Industry Overview - Ethylene Oxide (EO) is a crucial organic chemical raw material and intermediate, ranking third among ethylene derivatives after polyethylene and polyvinyl chloride [1][2] - In 2010, China's EO production capacity was approximately 1.26 million tons, which surged to 4.79 million tons by 2019, achieving a compound annual growth rate (CAGR) of 16% [5] - From 2020 to 2023, China's EO production capacity maintained a growth rate of over 14%, projected to reach 9.44 million tons by 2024, with a year-on-year increase of 8.51% [5] Production and Supply Chain - The upstream of the EO industry includes raw materials such as ethylene and oxygen, while the midstream involves EO production, primarily through the direct oxidation of ethylene [3] - The downstream applications of EO include a variety of products such as polycarboxylic acid superplasticizers, non-ionic surfactants, and others, serving multiple sectors including real estate, infrastructure, and agriculture [3] Regional Distribution - EO production in China is concentrated in East China, South China, and Northeast China, with these regions accounting for over 85% of total capacity [7] - East China, in particular, has become the most significant production base, contributing over 55% of the total capacity due to its robust chemical industry infrastructure and market demand [7] Trade Dynamics - China's EO exports have shown a rapid growth trend, with export volume reaching 971 tons in 2024, a year-on-year increase of 45.14% [9] - The country has maintained a net export status, with zero imports in 2023-2024, indicating that domestic production fully meets market demand [9] Consumption Market - The consumption structure of EO is evolving, with polycarboxylic acid superplasticizers being the largest market, although its share is declining from 61% in 2020 to 37% in 2024 due to a slowdown in the real estate sector [11] - Non-ionic surfactants are experiencing strong growth, increasing their share from 24% in 2024, driven by demand from the daily chemical and agricultural sectors [11] Competitive Landscape - The market share of private enterprises in the EO industry has increased from 33.79% in 2019 to 48.24%, while state-owned enterprises have seen a decline [13] - This shift is attributed to the competitive advantages of private firms in raw material procurement and flexible resource allocation [13] Future Trends - The EO production capacity is expected to continue expanding, with an anticipated addition of 1 million tons by 2025, leading to a total capacity exceeding 9 million tons [19] - The industry is also moving towards green processes and high-end transformation, with a focus on low-carbon catalysts and bio-based EO production methods [20]

Financial Performance - In 2024, the company achieved a revenue growth of approximately 49.2%, driven by a 9.7% increase in average selling price and an 84.6% increase in sales volume of ethylene glycol compared to 2023[7]. - The average selling price of butadiene increased by approximately 51.0% to about RMB 10,267 per ton, with sales volume rising by approximately 105.2% to about 74,732 tons in 2024[8]. - The overall gross profit margin improved from approximately 1.5% in 2023 to about 5.7% in 2024, attributed to the successful ramp-up of the new production facilities[8]. - The net profit attributable to equity holders for the year ended December 31, 2024, was approximately RMB 532.6 million, representing a growth of about 482.2% compared to 2023[7]. - The sales volume of ethylene glycol surged by approximately 84.6% to 868,951 tons, contributing to a revenue increase of about 102.7%[22]. - The revenue from propylene increased by approximately 24.6%, driven by a 23.5% rise in sales volume due to recovering downstream demand[24]. - The revenue from the butadiene business line increased by approximately 210.0% in 2024 compared to 2023, driven by an average selling price increase of about 51.0% and a sales volume rise of approximately 105.2%[25]. Operational Efficiency - The successful ramp-up of the sixth-phase ethylene oxide/ethylene glycol production facility significantly improved overall production efficiency and resource allocation flexibility[9]. - The company continues to invest in operational efficiency and diversification to adapt to changing market conditions[14]. - The overall gross margin improved from 1.5% in 2023 to approximately 5.7% in 2024, primarily due to enhanced production efficiency from the successful ramp-up of facilities in the second quarter of 2023[26]. Debt and Financial Stability - The company maintained a debt-to-asset ratio of approximately 49.5% in 2024, similar to 48.5% in 2023, aligning with internal guidelines[10]. - The group's cash and bank balance was approximately RMB 564.3 million as of December 31, 2024, compared to RMB 364.2 million in 2023[29]. - The interest-bearing borrowings amounted to approximately RMB 10,945 million as of December 31, 2024, up from RMB 10,190 million in 2023, resulting in a debt-to-asset ratio of approximately 49.5%[29]. Employee and Training Initiatives - The group employed a total of 1,430 full-time employees as of December 31, 2024, an increase from 1,307 employees in 2023[36]. - The total number of employees trained increased to 1,430 in 2024 from 1,307 in 2023, reflecting a growth of 9.4%[81]. - The average training hours for male and female employees remained consistent at 96 hours in 2024, indicating stable training engagement[81]. - The employee turnover rate decreased to 6.2% in 2024 from 10.2% in 2023, indicating improved employee retention[77]. Environmental and Social Responsibility - The company is committed to corporate social responsibility and aims to integrate sustainable development into its business operations[55]. - The group has invested RMB 94.2 million in environmental protection efforts in 2024, up from RMB 73.5 million in 2023[67]. - The total wastewater discharge for 2024 is reported at 2,456,299 tons, a significant increase from 723,874 tons in 2023[67]. - Greenhouse gas emissions (Scope 1) increased to 3,828,641 tons in 2024 from 1,950,496 tons in 2023, with an intensity of 195 tons per RMB 1 million revenue[67]. - The group aims to improve energy efficiency and resource utilization, with electricity consumption increasing to 1,400,813,410 kWh in 2024 from 1,071,105,625 kWh in 2023[72]. Corporate Governance - The board of directors believes that good corporate governance strengthens accountability and investor confidence, and has complied with all corporate governance codes as of the report date[92]. - The audit committee, consisting of three independent non-executive directors, has reviewed the interim results for the six months ending June 30, 2024, and the annual results for the year ending December 31, 2024[99]. - The board has adopted a diversity policy, recognizing the benefits of diversity in skills, experience, and background among its members[103]. - The company has established a policy to prohibit any illegal activities related to bribery, extortion, fraud, and money laundering, with no known violations reported as of the report date[89]. Shareholder Information - The board of directors did not recommend the distribution of a final dividend for the year ended December 31, 2024[37]. - The company has adopted a shareholder communication policy to ensure equal and timely access to relevant information for shareholders[117]. - The company will not recommend a final dividend for the year ending December 31, 2024[124]. - The largest customer accounted for 4.1% of total sales in 2024, down from 4.8% in 2023, while the top five customers collectively represented 15.3% of total sales[150]. Agreements and Contracts - The company entered into a desalinated water and material supply agreement with Zhejiang Jiayuan Energy Chemical Co., agreeing to supply desalinated water and materials at a weighted average price comparable to independent buyers[164]. - A steam purchase agreement was established with Jiayuan Energy Chemical Co. for the supply of low, medium, and high-pressure steam for a period ending December 31, 2026[165]. - The company has a low-pressure steam supply agreement with Jiaxing Xinggang Heat Network, effective from January 1, 2022, until December 31, 2024, at market prices[166].

Core Viewpoint - China Sanjiang Chemical (02198) reported a significant increase in revenue and profit for the fiscal year ending December 31, 2024, with total revenue reaching RMB 19.586 billion, a year-on-year growth of 49.2%, and a net profit attributable to shareholders of RMB 533 million, up 482.2% [1] Group 1: Business Performance - The company observed signs of stable and gradual recovery in its major business lines, particularly in ethylene glycol, butadiene, ethylene oxide, and surfactants, with polypropylene also showing positive momentum [1] - Ethylene glycol experienced a notable rebound in 2024, with average prices rising approximately 9.7% compared to 2023, reaching about RMB 3,986 per ton, and sales volume increasing by about 84.6% to 868,951 tons, making it one of the best-performing segments [1] - The rebound in ethylene glycol was driven by a stable domestic consumption and a recovery in the textile and apparel industry, alongside supply adjustments due to low-margin coal-based production [1] Group 2: Butadiene and Ethylene Oxide - Butadiene saw a strong rebound in 2024, with average prices increasing by approximately 51.0% to about RMB 10,267 per ton, and sales volume rising by about 105.2% to approximately 74,732 tons [2] - The growth in butadiene was primarily driven by increased demand from the automotive manufacturing sector and supply shortages due to unexpected power outages in South Korea and Japan [2] - The ethylene oxide segment also showed positive developments, with average prices rising about 5.6% to approximately RMB 5,993 per ton, reversing a downward trend observed in previous years [2][3] Group 3: Surfactants and Polypropylene - The surfactants business line saw a sales increase of approximately 45.6% compared to 2023, as the company focused on vertical integration to mitigate market risks and enhance profit margins [3] - Polypropylene maintained stable pricing in 2024 at around RMB 6,448 per ton, with a slight increase in downstream demand contributing to price stability [3] - The overall gross margin improved from 1.5% in 2023 to approximately 5.7% in 2024, attributed to enhanced production efficiency and cost-effectiveness following successful capacity increases in previous years [3]

Financial Performance - The company's revenue for the fiscal year ending December 31, 2024, reached RMB 19,586,052 thousand, representing a 49.2% increase compared to RMB 13,128,400 thousand in 2023[3]. - Gross profit surged to RMB 1,110,563 thousand, a significant increase of 471.5% from RMB 194,336 thousand in the previous year[3]. - Net profit attributable to shareholders was approximately RMB 532,550 thousand, marking a 482.2% increase from RMB 91,477 thousand in 2023[3]. - Basic earnings per share rose to RMB 45.99, up 486.6% from RMB 7.84 in 2023[3]. - The overall gross margin improved to 5.7%, up from 1.5% in the previous year, reflecting enhanced operational efficiency[3]. - The operating profit before tax for 2024 was RMB 547,147 thousand, compared to RMB 20,207 thousand in 2023, showing a significant improvement[15]. - The group's profit before tax for 2024 was RMB 532,550,000, a significant increase from RMB 91,477,000 in 2023, representing a growth of approximately 482%[54]. - The total tax expense for the year was RMB 13,207,000, compared to a tax credit of RMB 23,927,000 in 2023, indicating a shift from a tax benefit to a tax expense[51]. Revenue Breakdown - Revenue from industrial product sales was RMB 19,488,826 thousand in 2024, up from RMB 13,024,230 thousand in 2023, reflecting a growth of 49.8%[41]. - Revenue from external customers in mainland China amounted to RMB 19,256,801 thousand in 2024, compared to RMB 13,048,224 thousand in 2023, indicating a growth of 47.7%[42]. - Ethylene glycol revenue increased by approximately 102.7% to RMB 3,463,776 thousand, with sales volume rising by 84.6% to 868,951 tons[76]. - The sales revenue of butadiene surged by approximately 210.0%, with an average selling price increase of 51.0%[78]. - The average selling price of butadiene increased by 51.0% to RMB 10,267 per ton[73]. - The average selling price of ethylene glycol rose by approximately 9.7% to RMB 3,986 per ton[76]. - The average selling price of ethylene oxide rose by approximately 5.6% to RMB 5,993 per ton, indicating a recovery in demand[6]. Cost and Expenses - The cost of sold inventory increased to RMB 18,447,808,000 in 2024 from RMB 12,897,701,000 in 2023, reflecting a rise of about 43%[49]. - Financing costs totaled RMB 414,656 thousand in 2024, a substantial increase from RMB 214,904 thousand in 2023, primarily due to higher interest expenses on bank and other borrowings[48]. - Other income decreased to RMB 284,832 thousand in 2024 from RMB 550,104 thousand in 2023, largely due to the absence of gains from the acquisition of a subsidiary in the current year[47]. - The company reported a net foreign exchange loss of RMB 77,221 thousand in 2024, compared to a loss of RMB 26,733 thousand in 2023[47]. Assets and Liabilities - The company's debt-to-asset ratio for 2024 is approximately 49.5%, compared to 48.5% in 2023, aligning with internal guidelines[8]. - Current liabilities total RMB 13,694,427,000, an increase of 10.3% from RMB 12,419,637,000 in the previous year[18]. - Non-current liabilities decreased to RMB 3,517,656,000 from RMB 4,220,793,000, a reduction of 16.7%[18]. - The company's equity increased to RMB 4,893,788,000, up from RMB 4,361,342,000, reflecting a growth of 12.2%[18]. - The total issued share capital remains at RMB 102,662,000, unchanged from the previous year[18]. - The group’s deferred tax expense for the year was RMB 9,931,000, down from RMB 16,710,000 in 2023, showing a decrease of about 40%[51]. - The total number of full-time employees as of December 31, 2024, is 1,430, an increase from 1,307 employees in 2023[86]. Strategic Initiatives - The company has focused on high-value chemicals and downstream integration to enhance resilience against market volatility[10]. - The company has implemented strategic measures to improve cost efficiency and process optimization to ensure profitability amid market fluctuations[11]. - The company continues to invest in operational efficiency and diversification to adapt to changing market conditions[12]. - The successful ramp-up of the new production facilities is expected to significantly improve overall production efficiency and resource allocation flexibility[7]. - The company plans to maintain operational flexibility and production efficiency to adapt to market volatility and enhance profitability[7]. Accounting Standards and Compliance - The group plans to apply new and revised Hong Kong Financial Reporting Standards upon their effective date, including HKFRS 18 and HKFRS 19[30]. - The amendments clarify the classification of liabilities as current or non-current, emphasizing that the classification is not influenced by the entity's ability to exercise repayment rights[29]. - The group is currently analyzing the impact of HKFRS 18 on its financial statement presentation and disclosures[33]. - The amendments to HKFRS 9 and HKAS 7 clarify the derecognition of financial assets or liabilities and introduce accounting policy choices for certain financial liabilities settled before the settlement date[36]. - The group anticipates that the recent accounting standard amendments will not have a significant impact on its financial statements[39]. Shareholder Information - The board does not recommend the distribution of a final dividend for the year ended December 31, 2024[87]. - The annual general meeting will be held on May 30, 2025, in Hong Kong[100]. - Share transfer registration will be suspended from May 26 to May 30, 2025, to determine the eligibility of shareholders[101]. - The financial information provided does not constitute audited accounts for the year ending December 31, 2024, but is extracted from the consolidated financial statements[102]. - The annual report for the year ending December 31, 2024, will be sent to shareholders and published on the stock exchange and company websites[103].

江化二 SANJIANG CHEMICAL 中國三江精細化工有限公司 CHINA SANJIANG FINE CHEMICALS COMPANY LIMITED ( 於 開 曼 群 島 註 冊 成 立 的 有 限 公 司 ) 股份代號：2198 中 期 報 告 2024 0 混合產品 F FSC FBC C007445 © 版權 中國三江精網化工有限公司。本公司保留一切版權。 本產品採用FSC®認證的和其他受控來源的材料。 2 管理層討論及分析 未經審核綜合業績 5 簡明綜合損益表 6 簡明綜合全面收益表 7 簡明綜合財務狀況報表 9 簡明綜合現金流量表 10 簡明綜合權益變動表 11 簡明綜合財務資料附註 22 其他資料 28 公司資料 管理層討論及分析 於截至二零二四年六月三十日止六個月（「回顧期」）內，儘管中華人民共和國（「中國」）的石油及化工行業（「本 行業」）及經濟仍在恢復至新冠疫情前的水平，但中國三江精細化工有限公司（「本公司」）及其附屬公司（「本集 團」）已由毛虧率約–2.4%成功扭轉為毛利率約4.2%。這一進步主要是得益於本集團年產量1,000,000公噸的第 六期環氧乙烷╱乙二醇生產設施及其 ...

Financial Performance - Revenue for the six months ended June 30, 2024, increased over 100% to RMB 9,239.8 million compared to RMB 4,591.1 million in the same period of 2023[2]. - Gross profit turned from a loss of RMB 109.2 million in 2023 to a profit of RMB 386.4 million in 2024, achieving a gross margin of 4.2%[2][3]. - Net profit attributable to equity holders of the parent company surged over 100% to RMB 154.1 million from RMB 26.1 million year-on-year[2]. - The company reported a pre-tax profit of RMB 164.4 million, a significant turnaround from a loss of RMB 44.5 million in the previous year[12]. - The net profit for the period was RMB 154.4 million, compared to RMB 7.4 million in the same period last year, with earnings per share increasing to RMB 13.30 from RMB 2.22[12]. - Total comprehensive income for the period was RMB 154,055,000, reflecting the company's improved financial performance[17]. Revenue Growth - The glycol business line generated revenue of approximately RMB 1,685.5 million, representing a significant increase of about 268.4% year-over-year, with production rising approximately 243.8%[7]. - The revenue from the ethylene oxide business line was approximately RMB 1,042.3 million, an increase of about 39.7% compared to the same period in 2023, driven by a production increase of approximately 36.3% due to improved profit margins and market conditions[6]. - The polypropylene business line saw revenue increase by approximately 22.0%, attributed to a production increase of about 22.4% during the review period[8]. - The sales volume of ethylene glycol rose over 100% to 427,091 tons from 124,243 tons in the previous year[4]. - The company achieved a significant increase in sales of new products, including butadiene, contributing to revenue growth[3][4]. Production and Operational Efficiency - The production capacity of the new ethylene oxide/ethylene glycol facility increased output by approximately 80%, reducing production costs by about 20%[3]. - The new production facilities are expected to perform better in the second half of 2024, enhancing overall production efficiency[3]. - The overall gross margin improved by approximately 6.6% to about 4.2%, compared to a gross loss margin of about 2.4% in the same period last year, influenced by improved pricing and operational efficiencies from new production facilities[10]. Financial Position - The asset-liability ratio improved slightly to 53.7% from 54.7% in the previous year, indicating better financial stability[2]. - Total assets decreased to RMB 8,077.3 million from RMB 8,582.1 million, while total liabilities increased to RMB 13,400.9 million from RMB 12,419.6 million[14]. - Non-current liabilities decreased to RMB 3,563.1 million from RMB 4,220.8 million, indicating improved financial stability[15]. - The company’s equity attributable to shareholders increased to RMB 4,514.2 million from RMB 4,361.3 million, reflecting a positive trend in shareholder value[15]. Cash Flow and Investments - Net cash flow from operating activities for the six months ended June 30, 2024, was RMB 162,992,000, a significant improvement from a negative RMB 337,562,000 in the same period of 2023[16]. - Net cash flow from investing activities was negative RMB 915,561,000, compared to negative RMB 811,957,000 in the prior year, indicating increased investment outflows[16]. - Net cash flow from financing activities decreased to RMB 902,464,000 from RMB 1,451,310,000 year-over-year, reflecting a reduction in financing activities[16]. - The total cash and cash equivalents at the end of the period stood at RMB 514,286,000, slightly down from RMB 522,490,000 at the end of the previous year[16]. Dividend and Shareholder Returns - The company does not recommend the distribution of an interim dividend to maintain sufficient liquidity amid economic uncertainties[3]. - The company did not recommend the declaration of an interim dividend for the periods ended June 30, 2024, and June 30, 2023[33]. - Basic earnings per share attributable to equity holders of the parent for the six months ended June 30, 2024, was RMB 154,055, compared to RMB 26,121 for the same period in 2023, representing a significant increase[32]. Governance and Compliance - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange listing rules and has complied with all provisions up to the date of this announcement[49]. - The audit committee, consisting of three independent non-executive directors, has reviewed the interim results for the six months ending June 30, 2024[51]. - The remuneration committee evaluates the performance of directors and senior management and makes recommendations regarding their compensation[52]. - The nomination committee is responsible for recommending suitable candidates for the board and reviewing its structure and composition[53]. Employee and Operational Metrics - The company employed 1,350 full-time employees as of June 30, 2024, with various employee benefits including housing subsidies and performance bonuses[46]. - Inventory turnover days remained stable at 43.7 days as of June 30, 2024, compared to 42.6 days at the end of 2023[47].

Environmental Sustainability - The company has set a target to ensure that emissions, wastewater discharge, and industrial water usage do not increase by more than 5% compared to the previous year, based on a revenue intensity measure of RMB 1 million [17]. - The company has been implementing several pilot adjustment plans since 2015 to reuse some of the heat and gases generated during the production process [17]. - The company actively monitors its emissions and has not been aware of any violations of relevant laws and regulations regarding emissions as of the report date [17]. - The total wastewater discharge increased significantly to 723,874 tons in 2023 from 250,255 tons in 2022, representing a 189% increase [22]. - Industrial water usage rose to 9,818,992 tons in 2023, up from 8,520,363 tons in 2022, marking a 15.2% increase [22]. - Greenhouse gas emissions (Scope 1) increased to 1,950,496 tons in 2023 from 1,665,467 tons in 2022, a rise of 17.1% [22]. - The intensity of greenhouse gas emissions (Scope 1) per RMB 1 million revenue improved to 148 tons in 2023 from 188 tons in 2022, a decrease of 21.3% [22]. - The company invested RMB 73.5 million in environmental protection in 2023, up from RMB 51.3 million in 2022, reflecting a 43.2% increase [22]. - The company is committed to minimizing its impact on climate change by optimizing production efficiency and reducing emissions per unit of output [32]. Corporate Governance - The company emphasizes the importance of stakeholder engagement and maintains close communication with shareholders, customers, suppliers, employees, and regulatory bodies [9]. - The company has a commitment to corporate social responsibility, viewing it as a long-term and meaningful commitment [3]. - The company ensures that its environmental, social, and governance report is balanced and presents an unbiased view of its performance in these areas [6]. - The board of directors is responsible for overseeing all significant matters, including management and operational strategy, financial performance review, and monitoring senior management performance [64]. - The audit committee, consisting of three independent non-executive directors, reviewed the group's interim results for the six months ending June 30, 2023, and the annual results for the year ending December 31, 2023 [70]. - The remuneration committee held one meeting to review the remuneration of directors and senior management for the year ending December 31, 2023 [72]. - The nomination committee conducted two meetings to assess the independence of independent non-executive directors and review the board's diversity policy [75]. - The board has adopted a diversity policy to ensure a balanced mix of skills, experience, and diversity among its members, recognizing the benefits of gender diversity [78]. - The company has established various committees, including the audit, remuneration, and nomination committees, to enhance corporate governance practices [67]. Employee and Training Development - The total number of employees increased to 1,307 in 2023 from 1,160 in 2022, a growth of 12.7% [37]. - Employee turnover rate rose to 10.2% in 2023 from 8.4% in 2022, indicating a 21.4% increase in turnover [37]. - The number of major suppliers in China (annual procurement over RMB 1 million) rose to 390 in 2023, up from 297 in 2022, an increase of 31.3% [53]. - The number of overseas suppliers (annual procurement over RMB 1 million) increased to 26 in 2023, compared to 7 in 2022, reflecting a significant growth of 271.4% [53]. - Average training hours for other employees increased from 96 hours in 2022 to 160 hours in 2023 [46]. - The company has committed to providing comprehensive training to employees, engaging various external training institutions annually [45]. - The number of mid-level management employees trained increased from 67 in 2022 to 86 in 2023, a rise of 28.4% [46]. - The company maintained a product recall rate of 0% for safety and health reasons in both 2023 and 2022 [56]. - The company has not been aware of any violations related to child labor or forced labor as of December 31, 2023 [47]. Financial Performance - The company achieved a revenue growth of approximately 48.9% for the fiscal year ending December 31, 2023, driven by increased production capacity and competitive pricing strategies, resulting in sales volume growth between approximately 22% to 177% across most business lines compared to 2022 [113]. - The overall gross profit margin improved from a gross loss of -0.7% in 2022 to approximately 1.5% in 2023, with a net profit attributable to shareholders of approximately RMB 915 million, representing a growth of about 129.9% year-on-year [113]. - The company completed the commissioning of its new production facilities, which include an annual capacity of 1,000,000 tons of ethylene oxide/ethylene glycol and a 1,250,000 tons light hydrocarbon utilization facility, in the second quarter of 2023 [113]. - The average selling prices across most business lines decreased by approximately 12% to 19% compared to 2022, impacting revenue dynamics despite increased sales volumes [113]. - The company recorded a one-time income of approximately RMB 29 million due to the acquisition of a subsidiary, while also recognizing impairment provisions of approximately RMB 194 million for certain production facilities and intangible assets [116]. - The company plans to maintain high production efficiency to ensure sustainable profitability moving forward, following the successful integration of new and existing production facilities [114]. - The company’s management believes that its diversified and vertically integrated strategy has proven successful in mitigating market risks [114]. - In 2023, the total revenue reached RMB 13,128.4 million, a 49% increase compared to RMB 8,817.9 million in 2022 [125]. - Ethylene glycol revenue increased by approximately 136% in 2023, driven by a 177% increase in sales volume due to enhanced production capacity [128]. - The polypropylene business saw an 8% revenue increase, with a 22% rise in sales volume despite a 12% drop in average selling price [136]. Asset Management and Financial Stability - The group's cash and bank balances were approximately RMB 364.2 million as of December 31, 2023, an increase from RMB 224.6 million in 2022, representing a growth of about 62.1% [94]. - The group's interest-bearing borrowings were approximately RMB 10,190 million as of December 31, 2023, down from RMB 10,498.7 million in 2022, indicating a reduction of about 2.9% [94]. - The asset-liability ratio was approximately 48.5% as of December 31, 2023, down from 57.5% in 2022, showing a decrease of 9 percentage points [94]. - The group's capital commitments amounted to approximately RMB 1,115.5 million as of December 31, 2023, significantly lower than RMB 2,448.7 million in 2022, a decrease of about 54.5% [101]. - The company believes it has sufficient funds to meet its debt obligations and capital expenditures [165]. - The group is currently evaluating the impact of new accounting standards on its financial statements, with no significant impact expected [173]. - The financial statements include all intercompany transactions, with assets, liabilities, equity, income, expenses, and cash flows fully offset in the consolidated accounts [190]. - The company is subject to further disclosures regarding asset sales or capital injections between investors and their associates or joint ventures [195].

Financial Performance - The company's revenue for the year ended December 31, 2023, was RMB 13,128,400, representing a 48.9% increase from RMB 8,817,875 in 2022[3] - The gross profit for the year was RMB 194,336, a significant improvement from a gross loss of RMB 59,704 in the previous year, marking a 425.5% change[3] - The net profit attributable to shareholders was RMB 91,477, compared to a net loss of RMB 307,880 in 2022, reflecting a 129.7% increase[3] - Basic earnings per share rose to RMB 7.84, a 129.9% improvement from a loss of RMB 26.18 per share in 2022[3] - Total comprehensive income for the year was RMB 44,134 thousand, a recovery from a loss of RMB 354,454 thousand in the previous year[14] - The group reported a pre-tax profit of RMB 91,477 thousand for 2023, a recovery from a loss of RMB 307,880 thousand in 2022[56] Revenue Dynamics - Revenue from industrial product sales for the year 2023 was RMB 13,024,230,000, an increase from RMB 8,726,024,000 in 2022, representing a growth of approximately 49.5%[35] - Total revenue for the year 2023 reached RMB 13,128,400,000, compared to RMB 8,817,875,000 in 2022, indicating a year-over-year increase of about 49.5%[39] - Revenue from customer contracts for 2023 was RMB 13,113,128,000, up from RMB 8,801,775,000 in 2022, reflecting a growth of approximately 49.5%[41] - The revenue from ethylene glycol increased by 136% to RMB 1,709,173,000, compared to RMB 724,196,000 in the previous year[113] - The revenue from polypropylene was RMB 3,230,687,000, accounting for 25% of total revenue, with an 8% increase from the previous year[113] - The revenue from surfactants and water-reducing agents increased by 112% to RMB 2,537,707,000, compared to RMB 1,196,215,000 in the previous year[113] Cost and Expenses - The group's cost of sold inventory increased to RMB 12,897,701 thousand in 2023 from RMB 8,846,121 thousand in 2022, representing a significant rise[49] - The total financing costs for 2023 amounted to RMB 214,904 thousand, compared to RMB 168,317 thousand in 2022, indicating an increase of approximately 27.7%[47] - Other income decreased to RMB 550,104 thousand in 2023 from RMB 837,646 thousand in 2022, reflecting a decline of approximately 34.3%[46] - The impairment loss on long-term assets rose to RMB 193,611 thousand in 2023 from RMB 55,906 thousand in 2022, indicating a significant increase in asset impairment[49] Assets and Liabilities - The company's non-current assets increased to RMB 14,718,210 thousand in 2023 from RMB 13,339,478 thousand in 2022, reflecting a growth of approximately 10.4%[16] - Current assets rose to RMB 6,283,562 thousand in 2023, up from RMB 4,919,118 thousand in 2022, indicating a growth of about 27.7%[16] - Current liabilities increased to RMB 12,419,637 thousand in 2023, compared to RMB 10,608,821 thousand in 2022, representing a rise of approximately 17.0%[18] - The total amount of short-term borrowings due within 12 months as of December 31, 2023, was RMB 7,113,868,000, with no significant difficulties in renewing these borrowings[25] - The group has unutilized credit facilities from banks amounting to RMB 1,828,428,000 to meet debt obligations and capital expenditures[25] Shareholder Information - The company did not recommend a final dividend for the year ended December 31, 2023[6] - The group did not declare or pay any dividends for 2023, consistent with 2022[59] - The company’s issued share capital as of December 31, 2023, is RMB 102,662 thousand, with 1,190,000,000 shares issued[93] - The total number of shares available for issuance under the company's share incentive plan is capped at 5% of the total issued shares at the beginning of any financial year, which amounts to 59,500,000 shares for the year ended December 31, 2023[112] Operational Developments - The new production facility for ethylene oxide/ethylene glycol, with an annual capacity of 1,000,000 tons, commenced commercial operations in Q2 2023, enhancing production efficiency[5] - The company expects significant performance improvement in 2024 due to the full-year impact of the new production facilities[8] - The average selling price across most business lines decreased by approximately 12% to 19% compared to 2022, impacting revenue dynamics[5] Inventory and Receivables - The company’s inventory increased significantly to RMB 1,949,953 thousand in 2023 from RMB 1,067,372 thousand in 2022, reflecting an increase of approximately 82.5%[16] - Accounts receivable rose from RMB 610,719 thousand in 2022 to RMB 1,437,651 thousand in 2023, marking an increase of about 135.5%[66] - The provision for accounts receivable impairment increased from RMB 4,078 thousand in 2022 to RMB 6,857 thousand in 2023, indicating a rise of approximately 68.2%[68] - The total amount of prepayments and other receivables rose from RMB 235,983 thousand in 2022 to RMB 1,022,526 thousand in 2023, indicating an increase of about 333.5%[68] Debt Management - The debt-to-asset ratio decreased to 48.5% from 57.5% in 2022, indicating a 9.0% improvement[3] - The total bank loans due within one year for 2023 amount to RMB 7,113,868 thousand, a decrease from RMB 7,228,416 thousand in 2022, representing a reduction of approximately 1.6%[84] - The total outstanding loans as of 2023 is RMB 10,190,015 thousand, compared to RMB 10,498,651 thousand in 2022, showing a decline of approximately 2.9%[84] Employee Information - The number of full-time employees increased to 1,307 in 2023 from 1,160 in 2022[136]

Financial Performance - For the six months ended June 30, 2023, the company recorded a slight gross loss margin of 2.4%, a decrease of approximately 4.4% compared to the previous year[7]. - Revenue decreased by approximately 5.6% due to lower average selling prices and production capacity of key products including ethylene oxide, ethylene glycol, and polypropylene[8]. - Shareholders' net profit for the period was approximately RMB 26.1 million, with basic earnings per share of RMB 0.0222, influenced by one-time items including a RMB 115 million loan assumption from a joint venture partner[8]. - The overall gross margin decline was primarily due to a 12.0% decrease in methanol pricing, which constitutes about 70% of the company's total raw material procurement[10]. - The company reported a profit of RMB 7,367,000 for the six months ended June 30, 2023, compared to a loss of RMB 75,258,000 in the same period of 2022, marking a significant turnaround[67]. - Total comprehensive income for the period was RMB 7,367,000, a recovery from a comprehensive loss of RMB 75,258,000 in the previous year[67]. - The profit attributable to equity holders of the parent company was RMB 26,121,000, compared to a loss of RMB 62,689,000 in the prior year[67]. - The net loss before tax was RMB 44,457 thousand, an improvement from a loss of RMB 63,746 thousand in the previous year[65]. Revenue and Sales - Total revenue for the first half of 2023 was RMB 4,591,142,000, a decrease of 5.6% compared to RMB 4,864,325,000 in the same period of 2022[50]. - The revenue from the ethylene oxide business line was approximately RMB 745.8 million, a decrease of about 45.0% compared to the same period in 2022, primarily due to a production reduction of approximately 35.3%[53]. - The glycol business line generated revenue of approximately RMB 457.5 million, down about 9.8% year-on-year, mainly due to a 19.0% decline in average selling prices during the review period[54]. - The polypropylene business line's revenue decreased by approximately 18.5% compared to the same period in 2022, attributed to a 14.4% reduction in average selling prices[55]. - The company has seen a 95% increase in revenue from surfactants in the first half of 2023 compared to the same period in 2022[10]. Production and Capacity - The company anticipates improvement in gross margin in the second half of 2023, supported by the new production facilities that will double its market share in East China[11]. - The new production facilities, with an annual capacity of 1,000,000 tons, are expected to rebalance raw material composition from 20%-10%-70% (ethylene, propylene, methanol) to 70%-30% (naphtha, ethane, propane) starting Q3 2023[7]. - The sales volume of ethylene oxide decreased by 35.3% to 128,923 tons from 199,279 tons in the first half of 2022[50]. Cash Flow and Financial Position - The net cash flow from operating activities was negative at RMB 337,562,000, an improvement from negative RMB 604,775,000 in the same period last year[70]. - The net cash flow from investing activities was negative RMB 811,957,000, down from negative RMB 1,603,676,000 in the previous year[70]. - The net cash flow from financing activities was RMB 1,451,310,000, compared to RMB 1,955,920,000 in the same period of 2022[70]. - The company ended the period with cash and cash equivalents of RMB 522,490,000, an increase from RMB 342,806,000 at the end of the previous year[70]. - The company has a net current liability of approximately RMB 6,970,170,000 as of June 30, 2023, indicating a need for sufficient operating cash flow and financing capabilities[77]. Debt and Liabilities - The group's debt-to-asset ratio as of June 30, 2023, was 54.67%, compared to 57.50% as of December 31, 2022, with a guideline not exceeding 66.7%[30]. - The total current liabilities increased from RMB 10,608,821 thousand to RMB 13,124,255 thousand, indicating a rise in financial obligations[60]. - The group’s total liabilities increased significantly, with bank loans and other borrowings rising to RMB 3,067,104 thousand as of June 30, 2023, compared to RMB 2,833,614 thousand at the end of 2022, an increase of about 8.2%[115]. - The company has a total of RMB 8,167,458,000 in bank loans due within one year as of June 30, 2023, compared to RMB 7,228,416,000 as of December 31, 2022, indicating an increase of approximately 13.0%[123]. Corporate Governance and Compliance - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange rules and has complied with all provisions during the reporting period[46]. - The company confirmed compliance with the standard code for securities transactions by directors and senior management during the reporting period[47]. - The group did not declare an interim dividend for the periods ended June 30, 2023, and 2022, reflecting a conservative approach amid financial recovery efforts[107]. Shareholder Information - The company’s major shareholders include Han Jianhong and Guan Siyu, who collectively hold approximately 45.15% of the issued share capital[138]. - As of June 30, 2023, Sure Capital Holdings Limited holds 516,496,000 shares, representing approximately 43.40% of the issued share capital[144]. - Sure Capital is wholly owned by Yihao Development Limited, which is held by Yihao Trust, with Vistra Trust (Singapore) Pte. Ltd. as the trustee[145]. - The beneficial owners of Yihao Trust include Mr. Guan and Ms. Han, along with their children[145]. Acquisition and Investments - The acquisition of a 50% stake in Sanjiang Lotte Chemical Co., Ltd. was completed on June 20, 2023, resulting in the company gaining full control with a total equity interest of 100%[130]. - The fair value of identifiable assets and liabilities of Sanjiang Lotte at the acquisition date was assessed at RMB 167,138,000, with a bargain purchase gain of RMB 83,569,000 recorded[132]. - The cash flow analysis post-acquisition indicated a net cash inflow of RMB 116,824,000 from investment activities, reflecting the financial impact of the acquisition[134].

Revenue Performance - The group's revenue for the six months ended June 30, 2023, was approximately RMB 4,591,142, a decrease of 5.6% compared to RMB 4,864,325 for the same period in 2022[9]. - Revenue for the first half of 2023 was RMB 4,591.1 million, a decrease of 5.6% compared to RMB 4,864.3 million in the same period of 2022[52]. - The revenue from surfactants increased by 95% compared to the same period in 2022, indicating a strategic shift towards products with lower price elasticity and positive profit margins[12]. - The revenue from the ethylene oxide business line was approximately RMB 745.8 million, a decrease of about 45.0% compared to the same period in 2022, primarily due to a reduction in production by approximately 35.3% in response to negative profit margins and unfavorable market conditions[28]. - The revenue from the ethylene glycol business line was approximately RMB 457.5 million, down 9.8% year-on-year, primarily due to a 19.0% decrease in average selling price[54]. - The sales revenue from trading oil and chemical products reached RMB 448,023,000, compared to RMB 132,556,000 in the previous year, indicating a year-over-year increase of about 237%[94]. Profitability - The net profit attributable to equity holders was RMB 26.1 million, a significant improvement from a net loss of RMB 62.7 million in the same period last year, representing a change of –141.7%[9]. - The basic earnings per share for the period was RMB 2.22, compared to a loss of RMB 5.37 per share in the previous year, reflecting a change of –141.3%[9]. - The group reported a profit of RMB 7.367 million for the six months ended June 30, 2023, compared to a loss of RMB 75.258 million in the same period of 2022[35]. - The net profit attributable to equity holders of the parent company for the six months ended June 30, 2023, was RMB 26,121,000, a recovery from a loss of RMB 62,689,000 in the same period of 2022[99]. Gross Margin and Costs - The overall gross margin decreased by approximately 4.4% to a gross loss margin of 2.4%, primarily due to declines in the gross margins of key product lines: epoxy ethane (–14.5%), ethylene glycol (–3.8%), and polypropylene (–1.8%)[11]. - The gross profit margin for the company was impacted by a significant increase in the cost of sales, which rose to RMB 494.8 million from RMB 221.7 million[48]. - The average market price of upstream commodities/raw materials was relatively higher than downstream products, leading to a decrease in the overall gross margin of the group[30]. - The pricing of methanol, which accounts for approximately 70% of the group's total raw material procurement, decreased by about 12.0% year-on-year, impacting the overall profitability[30]. Assets and Liabilities - The company's total non-current assets are located in mainland China, with all external revenue generated from customers in China[5]. - The group’s pledged deposits amounted to approximately RMB 3,081,655,000 as of June 30, 2023, compared to RMB 2,888,279,000 as of December 31, 2022[6]. - The asset-liability ratio based on interest-bearing borrowings to total assets was 54.7%, an increase of 4.5% from 50.2% in the previous year[9]. - The net current liabilities of the group as of June 30, 2023, were approximately RMB 6.97 billion, indicating the need for sufficient operating cash flow and financing capabilities[39]. - Total liabilities increased to RMB 13,124,255 thousand from RMB 10,608,821 thousand, indicating a rise of approximately 23.7%[57]. - The total liabilities for bank loans as of June 30, 2023, were RMB 11,319,491 thousand, compared to RMB 10,498,651 thousand as of December 31, 2022, indicating an increase of 7.8%[87]. Cash Flow and Financial Position - Net cash flow from operating activities was negative RMB 337,562 thousand, an improvement from negative RMB 604,775 thousand in the prior year[61]. - Cash and cash equivalents at the end of the period were RMB 522,490 thousand, up from RMB 217,493 thousand, reflecting an increase of approximately 140.5%[61]. - The company believes it has sufficient funds to meet its debt obligations and capital expenditure requirements, ensuring continuity in operations[39]. Inventory and Receivables - As of June 30, 2023, the total inventory amounted to RMB 1,307,000 thousand, an increase of 22.5% from RMB 1,067,372 thousand as of December 31, 2022[79]. - Accounts receivable as of June 30, 2023, totaled RMB 822,352 thousand, up from RMB 606,641 thousand as of December 31, 2022, reflecting a growth of 35.5%[81]. - The company’s raw materials inventory increased to RMB 1,101,698 thousand as of June 30, 2023, from RMB 967,826 thousand as of December 31, 2022, representing a growth of 13.8%[79]. - The company’s finished goods inventory rose to RMB 205,302 thousand as of June 30, 2023, compared to RMB 99,546 thousand as of December 31, 2022, marking a substantial increase of 106.5%[79]. Strategic Initiatives and Future Outlook - The group anticipates that the slight gross loss margin situation will improve in the second half of 2023 due to the commissioning of new production facilities[24]. - The group expects to improve the gross margin in the second half of 2023 due to proactive measures taken to enhance sales and marketing forecasting and reporting mechanisms[26]. - The group anticipates that the sixth phase of ethylene oxide/ethylene glycol production facilities will be fully operational in the second half of 2023, potentially doubling its market share in the East China region[26]. - The strategic initiative to streamline production processes is expected to mitigate business risks associated with fluctuations in crude oil, natural gas, and coal prices[26]. Dividends and Shareholder Information - The company does not recommend the declaration of an interim dividend for the six months ended June 30, 2023[3]. - The average number of ordinary shares issued during the period was 1,176,119,000 shares, slightly up from 1,167,576,000 shares in the previous year[99]. Employment and Governance - As of June 30, 2023, the group employed a total of 1,165 full-time employees, with various employee benefits including housing subsidies and stock incentive plans[91]. - The board of directors consists of four executive directors and three independent non-executive directors as of the announcement date[134].