Financial Performance - In the first half of 2022, the Group achieved a net profit of approximately RMB 19.6 million, representing a year-on-year increase of 33.1%[14]. - The Group's revenue for the six months ended June 30, 2022, was approximately RMB 77.4 million, representing an increase of 1.1% compared to RMB 76.5 million for the same period in 2021[33]. - Profit for the period was RMB 15,212,000, an increase from RMB 14,286,000 in the previous period, representing a growth of 6.5%[137]. - Revenue for the six months ended June 30, 2022, was RMB 77,372,000, compared to RMB 76,515,000 for the same period in 2021, indicating a year-over-year increase of 1.1%[140]. - Gross profit for the same period was approximately RMB 39.7 million, an increase of approximately RMB 0.6 million from RMB 39.1 million in the prior year, with a gross profit margin rising from 51.1% to 51.3%[34]. - Other income significantly increased to RMB 9,035,000 from RMB 1,264,000, marking a rise of 613.5%[140]. - Profit before income tax was RMB 17,627,000, compared to RMB 16,457,000 in the previous period, showing an increase of 7.1%[140]. - Basic and diluted earnings per share attributable to equity holders of the Company were RMB 3.16, down from RMB 3.86 in the previous period, a decrease of 18.1%[140]. Operational Efficiency - The Group's consolidated gross profit margin increased by 0.2 percentage points to 51.3%, with a production-to-sales rate of 100%[14]. - The Group has developed the Huanlong Paper Machine Efficiency Operation System to enhance operational efficiency and provide customized products to customers[22]. - The Group plans to upgrade its efficiency operation system to facilitate data collection and analysis from customers' machinery, enhancing customized product services[28]. - Selling and distribution expenses were approximately RMB 7.5 million, accounting for about 9.7% of revenue, reflecting an increase of approximately RMB 0.4 million compared to the previous year[36]. - Administrative and other operating expenses rose to approximately RMB 18.6 million from RMB 13.0 million, mainly due to costs associated with the initial public offering[43]. Research and Development - The Group owns more than 100 registered patents and has nearly 40 patents under application for registration, emphasizing its commitment to research and development[19]. - The Group's focus on continuous innovation in technology is seen as key to maintaining product competitiveness[19]. - Research and development costs were reported at RMB 2,782,000, slightly down from RMB 3,006,000, a decrease of 7%[198]. Market Presence - The Group's products have reached both domestic and international markets, including North America, Europe, and Southeast Asia[14]. - Following the entry into the capital market in early 2022, the Group has transformed its marketing strategies to a dual driver model of product and technology solutions[20]. - Revenue from the PRC accounted for RMB 70,445,000, while overseas revenue was RMB 6,927,000, indicating a significant increase of approximately 87.5% in overseas revenue compared to RMB 3,703,000 in 2021[182]. - The Group generated approximately RMB 1.1 million from transactions with Russian clients, accounting for about 1.4% of total income during the reporting period[183]. - The Group did not have any single customer contributing 10% or more to total revenue for the six months ended June 30, 2022[186]. Financial Position - As of June 30, 2022, net assets reached approximately RMB 335.6 million, an increase from approximately RMB 215.0 million as of December 31, 2021[54]. - Current ratio as of June 30, 2022, was 252.9%, compared to 96.1% as of December 31, 2021[54]. - Outstanding bank borrowings and other borrowings as of June 30, 2022, were approximately RMB 172.0 million, up from approximately RMB 127.5 million as of December 31, 2021[55]. - Gearing ratio as of June 30, 2022, was approximately 51.5%, down from 61.7% as of December 31, 2021[65]. - Total assets amounted to RMB 566,570,000, an increase from RMB 416,764,000 as of December 31, 2021, representing a growth of approximately 36%[142]. - Current assets increased significantly to RMB 274,143,000 from RMB 177,989,000, marking a rise of about 54%[142]. - Cash and cash equivalents surged to RMB 116,620,000, up from RMB 12,609,000, reflecting a substantial increase of approximately 825%[142]. - Non-current liabilities totaled RMB 122,605,000, a notable increase from RMB 16,489,000 as of December 31, 2021[144]. Strategic Initiatives - The Group aims to expand production capacity in three phases from 2021 to 2024 to meet increasing demand for high-speed papermaking felts[28]. - Strategic acquisitions are being pursued to complement the Group's business and expand horizontally within the industry and supply chain[28]. - The Group's future plans include strengthening research and development capabilities and pursuing strategic acquisitions[85]. Risks and Liabilities - The Group has no major contingent liabilities as of June 30, 2022[74]. - The Group has not established any foreign exchange hedging policy but monitors currency fluctuations to manage risks[73]. - The Group's assets and liabilities are primarily denominated in RMB, exposing it to foreign exchange risk[73]. Shareholding Structure - As of June 30, 2022, Ms. Shen Genlian and Mr. Zhou Jun each hold 359,947,200 shares, representing approximately 74.46% of the company's total shares[94]. - Perfect Angle Limited holds 269,960,400 shares (55.84% of total shares) and Wonderful Advisor Limited holds 89,986,800 shares (18.61% of total shares) in the company[110]. - The total number of shares held by Perfect Angle and Wonderful Advisor combined is 359,947,200, which constitutes 74.46% of the company's shares[110].

Financial Performance - The Group's total revenue in 2021 increased by 16.9% to RMB 213.7 million compared to the previous year[13]. - Net profit for 2021 increased by 22.6% to RMB 59.5 million, with net profit attributable to owners of the Company amounting to RMB 50.1 million[13]. - Earnings per share for the year were RMB 13.7 cents, up from RMB 11.1 cents in 2020[13]. - The Group's revenue for the year ended December 31, 2021, was approximately RMB 213.7 million, representing an increase of 16.9% compared to approximately RMB 182.8 million for the year ended December 31, 2020, mainly due to increased sales of medium-speed and high-speed felts[45]. - The Group's gross profit for the year ended December 31, 2021, was approximately RMB 113.6 million, an increase of approximately RMB 14.0 million from approximately RMB 99.6 million for the year ended December 31, 2020, with a gross profit margin decreasing from approximately 54.5% to 53.2%[45]. - Other income decreased by approximately RMB 0.5 million to approximately RMB 5.5 million for the year ended December 31, 2021, primarily due to a decrease in government subsidies[45]. - Selling and distribution expenses for the year ended December 31, 2021, were approximately RMB 19.9 million, accounting for approximately 9.3% of revenue, an increase of approximately RMB 2.1 million compared to RMB 17.8 million for the year ended December 31, 2020[45]. - Administrative and other operating expenses for the year ended December 31, 2021, were approximately RMB 31.6 million, accounting for approximately 14.8% of revenue, a decrease of approximately RMB 0.6 million from RMB 32.1 million for the year ended December 31, 2020[48]. - Total finance costs for the year ended December 31, 2021, reached approximately RMB 8.2 million, an increase of approximately RMB 1.0 million compared to RMB 7.2 million for the year ended December 31, 2020, mainly due to increased loan interests[49]. - Income tax expense for the year ended December 31, 2021, was approximately RMB 8.8 million, an increase of approximately RMB 1.3 million from RMB 7.5 million for the year ended December 31, 2020, primarily due to an increase in profit before tax[50]. - The effective tax rate for the year ended December 31, 2021, was approximately 14.7%, down from 15.4% for the year ended December 31, 2020, attributed to favorable tax policies and increased deductible research and development expenses[51]. Production and Market Trends - The total sales volume of the Group in 2021 was 1,401 tonnes[13]. - The nationwide production volume of machine-made paper and paperboard in China reached 135.839 million tonnes in 2021, representing a year-on-year increase of 6.8%[14]. - The disclosed production capacity of the household paper industry accumulated to approximately 2.686 million tonnes per year in 2021[18]. - The demand for packaging papers and household paper is expected to demonstrate steady and sustainable growth in the forthcoming years due to urbanization and economic growth[18]. - The production and consumption volume of machine-made paper and paperboard in China is expected to grow at a CAGR of approximately 4.9% and 5.1%, respectively, from 2021 to 2025[20]. - The sales volume of papermaking felts in China increased from approximately 12,820.1 tonnes in 2016 to approximately 17,487.9 tonnes in 2020, representing a CAGR of approximately 8.1%[25]. Strategic Initiatives - The company aims to expand production capacity in 2022 while increasing investments in research and development to consolidate market share[27]. - The company plans to strengthen its core business of high-quality, intelligent papermaking felts to establish world-class production, sales, and technical capabilities[28]. - The development of a papermaking machine efficiency operation system is underway, which will allow for data analysis and customization of products to improve customer efficiency[39]. - The company is focused on creating a service ecosystem for papermaking machines that integrates IoT and AI technologies to enhance operational efficiency and reduce energy consumption[29]. - The company is committed to strengthening ESG management and reducing carbon emissions through advanced production technologies[32]. - The company may pursue strategic acquisitions to complement its business, particularly targeting manufacturers of papermaking screens, which are essential consumables in the papermaking process[89]. Corporate Governance - The Company has maintained high standards of corporate governance and complied with all code provisions of the Corporate Governance Code since its listing date[95]. - All directors confirmed compliance with the Model Code for Securities Transactions during the reporting period[96]. - The Board comprises seven Directors, including four Executive Directors and three Independent non-executive Directors, all of whom have confirmed compliance with the trading standards since the Listing Date[102][109]. - The Company has adopted the corporate governance code as per the Listing Rules, ensuring compliance and regular reviews of governance practices[100][108]. - The Audit Committee consists of three independent non-executive Directors, with Mr. Wang Yunchen serving as the chairman[138]. - The Audit Committee reviewed the audited financial statements for the year ended December 31, 2021, and made recommendations to the Board for approval[138]. - The roles of the chairperson and the chief executive are separated, with Ms. Shen Genlian as Chairperson and Mr. Zhou Jun as CEO[126]. - The Company has established mechanisms to ensure independent views are available to the Board, including strengthening the recruitment process for independent non-executive Directors[129]. - The Company has set up an audit committee, a remuneration committee, and a nomination committee to assist the Board in fulfilling its responsibilities[136]. - The Audit Committee's primary duties include reviewing the Group's financial reporting process and internal control systems[137]. Risk Management - The Company has established comprehensive risk management policies to identify, evaluate, and manage operational risks[178]. - The Board acknowledges its responsibility for maintaining effective internal control and risk management systems to safeguard shareholder investments[175]. - The risk management strategies and internal control processes are designed to prevent, avoid, or mitigate identified risks[188]. - The Audit Committee assists the Board in reviewing operational, financial, compliance controls, and risk management functions[192]. - The Company does not have an internal audit function due to the size and complexity of its business, but the Board has sufficient capacity to oversee risk management[191]. - An external consultant was engaged to review the Group's internal control and risk management systems, and no significant weaknesses were identified[192]. Employee and Diversity - The Group had 309 employees as of December 31, 2021[64]. - The total staff cost for the year ended December 31, 2021, amounted to approximately RMB35.8 million[70]. - As of December 31, 2021, the workforce gender ratio is 53% male and 47% female, while the senior management gender ratio is 60% male and 40% female[163]. - The Board's composition reflects a commitment to diversity, considering various perspectives in its appointments[162]. - The Company aims to ensure diversity in its hiring practices and will continue to consider diverse perspectives[163]. Dividend Policy - The Company has adopted a Dividend Policy allowing for annual dividends if profitable, with special dividends declared at the Board's discretion[165]. - The Board will consider factors such as actual and expected financial performance, retained earnings, and economic conditions when proposing dividend payouts[167]. - The Company will periodically review its Dividend Policy and submit amendments for Board approval if necessary[168].