Group 1 - The company reported a revenue of RMB 23.029 billion for the year ending December 31, 2024, representing a year-on-year growth of 1.34% [1] - The company achieved a profit attributable to shareholders of RMB 554 million, marking a turnaround from previous losses [1] - The earnings per share were RMB 0.6, and the company proposed a final dividend of HKD 0.1 per share [1] Group 2 - The company is facing a complex market environment in 2024 but is proactively addressing challenges by restoring production and optimizing product structure [1] - The company has improved its raw material procurement strategy and inventory management to effectively reduce risks [1] - The company plans to continue its capital expenditure control measures and improve its asset-liability structure to enhance financial stability [1] Group 3 - Looking ahead to 2025, the industry is expected to face intensified competition and ongoing cost pressures [2] - The company aims to leverage its management experience and brand influence to navigate market challenges and maintain confidence in the future [2] - The company will focus on product differentiation, quality improvement, and innovation to strengthen its market position [2] Group 4 - The company intends to invest in technological upgrades to enhance production efficiency and product quality [2] - Management innovation will be a key focus, with efforts to optimize management processes and improve organizational effectiveness [2] - The company aims to achieve superior performance in future market competition through these strategic initiatives [2]

Financial Performance - Revenue increased by 1.3% to RMB 23.003 billion[4] - Net profit amounted to RMB 588.6 million, compared to a loss of RMB 299.4 million in the previous year[6] - Profit attributable to shareholders was RMB 553.6 million, a significant recovery from a loss of RMB 375.7 million[5] - Basic earnings per share were RMB 0.60, compared to a loss of RMB 0.41 per share last year[5] - The gross profit for 2024 was approximately RMB 2.86 billion, significantly up from RMB 1.46 billion in 2023, with a gross margin increase of 6.0 percentage points to 12.4%[70] - The group reported a net income of RMB 185,696,000 for the year 2024, compared to RMB 169,194,000 in 2023, reflecting an increase in profitability[21] - The company achieved a turnaround with a net profit attributable to shareholders of approximately RMB 553.5 million, compared to a loss of about RMB 375.7 million in the previous year[62] Revenue Breakdown - Total revenue for the year ending December 31, 2024, reached RMB 36,737,273,000, with external customer revenue contributing RMB 23,029,033,000[16] - Revenue from external customers in Asia accounted for 91.7% of total revenue, while revenue from the Americas accounted for 7.7%[15] - The company reported a significant increase in revenue from yarn sales in China, totaling RMB 21,814,080,000[16] - Yarn sales accounted for RMB 17.91 billion in 2024, up 2.1% from RMB 17.54 billion in 2023, while woven fabric sales increased by 5.7% to RMB 2.17 billion[68] Cost and Expenses - The cost of materials and consumables decreased to RMB 16,018,473,000 in 2024 from RMB 16,229,059,000 in 2023, indicating a reduction of approximately 1.3%[20] - Employee benefits expenses slightly decreased to RMB 2,329,459,000 in 2024 from RMB 2,366,827,000 in 2023, a decline of about 1.6%[20] - Financial expenses netted RMB 387,993,000 in 2024, down from RMB 517,592,000 in 2023, showing a reduction of approximately 25%[20] - The cost of sales decreased by 5.2% to approximately RMB 20.2 billion in 2024, with raw material costs constituting 76.1% of total sales costs[71] Assets and Liabilities - Total assets decreased to RMB 20.983 billion from RMB 22.811 billion[7] - Total liabilities reduced to RMB 10.845 billion from RMB 13.056 billion[8] - The total assets of the group as of December 31, 2024, amounted to RMB 20,982,724, with total liabilities at RMB 10,845,439[17] - As of December 31, 2024, the company's total bank borrowings decreased to approximately RMB 6.40 billion from RMB 7.73 billion in 2023, indicating improved financial health[79] Dividends and Shareholder Returns - The board declared a final dividend of HKD 0.10 per share[4] - The total dividend paid for 2024 amounted to RMB 83,474,000, with a proposed final dividend of HKD 0.10 per share, compared to no dividends in 2023[35][38] - The board aims to maintain a long-term stable dividend payout ratio of approximately 30% of the net profit attributable to the owners of the company, proposing a final dividend of HKD 0.10 per share for the year ended December 31, 2024[90] Operational Efficiency - Operating cash flow for 2024 was RMB 4.48 billion, a substantial increase from RMB 1.99 billion in 2023, driven by improved sales and operational efficiency[76] - The company's inventory turnover days decreased from 109 days in 2023 to 87 days in 2024, reflecting better inventory management[77] - The company's current ratio improved to 1.40 in 2024 from 1.28 in 2023, indicating better liquidity[79] Market and Industry Trends - The textile industry in China achieved a total revenue of approximately RMB 2.399 trillion in 2024, with a year-on-year growth of 3.6%[54] - The total profit for the textile and apparel industry in China was approximately RMB 62.4 billion in 2024, reflecting a year-on-year increase of 1.5%[54] - The global economic environment remains complex, with ongoing challenges such as rising costs and geopolitical risks impacting the textile industry[56] Strategic Initiatives - The company plans to continue focusing on product differentiation and innovation to strengthen its market position in 2025[52] - The company is focusing on digital technology and generative AI applications to enhance production efficiency and product quality while reducing costs[65] - The company plans to sell approximately 800,000 tons of yarn, 100 million meters of woven fabric, and 10,000 tons of knitted fabric in 2025, excluding trade business sales[65] - The company has constructed a 50 MW solar power station in China and plans to continue building distributed solar power stations in 2025 to support environmental sustainability[65] Governance and Compliance - The board consists of three executive directors and three independent non-executive directors, adhering to the corporate governance code applicable during the reporting period[93] - The company has adopted a strict code of conduct for securities trading by directors, confirming compliance for the year ending December 31, 2024[95] - The Audit Committee, composed of three independent non-executive directors, has reviewed the audited consolidated financial statements for the year ending December 31, 2024, with no disagreements on accounting policies[97]

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 11,243,529, an increase of 4.2% compared to RMB 10,794,419 in the same period of 2023[8]. - Gross profit for the period was RMB 1,479,549, significantly up from RMB 256,745 in 2023, indicating a substantial recovery in profitability[8]. - Operating profit for the first half of 2024 was RMB 610,456, compared to an operating loss of RMB 445,099 in the previous year[8]. - Profit for the period reached RMB 282,269, a turnaround from a loss of RMB 740,178 in the same period last year[9]. - Basic earnings per share for the period was RMB 0.29, compared to a loss per share of RMB (0.81) in 2023[9]. - Total comprehensive income for the period attributable to owners of the company was RMB 281,419, compared to a loss of RMB 682,427 in the previous year[10]. - Other income increased to RMB 83,663 from RMB 57,284 in the same period of 2023, reflecting improved operational performance[8]. - The company reported a profit for the period of RMB 269,938 for the six months ended June 30, 2024, compared to a profit of RMB 7,535,924 at the beginning of the year[15]. Financial Position - Total assets decreased to RMB 21,572,140, down 5.4% from RMB 22,811,172 as of December 31, 2023[11]. - Non-current assets decreased to RMB 10,774,868, a decline of 2.9% from RMB 11,103,716[11]. - Current assets decreased to RMB 10,797,272, down 7.8% from RMB 11,707,456[12]. - Total equity attributable to owners increased to RMB 9,430,498, up 3.1% from RMB 9,149,079[12]. - Non-controlling interests decreased to RMB 490,261, down 19.2% from RMB 606,279[12]. - Total liabilities decreased to RMB 11,651,381, down 10.8% from RMB 13,055,814[13]. - Cash and cash equivalents increased to RMB 2,674,857, up 23.7% from RMB 2,161,795[11]. - Trade and bills receivables increased to RMB 1,713,033, up 8.9% from RMB 1,571,477[11]. Cash Flow - Net cash flows generated from operating activities for the six months ended June 30, 2024, amounted to RMB 2,403,440, compared to RMB 196,344 in the same period of 2023, representing a significant increase of over 1,125%[16]. - Cash flows from investing activities yielded a net inflow of RMB 903,716 for the first half of 2024, contrasting with a net outflow of RMB 264,048 in the prior year[17]. - Proceeds from borrowings in financing activities totaled RMB 4,733,365, while repayments of borrowings were RMB 4,881,099, indicating a net cash outflow in financing activities of RMB 2,800,389[17]. Cost Management - The company is focusing on cost management strategies, as evidenced by the reduction in various expense categories compared to the previous year[65]. - Interest expenses decreased from RMB 274,692,000 in 2023 to RMB 240,368,000 in 2024, a reduction of approximately 12.5%[71]. - Total finance costs incurred decreased from RMB 360,979,000 in 2023 to RMB 262,619,000 in 2024, representing a decline of about 27.3%[71]. - Net finance costs also saw a decrease from RMB 317,496,000 in 2023 to RMB 224,694,000 in 2024, a reduction of approximately 29.3%[71]. Taxation - Current tax on profits for the period was RMB 75,834,000 in 2024, compared to RMB 82,217,000 in 2023, indicating a decrease of about 7.9%[74]. - The effective income tax rate for subsidiaries in Mainland China is 25%, with sixteen subsidiaries qualifying for a preferential rate of 15%[74]. - Subsidiaries in Vietnam are entitled to four years of income tax exemption followed by nine years of a 50% tax reduction based on a 20% rate[76]. Investments and Assets - The closing net book amount of property, plant, and equipment as of June 30, 2024, is RMB 8,273,521, a decrease of 14.3% from RMB 9,506,379 as of June 30, 2023[96]. - The total amount recognized for associates and joint ventures in the condensed consolidated balance sheet as of June 30, 2024, was RMB 364,543, a decrease from RMB 379,038 as of December 31, 2023[114]. - The Group's inventories as of June 30, 2024, totaled RMB 5,070,113,000, down from RMB 5,244,583,000 at the end of 2023, reflecting a decrease of about 3.3%[132]. Financial Instruments and Risks - The Group's activities expose it to various financial risks, including foreign exchange risk, price risk, cash flow and fair value interest rate risk, credit risk, and liquidity risk[35]. - The Group's risk management policies have not changed since the last year-end[35]. - The Group held forward foreign exchange contracts, cross currency swap contracts, cotton future contracts, and cotton option contracts as of June 30, 2024, with fair values determined using active market quotes[40]. Shareholder Information - The share option scheme allows for a maximum of 30% of the ordinary shares to be issued upon the exercise of all outstanding options, ensuring alignment with shareholder interests[195]. - The total number of ordinary shares remained at 4,000,000 shares with a par value of HKD 0.1 each as of both June 30, 2024, and December 31, 2023[167].

Investment Rating - The investment rating for Tianhong International Group (02678.HK) is "Outperform the Market" [1][4][12]. Core Views - The company reported a 4.2% year-on-year revenue growth to 11.24 billion HKD in the first half of 2024, driven primarily by its yarn business, which saw an 8.9% increase in revenue [1]. - The net profit turned positive at 270 million HKD, compared to a loss of 750 million HKD in the same period last year, with a significant improvement in gross margin by 10.8 percentage points to 13.2% [1]. - The company is focusing on optimizing internal costs and enhancing automation, which is expected to reduce labor and electricity costs [1]. Summary by Sections Financial Performance - Revenue for the first half of 2024 reached 11.24 billion HKD, a 4.2% increase year-on-year [1]. - The gross margin improved significantly, rising to 13.2%, with a net profit of 270 million HKD, marking a turnaround from a loss of 750 million HKD in the previous year [1][10]. - The company plans to distribute an interim dividend of 0.1 HKD per share, with a payout ratio of approximately 31% [1]. Business Segments - Yarn business revenue increased by 8.9% to 8.81 billion HKD, accounting for 78.4% of total revenue, with volume and price growth of 6.6% and 2.2%, respectively [1]. - The woven fabric segment saw a decline in revenue by 3.2% to 990 million HKD due to weak overseas market recovery [1]. - The knitted fabric segment's revenue dropped by 25.5% due to the sale of a factory in Vietnam, but profitability improved post-sale [1]. Future Outlook - The company aims to sell 400,000 tons of yarn, 48 million meters of woven fabric, and 6,000 tons of knitted fabric in the second half of 2024, with an overall yarn sales target of 770,000 tons for the year [1]. - The long-term outlook remains positive, with expected net profits of 590 million HKD, 760 million HKD, and 920 million HKD for 2024-2026, reflecting growth rates of 29.2% and 21.5% for 2025-2026 [1][9].

Financial Performance - Revenue for the six months ended June 30, 2024, increased by 4.2% to RMB 11.243 billion compared to RMB 10.794 billion for the same period in 2023[2]. - Net profit for the period was RMB 282.3 million, a significant recovery from a net loss of RMB 740.2 million in the same period last year[4]. - Basic earnings per share for the period were RMB 0.29, compared to a loss per share of RMB 0.81 in the previous year[3]. - Operating profit for the period was RMB 610.5 million, a turnaround from an operating loss of RMB 445.1 million in the prior year[3]. - The company reported a total comprehensive income of RMB 296.1 million for the period, compared to a loss of RMB 667.8 million in the previous year[4]. - The consolidated gross profit margin improved from approximately 2.4% in the previous year to about 13.2% in the review period[39]. - The overall gross margin improved significantly from approximately 2.4% to 13.2% due to increased capacity utilization and inventory clearance[49]. - Yarn sales revenue reached approximately RMB 8.8123 billion, representing an increase of about 8.9% year-on-year[41]. - The average gross margin for yarn significantly improved to 12.5%, up from 0.7% in the same period last year[42]. Assets and Liabilities - Total assets as of June 30, 2024, were RMB 21.572 billion, down from RMB 22.811 billion at the end of 2023[5]. - Total liabilities decreased to RMB 11.651 billion from RMB 13.056 billion at the end of 2023[7]. - The company’s equity attributable to owners increased to RMB 9.921 billion from RMB 9.755 billion at the end of 2023[6]. - The company's asset-liability ratio decreased to 54% as of June 30, 2024, down from 57% at the end of the previous year[39]. - The current ratio improved to 1.38 as of June 30, 2024, compared to 1.28 as of December 31, 2023[56]. - The debt-to-equity ratio decreased to 0.81 as of June 30, 2024, from 0.84 as of December 31, 2023[56]. Cash Flow and Investments - Cash and cash equivalents increased to RMB 2.675 billion from RMB 2.162 billion at the end of 2023[5]. - The group’s bank and cash balance was approximately RMB 2.71 billion, an increase from RMB 2.23 billion as of December 31, 2023, primarily due to increased cash inflow from operating activities[55]. - The group’s capital expenditure for the six months ended June 30, 2024, was approximately RMB 290 million, down from RMB 572.6 million for the same period in 2023[58]. - No significant investments, acquisitions, or disposals were made by the company during the review period[59]. Inventory and Receivables - Total inventory as of June 30, 2024, was RMB 5,070,113,000, a decrease from RMB 5,244,583,000 as of December 31, 2023[28]. - Trade receivables amounted to RMB 1,713,033,000 as of June 30, 2024, compared to RMB 1,571,477,000 as of December 31, 2023, indicating an increase in receivables[29]. - The fair value of trade and notes receivables is close to their carrying value, indicating stable financial health in receivables management[33]. - The group’s inventory decreased by approximately RMB 174.5 million to about RMB 5.07 billion as of June 30, 2024, compared to RMB 5.25 billion as of December 31, 2023[55]. Operational Efficiency - The company maintained strict operational capital control, resulting in a reduction in working capital compared to the same period last year[39]. - The company actively adjusted its product structure and focused on differentiated markets, which enhanced profitability compared to the previous year[38]. - The company plans to continue optimizing its product mix and enhancing vertical integration across business segments to improve financial performance[51]. - The company is focusing on enhancing or divesting low-efficiency assets to concentrate on its core business and increase R&D investment in green and environmentally friendly products[53]. - The company aims to improve production efficiency and reduce costs through technological upgrades of existing equipment[52]. Tax and Compliance - The company is currently assessing risks associated with the implementation of the OECD Pillar Two legislation, which may affect its tax obligations in Vietnam[25]. - The company has engaged tax experts to assist in applying the new legislation due to its complexity and potential impacts on tax liabilities[25]. - The average effective tax rate for entities operating in Vietnam was 12.20% as of June 30, 2024, which is below the 15% minimum tax rate stipulated by the OECD Pillar Two model rules[25]. Employee and Governance - The total employee cost incurred by the company during the review period was approximately RMB 1.2 billion, compared to RMB 1.3 billion for the six months ended June 30, 2023[61]. - As of June 30, 2024, the company employed 27,011 staff, a decrease from 27,655 as of December 31, 2023, with 47% being female employees[61]. - The company has established an audit committee composed of three independent non-executive directors to oversee financial reporting and internal control systems[68]. - The remuneration committee is responsible for formulating the remuneration policies for the board and senior management, consisting of three independent non-executive directors[69]. - The nomination committee is tasked with reviewing the board's structure and assessing the independence of non-executive directors[70]. - The ESG committee is responsible for monitoring compliance with environmental, social, and governance regulations[71]. Market and Sales - Revenue from external customers accounted for 92.4% from Asia and 7.2% from the Americas, compared to 91.3% and 8.0% respectively in the previous year[10]. - The proportion of sales from the Chinese market slightly decreased from approximately 67.4% to 66.3%, with the top ten customers accounting for about 12.9% of total revenue[51]. - The textile industry in China saw a revenue increase of approximately 4.5% year-on-year, with net profit growth of about 19.3% in the first half of 2024[40]. - The sales volume of grey fabric reached approximately 21.9 million meters, a decrease of about 14.8% compared to the same period last year, with revenue dropping to approximately RMB 189 million[43]. - The sales volume of woven fabrics slightly decreased by 1.6% to approximately 43.6 million meters, while the gross margin improved from 12.1% to 18.8% due to favorable cotton yarn cost trends and a stronger USD against RMB[44]. - The sales volume of knitted fabrics fell significantly from approximately 7,700 tons to about 5,800 tons, resulting in a revenue decline of 25.5% to approximately RMB 298.7 million, although the gross margin increased from 9.2% to 11.4%[45]. - Trade business revenue decreased to approximately RMB 630 million, down 35.7% year-on-year, with a gross margin improvement from 5.7% to 12.3%[46]. - Non-woven fabric sales revenue increased slightly to approximately RMB 35.3 million, compared to RMB 34.1 million in the same period last year[47].

Financial Performance - Revenue for 2023 decreased by 4.5% to RMB 22,725,317 thousand compared to 2022[4] - Gross profit for 2023 dropped significantly by 46.9% to RMB 1,462,615 thousand[4] - The company reported a net loss of RMB 299,382 thousand in 2023, a sharp decline of 248.8% from the previous year's profit[4] - Total assets decreased by 12.8% to RMB 22,811,172 thousand as of 31 December 2023[5] - Current assets declined by 14.1% to RMB 11,707,456 thousand in 2023[5] - Return on equity (ROE) for 2023 was -4%, a significant drop from 2% in 2022[6] - The company's sales revenue in 2023 was approximately RMB 22.7 billion, with a net loss of approximately RMB 299.4 million, marking the first financial loss since its establishment[14][18] - Revenue decreased by 4.5% year-on-year to RMB 22.7 billion, and the net loss was RMB 299.4 million compared to a net profit of RMB 201.2 million in the previous year[18] - The company's basic loss per share was RMB 0.41, compared to a basic earning per share of RMB 0.17 in the previous year[18] - The company's loss attributable to shareholders was approximately RMB 375.7 million, compared to a profit of approximately RMB 156.8 million in the previous year[18] - Group revenue decreased by 4.5% to approximately RMB22.7 billion, with yarn sales accounting for 77.2% of total revenue at RMB17.5 billion, remaining flat compared to the previous year[25][28] - Garment fabric revenue decreased by 18.8% to approximately RMB2.9 billion due to weak overseas market demand[25][28] - Yarn sales volume increased by 12.7% to over 740,000 tonnes, with revenue remaining flat at RMB17.5 billion due to raw material price fluctuations[26][28] - Grey fabric sales volume increased by 9.9% to 55.3 million meters, but revenue decreased to RMB531.7 million, with gross profit margin dropping to 6.1% from 10.2%[27][28] - Woven garment fabric sales volume decreased by 22.9% to 89.7 million meters, with revenue dropping 22.3% to RMB2,056.3 million and gross profit margin declining to 12.7%[29][32] - Knitted garment fabric sales volume increased by 2.8% to 15,400 tonnes, but revenue decreased by 8.0% to RMB797.4 million, with gross profit margin improving to 8.7% from 5.3%[30][32] - Non-woven fabric sales revenue slightly increased to RMB70.0 million in 2023, as the company adjusted product structure to adapt to market demand changes[31][32] - Jeanswear business generated sales revenue of approximately RMB20.4 million, mainly from garment factories in China, with a gross profit margin of 6.0%[31][32] - The Group's overall gross profit margin declined to 6.4% from 11.6% in 2022, with a loss attributable to shareholders of approximately RMB375.7 million, compared to a profit of RMB156.8 million in the previous year[33][37] - Basic loss per share was RMB0.41, compared to basic earnings per share of RMB0.17 in 2022[33][37] - Yarn sales decreased by 0.3% in 2023 compared to 2022, with sales revenue dropping from RMB 17,587.45 million to RMB 17,537.02 million[45] - Grey fabrics sales declined by 27.0% in 2023, with revenue falling from RMB 727.98 million to RMB 531.66 million[45] - Woven garment fabrics sales dropped by 22.3% in 2023, with revenue decreasing from RMB 2,647.89 million to RMB 2,056.33 million[45] - Jeanswear sales plummeted by 77.7% in 2023, with revenue falling from RMB 91.34 million to RMB 20.41 million[45] - Non-woven fabrics sales increased by 12.8% in 2023, with revenue rising from RMB 62.07 million to RMB 69.98 million[45] - Total sales revenue decreased by 4.5% in 2023, dropping from RMB 23,805.35 million to RMB 22,725.32 million[45] - Gross profit margin decreased by 5.2 percentage points to 6.4% in 2023, with gross profit falling from RMB 2,755.6 million to RMB 1,462.6 million[52] - Raw materials cost accounted for 77.3% of total sales cost in 2023, with cotton being the major raw material[53] - The Chinese textile market accounted for 68.9% of the company's total sales in 2023[49] - The top ten largest customers accounted for approximately 13.4% of the company's total sales in 2023[50] - Selling and distribution costs decreased by 17.6% to approximately RMB730.4 million in 2023, mainly due to reduced freight and port charges compared to 2022[55] - General and administrative expenses decreased by 10.4% to approximately RMB1,178.6 million, accounting for 5.2% of the Group's revenue in 2023[55] - Net cash generated from operating activities increased to approximately RMB1,985.6 million in 2023, driven by improved inventory control and working capital efficiency[57] - Net cash generated from investing activities amounted to approximately RMB29.5 million in 2023, primarily due to reduced capital expenditures and partial receivables from asset disposals[57] - Net cash used in financing activities was approximately RMB2,337.6 million in 2023, mainly due to enhanced capital control and reduced bank borrowings[57] - Bank and cash balances (including pledged deposits) decreased to approximately RMB2,228.0 million as of 31 December 2023, compared to RMB2,580.1 million in 2022[58] - Inventories decreased by approximately RMB2,345.5 million to RMB5,244.6 million, with turnover days reduced to 109 days in 2023 from 126 days in 2022[58] - Trade and bills payables decreased by approximately RMB1,781.8 million to RMB3,364.7 million, with payable turnover days reduced to 72 days in 2023[61] - Total bank borrowings decreased by approximately RMB820.2 million to RMB7,723.2 million, with short-term borrowings reduced by RMB1,009.5 million[62] - Current ratio improved to 1.28 in 2023, compared to 1.12 in 2022, reflecting better liquidity management[64] - Total bank borrowings as of 31 December 2023 amounted to approximately RMB7,723.2 million, with 49.7% denominated in RMB, 6.8% in USD, 32.3% in HKD, 11.1% in VND, and 0.1% in AUD[65] - Current bank borrowings decreased to approximately RMB4,145.7 million as of 31 December 2023, down from RMB5,155.2 million in 2022, primarily due to repayment of short-term borrowings[67] - Capital expenditure for 2023 was approximately RMB899.0 million, a significant decrease from RMB2,391.0 million in 2022, mainly related to unfinished construction projects and asset acquisitions in Vietnam[69] - The Board does not recommend a final dividend for 2023 due to weakened demand in overseas textile markets, maintaining a long-term dividend payout ratio target of 30% of net profit[78] Operational Performance - Inventory turnover days improved to 109 days in 2023 from 126 days in 2022[6] - The company operates approximately 4.18 million spindles and 1,700 weaving and knitting machines as of 31 December 2023[8] - Texhong International Group has over 5,000 customers globally, with sales networks spanning multiple countries and regions[8] - The company's production bases are located in China, Vietnam, Turkey, and the Americas[8] - The domestic textile and apparel market experienced a substantial recovery in 2023, while overseas markets remained relatively lackluster with industry destocking efficiency falling short of expectations[11][13] - The company focused on controlling capital expenditures, optimizing resources, and streamlining management processes to foster a healthier internal environment[12][13] - The company prioritized investments with clear potential for return on investment and strategic alignment with long-term objectives to preserve financial flexibility[12][13] - The company strengthened regional production capacity and bolstered regional supply chain flexibility through vertical integration and supplier partnerships[12][13] - The company remains optimistic about the resilience of the textile industry and its own business, aiming to focus on innovation, sustainable development, and operational excellence in the upcoming year[15][17] - The company's efforts in the second half of the year led to positive changes, but the first-half loss resulted in an annual loss[14][16] - The Group targets to sell 760,000 tonnes of yarns, 92 million meters of woven garment fabrics, and 12,000 tonnes of knitted garment fabrics in 2024, excluding trading business sales[36][38] - The Group disposed of certain plots of land and buildings in Shaoxing for approximately RMB975.1 million as part of its restructuring efforts[40][42] - The Group plans to focus on high-end, intelligent, and green production trends, with increased R&D efforts in green and environmentally friendly products[39][42] - The Group is constructing yarn factories and a woven garment fabric factory in Vietnam to relocate production capacity from Shaoxing, China[39][42] - The Group's revenue from yarns decreased by approximately 0.3% in 2023 due to a decline in sales unit prices[43] - The Group had a total workforce of 27,655 employees as of 31 December 2023, with 52.3% being female employees, and total staff costs amounted to approximately RMB2.4 billion[76] - Core-spun yarn is the major earning source of the company, contributing significantly to its profitability[84] - The company plans to enhance customer communication, step up cooperation with raw material suppliers, and boost R&D input to improve product functionality and develop new products[85] - The company is exploring downstream industries and increasing the contribution of downstream products to diversify its revenue streams[85] - The company is facilitating the development of import and export business to tap into overseas markets[85] - The company is promoting diversified development in the textile industry to survive under adverse macro-environmental conditions[85] - The company faces risks from geographical concentration, with several production bases located in Mainland China, making it subject to economic, political, and social conditions in China[88] - The company is closely monitoring cotton futures and supply-demand balance to hedge risks and reduce reliance on cotton by diversifying synthetic fiber development[91] - The company is mitigating foreign exchange and interest rate risks by increasing RMB loans, using financial products like forward contracts, and monitoring economic data from the People's Bank of China and the Federal Reserve[91] - The Group has over 5,000 customers, with increasing business volume and types leading to higher total receivables[96] - Overseas market demand for textiles has declined, affecting the Group's profitability and increasing customer operation risks[96] - The Group faces product liability risks due to its wide and expanding product portfolio, with some customer claims regarding product quality[98] - Overseas textile market downturn has led to higher customer demands for product quality[98] - The Group operates in multiple countries and regions, facing tax risks due to varying tax regulations and increasing international tax compliance requirements[98] - The Group is exposed to financing risks due to its large business scale and high financing needs, with potential impacts on capital projects and operations if financing terms change[94] - The Group monitors credit terms and receivables in real-time, with alerts for overdue amounts and customers with abnormal operations[96] - The Group uses advanced measurement equipment and online quality control systems to manage production processes and mitigate product liability risks[98] - The Group engages local tax professionals and institutions to handle tax audits and ensure compliance with regional tax policies[98] - The Group diversifies its financing portfolio and maintains good relationships with financial institutions to mitigate financing risks[94] - The Group's electricity consumption in production is significant, and potential electricity shortages could adversely affect operations. Measures include equipping factories with generators, conducting technological renovations to reduce energy consumption, and liaising with the government for uninterrupted supply[101] - The Group faces human resources risks due to its labor-intensive industry. Despite advanced production facilities reducing labor needs, manpower requirements remain high. Strategies include performance-based rewards, expanded staff training, and improving employee living conditions[103] - Environmental protection compliance is a significant risk, with potential new regulations requiring substantial expenditure for facility upgrades. The Group selects suppliers ensuring environmental standards, establishes internal check systems, and monitors regulatory changes[104] - The Group operates in multiple jurisdictions, requiring compliance with various legal and regulatory frameworks, including the Securities and Futures Ordinance and Listing Rules of the Hong Kong Stock Exchange. Legal advisors and the company secretary ensure compliance and provide updates to the board[100] - The Group is expanding its operations abroad, which introduces cultural differences between foreign and Chinese employees. Training programs and local presence enhancement are strategies to mitigate this risk[103] Corporate Governance - The Board currently comprises five Directors, including two Executive Directors and three Independent Non-Executive Directors (INEDs), with one INED appointed and one retired in 2023[109][114] - The Board held six meetings and one general meeting in 2023, with all Executive Directors attending all meetings, while attendance varied among INEDs due to retirements and appointments[114] - The Board ensures independent oversight through mechanisms such as regular meetings between the Chairman and INEDs, and INEDs representing more than one-third of the Board[110][111] - The Board is responsible for strategic decisions, including investment plans, financial performance, and significant policies, with day-to-day operations delegated to senior management[114] - Board meetings are scheduled quarterly, with at least 14 days' notice and agendas distributed at least three days in advance[115] - Directors have access to Board papers, company secretary services, and senior management, and are updated on regulatory developments to ensure compliance[116] - The company provides continuous professional development for Directors to maintain their knowledge and skills, including updates on Listing Rules and regulatory changes[117] - The company has adopted a Securities Code for Directors' securities transactions, aligned with the Model Code for Securities Transactions by Directors of Listed Issuers[118] - The company's annual director's fees for the year ended 31 December 2023 were HKD125,000 for Mr. Ting Leung Huel Stephen, HKD150,000 for Professor Cheng Longdi, HKD180,000 for Professor Tao Xiaoming, and HKD120,273.97 for Mr. Shu Wa Tung, Laurence[125] - Mr. Ting Leung Huel Stephen ceased to be an independent non-executive director on 25 May 2023[125] - The company's Securities Code requires directors to notify designated directors and receive written acknowledgment before dealing in the company's securities and derivatives[122][126] - The company confirms that all directors have complied with the Securities Code and the Model Code during the year[123] - The roles of chairman and chief executive officer are separated, with Mr. Hong Tianzhu serving as chairman and Mr. Zhu Yongxiang as vice chairman and chief executive officer[124][127] - The Remuneration Committee comprises three independent non-executive directors: Mr. Shu Wa Tung, Laurence, Professor Tao Xiaoming, and Professor Cheng Longdi[129] - The Remuneration Committee held two meetings during the year to review and discuss the existing policy and structure for the remuneration of Directors[132] - The Company adopted a share option scheme in April 2014 for a term of ten years to attract, retain, and motivate senior executives and key employees[135] - The Remuneration Committee is responsible for making recommendations on the remuneration packages of executive Directors and senior management, including benefits in kind, pension rights, and compensation payments[129] - The Remuneration Committee ensures that no director or any of their associates is involved in deciding their own remuneration[131] - The Remuneration Committee reviews and approves compensation arrangements related to the dismissal or removal of directors for misconduct[131] - The Remuneration Committee reviews and approves compensation payable to executive Directors and senior management for any loss or termination of office or appointment[131] - The Remuneration Committee considers salaries paid by comparable companies, time commitment, responsibilities, and employment conditions elsewhere in the Group[129] - The Remuneration Committee makes recommendations to the Board on the remuneration of non-executive Directors[129] - The Remuneration Committee reviews and/or approves matters relating to share schemes under Chapter 17 of the Listing Rules[131] - The Audit Committee reviewed and approved the audit scope and fees for the 2022 Final Audit, which covered the Group's financial year ended 31 December 2022[139] - The Audit Committee reviewed the external auditor's report on the findings of the 2022 Final Audit[139] - The Audit Committee reviewed the financial reports for the year ended 31 December 2022 and the six months ended 30 June 2023[139] - The Audit Committee reviewed the effectiveness of the Group's internal control system, including financial, operational, and compliance controls, as well as risk management functions[139] - The Audit Committee met twice during the year, with attendance records showing full participation by members except for one member who attended 1 out of 2 meetings[139] - The Audit Committee is responsible for monitoring the integrity of the Company's financial statements, annual reports, and accounts, as well as reviewing significant financial reporting judgments[136] - The Audit Committee ensures the independence and objectivity of the external auditor and reviews the effectiveness of the audit process[136] - The Audit Committee is chaired by an Independent Non-Executive Director with appropriate professional qualifications or accounting expertise[136] - The Audit Committee is tasked with reviewing the Group's financial and accounting policies and practices[137] - The Audit Committee reviews the external auditor's management letter and any material queries raised by the auditor regarding accounting records, financial accounts, or control systems[137] - The Nomination Committee was established on 1 April 2012 and currently consists of one executive director and three independent non-executive directors[140] - The Nomination Committee reviews the structure, size, and composition of the Board annually and makes recommendations to align with the company's corporate strategy[140] - The Nomination Committee assesses the independence of independent non-executive directors and recommends candidates for direct

Investment Rating - The report maintains a "Buy" rating for Tianhong International Group (02678 HK) with a target price range of 4 70-5 00 HKD [1][3] Core Views - Tianhong International Group experienced a 5% decline in revenue in 2023 due to overseas brand destocking, resulting in a net loss of 380 million RMB [1] - The company's gross margin recovered to 10% in H2 2023, driven by improved order demand and higher capacity utilization in Vietnam [1] - The company's yarn business remained stable with a slight revenue decline of 0 3%, while woven fabric and knitted fabric revenues dropped by 22 3% and 8 0% respectively [1] - The company's financial expenses increased due to higher debt levels from previous capital expenditures and overseas interest rate hikes [1] - Operating cash flow improved by 23% to 1 99 billion RMB in 2023, supported by better inventory management [1] Financial Performance - Revenue for 2023 decreased by 4 5% to 22 725 billion RMB, with a net loss of 376 million RMB compared to a profit of 157 million RMB in 2022 [1][2] - In H2 2023, revenue grew by 11% YoY, with yarn revenue increasing by 13 2% and gross margin recovering to 10 0% [1] - The company's net profit in H2 2023 was 370 million RMB, supported by the sale of its Vietnam knitted fabric business and domestic factory relocation [1] - The company's 2024-2026 net profit forecasts are 590 million, 760 million, and 920 million RMB, with growth rates of 29% and 22% in 2025 and 2026 respectively [1][9] Operational Highlights - The company plans to sell 760,000 tons of yarn, 92 million meters of woven fabric, and 120 million meters of knitted fabric in 2024 [1] - Capital expenditure in 2023 was 900 million RMB, significantly lower than previous years, and the company plans to continue controlling capital spending in 2024 [1] - The company aims to reduce foreign currency debt to alleviate interest expense pressure [1] Industry Outlook - The report highlights a recovery in demand, with overseas brand destocking nearing its end and cotton prices rising, which is expected to support order volume and pricing in 2024 [1][9] - The company's early globalization strategy and local supply chain advantages position it well to capture market share in the long term [1][9] Financial Metrics - The company's ROE is expected to improve from -4 1% in 2023 to 6 1%, 7 5%, and 8 6% in 2024-2026 [2][10] - The PE ratio is forecasted to decline from 22 6 in 2022 to 6 0, 4 7, and 3 8 in 2024-2026 [2][10] - The EV/EBITDA ratio is projected to decrease from 33 5 in 2023 to 8 3, 7 3, and 6 5 in 2024-2026 [2][10]

2024年3月29日 公司研究 23 年需求疲弱下业绩承压，24 年期待盈利能力逐步改善 ——天虹国际集团（2678.HK）2023 年业绩点评 增持（维持） 要点 当前价：4.28元港币 23年收入同比下滑5%、归母净利润亏损3.76亿元 作者 天虹国际集团发布2023年业绩。公司实现营业收入227.25亿元人民币、同比下滑 分析师：唐佳睿 CFA FCPA(Aust.) 4.5%，归母净利润亏损3.76亿元、同比转亏，EPS为-0.41元。分上下半年来看， ACCA CAIA FRM 2023年上半年公司收入同比下滑17.1%，归母净利润亏损7.47亿元、同比转亏； 执业证书编号：S0930516050001 021-52523866 下半年公司收入同比增长10.6%，实现归母净利润3.71亿元、同比扭亏，下半年业 tangjiarui@ebscn.com 绩初步改善；上下半年归母净利率分别为-6.92%、3.11%。 分析师：孙未未 23 年公司内销、出口收入占比分别为 69%、31%。受全球经济、地缘政治冲突影 执业证书编号：S0930517080001 响海外需求较为疲弱且存在去库存压力，中国市场需 ...

Financial Performance - Revenue decreased by 4.5% to RMB 22.73 billion[2] - Gross margin fell by 5.2 percentage points to 6.4%[2] - Net loss amounted to RMB 299.38 million, compared to a profit of RMB 201.19 million in the previous year[4] - Loss attributable to shareholders was RMB 375.70 million, with a basic loss per share of RMB 0.41[3] - The company reported a comprehensive loss of RMB 272.26 million for the year[4] - Total revenue for the year ended December 31, 2023, was 38,364,419, with a significant contribution from the China segment at 21,879,282[11] - The company reported a loss of RMB (375,700) thousand attributable to owners in 2023, compared to a profit of RMB 156,808 thousand in 2022, indicating a significant decline in financial performance[24] - Basic loss per share for 2023 was RMB (0.41), compared to earnings of RMB 0.17 per share in 2022, reflecting a significant decline in profitability[24] Assets and Liabilities - Total assets decreased from RMB 26.15 billion to RMB 22.81 billion[5] - Total liabilities reduced from RMB 16.05 billion to RMB 13.06 billion[6] - The total assets of the group as of December 31, 2023, amounted to 22,811,172, with significant holdings in China[15] - The total liabilities of the group were reported at 16,049,823, indicating a high leverage situation[16] - The company had trade payables of RMB 868,848 thousand in 2023, down from RMB 4,597,463 thousand in 2022[33] Cash Flow and Financing - Cash and cash equivalents decreased from RMB 2.47 billion to RMB 2.16 billion[5] - The company recorded a net cash inflow from operating activities of approximately RMB 1.9856 billion in 2023, an increase from RMB 1.6201 billion in 2022, attributed to improved inventory control[58] - The company’s net cash outflow from financing activities was approximately RMB 2.3376 billion in 2023, primarily due to enhanced working capital management and reduced bank borrowings[58] - The total bank borrowings decreased by approximately RMB 820.2 million to about RMB 7.7232 billion as of December 31, 2023, with current bank borrowings reducing to RMB 4.1457 billion from RMB 5.1552 billion in 2022[62] Revenue Sources and Market Performance - The group reported that revenue from external customers in Asia accounted for 92.9% of total revenue, while revenue from the Americas accounted for 6.8%[10] - The company’s yarn sales revenue remained stable at approximately RMB 17.5 billion, accounting for about 77.2% of total revenue, primarily due to the recovery in domestic market demand[43] - Fabric revenue declined by 18.8% year-on-year to approximately RMB 2.9 billion, impacted by weaker-than-expected overseas market demand[43] - The total sales volume of yarn exceeded 740,000 tons, representing an increase of approximately 12.7% compared to the previous year[43] Cost Management and Expenses - The company recorded a loss of 299,382 in financial expenses, reflecting challenges in managing costs[12] - Employee benefit expenses decreased to RMB 2,366,827 thousand in 2023 from RMB 2,594,979 thousand in 2022, a decrease of approximately 8.8%[19] - The company incurred a net finance cost of RMB 517,592 thousand in 2023, up from RMB 466,861 thousand in 2022, an increase of about 10.9%[19] - Sales and distribution expenses decreased by 17.6% to approximately RMB 730.4 million in 2023, primarily due to high shipping and port-related costs in 2022 caused by the pandemic[56] Strategic Initiatives and Future Plans - The company plans to focus on market expansion and new product development in the upcoming fiscal year[2] - The company plans to expand its market presence in Southeast Asia, aiming for a revenue increase of 10% in the next fiscal year[11] - New product development initiatives are underway, focusing on sustainable materials, with an investment of 100 million planned for R&D[11] - The company aims to focus on innovation, sustainable development, and efficient operations in the new fiscal year to enhance its competitive position and seize emerging opportunities[40] Governance and Compliance - The group has established an audit committee composed of three independent non-executive directors to oversee financial reporting and internal controls[74] - The ESG committee is chaired by Mr. Zhu Yongxiang, overseeing compliance with environmental, social, and governance regulations[77] - The board consists of two executive directors and three independent non-executive directors, adhering to corporate governance codes as per the Hong Kong Stock Exchange[71] Inventory and Supply Chain - Inventory decreased from RMB 7.59 billion to RMB 5.24 billion[5] - Total inventory decreased from RMB 8,194,991 thousand in 2022 to RMB 5,586,878 thousand in 2023, with a provision for inventory write-down of RMB (342,295) thousand[28] - Supply chain financing increased significantly to RMB 2,495,882 thousand in 2023 from RMB 426,093 thousand in 2022[35] Market Challenges - The overall textile market is facing challenges from inflation and geopolitical tensions, leading to cautious purchasing strategies from downstream retailers[39] - The overall gross margin of the company decreased from 11.6% in 2022 to 6.4% in 2023, primarily due to weak product prices and increased financing costs[45]

Total Assets and Liabilities - Total assets decreased to RMB 24.48 billion as of 30 June 2023, compared to RMB 26.15 billion as of 31 December 2022[7] - Non-current assets increased slightly to RMB 12.60 billion as of 30 June 2023, up from RMB 12.52 billion as of 31 December 2022[7] - Current assets decreased to RMB 11.88 billion as of 30 June 2023, down from RMB 13.63 billion as of 31 December 2022[7] - Total equity decreased to RMB 9,435,212,000 from RMB 10,101,476,000, a decline of 6.6%[8] - Non-current liabilities increased to RMB 4,812,622,000 from RMB 3,882,939,000, a rise of 23.9%[8] - Current liabilities decreased to RMB 10,234,701,000 from RMB 12,166,884,000, a reduction of 15.9%[9] - Total equity increased from RMB 10,600,952 thousand in 2022 to RMB 11,202,692 thousand in 2023, reflecting a growth of 5.7%[18] - Total liabilities of the Group were 15,047,323 thousand RMB, with segment liabilities at 13,006,620 thousand RMB[70] - Total borrowings increased to RMB 9,237,131,000 as of 30 June 2023, up from RMB 8,543,372,000 at the end of 2022[161] Revenue and Profitability - Revenue for the six months ended 30 June 2023 was RMB 10,794,419,000, a decrease of 17.1% compared to RMB 13,020,846,000 in the same period in 2022[10] - Gross profit fell sharply to RMB 256,745,000 from RMB 2,567,797,000, a decline of 90%[10] - Operating loss was RMB 445,099,000 compared to an operating profit of RMB 1,381,863,000 in the same period last year[10] - Net loss for the period was RMB 740,178,000, compared to a net profit of RMB 1,024,444,000 in the same period in 2022[10] - Basic loss per share was RMB 0.81, compared to earnings per share of RMB 1.08 in the same period last year[12] - Total comprehensive loss for the period was RMB 667,764,000, compared to a comprehensive income of RMB 1,051,185,000 in the same period in 2022[16] - Comprehensive income for the six months ended 30 June 2023 was a loss of RMB 740,178 thousand, compared to a profit of RMB 1,024,444 thousand in the same period in 2022[19] - Total revenue from external customers for the six months ended 30 June 2023 was RMB 10,794,419 thousand[62] - Segment results for the six months ended 30 June 2023 showed a loss of RMB 740,178 thousand[62] - Operating profit for the period was 1,381,983 thousand RMB, reflecting strong operational performance[67] - Profit for the period stood at 1,004,464 thousand RMB, indicating solid profitability[67] Cash Flow and Financing - Net cash flows generated from operating activities decreased significantly from RMB 770,307 thousand in 2022 to RMB 196,344 thousand in 2023[20] - Net cash flows used in investing activities decreased from RMB 1,434,812 thousand in 2022 to RMB 264,048 thousand in 2023[20] - Net cash flows used in financing activities were RMB 351,722 thousand in 2023, compared to net cash flows generated of RMB 247,677 thousand in 2022[21] - Cash and cash equivalents at the end of the period decreased slightly from RMB 2,088,579 thousand in 2022 to RMB 2,085,531 thousand in 2023[21] - Proceeds from borrowings increased from RMB 4,174,836 thousand in 2022 to RMB 7,891,621 thousand in 2023[21] - Dividends paid in 2022 amounted to RMB 447,492 thousand, while no dividends were paid in 2023[21] - The weighted average effective interest rate rose to 4.25% in June 2023, compared to 2.93% in December 2022[167] - Undrawn borrowing facilities stood at approximately RMB 2,245,667,000 as of 30 June 2023, slightly down from RMB 2,299,757,000 at the end of 2022[167] Inventory and Receivables - Inventories decreased to RMB 6.41 billion as of 30 June 2023, compared to RMB 7.59 billion as of 31 December 2022[7] - Trade and bills receivables increased to RMB 411.04 million as of 30 June 2023, up from RMB 340.80 million as of 31 December 2022[7] - Inventory decreased from RMB 8,194,991,000 in 2022 to RMB 6,823,569,000 in 2023, with a provision for write-down of inventories reducing from RMB 604,886,000 to RMB 416,974,000[120] - Trade and bills receivables decreased slightly from RMB 1,378,569,000 in 2022 to RMB 1,342,118,000 in 2023, with a provision for impairment reducing from RMB 15,423,000 to RMB 17,791,000[134] - Trade and bills receivables as of 30 June 2023 amounted to RMB 1,324,327,000, a decrease from RMB 1,363,146,000 as of 31 December 2022[139] - The provision for impairment of trade and bills receivables was RMB 17,791,000 as of 30 June 2023, compared to RMB 15,423,000 as of 31 December 2022[139] - Prepayments, deposits, and other receivables as of 30 June 2023 totaled RMB 1,080,288,000, down from RMB 1,326,609,000 as of 31 December 2022[142] Property, Plant, and Equipment - Property, plant, and equipment decreased to RMB 9.51 billion as of 30 June 2023, compared to RMB 9.61 billion as of 31 December 2022[7] - Investment properties increased to RMB 348.16 million as of 30 June 2023, up from RMB 268.89 million as of 31 December 2022[7] - Right-of-use assets increased to RMB 1.65 billion as of 30 June 2023, compared to RMB 1.58 billion as of 31 December 2022[7] - Property, plant, and equipment closing net book amount as of 30 June 2023 was RMB 9,506,379, with depreciation of RMB 508,124 and currency translation differences of RMB 34,732[77] - Investment properties closing net book amount as of 30 June 2023 was RMB 348,158, with depreciation of RMB 11,960 and currency translation differences of RMB 2,962[80] - Right-of-use assets as of 30 June 2023 totaled RMB 1,651,422, with land use rights at RMB 1,365,578, buildings and warehouses at RMB 259,127, and equipment and others at RMB 26,717[87] - Lease liabilities as of 30 June 2023 were RMB 310,503, with current liabilities at RMB 57,492 and non-current liabilities at RMB 253,011[87] - Depreciation of right-of-use assets for the six months ended 30 June 2023 was RMB 50,575, with land use rights at RMB 17,234, buildings and warehouses at RMB 29,478, and equipment and others at RMB 3,863[91] - Intangible assets closing net book amount as of 30 June 2023 was RMB 63,586, with amortisation charges of RMB 1,831[94] - Rental income from operating leases for investment properties was RMB 20,277 for the six months ended 30 June 2023[83] - No property, plant, and equipment were pledged as of 30 June 2023 and 31 December 2022[77] - No finance cost was capitalised as part of property, plant, and equipment for the six months ended 30 June 2023, compared to RMB 30,839,000 in the same period in 2022[77] Investments and Joint Ventures - The total investments accounted for using the equity method as of 30 June 2023 were RMB 334,906 thousand, with associates contributing RMB 330,529 thousand and joint ventures contributing RMB 4,377 thousand[96] - The share of losses from associates and joint ventures for the six months ended 30 June 2023 was RMB 29,168 thousand, compared to RMB 1,979 thousand in the same period in 2022[97] - The opening amount of investments in associates as of 1 January 2023 was RMB 355,774 thousand, with a share of losses of RMB 29,279 thousand and a closing amount of RMB 330,529 thousand as of 30 June 2023[100] - The company holds a 45% interest in a British Virgin Islands-based investment holding company with an issued share capital of RMB 166,167 thousand[104] - The company holds a 30% interest in a Hong Kong-based investment holding company with an issued share capital of USD 5,000,000[104] - The company holds a 45% interest in a Vietnam-based garment manufacturing company with an issued share capital of VND 39,492,000,000[109] - The company holds a 45% interest in a Vietnam-based garment manufacturing company with an issued share capital of VND 46,580,000,000[109] - The company holds a 45% interest in a Vietnam-based garment manufacturing company with an issued share capital of VND 37,236,800,000[109] - The company holds a 30% interest in a Vietnam-based textile manufacturing company with an issued share capital of USD 5,000,000[109] - The company holds a 30% interest in a Mainland China-based textile manufacturing company with an issued share capital of RMB 23,030,000[112] - The company's investment in joint ventures increased from RMB 4,131,000 in 2022 to RMB 4,377,000 in 2023, with a share of profits rising from RMB 51,000 to RMB 111,000[115] Financial Instruments and Derivatives - Derivative financial instruments increased to RMB 192.65 million as of 30 June 2023, compared to RMB 99.35 million as of 31 December 2022[7] - Derivative financial instruments assets increased to RMB 549,625 thousand as of 30 June 2023, compared to RMB 479,968 thousand as of 31 December 2022[57][58] - Derivative financial instruments liabilities decreased to RMB 24,809 thousand as of 30 June 2023, compared to RMB 142,054 thousand as of 31 December 2022[57][58] - Derivative financial instruments assets increased to RMB 192,652,000 in June 2023, compared to RMB 99,353,000 in December 2022[169] - Derivative financial instruments liabilities decreased to RMB 24,809,000 in June 2023, down from RMB 142,054,000 in December 2022[169] - The cotton option contracts as of 30 June 2023 comprised six contracts with a notional principal amount totaling USD 1,598,000, a decrease from one contract with USD 2,897,000 as of 31 December 2022[171] - Cross currency swap contracts as of 30 June 2023 included six contracts with a notional principal amount totaling RMB 1,046,789,000, down from eight contracts with RMB 1,703,641,000 as of 31 December 2022[171] - Forward foreign exchange contracts as of 30 June 2023 consisted of 124 contracts with a notional principal amount totaling RMB 4,286,891,000, compared to 172 contracts with RMB 6,743,389,000 as of 31 December 2022[171] - The cotton future contract as of 30 June 2023 included one contract with a notional principal amount of USD 16,593,000, a decrease from one contract with USD 32,482,000 as of 31 December 2022[171] Other Financial Information - The company's condensed consolidated financial statements for the six months ended 30 June 2023 were prepared in accordance with HKAS 34, 'Interim Financial Reporting'[24] - The financial statements are presented in Chinese Renminbi (RMB) unless otherwise stated[22] - The company's shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 9 December 2004[22] - The company adopted International Tax Reform — Pillar Two Model Rules — Amendments to HKAS 12 on 21 July 2023, which provides a temporary mandatory exception for deferred tax accounting for the top-up tax[36] - The amendments to HKAS 12 require the recognition of deferred tax on transactions that give rise to equal amounts of taxable and deductible temporary differences, such as leases and decommissioning obligations[32] - The cumulative effect of recognizing adjustments as of 31 December 2022 was not material, and no adjustment was made to the beginning retained earnings or another component of equity[36] - The company did not change its accounting policies as a result of adopting new and amended standards applicable for the current reporting period[29] - The company is principally engaged in the manufacturing and sales of yarns, grey fabrics, non-woven fabrics, garment fabrics, and garments[22] - The Group is assessing the impact of new accounting standards and interpretations, including HKAS 1 amendments on liability classification and HKFRS 16 amendments on lease liabilities, effective from 1 January 2024[40] - No material changes in financial risk management policies compared to the previous year end[45] - The Group's financial liabilities showed no significant change in contractual undiscounted cash outflows compared to last year end[48] - Fair value estimation for financial instruments includes Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[51] - The Group holds forward foreign exchange contracts, cross currency swaps, cotton futures, cotton options, and bills receivables, all fair valued using active market rates[52] - Financial assets and liabilities measured at fair value as of 30 June 2023 and 31 December 2022 are presented in detail[53] - Revenue from external customers in Asia accounted for 91.3% of the Group's total revenue for the six months ended 30 June 2023, up from 88.6% in the same period in 2022[59] - Revenue from external customers in the Americas accounted for 8.0% of the Group's total revenue for the six months ended 30 June 2023, down from 10.6% in the same period in 2022[59] - The Group's operating segments are assessed based on revenue and operating profit, with a focus on product and geographical perspectives[59] - The Group's geographical segments include China (Mainland China, Hong Kong, and Macao), Southeast Asia (Vietnam and Cambodia), and the Americas (United States, Mexico, Nicaragua, and Honduras)[59] - Total revenue from external customers reached 8,720,552 thousand RMB, with China contributing the majority at 11,725,485 thousand RMB[66] - Depreciation and amortization expenses for the six months ended 30 June 2023 amounted to RMB 572,400 thousand[62] - Depreciation and amortization expenses totaled 400,350 thousand RMB, impacting net income[67] - Total segment assets as of 30 June 2023 amounted to 23,660,456 thousand RMB, with China holding 9,042,045 thousand RMB[70] - Additions to non-current assets were 572,630 thousand RMB, with significant investments in China and Southeast Asia[70] - Freehold land's closing net book amount as of 30 June 2023 was 141,478 thousand RMB, reflecting a decrease from the previous year[73] - Currency translation differences for freehold land amounted to 2,591 thousand RMB, affecting the net book value[73] - The Group's total assets as of 31 December 2022 were 26,151,788 thousand RMB, showing a strong asset base[71] - The total consideration for the sale and purchase of Great Triumph Investments Limited was RMB 810,387,000, with RMB 146,000,000 disclosed as other receivables and long-term receivables as of 30 June 2023[145][146] - Supply chain financing as of 30 June 2023 amounted to RMB 222,236,000, guaranteed by certain subsidiaries, down from RMB 426,093,000 as of 31 December 2022[173][175] - The Group's supply chain financing is repayable within 1 year as of 30 June 2023[174] - The Company's share option scheme allows for the issuance of shares up to 30% of the ordinary shares issued from time to time, with options granted to executive directors at subscription prices of HKD 8.7 and HKD 5.7 per share[182][183] - The fair value of options granted on 23 March 2015 was RMB 17,154,000, and options granted on 28 December 2015 had a fair value of RMB 3,171,000, both determined using the Binomial Option-Pricing Model[186] - The fair value of stock options granted on March 23, 2015, was RMB 17,154,000, and all options have vested with no administrative expense deduction[187] - The fair value of stock options granted on December 28, 2015, was RMB 3,171,000, and all options have vested with no administrative expense deduction[187] - As of June 30, 2023, 3,500,000 options lapsed due to the resignation of a former executive director[188][189] - Total other income for the six months ended June 30, 2023, was RMB 57,284,000, including subsidy income of RMB 20,277