Core Viewpoint - The global semiconductor equipment market is projected to grow by 21% year-on-year in Q1 2025, reaching $32.05 billion, despite a 5% quarter-on-quarter decline, indicating resilience in the industry amid geopolitical uncertainties and supply chain adjustments [1][37]. Regional Summaries Chinese Mainland - In Q1 2025, the revenue was $10.26 billion, maintaining its position as the largest single market globally, but experienced a 14% quarter-on-quarter and 18% year-on-year decline, reflecting a "double drop" trend [5][6][25]. - The market share of the Chinese mainland shrank from 47% in the previous year to 32% due to significant investments in semiconductor equipment in Taiwan and Korea [6]. Korea - The Korean semiconductor equipment market saw a robust performance in Q1 2025, with revenues of $7.69 billion, marking a 24% quarter-on-quarter and 48% year-on-year increase, driven by a recovery in memory chips and substantial investments from major companies [9][10]. - The Korean government’s "K-Semiconductor Strategy" includes significant tax incentives and subsidies, further boosting the market [10][11]. Chinese Taiwan - Taiwan's semiconductor equipment market experienced a remarkable growth of 203% year-on-year in Q1 2025, reaching $7.09 billion, fueled by major manufacturers' expansion plans and advanced packaging technologies [12][15]. - TSMC's aggressive investment in advanced processes, including a significant capital expenditure directed towards new technologies, has been a key driver of this growth [12][14]. North America - North America's equipment market revenue reached $2.93 billion in Q1 2025, reflecting a 41% quarter-on-quarter decline but a 55% year-on-year increase, indicating a "pulse-like" expansion pattern influenced by concentrated procurement in the previous quarter [16][17]. - The market is expected to rebound in Q2 2025, driven by ongoing investments in advanced manufacturing processes and local production initiatives [17]. Japan - Japan's semiconductor equipment market reported a 20% year-on-year increase in Q1 2025, reaching $2.18 billion, supported by government subsidies and local production expansions, despite an 18% quarter-on-quarter decline [19][20]. Europe - The European semiconductor equipment market faced a significant downturn, with revenues dropping 54% year-on-year and 11% quarter-on-quarter to $0.87 billion, attributed to ineffective policy execution and reduced capital expenditures [21][22]. - The lack of competitive local semiconductor manufacturing capabilities has exacerbated the market's decline, leading to increased supply chain risks [23][24]. Industry Dynamics - The global semiconductor equipment market is characterized by a structural differentiation, with high-end chips driven by AI demand maintaining price resilience, while mid-range chips face downward pressure due to overcapacity [39][42]. - The industry is currently in a recovery phase, with Q1 2025's decline attributed to seasonal fluctuations and geopolitical factors rather than a complete cycle shift [40][42]. - Future growth is anticipated as capacity expansion and demand recovery are expected to lead the industry into an expansion phase in the latter half of 2025 [42].

Group 1 - Taiwan's authorities have placed Huawei and SMIC on an export blacklist, indicating a strong alignment with U.S. policies to suppress China's chip industry [2][13] - TSMC has already ceased orders from Huawei in 2023, and while SMIC faces equipment procurement restrictions, other mainland manufacturers are stepping in, limiting the impact on Huawei [2][6] - Taiwan's semiconductor manufacturers are heavily reliant on materials from mainland China, with over 90% of critical photolithography materials sourced from there, which poses a significant risk to their operations [4][6] Group 2 - The recent actions by Taiwan may lead to a dual loss scenario, as the U.S. has already imposed export taxes on Taiwan, and Taiwan's response could further harm its own interests [6][9] - If mainland China decides to restrict rare earth exports, it could severely impact various sectors in Taiwan, including chips, electronics, and renewable energy [6][12] - The global chip supply chain is undergoing restructuring, with efforts to relocate TSMC's operations to the U.S., but high-end packaging and silicon processing remain in Taiwan, highlighting its critical role [8][9] Group 3 - Taiwan's unilateral export control measures may backfire, potentially leading to a collapse of its chip industry if mainland China retaliates [13] - The call for "independence and self-sufficiency" in Taiwan's chip industry is undermined by its lack of control over the foundational supply chain [13][12] - The high stakes of Taiwan's current strategy could lead to severe consequences if the situation escalates, emphasizing the need for a balanced approach [12][13]

Core Viewpoint - Morgan Stanley's recent report provides a detailed analysis of TSMC, highlighting its current challenges and forecasts for 2nm capacity and wafer pricing [1][2]. Group 1: Stock Performance and Market Comparison - TSMC's stock price has increased by 31% over the past three months, outperforming Taiwan's weighted index (TAIEX) which rose by 27% [2]. - In comparison, NVIDIA's stock surged by 53% during the same period, with currency pressures, particularly the appreciation of the New Taiwan Dollar (TWD) against the US Dollar (USD), contributing to TSMC's relative underperformance [2]. Group 2: Financial Forecast Adjustments - The appreciation of TWD by 8.1% has negatively impacted TSMC's gross margin by over 3%, leading to a downward revision of its gross margin expectations for 2025 from 58-59% to 55-56% [2]. - EPS forecasts for 2025 and 2026 have been reduced by 6% and 12%, respectively, due to the adverse effects of exchange rates [2]. Group 3: AI Semiconductor Market Position - TSMC holds a dominant position in the AI semiconductor market, with projected revenue growth from cloud AI semiconductor business at a compound annual growth rate (CAGR) of 40% over the next five years [3]. - By 2027, revenue from cloud AI is expected to account for 34% of TSMC's total revenue, up from 13% in 2024 and 25% in 2025 [3]. Group 4: Strategic Partnerships and Production Capacity - Intel's decision to outsource the production of its NovaLake CPU and GPU chips to TSMC using 2nm technology reflects high industry recognition of TSMC's advanced manufacturing capabilities [6]. - TSMC is poised to capture a share of the AI GPU market in mainland China, particularly if NVIDIA secures export licenses for its B30 chips, with a potential demand of 500,000 units [6]. Group 5: Industry Trends and Pricing Strategy - The semiconductor industry's inventory levels are declining, indicating a potential recovery in non-AI semiconductor demand [7]. - TSMC plans to increase wafer prices by 3-5% globally in 2026, with potential increases exceeding 10% at its US facilities, which may help mitigate gross margin pressures from currency appreciation [7]. Group 6: Capital Expenditure and Production Plans - TSMC plans to maintain a capital expenditure level of $40 billion in 2026, primarily to expand 2nm capacity to 90,000 wafers per month [9]. - The investment strategy reflects a balance between meeting future market demand and maintaining financial discipline, contrasting with the high volatility of capital expenditure cycles in the semiconductor industry [9]. Group 7: Key Issues Impacting Investor Confidence - Four key issues will significantly influence investor confidence in TSMC by 2026: growth in AI semiconductor business, uncertainty regarding Intel's outsourcing scale, the total addressable market for AI GPUs in mainland China, and TSMC's wafer pricing strategy [11][12]. - Successful implementation of a 3-5% price increase globally will be crucial for TSMC to offset rising costs and currency impacts [12]. Group 8: Geopolitical Risk Management - TSMC's $165 billion investment in the US enhances its ability to address geopolitical risks, particularly concerning semiconductor tariffs [15]. - If TSMC can secure exemptions for equipment and chemical imports, it may maintain a long-term gross margin above 53%, which is vital for its profitability [15].

Group 1 - The Taiwanese government has added Huawei, SMIC, and several subsidiaries to its list of "strategic high-tech goods" requiring export licenses, indicating a shift towards tighter technology trade controls [1][2] - This action is perceived as a political maneuver to align with external forces and disrupt cross-strait industrial cooperation, potentially harming Taiwan's semiconductor industry [1][2] - The list includes 601 entities, marking the first time core Chinese tech companies are explicitly named, which aligns with the U.S. strategy to curb technology exports to China [1][2] Group 2 - The Taiwanese semiconductor industry may face significant risks, including losing access to the mainland market and hindering its development due to increased compliance scrutiny [2][3] - The Taiwanese government’s actions are criticized as detrimental to free market principles and are seen as a sacrifice of local industry for political gains [2][3] - Taiwan's reliance on the mainland for 40% of its chip production capacity below 14nm indicates that a forced decoupling could lead to substantial financial losses for Taiwanese companies, with MediaTek alone facing over 30 billion NTD in losses [4]

Financial Performance - For the year ended December 31, 2024, the company's revenue was approximately RMB 23.32 million, a significant decrease from RMB 4.44 million in 2023[9] - The loss attributable to owners of the company for 2024 was RMB 42.99 million, compared to a loss of RMB 46.23 million in 2023[9] - Total assets as of December 31, 2024, were RMB 569.34 million, down from RMB 651.73 million in 2023[9] - Total liabilities decreased to RMB 466.85 million in 2024 from RMB 503.66 million in 2023[9] - The net asset value attributable to owners of the parent was RMB 140.46 million in 2024, compared to RMB 176.93 million in 2023[9] - The Group's revenue for the year amounted to approximately RMB 23.3 million, a significant increase from RMB 4.4 million in 2023, primarily from the trading of electronic products[31] - The loss attributable to owners of the Company was approximately RMB 43.0 million, a slight improvement from RMB 46.2 million in 2023, mainly due to low gross profit from trading activities[31] - The gross profit margin for the trading business was approximately 0.1% for the year[25] - The Group's bank balances and cash were approximately RMB 15.8 million as of December 31, 2024, a decrease from RMB 17.2 million in 2023[32] Project Development - The Second Maoming Project has a total site area of approximately 29,274.16 square meters, with a planned gross saleable area of 84,000 square meters[16] - The company has no real estate project for sale during the year due to unfavorable market conditions, resulting in a significant revenue decrease[12] - The total area of residential and commercial properties recognized as sales in 2023 was approximately 747 square meters[13] - The company is focusing on the development of the Second Maoming Project, which includes 1,000 carpark spaces and a mix of residential and commercial areas[16] - As of December 31, 2024, approximately 63% of the construction for the Second Maoming Project has been completed, with pre-sales for residential properties scheduled for the second half of 2024[19] Capital Structure and Financing - The Group's total secured bank borrowings and other borrowings amounted to approximately RMB 9.4 million as of December 31, 2024, down from RMB 30.0 million in 2023[33] - The gearing ratio was approximately 9% as of December 31, 2024, compared to 20% in 2023, indicating improved financial stability[33] - The Placing of new shares on February 15, 2024, raised gross proceeds of approximately HK$7.12 million, enhancing the Company's capital structure[41] - The total gross proceeds from the placing amounted to approximately HK$7.12 million, with net proceeds of about HK$6.88 million after deducting commissions and other expenses[44] - The company plans to use the net proceeds from the placing for repayment of outstanding liabilities and general working capital, including staff costs and administrative expenses[46][50] - A rights issue was announced on April 8, 2024, offering two rights shares for every one share held at a subscription price of HK$0.15, which was completed on July 22, 2024[48][49] - The total gross proceeds from the rights issue and the specific mandate placing were approximately HK$1.6 million, with net proceeds of about HK$0.56 million after expenses[54][59] Employment and Remuneration - The group employed 35 full-time employees as of December 31, 2024, with total remuneration for the year being approximately RMB8.4 million, down from RMB13.2 million in 2023[66] - The group employed 35 full-time employees in Hong Kong and China, down from 53 in 2023, with total compensation amounting to approximately RMB 8.4 million, a decrease from RMB 13.2 million in 2023[71] Corporate Governance - The Company complied with all relevant code provisions set out in the Corporate Governance Code during the year[122] - The Company adopted the Model Code for Securities Transactions by Directors, confirming compliance by all Directors during the year[123] - The Company is committed to maintaining good corporate governance practices and procedures[121] - The Board consists of seven Directors, including three executive Directors and four independent non-executive Directors, enhancing corporate governance practices[127] - The Board held 12 meetings during the year, ensuring Directors received relevant information for informed decision-making[138] - The Company adopts a practice of holding Board meetings at least four times a year, with additional ad-hoc meetings as necessary[135] - Directors have independent access to senior management and can seek independent professional advice if needed[134] Board Changes and Appointments - Mr. Liu Jianhui was appointed as the executive Director and CEO effective April 1, 2025, bringing extensive experience in financial institutions[84][91] - Mr. Zhang Xiaojun appointed as Executive Director on October 30, 2023, with a focus on optimizing cash flow and establishing investment funds[98] - Mr. Yau Sze Yeung has over 20 years of experience in the financial industry, including audit and corporate finance, and serves as the chairman of the Audit Committee[105] - Mr. Lee Chun Tung appointed as an independent non-executive Director and has extensive experience in internal control and regulatory compliance[111] - Mr. Su Zhi Jie appointed as independent non-executive Director on September 30, 2024, with over 10 years of experience as a qualified internal auditor[113] - Ms. Aika Ouji appointed as independent non-executive Director on December 31, 2024, with extensive experience in international trade and real estate management[114] - Mr. Liu Jian Hui appointed as Chief Executive Officer on April 1, 2025, indicating a leadership transition within the Company[128] Audit and Risk Management - The Audit Committee held 5 meetings during the year to review the audited consolidated financial statements for the years ended December 31, 2022, and 2023[180] - The Committee reviewed the unaudited consolidated interim financial statements for the six months ended June 30, 2023, and June 30, 2024[181] - The Audit Committee evaluated the effectiveness of the internal audit functions and the risk management and internal control systems of the Group[183][184] - The external auditor's fees were reviewed and the remuneration and terms of engagement were approved based on guidelines from the Financial Reporting Council[189] Subsequent Events and Contingencies - The company failed to publish the 2024 Annual Results Announcement by the March 31, 2025 deadline due to additional time required for the auditor to complete its work, leading to a suspension of trading from April 1, 2025[85][86] - There are no material contingent liabilities as of December 31, 2024[83][88] - No significant subsequent events occurred that materially affect the group's financial condition or operation following the reporting period[87][90]

Financial Performance - For the fiscal year ending December 31, 2024, the company reported total revenue of RMB 23,322,000, an increase of 426% compared to RMB 4,442,000 in 2023[3] - The cost of sales for the same period was RMB 23,302,000, resulting in a gross profit of RMB 20,000, down from RMB 180,000 in the previous year[3] - The company incurred a net loss of RMB 53,347,000 for the year, compared to a net loss of RMB 51,637,000 in 2023, reflecting a year-over-year increase in losses of approximately 3.3%[4] - Basic and diluted loss per share for the year was RMB 14.17, an improvement from RMB 17.90 in the previous year[4] - The group reported a loss attributable to shareholders of approximately RMB 43.0 million, an improvement from RMB 46.2 million in 2023, mainly due to lower gross profit from trading activities[44] Assets and Liabilities - Total assets decreased to RMB 566,471,000 from RMB 632,502,000, indicating a decline of approximately 10.4%[7] - The company's cash and bank balances were RMB 15,797,000, which raises concerns about liquidity given current liabilities of RMB 451,791,000[10] - The group’s non-current assets in mainland China were valued at RMB 2,160 thousand in 2024, compared to RMB 3,871 thousand in 2023[25] - Trade payables as of December 31, 2024, amounted to RMB 115.110 million, a decrease from RMB 132.331 million in 2023[36] - The maximum liability for mortgage loans provided to certain buyers of the group's properties is approximately RMB 82.5 million as of December 31, 2024, compared to RMB 94.0 million in 2023[57] Revenue Sources - The group reported revenue from electronic product sales of RMB 23,322 thousand in 2024, compared to RMB 4,437 thousand in 2023[20] - The total revenue from external customers in 2024 was RMB 23,322 thousand, while in 2023 it was RMB 4,442 thousand, indicating a significant increase[25] - The group plans to diversify its revenue sources by starting sales of electronic components, with revenue from electronic products trading amounting to approximately RMB 23.3 million this year[44] - The group’s revenue from property sales is recognized upon the transfer of control to customers, typically after receiving a 30% advance payment[21] - Total revenue from property development and investment for the year was approximately RMB 0, a significant decrease from RMB 44 million in 2023[39] Financial Management and Strategy - The company has secured written confirmations from non-controlling interests to defer repayment of approximately RMB 115,500,000 until the group becomes profitable[11] - Major shareholders have confirmed financial assistance of up to RMB 46,900,000 to support the company's liquidity needs[11] - The group continues to seek equity financing opportunities and actively control administrative costs and capital expenditures[14] - The group is exploring other business opportunities to enhance revenue diversification and stabilize operations while awaiting recovery in the Chinese real estate market[44] - The group anticipates stronger performance in the coming year due to improving economic conditions and supportive government policies in the real estate sector[43] Operational Updates - The second Maoming project is approximately 63% completed, with residential pre-sales expected to begin in the second half of 2024[40] - The company has recognized a provision for expected credit losses of RMB 6.893 million in 2024, compared to a reversal of RMB 274 thousand in 2023[30] - The trading business generated a gross profit margin of approximately 0.1% for the year[44] - The company has completed a placement of 50,888,000 shares at a price of HKD 0.14 per share, raising approximately HKD 7.12 million[46] - The group has committed to using the net proceeds from the placement to repay outstanding debts and for general working capital[47] Employment and Compensation - The total number of full-time employees as of December 31, 2024, is 35, a decrease from 53 in 2023, with total compensation amounting to approximately RMB 8.4 million, down from RMB 13.2 million in 2023[56] Regulatory and Governance - The company has no declared or proposed dividends for the years ended December 31, 2024, and 2023[31] - There were no significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the year, and no major investment or capital asset plans as of the announcement date[60] - Aika Ouji has been appointed as a member of the Board Nomination Committee effective April 11, 2025, ensuring at least one female member in the committee[76] - The company’s shares were suspended from trading on the Stock Exchange starting April 1, 2025, due to the failure to publish audited annual results by March 31, 2025[78] - The company has applied for the resumption of trading, effective from April 14, 2025, at 9:00 AM[78]

Financial Performance - For the fiscal year ending December 31, 2024, the company reported total revenue of RMB 23,322,000, an increase of 426% compared to RMB 4,442,000 in 2023[3] - The cost of sales for the same period was RMB 23,302,000, resulting in a gross profit of RMB 20,000, down from RMB 180,000 in the previous year[3] - The company incurred a net loss of RMB 53,347,000 for the year, compared to a loss of RMB 51,637,000 in 2023, reflecting a year-over-year increase in losses of approximately 3.3%[4] - Basic and diluted loss per share for the year was RMB 14.17, an improvement from RMB 17.90 in the previous year[4] - The company reported other income of RMB 15,832 thousand in 2024, a significant increase from RMB 161 thousand in 2023[27] - The company recorded a net loss attributable to shareholders of RMB 42,987 thousand in 2024, compared to a loss of RMB 46,231 thousand in 2023[32] - The company reported a loss attributable to shareholders of approximately RMB 43.0 million, an improvement from RMB 46.2 million in the previous year[44] - The company has no taxable profits for the years ended December 31, 2024, and 2023, resulting in no provisions for Hong Kong profits tax[28] Assets and Liabilities - Total assets decreased to RMB 566,471,000 from RMB 632,502,000, indicating a decline of approximately 10.4%[7] - The company's cash and bank balances were RMB 15,797,000, which raises concerns about liquidity given current liabilities of RMB 451,791,000[10] - The total trade and other payables decreased to RMB 115,110 thousand in 2024 from RMB 132,331 thousand in 2023[36] - The company’s other receivables increased to RMB 12,278 thousand in 2024 from RMB 8,122 thousand in 2023, with a net amount of RMB 4,275 thousand after provisions[33] - The maximum liability for mortgage loans provided to certain buyers of the group's properties was approximately RMB 82.5 million as of December 31, 2024, down from RMB 94.0 million in 2023[57] Revenue Sources - The group reported revenue from electronic product sales of RMB 23,322 thousand in 2024, compared to RMB 4,437 thousand in 2023[20] - The total revenue from property sales was RMB 0 in 2024, down from RMB 4,437 thousand in 2023[20] - Revenue from external customers in mainland China was RMB 0 in 2024, down from RMB 4,442 thousand in 2023[25] - Revenue from external customers in Hong Kong was RMB 23,322 thousand in 2024, compared to RMB 0 in 2023[25] - The company has initiated the sale of electronic components, generating revenue of approximately RMB 23.3 million this year, marking a diversification of its income sources[42] Future Plans and Concerns - The company is assessing its ability to continue as a going concern due to recurring net losses and limited cash reserves[10] - The company plans to continue pre-selling properties in its second Maoming project to generate cash flow[11] - Major shareholders have confirmed financial assistance of up to RMB 46,900,000 to support the company's liquidity needs[11] - The management expects stronger performance in the coming year due to improving market conditions and government support for the real estate sector[43] - The group will continue to seek equity financing opportunities and actively control administrative costs and capital expenditures[14] Construction and Development - The company successfully acquired land use rights for the second Maoming project at a cost of approximately RMB 241.5 million, with a total planned area of about 84,000 square meters[40] - As of December 31, 2024, approximately 63% of the construction for the second Maoming project has been completed, with residential sales expected to begin in the second half of 2024[40] - As of December 31, 2024, the group's property development commitments amounted to RMB 237.3 million, a decrease from RMB 243.0 million in 2023[55] Shareholder Information - The company did not declare or propose any dividends for the years ended December 31, 2024, and 2023[31] - No dividends were declared or proposed for the year, as the board did not recommend any distribution[58] - The annual report for 2024 will be sent to shareholders by April 30, 2025, and will be published on the Hong Kong Stock Exchange and the company's website[75] Compliance and Governance - The independent auditor confirmed that the financial statements for the year ending December 31, 2024, accurately reflect the group's financial position and performance[71] - The group has no significant contingent liabilities as of December 31, 2024[62] - The group did not engage in any significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the year, nor are there plans for major investments or capital assets as of December 31, 2024[60] - Aika Ouji has been appointed as a member of the board's nomination committee, ensuring at least one female member in the committee[76] Market Activity - Trading of the company's shares was suspended on the Hong Kong Stock Exchange starting April 1, 2025, due to the failure to publish audited annual results by March 31, 2025[78] - The company has applied for the resumption of trading, effective from April 14, 2025[78] Accounting Standards - The group has no significant impact on financial performance from the newly adopted Hong Kong Financial Reporting Standards in the current and prior years[16] - The group is currently assessing the impact of the new Hong Kong Financial Reporting Standards on its consolidated financial statements[19] - The group has not early adopted any new accounting standards that have been issued but are not yet effective[15] - The group has no significant investments or plans for major capital assets as of the reporting date[60] - The group has no foreign exchange hedging policy but closely monitors foreign exchange risks[52]

Core Viewpoint - TSMC, referred to as the "guardian mountain" of Taiwan, plays a crucial role in the economic and technological development of Taiwan, symbolizing its achievements in the semiconductor industry [2][3]. Group 1: TSMC's Role and Impact - TSMC was established in 1987 and pioneered the foundry model, quickly becoming a leader in the global semiconductor industry [2]. - The company's rapid advancements in logic process technology are largely attributed to the dedication of its engineers, who work tirelessly to push R&D efforts forward [3]. - TSMC's overseas expansion has raised concerns about technology leakage and regional security, despite its contributions to Taiwan's economic growth and technological image [3][4]. Group 2: Semiconductor Manufacturing Challenges - TSMC's manufacturing facilities include a research center, a main factory, several high-volume manufacturing plants, and advanced packaging facilities, making it a model of a comprehensive semiconductor ecosystem [4][5]. - The manufacturing process involves complex roles and modules, including lithography, etching, thin films, and diffusion, requiring precise management of the overall process [6][7]. - Engineers face a demanding work environment, often needing to be on call 24/7, which poses challenges to work-life balance [7][8]. Group 3: Corporate Culture and Recruitment - TSMC's corporate culture is influenced by Confucian values, emphasizing discipline, professionalism, and integrity, while adapting to cultural differences in global operations [10]. - The company plans to recruit approximately 8,000 new employees, with an average annual salary of 2.2 million New Taiwan Dollars for master's degree holders [11]. - TSMC's recruitment efforts also include a summer internship program aimed at undergraduate students, with high-performing interns potentially receiving job offers [11]. Group 4: Key Aspects of Semiconductor Foundries - Knowledge transfer and technical legacy are critical, as new engineers rely on mentorship from experienced colleagues to gain practical skills [31]. - System integration in foundries requires extensive experience and data analysis capabilities to create a seamless manufacturing system [32]. - The high-pressure work environment necessitates effective talent retention strategies, especially as TSMC expands its operations internationally [33]. Group 5: Production Optimization and Market Dynamics - Maximizing yield and capacity utilization is essential for foundries, as each process step is interconnected, impacting overall production efficiency [34]. - Pricing strategies directly affect profitability, with aggressive pricing from competitors like China putting pressure on global pricing [36]. - Advanced packaging is becoming a key trend in the industry, with TSMC investing in facilities to support cutting-edge processes [39].

Revenue and Financial Performance - Revenue from property development and investment business for the six months ended June 30, 2024, was RMB nil, a significant decrease from RMB 4,468,000 in the same period of 2023[6]. - The Group's revenue for the six months ended June 30, 2024, was approximately RMB 23,328,000, a significant increase from RMB 4,468,000 in 2023, all attributed to the trading business[15]. - For the period, the Group's revenue from trading business was approximately RMB 23,328,000, compared to RMB 4,468,000 from property development and investment in 2023[18]. - The Group's total revenue for the first half of 2024 was RMB 23,328,000, a notable increase from the previous year's total of RMB 4,468,000[76]. - The loss attributable to owners of the Company for the period was approximately RMB 16,414,000, an improvement from RMB 32,831,000 in 2023, primarily due to low gross profit from trading and allowances on properties[15]. - The Group reported a net loss of approximately RMB 19,636,000 for the six months ended June 30, 2024, continuing a trend of recurring losses over the past four years[70]. - The total comprehensive expense for the period was RMB 19,774,000, down from RMB 44,503,000 in the previous year, indicating a decrease of about 55.6%[59]. - The loss before taxation was RMB 19,646,000, compared to a loss of RMB 43,812,000 in the same period of 2023[58]. - Basic loss per share was (5.63) RMB cents, improved from (12.71) RMB cents in the previous year[58]. Property Development Projects - The total area of residential and commercial properties recognized as sales from the First Maoming Project was approximately 510 square meters in the last corresponding period[6]. - The Second Maoming Project has a total site area of approximately 29,274.16 square meters, with land acquisition costs amounting to approximately RMB 241,512,000[9]. - The planned gross saleable area for the Second Maoming Project is 84,000 square meters, which includes 59,000 square meters for residential areas and 25,000 square meters for commercial areas[9]. - The Second Maoming Project will also include 1,000 carpark spaces[9]. - The First Maoming Project's sales process is nearing completion, impacting revenue generation significantly[6]. - The Group's focus remains on the development of the Second Maoming Project, which is still under construction[6]. - As of June 2024, approximately 63% of the Second Maoming Project's construction has been completed, with pre-sales of the first two residential blocks commencing in June 2022 and the remaining two blocks scheduled for the second half of 2024[10]. - The Group is exploring property development opportunities outside China and diversifying into additional types of electronic products and commodities[14]. Financial Position and Assets - Bank balances and cash as of June 30, 2024, were approximately RMB 12,102,000, down from RMB 17,208,000 as of December 31, 2023[16]. - The total assets of the Group as of June 30, 2024, were approximately RMB 660,394,000, compared to RMB 651,734,000 as of December 31, 2023[16]. - The Group's total assets were approximately RMB 660,394,000, up from RMB 651,734,000 as of December 31, 2023[18]. - The gearing ratio was approximately 23% as of June 30, 2024, compared to 20% on December 31, 2023[19]. - The Group had commitments for property development amounting to RMB 240,000,000 as of June 30, 2024, slightly down from RMB 242,952,000 at the end of 2023[23]. - The Group's maximum obligation regarding mortgage facilities provided to purchasers of properties was approximately RMB 92,542,000, down from RMB 94,046,000 in 2023[29]. - The Group's total liabilities increased to RMB 525,548,000 from RMB 503,659,000, reflecting an increase of approximately 4%[84]. - The Group's segment assets for property development and investment decreased to RMB 616,567,000 from RMB 630,026,000, a decline of about 2%[84]. Governance and Management - Changes in the Board of Directors included the resignation of Mr. PAN Shimin as Chairman on April 10, 2024, and the appointment of Mr. PANG Chung Fai Benny as Chairman on the same date[46]. - The Company confirmed compliance with all relevant code provisions set out in the Corporate Governance Code during the reporting period[46]. - The Company has adopted the Model Code for Directors' securities transactions and confirmed compliance throughout the reporting period[46]. - The Audit Committee comprises three independent non-executive Directors, ensuring compliance with corporate governance standards[49]. - The Company appointed new members to key committees, including the Remuneration and Nomination Committees, indicating a shift in governance structure[47]. Financing and Capital Management - The Company aims to leverage the proceeds from the First Maoming Project to fund the development of the Second Maoming Project[5]. - The Group plans to continue identifying various financing options, including attracting new investors and establishing business partnerships[12]. - A rights issue was announced on April 8, 2024, offering two rights shares for every one share held at a subscription price of HK$0.15[31]. - The rights issue and placing were completed on July 22, 2024, and August 5, 2024, respectively, with a total of 8,347,605 rights shares allotted, representing approximately 1.8% of the total available[32]. - The gross proceeds from the rights issue and placing were approximately HK$1.6 million, with net proceeds estimated at HK$0.56 million after expenses[33]. - The net proceeds from the rights issue and placing will be used for professional fees and general working capital[33]. - The Group is actively seeking property development opportunities outside of China and exploring trade in other types of electronic products and goods[17]. - The Group is exploring property development opportunities outside China and diversifying into additional types of electronic products and commodities[14]. Risks and Uncertainties - There exists a material uncertainty regarding the Group's ability to continue as a going concern due to the reliance on successful execution of financing plans[55]. - The Group is facing material uncertainties regarding its ability to continue as a going concern due to ongoing losses and limited cash reserves[68]. - The report emphasizes the importance of risk management and internal control systems, highlighting the Company's commitment to financial integrity[49]. Shareholder Information - As of June 30, 2024, Ming Hung Fung Company Limited held 72,000,000 shares, representing approximately 23.58% of the total shares in issue[38]. - Mr. Liu Dong and Mr. Liu Zhongxiang each have interests in controlled corporations holding 72,000,000 shares and 24,210,526 shares, respectively[38]. - Mr. Chen Qiang held 14,950,000 shares, representing approximately 4.90% of the total shares in issue[38]. - As of June 30, 2024, no party was reported to have an interest or short position in the shares that required disclosure under the SFO[40]. - No significant shareholders were identified as having the ability to control 5% or more of the voting power at the general meeting as of June 30, 2024[40]. Operational Highlights - The Group's trading team will continue to explore other opportunities and may diversify into other products, including commodities[12]. - The Group's financial performance reflects a strategic shift towards electronic product trading, with no significant contributions from property development in the current reporting period[79]. - The Group's segment loss for property development and investment was RMB (11,621,000), while the trading of electronic products reported a profit of RMB 13,000, resulting in a total segment loss of RMB (11,608,000) for the first half of 2024[81]. - The Group's revenue from electronic product sales in Hong Kong was RMB 23,328,000, with no revenue reported from property sales in mainland China during the current period[76].

Financial Performance - The company reported revenue of RMB 23,328,000 for the six months ended June 30, 2024, a significant increase from RMB 4,468,000 in the same period of 2023, representing a growth of approximately 422%[1] - The cost of sales for the same period was RMB 23,305,000, leading to a gross profit of RMB 23,000, compared to a gross profit of RMB 206,000 in 2023[1] - The net loss for the period was RMB 19,636,000, an improvement from a net loss of RMB 43,012,000 in the previous year, indicating a reduction of approximately 54%[2] - The company reported a pre-tax loss of RMB 19,646,000 for the six months ended June 30, 2024[14] - The company reported a loss attributable to shareholders of approximately RMB 16,414,000 for the period, an improvement from a loss of RMB 32,831,000 in the previous year, primarily due to lower gross profit from trading activities[34] Assets and Liabilities - The company’s total assets as of June 30, 2024, were RMB 642,519,000, compared to RMB 632,502,000 as of December 31, 2023, showing a slight increase[4] - The company’s total assets as of June 30, 2024, amounted to RMB 660,394,000, compared to RMB 651,734,000 as of December 31, 2023[16] - The total liabilities increased to RMB 525,548,000 as of June 30, 2024, from RMB 503,659,000 as of December 31, 2023[16] - The company has current liabilities totaling approximately RMB 105,030,000, with additional non-controlling interest payables of RMB 115,498,000 and other borrowings due within the next twelve months amounting to RMB 21,406,000[54] Cash Flow and Financing - The company’s cash and bank balances decreased to RMB 12,102,000 from RMB 17,208,000, indicating a decline of about 30%[4] - The company has cash and bank balances of approximately RMB 12,102,000, with restricted bank deposits of RMB 37,418,000 designated for construction purposes[54] - The company has ongoing discussions to extend the repayment terms of outstanding loans totaling RMB 21,406,000, which are due in August 2024[6] - The company has confirmed that non-controlling interests will not demand repayment of approximately RMB 115,498,000 in outstanding principal, providing some liquidity relief[6] - The company successfully placed a total of 50,888,000 placement shares at HKD 0.14 per share and 10,950,405 rights shares at HKD 0.15 per share, receiving net amounts of approximately RMB 6,321,000 and RMB 522,000 respectively[7] - The company completed a rights issue on July 22, 2024, issuing a total of 8,347,605 shares at a subscription price of HKD 0.15, which represents about 1.8% of the total rights shares available for subscription[47] - The total proceeds from the rights issue and placement amounted to approximately HKD 1.6 million, with a net amount of about HKD 0.56 million after expenses[47] Operational Highlights - The company is actively pre-selling properties in its second Maoming project to generate cash flow[6] - The second Maoming project has approximately 63% of construction completed as of June 2024, with residential property pre-sales scheduled for the second half of 2024 and the first half of 2025[30] - The company has faced financial challenges due to construction delays and cash flow constraints related to the second Maoming project[30] - Revenue from property development and investment was RMB 0 for the current period, a significant decrease from RMB 4,468,000 in the same period last year[28] - The company’s trading business generated revenue of approximately RMB 23,328,000 for the six months ended June 30, 2024, compared to RMB 0 in the same period of 2023, indicating a significant diversification into electronic products trading[32] Employee and Governance - The company employed 36 full-time employees as of June 30, 2024, a decrease from 47 employees as of December 31, 2023, with total compensation for the period amounting to approximately RMB 3,945,000[42] - The company has established an audit committee responsible for reviewing financial reporting and risk management systems[51] - The company has complied with all relevant corporate governance codes during the reporting period[48] - The interim financial statements have been reviewed by an independent auditor, confirming compliance with the applicable accounting standards[53] Accounting and Taxation - The company has not adopted any new or revised accounting standards in advance for the preparation of the interim financial statements[9] - The company has not made any provisions for Hong Kong profits tax for the periods ended June 30, 2024, and 2023 due to no taxable profits[19] - The company recorded a provision for properties held for sale of RMB 2,681,000 for the current period, down from RMB 6,514,000 in the previous year[20] Dividends - The company did not declare or recommend any dividends for the six months ended June 30, 2024, and 2023[21] - No dividends were declared or proposed for the period, consistent with the previous year[44]