank Facilities](index=35&type=section&id=Bank%20Facilities) As of June 30, 2025, the Group's total bank facilities amounted to approximately **RMB 6.181 billion**, of which approximately **RMB 2.023 billion** was utilized, leaving approximately **RMB 4.157 billion** unutilized - As of June 30, 2025, the Group's total bank facilities amounted to approximately **RMB 6.181 billion**[91](index=91&type=chunk) - Utilized bank facilities amounted to approximately **RMB 2.023 billion**, with unutilized bank facilities of approximately **RMB 4.157 billion**[91](index=91&type=chunk) [Borrowings and Gearing Ratio](index=36&type=section&id=Borrowings%20and%20Gearing%20Ratio) The Group's total borrowings slightly increased to approximately **RMB 216 million**, primarily used for construction payments and daily operations, while the gearing ratio decreased from **4.1%** as of December 31, 2024, to **3.9%** as of June 30, 2025, mainly due to increased reserves from profits - The Group's total borrowings increased by **1.1%** from approximately **RMB 214 million** as of December 31, 2024, to approximately **RMB 216 million** as of June 30, 2025[92](index=92&type=chunk) - All borrowings are denominated in RMB, with interest rates ranging from **2.11% to 3.53%**, and approximately **RMB 135 million** will mature within one year[92](index=92&type=chunk) - The Group's gearing ratio decreased from approximately **4.1%** as of December 31, 2024, to approximately **3.9%** as of June 30, 2025, primarily due to increased reserves from profits[92](index=92&type=chunk) [Pledge of Assets](index=36&type=section&id=Pledge%20of%20Assets) As of June 30, 2025, the Group had no assets or rights pledged - As of June 30, 2025, the Group had no assets or rights pledged[93](index=93&type=chunk) [Contingent Liabilities and Guarantees](index=36&type=section&id=Contingent%20Liabilities%20and%20Guarantees) As of June 30, 2025, the Group had no material contingent liabilities or guarantees - As of June 30, 2025, the Group had no material contingent liabilities or guarantees[94](index=94&type=chunk) [Material Investments, Acquisitions and Disposals](index=36&type=section&id=Material%20Investments%2C%20Acquisitions%20and%20Disposals) During the reporting period, the Group undertook several strategic investments and acquisitions, including establishing MET Malaysia as a wholly-owned subsidiary, co-founding non-wholly-owned subsidiaries Senhong Technology and Senyi Fluid with independent third parties, and acquiring full equity in Morimatsu Thailand, to expand its business and technological capabilities in Southeast Asia - In **January 2025**, Morimatsu Singapore, a subsidiary of the Company, established a new wholly-owned subsidiary, MET Malaysia, with a share capital of **MYR 3 million**, serving as Morimatsu Energy Materials' technology hub and engineering service center in Southeast Asia[95](index=95&type=chunk) - In **February 2025**, Morimatsu Biotech, a subsidiary of the Company, co-founded a new non-wholly-owned subsidiary, Senhong Technology, with four independent third parties, with the Company indirectly holding a **70%** stake, primarily engaged in R&D, production, and sales of drying, cleaning, sterilization equipment, and transfer systems[96](index=96&type=chunk) - In **April 2025**, Lifesciences Singapore and Pharmadule Singapore signed an equity transfer agreement to acquire **100%** equity in Morimatsu Thailand[96](index=96&type=chunk) - In **June 2025**, Morimatsu Heavy Industry, a subsidiary of the Company, co-founded a new non-wholly-owned subsidiary, Shanghai Senyi Intelligent Fluid Equipment Co, Ltd, with an independent third party, with the Company indirectly holding a **51%** stake, primarily engaged in R&D, manufacturing, sales, and after-sales maintenance of valves[96](index=96&type=chunk) [Events After the Reporting Period](index=37&type=section&id=Events%20After%20the%20Reporting%20Period) Subsequent to the reporting period, the Group continued its strategic expansion, including an investor subscribing to Morimatsu Pharma's increased registered capital and establishing MET Italy as a new wholly-owned subsidiary to enhance communication with European clients, suppliers, and strategic partners, empowering global business development - In **July 2025**, an investor subscribed to **RMB 12.95 million** of Morimatsu Pharma's increased registered capital for **RMB 330 million**, after which the Company directly and indirectly held approximately **73.99%** equity in Morimatsu Pharma[98](index=98&type=chunk) - In **August 2025**, Morimatsu Singapore, a subsidiary of the Company, established a new wholly-owned subsidiary, Morimatsu Engineering & Technology (Italy) S.r.l. (MET Italy), with a registered capital of **EUR 4,500**, aiming to strengthen communication with European clients, suppliers, and strategic partners[99](index=99&type=chunk) [Other Information](index=38&type=section&id=Other%20Information) This section covers corporate governance aspects, including the audit committee, dividends, share transactions, corporate governance code compliance, board composition, and website information [Audit Committee](index=38&type=section&id=Audit%20Committee) The Board's Audit Committee, comprising one non-executive director and two independent non-executive directors, has reviewed the Group's unaudited consolidated results for the interim period - The Audit Committee comprises Mr Matsuhisa Koki (Non-executive Director), Ms Chan Yuen Sheung and Mr Sugano Shinichiro (Independent Non-executive Directors)[101](index=101&type=chunk) - The Audit Committee has reviewed the Group's unaudited consolidated results for the interim period[101](index=101&type=chunk) [Dividends](index=38&type=section&id=Dividends) The Board did not resolve to declare any interim dividends for the six months ended June 30, 2025 - The Board did not resolve to declare any interim dividends for the six months ended June 30, 2025[102](index=102&type=chunk) [Repurchase, Sale or Redemption of the Company's Listed Securities](index=38&type=section&id=Repurchase%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) During the reporting period, the Group did not repurchase, sell, or redeem any of the Company's listed securities - During the reporting period, the Group did not repurchase, sell, or redeem any of the Company's listed securities[103](index=103&type=chunk) [Corporate Governance Code](index=39&type=section&id=Corporate%20Governance%20Code) During the reporting period, the Company adopted and complied with the code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules, with no deviations from the code provisions - During the reporting period, the Company adopted and complied with the code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules[104](index=104&type=chunk) - There were no deviations from the code provisions during the reporting period[104](index=104&type=chunk) [Board of Directors](index=39&type=section&id=Board%20of%20Directors) As of the date of this announcement, the Board comprises Mr Nishimatsu Hideo, Mr Hirasawa Shungo, Mr Tang Weihua, Mr Sheng Ye, and Mr Kawashima Hiroki as Executive Directors; Mr Matsuhisa Koki as Non-executive Director; and Ms Chan Yuen Sheung, Mr Sugano Shinichiro, and Mr Yu Jianguo as Independent Non-executive Directors - Executive Directors: Mr Nishimatsu Hideo, Mr Hirasawa Shungo, Mr Tang Weihua, Mr Sheng Ye, and Mr Kawashima Hiroki[105](index=105&type=chunk) - Non-executive Director: Mr Matsuhisa Koki[105](index=105&type=chunk) - Independent Non-executive Directors: Ms Chan Yuen Sheung, Mr Sugano Shinichiro, and Mr Yu Jianguo[105](index=105&type=chunk) [Website Information](index=39&type=section&id=Website%20Information) This announcement is available on the Company's website www.morimatsu-online.com and the HKEX website www.hkexnews.hk - This announcement is available on the Company's website **www.morimatsu-online.com** and the HKEX website **www.hkexnews.hk**[106](index=106&type=chunk)