Core Insights - The report highlights significant changes in the shareholding ratios of various companies under the Hong Kong Stock Connect program, indicating investor sentiment and potential market trends [1][2]. Group 1: Increased Shareholding Ratios - The companies with the largest increases in shareholding ratios include: - Shandong Holdings (00412) with an increase of 8.01%, reaching a holding ratio of 9.56% [2]. - Hang Seng China Enterprises (02828) with an increase of 2.21%, reaching a holding ratio of 3.02% [2]. - Tianyue Advanced (02631) with an increase of 2.02%, reaching a holding ratio of 15.74% [2]. - Over the last five trading days, the largest increases were observed in: - Yihua Tong (02402) with a 14.13% increase, holding 23.47% [3]. - Shandong Holdings (00412) with an 8.12% increase [3]. - Changfei Optical Fiber (06869) with a 6.79% increase, holding 69.57% [3]. Group 2: Decreased Shareholding Ratios - The companies with the largest decreases in shareholding ratios include: - Haotian International Investment (01341) with a decrease of 1.56%, holding 60.48% [2]. - Beijing Machinery (00187) with a decrease of 1.23%, holding 51.92% [2]. - Shandong Molong (00568) with a decrease of 0.99%, holding 52.79% [2]. - Over the last five trading days, the largest decreases were observed in: - Baiguoyuan Group (02411) with a 4.05% decrease, holding 8.48% [3]. - Shandong Molong (00568) with a 3.84% decrease [3]. - Yisou Technology (02550) with a 2.90% decrease, holding 34.78% [3]. Group 3: Long-term Trends - Over the last 20 days, the largest increases in shareholding ratios were: - Yihua Tong (02402) with a 14.25% increase, holding 23.47% [4]. - Changfei Optical Fiber (06869) with a 13.15% increase [4]. - COSCO Shipping Energy (01138) with a 13.07% increase, holding 69.53% [4]. - The largest decreases over the same period were: - Yisou Technology (02550) with a 13.71% decrease, holding 34.78% [4]. - Baiguoyuan Group (02411) with a 6.37% decrease [4].

Core Insights - The article highlights significant changes in the stock holdings of various companies in the Hong Kong Stock Connect, with notable increases and decreases in ownership percentages [1][2]. Group 1: Companies with Increased Holdings - Yihua Tong (02402) saw the largest increase in stock holdings, rising by 14.82% to a total holding of 24.14% [2]. - Hong Kong Broadband (01310) experienced a 4.71% increase, bringing its holding to 4.99% [2]. - Dongfang Electric (01072) had a 2.17% increase, resulting in a holding of 39.16% [2]. - Other companies with notable increases include Beijing Machinery (00187) (+1.99%, 53.15%), and East Jiang Environmental Protection (00895) (+1.69%, 43.93%) [2]. Group 2: Companies with Decreased Holdings - Longpan Technology (02465) faced the largest decrease, with a drop of 3.69% to a holding of 47.77% [2]. - Shandong Molong (00568) saw a decrease of 1.44%, resulting in a holding of 53.78% [2]. - Da Zhong Public Utilities (01635) decreased by 1.39%, with a holding of 33.57% [2]. - Other companies with significant decreases include Huahong Semiconductor (01347) (-1.16%, 23.26%) and Jintian Copper (-1.10%, 24.66%) [2]. Group 3: Five-Day Changes in Holdings - Over the last five trading days, Yihua Tong (02402) had the highest increase of 14.99%, maintaining a holding of 24.14% [3]. - Tongyuan Kang Pharmaceutical-B (02410) increased by 7.60%, reaching a holding of 24.20% [3]. - Changfei Optical Fiber (06869) rose by 7.41%, with a holding of 69.80% [3]. - Companies with notable decreases include Shandong Molong (00568) (-3.89%, 53.78%) and Baiguoyuan Group (02411) (-3.55%, 9.28%) [3]. Group 4: Twenty-Day Changes in Holdings - In the last twenty days, Yihua Tong (02402) increased by 14.87%, holding at 24.14% [4]. - Changfei Optical Fiber (06869) saw a rise of 13.73%, maintaining a holding of 69.80% [4]. - Zhongyuan Marine Energy (01138) increased by 12.27%, with a holding of 68.92% [4].

Core Viewpoint - The stock price of Baiguoyuan Group (02411.HK) surged over 20% following the announcement of a share placement to raise funds for debt repayment and improve liquidity [2][5]. Group 1: Stock Performance - Baiguoyuan's stock opened high on September 22, closing at 1.75 HKD, a rise of 20.69% [2]. - The share placement announcement was a key driver for the stock's price increase [2]. Group 2: Fundraising Details - Baiguoyuan announced a placement of 280 million new H-shares at a price of 1.17 HKD per share, representing a discount of approximately 19.31% compared to the closing price before the announcement [5]. - The total expected proceeds from the placement are approximately 327 million HKD, with a net amount of about 325 million HKD [5]. - The placement shares will account for about 19.2% of the total H-shares and 18.2% of the total shares as of the announcement date [5]. Group 3: Use of Proceeds - Approximately 61.5% (200 million HKD) of the net proceeds will be used to pay trade payables, 30.8% (100 million HKD) for repaying bank loans, and 7.7% (25 million HKD) for general working capital and administrative expenses [5]. - The funds are expected to be fully utilized by June 30, 2026 [5]. Group 4: Financial Performance - Baiguoyuan's revenue declined from 113.91 billion HKD in 2023 to 102.73 billion HKD in 2024, a drop of 9.81%, with a net loss of 386 million HKD [8]. - In the first half of 2025, revenue further decreased by 21.78% to 43.76 billion HKD, with a net loss of 342 million HKD, indicating a significant deterioration in financial performance [8][10]. - The number of retail stores decreased from 6093 at the end of 2023 to 4386 in the first half of 2025, reflecting a closure rate of 27% [8][10]. Group 5: Debt and Cash Flow - The capital debt ratio increased from 89.3% at the end of the previous year to 103.5% in the first half of 2025 due to net losses [10]. - As of June 30, 2025, Baiguoyuan had short-term bank borrowings of 2.283 billion HKD, while cash and cash equivalents totaled 2.252 billion HKD, indicating a shortfall [10]. - The net cash used in operating activities halved to 123 million HKD compared to the previous year, highlighting cash flow challenges [11].

[Company Introduction](index=2&type=section&id=Company%20Introduction) [Overview](index=3&type=section&id=Overview) The company transitioned from scale expansion to efficiency-driven growth in H1 2025, optimizing its store network, product structure, and supply chain for sustainable development. - The company completed a strategic transformation from scale expansion to efficiency-driven growth in H1 2025, focusing on being a "high-quality and cost-effective fruit expert and leader"[5](index=5&type=chunk)[7](index=7&type=chunk) - This involved actively optimizing the store network, reshaping product structure, strengthening brand differentiation, and expanding the global supply chain, solidifying the foundation for long-term sustainable development[5](index=5&type=chunk)[7](index=7&type=chunk) - Terminal competitiveness was systematically enhanced, including reconstructing an efficient store network, strengthening refined member operations and scenario-based marketing, and strategically closing inefficient locations to focus on prime business districts[5](index=5&type=chunk)[8](index=8&type=chunk) - Leveraging supply chain economies of scale and technological empowerment, the company deepened domestic 2B channel coverage and explored overseas incremental markets, perfecting a "buy globally, sell globally" circulation system[6](index=6&type=chunk)[9](index=9&type=chunk) [Our Strategy](index=4&type=section&id=Our%20Strategy) The company's strategy is to be a leading expert in high-quality and cost-effective fruits. - Strategic positioning as a "high-quality and cost-effective fruit expert and leader"[11](index=11&type=chunk)[15](index=15&type=chunk) [Our Vision](index=4&type=section&id=Our%20Vision) The company envisions becoming a global leader in fruit industry ecological technology. - The vision is to become a global leading fruit industry ecological technology company[12](index=12&type=chunk)[16](index=16&type=chunk) [Our Mission](index=4&type=section&id=Our%20Mission) The company's mission is to enable everyone to enjoy a good fruit life. - The mission is to enable everyone to enjoy a good fruit life[13](index=13&type=chunk)[17](index=17&type=chunk) [Our Core Values](index=4&type=section&id=Our%20Core%20Values) Core values of conscience, trust, altruism, innovation, and results guide the company's development and conduct. - Core values are conscience, trust, altruism, innovation, and results[14](index=14&type=chunk)[18](index=18&type=chunk) - Conscience refers to having correct concepts and goodwill in development; trust means full confidence in partners; altruism is a guide for action, considering others' interests; innovation is the driving force for future development; results emphasize output and process optimization through outcomes[14](index=14&type=chunk)[18](index=18&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) [Board of Directors](index=5&type=section&id=Board%20of%20Directors) The Board of Directors, chaired by Mr. Yu Huiyong, saw changes in executive and non-executive roles during the period. - Board members include Yu Huiyong (Chairman), Xu Yanlin, Tian Xiqiu, Zhu Qidong (Executive Directors), Jiao Yue (Non-Executive Director, re-designated on April 30, 2025), Sun Kai (Non-Executive Director, resigned on May 23, 2025), and Jiang Yanbo, Ma Ruiguang, Wu Zhanchi, Zhang Yide, Zhu Fang (Independent Non-Executive Directors)[19](index=19&type=chunk)[20](index=20&type=chunk) [Audit Committee](index=5&type=section&id=Audit%20Committee) The Audit Committee, chaired by Dr. Wu Zhanchi, experienced a change in membership with Mr. Jiao Yue's appointment. - The Audit Committee is chaired by Dr. Wu Zhanchi, with Mr. Ma Ruiguang as a member; Mr. Sun Kai resigned on May 23, 2025, and Mr. Jiao Yue was appointed on the same day[20](index=20&type=chunk) [Remuneration Committee](index=5&type=section&id=Remuneration%20Committee) The Remuneration Committee is chaired by Mr. Ma Ruiguang, with Dr. Jiang Yanbo and Ms. Xu Yanlin as members. - The Remuneration Committee is chaired by Mr. Ma Ruiguang, with Dr. Jiang Yanbo and Ms. Xu Yanlin as members[20](index=20&type=chunk) [Nomination Committee](index=5&type=section&id=Nomination%20Committee) The Nomination Committee, chaired by Dr. Jiang Yanbo, saw a change in membership with Ms. Xu Yanlin's appointment. - The Nomination Committee is chaired by Dr. Jiang Yanbo, with Mr. Ma Ruiguang as a member; Mr. Yu Huiyong resigned on April 30, 2025, and Ms. Xu Yanlin was appointed on the same day[21](index=21&type=chunk) [Strategy Committee](index=5&type=section&id=Strategy%20Committee) The Strategy Committee, chaired by Mr. Yu Huiyong, experienced a change in membership with Mr. Jiao Yue's appointment. - The Strategy Committee is chaired by Mr. Yu Huiyong, with Ms. Zhu Fang as a member; Mr. Sun Kai resigned on May 23, 2025, and Mr. Jiao Yue was appointed on the same day[21](index=21&type=chunk) [Environmental, Social and Governance Committee](index=6&type=section&id=Environmental%2C%20Social%20and%20Governance%20Committee) The ESG Committee, chaired by Ms. Xu Yanlin, saw a change in membership with Mr. Zhu Qidong's appointment. - The Environmental, Social and Governance Committee is chaired by Ms. Xu Yanlin, with Ms. Zhu Fang as a member; Mr. Jiao Yue resigned on April 30, 2025, and Mr. Zhu Qidong was appointed on the same day[23](index=23&type=chunk) [Supervisory Committee](index=6&type=section&id=Supervisory%20Committee) The Supervisory Committee is chaired by Mr. Yang Xiaohu, with Mr. Zou Feng and Mr. Su Yan as members. - The Supervisory Committee is chaired by Mr. Yang Xiaohu, with Mr. Zou Feng and Mr. Su Yan as members[23](index=23&type=chunk) [Joint Company Secretaries](index=6&type=section&id=Joint%20Company%20Secretaries) Ms. Fu Xiaoyan and Ms. Tam Pak Yu serve as the Joint Company Secretaries. - The Joint Company Secretaries are Ms. Fu Xiaoyan and Ms. Tam Pak Yu[24](index=24&type=chunk) [Authorized Representatives](index=6&type=section&id=Authorized%20Representatives) Ms. Fu Xiaoyan is the Authorized Representative, with Mr. Zhu Qidong appointed following Mr. Jiao Yue's resignation. - The Authorized Representative is Ms. Fu Xiaoyan; Mr. Jiao Yue resigned on April 30, 2025, and Mr. Zhu Qidong was appointed on the same day[24](index=24&type=chunk) [Overseas Auditor](index=6&type=section&id=Overseas%20Auditor) PricewaterhouseCoopers serves as the company's overseas auditor. - The overseas auditor is PricewaterhouseCoopers[24](index=24&type=chunk) [Domestic Auditor](index=6&type=section&id=Domestic%20Auditor) Shinewing Certified Public Accountants Shenzhen Branch serves as the company's domestic auditor. - The domestic auditor is Shinewing Certified Public Accountants (Special General Partnership) Shenzhen Branch[24](index=24&type=chunk) [Registered Office](index=7&type=section&id=Registered%20Office) The registered office is located at Pagoda Technology Building in Shenzhen, China. - The registered office is located at Pagoda Technology Building, No. 2005 Shenyan Road, Pengwan Community, Haishan Street, Yantian District, Shenzhen, China[25](index=25&type=chunk) [China Headquarters](index=7&type=section&id=China%20Headquarters) The China Headquarters is located at the same address as the registered office. - The China Headquarters shares the same address as the registered office[25](index=25&type=chunk) [Principal Place of Business in Hong Kong](index=7&type=section&id=Principal%20Place%20of%20Business%20in%20Hong%20Kong) The principal place of business in Hong Kong is located at Dah Sing Financial Centre, Wan Chai. - The principal place of business in Hong Kong is located at 40/F, Dah Sing Financial Centre, 248 Queen's Road East, Wan Chai, Hong Kong[25](index=25&type=chunk) [H Share Registrar](index=8&type=section&id=H%20Share%20Registrar) Hong Kong Registrars Limited serves as the H Share Registrar. - The H Share Registrar is Hong Kong Registrars Limited[27](index=27&type=chunk) [Principal Bankers](index=8&type=section&id=Principal%20Bankers) Principal bankers include China Merchants Bank, Bank of Communications, and Shanghai Pudong Development Bank. - Principal bankers include China Merchants Bank Longhua Sub-branch, Bank of Communications Xiangzhou Sub-branch, and Shanghai Pudong Development Bank Shenzhen Fuqiang Sub-branch[27](index=27&type=chunk) [Stock Code](index=8&type=section&id=Stock%20Code) The company's stock code is 2411. - The stock code is 2411[27](index=27&type=chunk) [Company Website](index=8&type=section&id=Company%20Website) The company's official website is www.pagoda.com.cn. - The company's website is www.pagoda.com.cn[27](index=27&type=chunk) [Definitions](index=8&type=section&id=Definitions) This section provides definitions for key terms and abbreviations used in the interim report, ensuring clarity and consistency of content. - Key terms defined include "2023 Share Award Scheme", "Articles of Association", "Audit Committee", "Award", "Award Shares", "Board", "Corporate Governance Code", "China", "Company", "CSRC", "Directors", "ESG Committee", "Global Offering", "Group", "H Shares", "H Shareholder", "Hengyili Investment", "HKD", "HKFRS", "Hong Kong", "HKEX", "Model Code", "Nomination Committee", "O2O Integration", "Pagoda Investment", "Prospectus", "Remuneration Committee", "This Interim Report", "Reporting Period", "RMB", "SFO", "Shares", "Shareholders", "Shenzhen Banguo", "Shenzhen Huilin", "Strategy Committee", "Supervisors", "Unlisted Shares", "Unlisted Shareholder", "USD", and "Percentage"[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) [Performance Review and Outlook](index=13&type=section&id=Performance%20Review%20and%20Outlook) [Market Overview](index=14&type=section&id=Market%20Overview) H1 2025 saw a 2.7% rise in fresh fruit CPI, a shift to a buyer's market, declining high-end fruit prices, and a mixed import/export performance. - In H1 2025, the national fresh fruit Consumer Price Index (CPI) increased by **2.7% year-on-year**, higher than the overall CPI decrease of 0.1% in the same period, reflecting increased consumer recognition of fresh fruit's health attributes and emotional value[37](index=37&type=chunk)[39](index=39&type=chunk) - Domestic macroeconomic uncertainties persisted, shifting the consumer market from a seller's to a buyer's market, prompting fruit retail enterprises to accelerate transformation, focusing on optimizing quality-price ratio, upgrading service experience, and innovating consumption scenarios[37](index=37&type=chunk)[39](index=39&type=chunk) - Prices of traditional high-end fruits like durian, blueberries, and cherries significantly declined, accelerating their popularization; the substitution effect of domestic brands for multiple categories such as blueberries and avocados became increasingly prominent[38](index=38&type=chunk)[40](index=40&type=chunk) 2025 H1 Fruit Import and Export Value Compared to 2024 H1 | Indicator | 2025 H1 (USD billion) | Year-on-year Change (%) | | :--- | :--- | :--- | | Fruit Export Value | 37.6 | +6.2 | | Fruit Import Value | 107.4 | -5.3 | [Company Performance Overview](index=15&type=section&id=Company%20Performance%20Overview) H1 2025 saw strategic transformation, leading to a net loss and reduced revenue, but a healthier asset structure and optimized business lines. - In H1 2025, the company continued to deepen its "high-quality and cost-effective fruit expert and leader" strategy, enhancing operational efficiency through promotional activities, product structure optimization, store network adjustments, and supply chain expansion[41](index=41&type=chunk)[43](index=43&type=chunk) - Revenue and gross profit decreased, and a net loss was recorded, but the company views this as a necessary step for strategic transformation and operational quality improvement, having formed a healthier asset structure and optimized business lines[41](index=41&type=chunk)[43](index=43&type=chunk) 2025 H1 vs 2024 H1 Financial Performance Comparison | Indicator | 2025 H1 (RMB million) | 2024 H1 (RMB million) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 4,375.9 | 5,594.1 | -21.8 | | Gross Profit | 215.6 | 618.5 | -65.1 | | Profit/(Loss) Attributable to Owners of the Company | (342.1) | 88.5 | Turned from profit to loss | [Company Business Summary](index=16&type=section&id=Company%20Business%20Summary) Business highlights include retail network optimization, 2B market expansion, and category brand development, with a focus on quality and omnichannel integration. [Retail Business Group](index=16&type=section&id=Retail%20Business%20Group) The Retail Business Group optimized its store network by closing inefficient stores and enhanced omnichannel sales, despite a decline in paid members. Offline Store Network Development (As of June 30) | Store Type | 2025 (Units) | 2024 (Units) | Change (Units) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Franchised Stores (Managed by the Group) | 3,570 | 4,707 | -1,137 | -24.2 | | Franchised Stores (Others) | 805 | 1,304 | -499 | -38.3 | | Subtotal | 4,375 | 6,011 | -1,636 | -27.2 | | Self-operated Stores | 11 | 14 | -3 | -21.4 | | **Total** | **4,386** | **6,025** | **-1,639** | **-27.0** | - In H1 2025, the company optimized its national retail store layout, actively guiding franchisees to close inefficient stores and focus on advantageous locations, resulting in a **net reduction of 1,639 retail stores**, a **year-on-year decrease of approximately 27.0%**[48](index=48&type=chunk)[49](index=49&type=chunk) - Store facades were upgraded, highlighting the "Pagoda" brand and IP image to enhance brand recognition; **seven stores were opened in Indonesia**, successfully establishing a regional market presence[51](index=51&type=chunk)[52](index=52&type=chunk) - Over **20 themed stores** were launched, such as for Chinese New Year and Thai Fruit Festival, transforming shopping into social check-ins, boosting brand exposure and sales[53](index=53&type=chunk)[54](index=54&type=chunk) - Display standards and product tasting methods were optimized, and food safety training and implementation were strengthened to enhance brand credibility[56](index=56&type=chunk)[57](index=57&type=chunk) - A product portfolio of "high-traffic single products" and "extreme value-for-money seasonal products" was promoted, with **eight seasonal products** (e.g., Pa Pa Citrus, blueberries, Feizixiao lychees) seeing **store traffic increase by approximately 95.0% year-on-year** and **total sales increase by approximately 63.8% year-on-year**[58](index=58&type=chunk)[59](index=59&type=chunk) - Online orders accounted for approximately **24.7% of total orders**, with Meituan accounting for approximately 52.9%; the total number of WeChat communities increased to approximately **30,000**, with approximately **18.0 million followers**, and community group buying sales exceeded **RMB 58.0 million**, a **year-on-year increase of approximately 12.9%**[60](index=60&type=chunk)[62](index=62&type=chunk) - The total number of Douyin live-streaming customers was approximately **1.87 million**, a **year-on-year increase of approximately 64.47%**; total retail sales from Douyin live-streaming rooms were **RMB 53.49 million**, a **year-on-year increase of approximately 29.32%**[61](index=61&type=chunk)[63](index=63&type=chunk) - A cross-promotional campaign with the TV series "Chang'an Lychee" IP led to a **year-on-year increase of approximately 28.0% in lychee category sales**; gift sales as a proportion of total store retail sales increased from 12.8% to approximately **14.8%**[65](index=65&type=chunk)[67](index=67&type=chunk) - Total members accumulated to over **93.0 million**, and WeChat mini-program users accumulated to **78.58 million**, a **year-on-year increase of approximately 13.24%**; the number of paid members decreased to approximately **719,000**, a **year-on-year decrease of approximately 32.9%**, mainly due to macroeconomic uncertainties[66](index=66&type=chunk)[68](index=68&type=chunk) [2B Business Group](index=21&type=section&id=2B%20Business%20Group) The 2B Business Group expanded domestic and international markets, with direct sales slightly down due to overseas restrictions but domestic growth. - In H1 2025, the 2B Business Group expanded its customer base in domestic and international markets, establishing partnerships with several traditional supermarkets and online new retail companies[69](index=69&type=chunk)[71](index=71&type=chunk) 2B Business Group Direct Sales of Fruits and Other Food Products Revenue Comparison | Indicator | 2025 H1 (RMB million) | 2024 H1 (RMB million) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | | Direct Sales of Fruits and Other Food Products Revenue | 700.5 | 712.8 | -1.7 | | Overseas Market Direct Sales of Fruits | 113.3 | 141.0 | -19.6 | | Domestic Market 2B Customer Sales | 587.1 | 571.8 | +2.7 | - Shenzhen Banguo's Gross Merchandise Volume (GMV) was approximately **RMB 1.15 billion**, with **seven central warehouses** established nationwide (one new addition) and **428 city warehouses**, expanding market share[69](index=69&type=chunk)[72](index=72&type=chunk) - The government and enterprise business department focused on corporate client resources, providing diversified welfare and consumption scenario products, and expanding its sales network through online welfare platforms and cross-industry collaborations[70](index=70&type=chunk)[73](index=73&type=chunk) [Category Business Group](index=22&type=section&id=Category%20Business%20Group) The Category Business Group focused on differentiated private label brands, with signature and A-grade fruits comprising 64.5% of retail sales. - Executing the "high-quality and cost-effective fruit expert and leader" operational strategy, firmly believing that building differentiated fruit category brands can create greater market space[75](index=75&type=chunk)[77](index=77&type=chunk) - As of June 30, 2025, total sales of signature and A-grade fruits accounted for approximately **64.5% of Pagoda's total store retail sales**[75](index=75&type=chunk)[77](index=77&type=chunk) - Successfully launched **51 private label signature fruit brands** (e.g., Zhaiguanguan Lychee, Liuying Cherry Tomato), with their total retail sales accounting for approximately **14.9% of Pagoda's total store retail sales**[75](index=75&type=chunk)[77](index=77&type=chunk) - Deepened customer awareness of signature fruits by holding launch events for signature Mojianbao Red Fruit Ginseng, origin traceability activities for Huahuang Jinfeng Pineapple, and co-branded pop-up events with Weifang Kite Festival[78](index=78&type=chunk) - Continuously provided suppliers with soil improvement, agricultural management, and post-harvest preservation technologies to enhance fruit quality, secure supply, and build a high-standard supply chain ecosystem[76](index=76&type=chunk)[79](index=79&type=chunk) [Other Business Updates](index=23&type=section&id=Other%20Business%20Updates) The company upgraded its digital gift card system and introduced a "worry-free gift after-sales card" to enhance customer experience. - Upgraded the gift card mall mini-program, establishing digital gifting capabilities, breaking through the limitations of offline physical cards, offering diverse card designs and themes to meet consumer gifting needs[80](index=80&type=chunk)[81](index=81&type=chunk) - Launched the "worry-free gift after-sales card," printed via smart POS systems, allowing recipients of fruit gifts to enjoy "not tasty, return at will" after-sales service, enhancing brand credibility[80](index=80&type=chunk)[81](index=81&type=chunk) [Business Outlook and Group Strategy](index=24&type=section&id=Business%20Outlook%20and%20Group%20Strategy) Despite H1 2025 challenges, the company's strategic transformation is complete, focusing on retail optimization, 2B expansion, and category brand building for long-term value. - H1 2025 was a challenging climbing period for the "high-quality and cost-effective fruit expert and leader" strategy, but store traffic significantly increased, sales rebounded and remained stable, and store quality was further optimized[83](index=83&type=chunk)[84](index=84&type=chunk) - The retail business will iterate selection standards, strengthen freshness management, enhance quality control norms, and utilize data to upgrade scientific pricing systems, adjusting category structure and pricing strategies by city business districts[85](index=85&type=chunk) - The 2B business will continue to expand more categories and domestic and international channels, develop new fruit gift boxes, enlarge the 2B customer base, and enhance product competitiveness through exclusive distribution rights[86](index=86&type=chunk)[89](index=89&type=chunk) - Firmly execute the "global sourcing, global selling" strategy to promote the global circulation of high-quality fruits[87](index=87&type=chunk)[89](index=89&type=chunk) - In category brand building, deepen cooperation with suppliers, introduce advanced agricultural technologies, build major category brands with market competitiveness, and focus on product differentiation and food safety[87](index=87&type=chunk)[90](index=90&type=chunk) - The company firmly believes the strategy will regain consumer and franchisee confidence, consolidate market leadership, and create greater financial and social value for shareholders, customers, employees, and society through continuous strategic advancement and innovation[88](index=88&type=chunk)[91](index=91&type=chunk) [Management Discussion and Analysis](index=25&type=section&id=Management%20Discussion%20and%20Analysis) [Financial Performance Overview](index=26&type=section&id=Financial%20Performance%20Overview) H1 2025 saw a significant decline in revenue and gross profit, resulting in a net loss due to strategic product and store network optimization. 2025 H1 vs 2024 H1 Consolidated Statement of Profit or Loss Key Data | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | Year-on-year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 4,375,873 | 5,594,124 | -21.8 | | Cost of Sales | (4,160,322) | (4,975,616) | -16.4 | | Gross Profit | 215,551 | 618,508 | -65.1 | | Operating (Loss)/Profit | (319,856) | 127,920 | Turned from profit to loss | | (Loss)/Profit Before Income Tax | (352,966) | 99,263 | Turned from profit to loss | | (Loss)/Profit for the Period | (353,251) | 83,955 | Turned from profit to loss | | (Loss)/Profit Attributable to Owners of the Company | (342,053) | 88,506 | Turned from profit to loss | [Revenue](index=27&type=section&id=Revenue) Total revenue decreased by 21.8% to RMB 4,375.9 million, mainly due to fewer franchised stores and lower-margin product optimization. - Total revenue decreased by approximately **21.8% year-on-year to RMB 4,375.9 million**, primarily from sales of fruits and other food products, accounting for **98.5% of total revenue**[96](index=96&type=chunk) 2025 H1 vs 2024 H1 Revenue by Operating Segment | Operating Segment | 2025 H1 (RMB thousand) | % of Total Revenue | 2024 H1 (RMB thousand) | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Sales of Fruits and Other Food Products | 4,308,322 | 98.5 | 5,435,726 | 97.2 | | Royalty and Franchise Income | 8,575 | 0.2 | 67,157 | 1.2 | | Membership Fee Income | 21,687 | 0.5 | 38,353 | 0.7 | | Others | 37,289 | 0.8 | 52,888 | 0.9 | | **Total** | **4,375,873** | **100.0** | **5,594,124** | **100.0** | - The decrease in revenue from franchised stores was the main reason, as the company optimized its lower-margin product portfolio and encouraged franchisees to optimize store locations, leading to a reduction in franchised stores from 6,011 to 4,375[101](index=101&type=chunk)[102](index=102&type=chunk) 2025 H1 vs 2024 H1 Sales of Fruits and Other Food Products by Distribution Channel | Distribution Channel | 2025 H1 (RMB thousand) | % of Sales of Fruits and Other Food Products | 2024 H1 (RMB thousand) | % of Sales of Fruits and Other Food Products | | :--- | :--- | :--- | :--- | :--- | | Franchised Stores | 3,076,920 | 71.4 | 4,011,787 | 73.8 | | Self-operated Stores | 14,772 | 0.3 | 21,218 | 0.4 | | Regional Agents | 479,212 | 11.1 | 627,807 | 11.5 | | Direct Sales | 700,473 | 16.3 | 712,778 | 13.1 | | Online Channels | 36,945 | 0.9 | 62,136 | 1.2 | | **Total** | **4,308,322** | **100.0** | **5,435,726** | **100.0** | - The decrease in direct sales revenue was mainly due to restrictions on the export of certain domestic fruits to overseas markets, resulting in a **year-on-year decrease of approximately 19.6%** in overseas market direct sales of fruits; domestic market 2B customer sales, however, **increased by approximately 2.7% year-on-year**[103](index=103&type=chunk)[105](index=105&type=chunk) [Cost of Sales](index=29&type=section&id=Cost%20of%20Sales) Cost of sales decreased by 16.4% to RMB 4,160.3 million, reflecting strategic product optimization in response to market conditions. - Cost of sales decreased by approximately **16.4% year-on-year to RMB 4,160.3 million**[104](index=104&type=chunk)[106](index=106&type=chunk) - Cost of inventories sold constituted the majority of cost of sales, approximately **95.9%**[104](index=104&type=chunk)[106](index=106&type=chunk) - The differing rates of decrease between cost of sales and revenue were mainly due to the company's optimization of lower-margin product offerings since H2 2024 to meet consumer demand for high-quality and cost-effective products[104](index=104&type=chunk)[106](index=106&type=chunk) [Gross Profit and Gross Margin](index=30&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit decreased by 65.1% to RMB 215.6 million, with gross margin falling to 4.9%, due to strategic product optimization. - Gross profit decreased by approximately **65.1% year-on-year to RMB 215.6 million**[107](index=107&type=chunk)[110](index=110&type=chunk) - Gross margin decreased from **11.1% in H1 2024 to 4.9% in H1 2025**[107](index=107&type=chunk)[110](index=110&type=chunk) - The decrease in gross profit and gross margin was mainly due to the company's optimization of lower-margin product offerings since H2 2024 to meet consumer demand for high-quality and cost-effective products[107](index=107&type=chunk)[110](index=110&type=chunk) - The company will continue to take proactive measures, including enriching product categories and optimizing product mix, to improve gross margin[107](index=107&type=chunk)[110](index=110&type=chunk) [Other Income](index=30&type=section&id=Other%20Income) Other income decreased by 36.4% to RMB 17.4 million, primarily due to reduced government grants for agricultural development. - Other income decreased by approximately **36.4% year-on-year to RMB 17.4 million**[108](index=108&type=chunk)[111](index=111&type=chunk) - The decrease was mainly due to a reduction in government grants related to agricultural development from **RMB 14.5 million to RMB 2.1 million**[108](index=108&type=chunk)[111](index=111&type=chunk) [Net Other Gains](index=30&type=section&id=Net%20Other%20Gains) Net other gains decreased to RMB 7.0 million, primarily due to dilution losses from a joint venture investment. - Net other gains were **RMB 7.0 million**, compared to **RMB 22.5 million in H1 2024**[109](index=109&type=chunk)[112](index=112&type=chunk) - This was mainly due to losses from the dilution of investment in joint venture Nanjing Golden Manor Agricultural Products Co., Ltd[109](index=109&type=chunk)[112](index=112&type=chunk) [Selling Expenses](index=31&type=section&id=Selling%20Expenses) Selling expenses decreased by 13.3% to RMB 257.2 million, primarily due to a reduction in sales personnel. - Selling expenses decreased by approximately **13.3% year-on-year to RMB 257.2 million**[113](index=113&type=chunk)[116](index=116&type=chunk) - The decrease was mainly due to a reduction in the number of sales personnel from **1,228 to 1,035**[113](index=113&type=chunk)[116](index=116&type=chunk) [Administrative Expenses](index=31&type=section&id=Administrative%20Expenses) Administrative expenses increased by 28.2% to RMB 216.2 million, driven by share-based payments and severance compensation. - Administrative expenses increased by approximately **28.2% year-on-year to RMB 216.2 million**[114](index=114&type=chunk)[117](index=117&type=chunk) - The increase was mainly due to **RMB 17.7 million in share-based payment expenses** from the share award scheme (zero in H1 2024)[114](index=114&type=chunk)[117](index=117&type=chunk) - And **RMB 24.0 million in severance compensation** paid for large-scale systemic layoffs in Q4 2024 (RMB 2.7 million in H1 2024)[114](index=114&type=chunk)[117](index=117&type=chunk) [Net Impairment Loss Provision on Financial Assets](index=31&type=section&id=Net%20Impairment%20Loss%20Provision%20on%20Financial%20Assets) Net impairment loss provision on financial assets increased to RMB 39.9 million, mainly due to extended aging of receivables from store closures. - Net impairment loss provision on financial assets increased from **RMB 8.9 million in H1 2024 to RMB 39.9 million in H1 2025**[115](index=115&type=chunk)[118](index=118&type=chunk) - This was mainly due to the extended aging of trade and other receivables resulting from franchised store closures, leading to increased expected credit losses[115](index=115&type=chunk)[118](index=118&type=chunk) [Research and Development Expenses](index=32&type=section&id=Research%20and%20Development%20Expenses) R&D expenses decreased by 29.9% to RMB 46.5 million, primarily due to a reduction in R&D personnel. - R&D expenses decreased by approximately **29.9% year-on-year to RMB 46.5 million**[119](index=119&type=chunk)[122](index=122&type=chunk) - The decrease was mainly due to a reduction in the number of R&D personnel from **374 to 288**[119](index=119&type=chunk)[122](index=122&type=chunk) [Net Finance Costs](index=32&type=section&id=Net%20Finance%20Costs) Net finance costs were impacted by a 57.1% decrease in finance income and a 6.4% decrease in finance costs. - Finance income decreased by approximately **57.1% year-on-year to RMB 12.0 million**, mainly due to lower interest income from bank deposits[120](index=120&type=chunk)[123](index=123&type=chunk) - Finance costs decreased by approximately **6.4% year-on-year to RMB 49.2 million**, mainly due to a reduction in bank borrowings[120](index=120&type=chunk)[124](index=124&type=chunk) [Share of Profits/(Losses) of Associates and Joint Ventures](index=32&type=section&id=Share%20of%20Profits%2F%28Losses%29%20of%20Associates%20and%20Joint%20Ventures) The company reported a net share of profits from associates and joint ventures of RMB 4.1 million, reversing a prior-year loss. - In H1 2025, the company recorded a net share of profits from associates and joint ventures of **RMB 4.1 million**, compared to a net loss of **RMB 4.0 million in H1 2024**[121](index=121&type=chunk)[125](index=125&type=chunk) - The profit was mainly contributed by Nanjing Golden Manor, which primarily engages in strawberry trading[121](index=121&type=chunk)[125](index=125&type=chunk) [Loss/(Profit) Before Income Tax](index=33&type=section&id=Loss%2F%28Profit%29%20Before%20Income%20Tax) The company reported a loss before income tax of RMB 353.0 million, primarily due to strategic product optimization and fewer franchised stores. - In H1 2025, the company recorded a loss before income tax of **RMB 353.0 million**, compared to a profit of **RMB 99.3 million in H1 2024**[126](index=126&type=chunk)[129](index=129&type=chunk) - This was mainly due to the company's optimization of lower-margin product offerings to meet consumer demand for high-quality and cost-effective products, and a reduction in the number of franchised stores[126](index=126&type=chunk)[129](index=129&type=chunk) [Income Tax Expense](index=33&type=section&id=Income%20Tax%20Expense) Income tax expense significantly decreased by 98.1% to RMB 0.3 million, primarily due to lower taxable income and tax exemptions. - Income tax expense decreased by approximately **98.1% year-on-year to RMB 0.3 million**[127](index=127&type=chunk)[130](index=130&type=chunk) - The decrease was mainly due to lower taxable income resulting from reduced operating profit, and preferential tax treatments and exemptions for some subsidiaries[127](index=127&type=chunk)[130](index=130&type=chunk) [Loss/(Profit) for the Period](index=33&type=section&id=Loss%2F%28Profit%29%20for%20the%20Period) The company reported a net loss of RMB 353.3 million for the period, resulting in an 8.1% net loss margin. - In H1 2025, the company recorded a net loss of approximately **RMB 353.3 million**, compared to a net profit of approximately **RMB 84.0 million in H1 2024**[128](index=128&type=chunk)[131](index=131&type=chunk) - The net loss margin was **8.1%**, compared to a net profit margin of **1.5% in H1 2024**[128](index=128&type=chunk)[131](index=131&type=chunk) [Non-HKFRS Measures - Adjusted Net Loss/(Profit) and Adjusted Net Loss/(Profit) Margin](index=34&type=section&id=Non-HKFRS%20Measures%20-%20Adjusted%20Net%20Loss%2F%28Profit%29%20and%20Adjusted%20Net%20Loss%2F%28Profit%29%20Margin) Adjusted net loss for H1 2025 was RMB 295.2 million, with a 6.7% adjusted net loss margin, after excluding non-recurring items. - Adjusted net profit excludes non-recurring items such as share-based payment expenses, severance compensation, and dilution loss/(gain) on investments in associates and joint ventures[132](index=132&type=chunk)[134](index=134&type=chunk) 2025 H1 vs 2024 H1 Reconciliation of Adjusted Net Loss/(Profit) | Indicator | 2025 H1 (RMB thousand) | 2024 H1 (RMB thousand) | | :--- | :--- | :--- | | (Loss)/Profit for the Period (under HKFRS) | (353,251) | 83,955 | | Add: Share-based Payment Expenses | 17,688 | 4,959 | | Add: Severance Compensation Related to Layoffs or Personnel Adjustments | 24,002 | 2,718 | | Add: Dilution Loss/(Gain) on Investments in Associates and Joint Ventures | 16,407 | (3,658) | | **Adjusted Net (Loss)/Profit for the Period** | **(295,154)** | **87,974** | | Net (Loss)/Profit Margin (under HKFRS) | (8.1%) | 1.5% | | **Adjusted Net (Loss)/Profit Margin** | **(6.7%)** | **1.6%** | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company's operations in H1 2025 were primarily funded by operating cash, shareholder contributions, and bank borrowings. - The company primarily funded its operations through cash generated from operations, shareholder contributions, and bank borrowings[139](index=139&type=chunk)[140](index=140&type=chunk) [Capital Structure](index=36&type=section&id=Capital%20Structure) As of June 30, 2025, net assets decreased to RMB 2,465.2 million, reflecting changes in current and non-current assets and liabilities. - As of June 30, 2025, net assets were **RMB 2,465.2 million**, a decrease from **RMB 2,810.3 million as of December 31, 2024**[141](index=141&type=chunk)[145](index=145&type=chunk) - Net assets primarily comprised current assets of **RMB 5,082.7 million**, non-current assets of **RMB 2,201.4 million**, current liabilities of **RMB 4,092.7 million**, and non-current liabilities of **RMB 726.2 million**[141](index=141&type=chunk)[145](index=145&type=chunk) [Cash and Bank Balances](index=36&type=section&id=Cash%20and%20Bank%20Balances) Cash and bank balances as of June 30, 2025, were RMB 2,316.5 million, primarily in RMB. - As of June 30, 2025, cash and bank balances were **RMB 2,316.5 million**, including unrestricted cash and cash equivalents of **RMB 1,954.9 million** and restricted bank deposits of **RMB 361.6 million**[142](index=142&type=chunk)[146](index=146&type=chunk) - Cash and cash equivalents were primarily denominated in RMB[142](index=142&type=chunk)[146](index=146&type=chunk) [Financial Risks](index=36&type=section&id=Financial%20Risks) The company manages interest rate and foreign exchange risks, considering overall interest rate risk not significant, without using derivatives. - The company faces interest rate risk related to cash and bank balances, bank borrowings, and fixed-rate receivables; management considers the overall interest rate risk not significant[143](index=143&type=chunk)[147](index=147&type=chunk) - The company holds foreign currency cash and is exposed to foreign exchange risk, but does not use derivative contracts for hedging, managing it by closely monitoring exchange rate movements[143](index=143&type=chunk)[147](index=147&type=chunk) [Use of Proceeds from Global Offering](index=36&type=section&id=Use%20of%20Proceeds%20from%20Global%20Offering) HKD 236.6 million of global offering proceeds were used for IT upgrades, debt repayment, and working capital, with HKD 18.8 million remaining. - The company completed its global offering and listing in Q1 2023, raising net proceeds of approximately **HKD 474.0 million**[144](index=144&type=chunk)[148](index=148&type=chunk) Use of Net Proceeds from Global Offering (As of June 30, 2025) | Intended Use | Adjusted Allocation (HKD million) | % of Total | Utilized as of Dec 31, 2024 (HKD million) | Utilized as of June 30, 2025 (HKD million) | Unutilized as of June 30, 2025 (HKD million) | Expected Timeline | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Improve and Enhance Operations and Supply Chain Systems | 23.3 | 4.9 | 11.4 | 11.9 | 0 | – | | Upgrade and Improve Core IT Systems and Infrastructure | 169.5 | 35.8 | 92.4 | 68.2 | 8.9 | Before Dec 31, 2026 | | Repay Part of Interest-Bearing Bank Borrowings | 91.5 | 19.3 | 91.5 | 0 | 0 | – | | Use as Working Capital and Other General Corporate Purposes | 189.7 | 40.0 | 23.3 | 156.5 | 9.9 | Before Dec 31, 2025 | | **Total** | **474.0** | **100.0** | **218.6** | **236.6** | **18.8** | | - As of June 30, 2025, the unutilized net proceeds were deposited in licensed banks in China as short-term interest-bearing deposits[151](index=151&type=chunk)[153](index=153&type=chunk) [Indebtedness](index=38&type=section&id=Indebtedness) Total bank borrowings were RMB 2,550.3 million, and the gearing ratio increased to 103.5% due to reduced equity from strategic transformation. - As of June 30, 2025, total non-current bank borrowings were **RMB 267.4 million**, and current bank borrowings were **RMB 2,282.9 million**[152](index=152&type=chunk)[154](index=154&type=chunk) - The gearing ratio increased from **89.3% as of December 31, 2024, to 103.5% as of June 30, 2025**, primarily due to a decrease in total equity[152](index=152&type=chunk)[155](index=155&type=chunk) - The decrease in total equity was mainly attributed to the phased impact of the company's proactive strategic transformation and operational efficiency upgrades since H2 2024, resulting in a loss attributable to the company[152](index=152&type=chunk)[155](index=155&type=chunk) - The Board believes the strategic transformation was completed in H1 2025, and the company will continue to enhance overall profitability through proactive measures such as enriching product categories, optimizing product structure, and expanding the store network[152](index=152&type=chunk)[155](index=155&type=chunk) [Pledged Assets](index=39&type=section&id=Pledged%20Assets) The company pledged RMB 45.5 million in right-of-use assets and RMB 21.4 million in property, plant and equipment for bank borrowings. - As of June 30, 2025, the company pledged right-of-use assets of **RMB 45.5 million** (December 31, 2024: RMB 47.7 million) and property, plant and equipment of **RMB 21.4 million** (December 31, 2024: RMB 22.0 million) as collateral for bank borrowings[157](index=157&type=chunk)[160](index=160&type=chunk) [Cash Flows](index=39&type=section&id=Cash%20Flows) H1 2025 saw net cash used in operations, net cash generated from investing, and net cash used in financing, impacting overall cash balances. - In H1 2025, net cash used in operating activities was **RMB 123.2 million**, compared to net cash generated from operating activities of **RMB 277.7 million in H1 2024**[158](index=158&type=chunk)[161](index=161&type=chunk) - The change in operating cash flow was mainly due to a **decrease in trade payables of RMB 61.6 million** and an **increase in deposits, prepayments, and other receivables of RMB 60.1 million**; the decrease in trade payables was primarily due to settling payments for closed stores during strategic transformation[158](index=158&type=chunk)[161](index=161&type=chunk) - Net cash generated from investing activities was **RMB 191.4 million**, compared to net cash used of **RMB 1,002.7 million in H1 2024**, mainly impacted by payments for a new office building (**RMB 27.1 million**) and net proceeds from financial assets measured at fair value through profit or loss (**RMB 227.7 million**)[158](index=158&type=chunk)[162](index=162&type=chunk) - Net cash used in financing activities was **RMB 8.3 million**, compared to net cash generated of **RMB 905.8 million in H1 2024**, mainly impacted by repayments under supplier financing arrangements of **RMB 113.6 million** and net redemption of restricted deposits of **RMB 118.5 million**[159](index=159&type=chunk)[163](index=163&type=chunk) [Financial Assets, Capital and Investment Management](index=40&type=section&id=Financial%20Assets%2C%20Capital%20and%20Investment%20Management) The company manages cash through low-risk, short-term structured deposits and other financial assets, adhering to strict investment policies. - The company invests in structured deposits (principal-protected, short-term, low-risk) for cash management[164](index=164&type=chunk)[166](index=166&type=chunk) Financial Assets Held (As of June 30, 2025) | Financial Asset Type | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Structured Deposits (FVTPL) | 487.7 | 669.7 | | Other Financial Assets (FVTPL) | 50.0 | 83.7 | | Financial Assets (FVOCI) | 37.5 | 35.9 | - The company has implemented capital and investment policies to monitor and control investment risks, generally investing only in low-risk, highly liquid, and non-speculative products, following detailed review procedures[168](index=168&type=chunk) - The Directors believe that structured deposits are low-risk, fair, and reasonable, serving the overall interests of the company and its shareholders[169](index=169&type=chunk)[170](index=170&type=chunk) [Capital Expenditure](index=41&type=section&id=Capital%20Expenditure) Capital expenditure of RMB 27.1 million in H1 2025 was primarily for a new office building, funded by operations, borrowings, and global offering proceeds. - In H1 2025, capital expenditure was **RMB 27.1 million**, primarily for payments related to the construction of a new office building in Yantian District, Shenzhen, China[171](index=171&type=chunk)[174](index=174&type=chunk) - Capital expenditure was mainly funded by cash generated from operations, bank borrowings, and proceeds from the global offering[172](index=172&type=chunk)[174](index=174&type=chunk) [Contingent Liabilities and Guarantees](index=41&type=section&id=Contingent%20Liabilities%20and%20Guarantees) As of June 30, 2025, the company had no significant contingent liabilities, guarantees, or litigations. - As of June 30, 2025, the company had no contingent liabilities, guarantees, or any significant litigations against the Group[173](index=173&type=chunk)[175](index=175&type=chunk) [Significant Investments, Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures](index=42&type=section&id=Significant%20Investments%2C%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20Associates%20and%20Joint%20Ventures) H1 2025 saw subscriptions to structured deposits for cash management, with no other significant investments, acquisitions, or disposals. [Subscription of Wealth Management Products](index=42&type=section&id=Subscription%20of%20Wealth%20Management%20Products) The company subscribed to short-term, principal-protected structured deposits from major banks to maximize returns on unutilized funds. - In H1 2025, the company subscribed to multiple structured deposit products from CITIC Bank and Bank of Beijing, with principal amounts ranging from **RMB 140 million to RMB 200 million**, and expected annualized returns between **1.05% and 2.20%**[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - These wealth management products were short-term, principal-protected, and relatively low-risk, issued by reputable commercial banks, aligning with the company's internal risk management, cash management, and investment policies, aiming to maximize returns on unutilized funds[183](index=183&type=chunk)[187](index=187&type=chunk) - As of June 30, 2025, all subscriptions except for two wealth management products had matured and been fully redeemed[183](index=183&type=chunk)[187](index=187&type=chunk) [Turnover Ratios](index=44&type=section&id=Turnover%20Ratios) Inventory and trade receivables turnover days slightly increased, while trade payables turnover days increased due to extended settlement policies. - Average inventory turnover days slightly increased from **10.9 days in H1 2024 to 12.3 days in H1 2025**[191](index=191&type=chunk)[193](index=193&type=chunk) - Average trade receivables turnover days slightly increased from **34.2 days in H1 2024 to 35.8 days in H1 2025**, mainly due to a **decrease in total revenue of approximately 21.8%**; the company maintained credit control through regular reviews and dedicated follow-ups[191](index=191&type=chunk)[194](index=194&type=chunk) - Average trade payables turnover days increased from **14.1 days in H1 2024 to 21.5 days in H1 2025**, mainly due to the company extending its settlement policy since Q4 2024[192](index=192&type=chunk)[195](index=195&type=chunk) [Employees and Employee Benefit Expenses](index=45&type=section&id=Employees%20and%20Employee%20Benefit%20Expenses) As of June 30, 2025, the company had 2,156 employees, with H1 2025 employee benefit expenses totaling RMB 338.2 million. - As of June 30, 2025, the company had **2,156 employees**, with marketing department accounting for approximately **16.7%**, operations and store management for **15.2%**, production and logistics for **16.9%**, and IT department for **13.4%**[196](index=196&type=chunk)[198](index=198&type=chunk) - The company highly values talent development and retention, having established comprehensive talent cultivation and performance evaluation systems to determine compensation, bonuses, and promotions[196](index=196&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) - Total employee benefit expenses in H1 2025 were **RMB 338.2 million**, accounting for approximately **7.7% of total revenue** for the same period[197](index=197&type=chunk)[201](index=201&type=chunk) - The company adopted a share award scheme on September 28, 2023, to incentivize eligible personnel who have contributed to the Group[197](index=197&type=chunk)[202](index=202&type=chunk) [Major Suppliers and Major Customers](index=46&type=section&id=Major%20Suppliers%20and%20Major%20Customers) The largest supplier accounted for 5.3% of procurement, and the largest customer (a franchisor) contributed 1.5% of revenue. - In H1 2025, purchases from the largest supplier accounted for approximately **5.3% of total procurement costs**, and the top five suppliers collectively accounted for **20.4%**[203](index=203&type=chunk)[204](index=204&type=chunk) - Revenue from the largest customer accounted for approximately **1.5% of total revenue**, and the top five customers collectively contributed **6.6%**, all of whom were franchisors[203](index=203&type=chunk)[205](index=205&type=chunk) [Reserves](index=46&type=section&id=Reserves) As of June 30, 2025, distributable reserves to shareholders were approximately RMB 94.5 million. - As of June 30, 2025, the company's distributable reserves to shareholders were approximately **RMB 94.5 million**[206](index=206&type=chunk)[207](index=207&type=chunk) [Corporate Governance and Other Information](index=46&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Corporate Governance Practices](index=47&type=section&id=Corporate%20Governance%20Practices) The company maintains high corporate governance standards, complying with the Listing Rules' Corporate Governance Code since listing. - The company is committed to maintaining high standards of corporate governance to safeguard shareholder interests and enhance corporate value and accountability[208](index=208&type=chunk)[209](index=209&type=chunk) - For the six months ended June 30, 2025, the company has complied with all applicable code provisions under the Corporate Governance Code and adopted most of its best practices[208](index=208&type=chunk)[210](index=210&type=chunk) [Model Code for Securities Transactions](index=47&type=section&id=Model%20Code%20for%20Securities%20Transactions) The company adopted the Model Code for securities transactions, with all directors and supervisors complying in H1 2025. - The company has adopted the Model Code set out in Appendix C3 of the Listing Rules since its listing date as a code of conduct for securities transactions by directors, supervisors, and relevant employees[211](index=211&type=chunk)[212](index=212&type=chunk) - For the six months ended June 30, 2025, each Director and Supervisor has complied with the Model Code, and no breaches by relevant employees were found[211](index=211&type=chunk)[213](index=213&type=chunk) [Directors', Supervisors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=48&type=section&id=Directors%27%2C%20Supervisors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) Directors, supervisors, and the chief executive held interests in company shares, including significant non-listed and H shares, as of June 30, 2025. Directors'/Supervisors' Interests in the Company (As of June 30, 2025) | Director/Supervisor Name | Class of Shares | Nature of Interest | Number of Shares | Approximate % of Relevant Class of Shares | | :--- | :--- | :--- | :--- | :--- | | Mr. Yu Huiyong | Unlisted Shares | Beneficial Owner | 83,957,019 | 98.25% | | | H Shares | Spouse Interest and Controlled Corporation Interest | 652,293,740 | 44.87% | | Ms. Xu Yanlin | Unlisted Shares | Spouse Interest | 83,957,019 | 98.25% | | | H Shares | Spouse Interest and Controlled Corporation Interest | 652,293,740 | 44.87% | | Mr. Jiao Yue | H Shares | Controlled Corporation Interest | 49,853,264 | 3.43% | | Mr. Tian Xiqiu | H Shares | Controlled Corporation Interest | 2,913,398 | 0.20% | | Mr. Zhu Qidong | H Shares | Beneficial Owner and Spouse Interest | 6,957,500 | 0.48% | | Mr. Yang Xiaohu | H Shares | Beneficial Owner | 82,500 | 0.01% | | Mr. Su Yan | H Shares | Beneficial Owner | 360,000 | 0.02% | - Mr. Yu Huiyong is the general partner of Hongyuan Shanguo, Hengyili Investment, and Huihe Zhixiang, and owns 51% equity in Shenzhen Huilin, thus deemed to have an interest in the shares held by them[217](index=217&type=chunk) - Ms. Xu Yanlin is the spouse of Mr. Yu Huiyong and owns 49% equity in Shenzhen Huilin and has invested over one-third of the capital in Hengyili Investment, thus deemed to have an interest in the shares held by them[217](index=217&type=chunk) - Ms. Shu Xiaoqin (spouse of Mr. Zhu Qidong), Mr. Yang Xiaohu, and Mr. Su Yan were granted awards under the 2023 Share Award Scheme, all of which remained unvested as of June 30, 2025[217](index=217&type=chunk) [Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares](index=51&type=section&id=Substantial%20Shareholders%27%20Interests%20and%20Short%20Positions%20in%20Shares%20and%20Underlying%20Shares) Major shareholders, including Hongyuan Shanguo, Hengyili Investment, and CICC, held significant interests in the company's H shares. Substantial Shareholders' Interests in the Company (As of June 30, 2025) | Shareholder Name | Class of Shares | Nature of Interest | Number of Shares | Approximate % of Relevant Class of Shares | | :--- | :--- | :--- | :--- | :--- | | Hongyuan Shanguo | H Shares | Beneficial Owner | 129,749,246 | 8.92% | | Hengyili Investment | H Shares | Beneficial Owner | 120,663,036 | 8.30% | | China International Capital Corporation Limited (CICC) | H Shares | Controlled Corporation Interest | 153,727,838 | 10.57% | | CICC Capital Operation Limited (CICC Capital) | H Shares | Controlled Corporation Interest | 108,260,338 | 7.45% | | CICC Qianhai (Shenzhen) Private Equity Fund Management Co., Ltd. | H Shares | Controlled Corporation Interest | 76,409,758 | 5.26% | - CICC Capital and CICC are deemed to have an interest in the **10.23% of the total issued share capital** of the company held by Bole No. 1, Baima No. 4, Henan Zhanxin, CICC Haoze, and Xinyu Unicorn collectively[225](index=225&type=chunk)[229](index=229&type=chunk) [Interim Dividend](index=52&type=section&id=Interim%20Dividend) The Board resolved not to declare an interim dividend for the six months ended June 30, 2025. - The Board has resolved not to declare an interim dividend for the six months ended June 30, 2025[227](index=227&type=chunk)[230](index=230&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=53&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) Neither the company nor its subsidiaries purchased, redeemed, or sold any listed securities in H1 2024. - For the six months ended June 30, 2024, neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities[232](index=232&type=chunk)[235](index=235&type=chunk) [Changes in Information of Directors, Supervisors and Chief Executive](index=53&type=section&id=Changes%20in%20Information%20of%20Directors%2C%20Supervisors%20and%20Chief%20Executive) Mr. Zhu Qidong's role changed from Deputy General Manager to Executive Deputy General Manager in April 2025. - Mr. Zhu Qidong ceased to be the Deputy General Manager of the company and was appointed as Executive Deputy General Manager since April 2025[233](index=233&type=chunk)[236](index=236&type=chunk) - Other than the aforementioned change, there were no other changes in information of directors, supervisors, and chief executive requiring disclosure[233](index=233&type=chunk)[236](index=236&type=chunk) [Application for H Share Full Circulation](index=53&type=section&id=Application%20for%20H%20Share%20Full%20Circulation) The Board approved an H Share Full Circulation plan to convert 85.4 million non-listed shares, pending regulatory approval. - The Board approved the implementation of the H Share Full Circulation plan on May 20, 2025, proposing to convert a total of **85,448,554 non-listed shares** (i.e., all existing non-listed shares) into H shares on a one-to-one basis[234](index=234&type=chunk)[237](index=237&type=chunk) - The company submitted the application to the China Securities Regulatory Commission on May 29, 2025, but has not yet received approval as of the reporting date, and the plan details are not yet finalized[234](index=234&type=chunk)[237](index=237&type=chunk) - The completion of the H Share Full Circulation plan is subject to the fulfillment of other relevant procedural requirements by the CSRC, HKEX, and other relevant regulatory authorities[234](index=234&type=chunk)[23

Group 1 - The stock price of Baiguoyuan Group (02411.HK) surged over 23% in early trading on September 22, reaching a price of 1.79 HKD [1] - The trading volume amounted to 10.7695 million HKD at the time of reporting [1]

Core Viewpoint - Baiguoyuan Group (02411) has seen a significant stock price increase of over 23%, indicating positive market sentiment following the announcement of a new share placement [1] Group 1: Share Placement Details - Baiguoyuan Group plans to issue 279.5 million H-shares at a price of HKD 1.17 per share, which will represent approximately 16.1% of the enlarged total H-shares and about 15.4% of the total shares [1] - The expected net proceeds from this placement are approximately HKD 325 million [1] Group 2: Use of Proceeds - Approximately 61.5% of the net proceeds will be allocated to pay trade payables [1] - About 30.8% will be used to repay bank loans [1] - Approximately 7.7% will be allocated for general working capital and administrative expenses [1] Group 3: Market and Operational Insights - Recent brokerage research reports indicate that Baiguoyuan's channel adjustments are nearing completion, with both single-store customer traffic and gross margins showing signs of recovery [1] - The increase in single-store customer traffic is attributed to successful promotional activities like "Good Fruits Reward," which have effectively stimulated consumer demand and enhanced brand loyalty [1] - The recovery in gross margins suggests that the positive effects of customer traffic on high-margin products are gradually being realized, reflecting the company's efforts in optimizing product structure and improving supply chain efficiency [1]

Group 1 - The core point of the article is that Baiguoyuan Group's stock price surged over 23% following the announcement of a share placement plan [1] - Baiguoyuan Group plans to issue 279.5 million H-shares at a price of HKD 1.17 per share, which will account for approximately 16.1% of the expanded total H-shares and about 15.4% of the total shares [1] - The expected net proceeds from the placement are approximately HKD 325 million, with 61.5% allocated for trade payables, 30.8% for repaying bank loans, and 7.7% for general working capital and administrative expenses [1] Group 2 - Recent brokerage research reports indicate that Baiguoyuan's channel adjustments are nearing completion, with both single-store customer traffic and gross margins showing signs of recovery [1] - The increase in single-store customer traffic is attributed to successful promotional activities like "Good Fruits Reward," which have activated consumer demand and enhanced brand loyalty [1] - The recovery in gross margins reflects the positive impact of customer traffic on high-margin products, indicating that the company's efforts in optimizing product structure and improving supply chain efficiency are beginning to yield results [1]

Core Viewpoint - Baiguoyuan Group plans to raise approximately 300 million yuan to repay debts through a share placement, amid significant financial challenges and a decline in store numbers [1][2]. Financial Performance - In the past two years, Baiguoyuan has faced pressure on its performance, reporting a net loss attributable to shareholders of 386 million yuan last year, marking its first annual loss since 2019 [2]. - For the first half of this year, the company reported revenue of 4.376 billion yuan, a year-on-year decline of 21.8%, and a net loss of 342 million yuan, representing its first half-year loss since going public [2]. - The net loss margin for the group reached 8.1% in the first half of this year, compared to a profit margin of 1.5% in the same period last year [2]. Asset Structure - As of the first half of this year, Baiguoyuan's net asset value stood at 2.465 billion yuan, comprising current assets of 5.083 billion yuan and non-current assets of 2.201 billion yuan, with current liabilities of 4.093 billion yuan and non-current liabilities of 726 million yuan [2]. Store Count and Strategy - The number of Baiguoyuan stores decreased from 6,025 in June 2024 to 4,386 in June 2025, a reduction of 1,639 stores [2]. - The company is optimizing its retail store layout to improve operational efficiency, encouraging franchisees to reassess store locations and close underperforming outlets [2]. Controversies and Public Perception - Baiguoyuan faced controversy over high fruit prices, with Chairman Yu Huiyong stating that the company aims to educate consumers rather than cater to their ignorance, which sparked public backlash [3]. - Following these comments, Baiguoyuan's stock price fell by 0.57% to 1.74 HKD per share, with an intraday drop of 8% [3]. Future Outlook - Baiguoyuan plans to continue providing a diverse range of products and services while maintaining a focus on high quality and price competitiveness to strengthen brand value among core customers [3].

Group 1 - The company, Baiguoyuan Group, has signed a placement agreement with a placement agent to issue 279.5 million H-shares at a price of HKD 1.17 per share [1] - After the issuance, the placement shares will account for approximately 16.1% of the enlarged total H-shares and about 15.4% of the total shares [1] - The placement price represents a discount of approximately 19.31% to the closing price on the day of the announcement [1] Group 2 - The expected total amount raised from this placement is approximately HKD 327 million, with net proceeds estimated at around HKD 325 million [1] - The allocation of the net proceeds is as follows: approximately 61.5% for trade payables, about 30.8% for repaying bank loans, and around 7.7% for general working capital and administrative expenses [1]

Core Viewpoint - The report highlights the changes in the Hong Kong Stock Connect holdings, indicating significant increases and decreases in ownership percentages for various companies, which may signal investment trends and market sentiment. Group 1: Companies with Increased Holdings - Changfei Fiber Optics (06869) saw the largest increase in holdings, up by 5.51%, bringing the total to 68.51% [1][2] - Tongyuan Kang Pharmaceutical-B (02410) increased by 2.18%, with a new holding percentage of 23.40% [1][2] - Fortior Technology (Shenzhen) Co., Ltd. (01304) experienced a 2.14% increase, resulting in a holding of 14.00% [1][2] - Other notable increases include Tianyue Advanced (02631) at +1.85% (13.18%) and Kanglong Chemical (03759) at +1.48% (62.37%) [2] Group 2: Companies with Decreased Holdings - Southern Hengsheng Technology (03033) had the largest decrease, down by 1.10% to 60.60% [1][2] - Haotian International Construction Investment (01341) decreased by 0.90%, now at 60.82% [1][2] - Beijing Beichen Industrial Holdings (00588) saw a reduction of 0.76%, bringing its holding to 39.85% [1][2] - Other significant decreases include Hongye Futures (03678) at -0.74% (63.01%) and Yisou Technology (02550) at -0.73% (35.50%) [2] Group 3: Five-Day Holding Changes - Over the last five trading days, Tongyuan Kang Pharmaceutical-B (02410) had the highest increase at +6.99%, with a holding of 23.40% [1][3] - Changfei Fiber Optics (06869) increased by 5.91%, reaching 68.51% [1][3] - Longpan Technology (02465) saw a 5.41% increase, now at 51.46% [1][3] - Conversely, Shandong Molong (00568) experienced the largest decrease at -4.44%, with a holding of 55.22% [1][3] Group 4: Twenty-Day Holding Changes - In the last twenty days, Zhongyuan Marine Energy (01138) had the highest increase at +12.54%, with a holding of 69.07% [1][4] - Changfei Fiber Optics (06869) also saw a significant increase of +12.33%, now at 68.51% [1][4] - Tongyuan Kang Pharmaceutical-B (02410) increased by +8.83%, reaching 23.40% [1][4]