Financial Performance - For the fiscal year ending December 31, 2024, the company reported total revenue of RMB 1,652,996, a decrease of 20% compared to RMB 2,063,746 in 2023[5] - The gross profit for the same period was RMB 597,906, down 25% from RMB 798,110 in the previous year[5] - The operating profit decreased to RMB 149,049, representing a decline of 40% from RMB 249,029 in 2023[5] - The net profit attributable to the company's owners was RMB 18,381, a significant drop of 87% compared to RMB 146,370 in the prior year[5] - Total revenue for the year ended December 31, 2024, was RMB 1,652,996 million, a decrease from RMB 2,063,746 million in 2023, representing a decline of approximately 19.9%[23] - The operating profit for the year 2024 was RMB 149,049 million, compared to RMB 249,029 million in 2023, indicating a decrease of about 40.2%[22] - The net profit attributable to the company's owners for 2024 was RMB 18,381 million, a sharp decline from RMB 146,370 million in 2023, representing a decrease of about 87.5%[30] - Net profit for the year was approximately RMB 63.3 million, a significant decrease of 55.0% compared to RMB 140.6 million in 2023[47] Assets and Liabilities - The total assets increased to RMB 6,297,925, up from RMB 6,006,867 in 2023, reflecting a growth of approximately 4.8%[8] - The company's total liabilities rose to RMB 2,888,647, an increase of 9.8% from RMB 2,630,640 in the previous year[9] - As of December 31, 2024, the group's net current assets were approximately RMB 46,700,000, a decrease from RMB 100,600,000 in 2023, primarily due to reduced cash and increased short-term borrowings[68] - The total equity of the group as of December 31, 2024, was approximately RMB 3,409,300,000, an increase from RMB 3,376,200,000 in 2023, attributed to an increase in other reserves[69] - The total borrowings amounted to approximately RMB 1,850,000,000 as of December 31, 2024, compared to RMB 1,555,300,000 in 2023, resulting in a debt-to-equity ratio of 54.3%, up from 46.1% in 2023[69] Cash Flow and Expenses - The cash and cash equivalents decreased to RMB 282,721, down from RMB 349,794, indicating a decline of 19.1%[8] - The total expenses for sales, marketing, and administrative costs in 2024 were RMB 1,438,245 million, a decrease from RMB 1,717,020 million in 2023, representing a reduction of about 16.2%[25] - The company reported a net financial cost of RMB 63,820 million for 2024, compared to RMB 65,558 million in 2023, showing a slight improvement of about 2.7%[22] - The depreciation and amortization expenses for 2024 were RMB 120,795 million, down from RMB 132,071 million in 2023, indicating a decrease of approximately 8.5%[25] Revenue Breakdown - The revenue from external customers in China for 2024 was RMB 1,363,798 million, down from RMB 1,416,963 million in 2023, reflecting a decline of approximately 3.7%[24] - The electronic cigarette and flavor enhancer segments contributed approximately 75.1% of total revenue, down from 81.0% in 2023[47] - The revenue from the electronic cigarette segment was RMB 639.6 million, a decrease of 29.1% from RMB 901.6 million in 2023[49] - The revenue for flavor enhancers was approximately RMB 602 million, a decrease of 21.7% compared to RMB 768.6 million in the previous year[50] - The food flavor segment recorded revenue of approximately RMB 190.4 million, an increase of 4.6% from RMB 182 million last year, supported by existing customers[51] Strategic Initiatives - The company plans to continue focusing on the manufacturing and sales of flavors, fragrances, and electronic cigarette products in China and Asia[11] - The company plans to actively restore and enhance its domestic market share while accelerating globalization, particularly in developing countries[66] - The company established a new marketing team and developed new strategies to promote products and expand into international markets[46] - The company aims to implement advanced production technologies in its factories to capture high-value markets and enhance productivity[66] - The group plans to expand its electronic cigarette product division as part of its strategic initiatives[77] Legal and Governance - The company is involved in four legal lawsuits related to the acquisition of Kimree, Inc., including claims against sellers for breaching non-competition agreements[84] - A legal case regarding a remaining payment of RMB 150,000,000 related to the Kimree acquisition is still in its early stages, with no further actions taken by the plaintiff as of the announcement date[85] - The board of directors does not recommend any dividend payment for the year ending December 31, 2024, consistent with the previous year[86] - The company has adopted high standards of corporate governance and has complied with all provisions of the corporate governance code, except for the separation of roles between the chairman and CEO[91] - The audit committee reviewed the effectiveness of the internal control systems and risk management for the year ending December 31, 2024[92] Employment and Operations - The group employed 1,245 staff as of December 31, 2024, down from 1,334 in 2023, due to changes in the employment structure[76] - The company implemented strict cost control measures and new automation technologies to reduce production costs amid rising expenses[46] Other Financial Metrics - The company reported a basic and diluted earnings per share of RMB 0.02, down from RMB 0.14 in 2023, a decrease of 85.7%[5] - The company’s other comprehensive income for the year was RMB 828, compared to RMB 4,453 in the previous year, reflecting a decline of 81.4%[6] - Other income decreased to approximately RMB 3.4 million from RMB 5.4 million, mainly due to reduced government subsidies[60] - The group recorded a net foreign exchange loss of approximately RMB 300,000 in 2024, a decrease from RMB 4,400,000 in 2023[73]

Financial Performance - For the six months ended June 30, 2024, the company reported revenue of RMB 750,975,000, a decrease of 6.7% compared to RMB 805,245,000 in the same period of 2023[6] - Gross profit for the same period was RMB 305,631,000, down from RMB 328,105,000, reflecting a gross margin decline[6] - Operating profit decreased to RMB 109,237,000 from RMB 139,670,000, indicating a decline of 21.8% year-over-year[6] - The net profit attributable to the company's owners was RMB 44,332,000, down 32.2% from RMB 65,355,000 in the previous year[6] - The company's profit for the six months ended June 30, 2024, was RMB 62,682 thousand, a decrease of 27% compared to RMB 85,888 thousand in the same period of 2023[7] - Total comprehensive income for the period was RMB 59,390 thousand, down 40% from RMB 99,231 thousand year-on-year[7] - The company's net cash generated from operating activities increased to RMB 18,422 thousand, compared to RMB 8,371 thousand in the previous year, representing a 120% increase[11] - The company reported a foreign exchange loss of RMB 3,292 thousand for the period, compared to a gain of RMB 13,343 thousand in the previous year[7] - Basic earnings per share for the six months ended June 30, 2024, were RMB 0.04, down from RMB 0.06 in the same period of 2023[44] Assets and Liabilities - Total assets as of June 30, 2024, were RMB 5,869,289,000, a decrease from RMB 6,006,867,000 at the end of 2023[4] - Total liabilities decreased to RMB 2,458,964,000 from RMB 2,630,640,000, reflecting a reduction of 6.5%[4] - Cash and cash equivalents were reported at RMB 319,895,000, down from RMB 349,794,000, indicating a decrease of 8.5%[3] - The company’s inventory increased slightly to RMB 338,727,000 from RMB 330,619,000, showing a growth of 2.0%[3] - Accounts receivable as of June 30, 2024, totaled RMB 646,884 thousand, a decrease of 11.1% from RMB 728,106 thousand as of December 31, 2023[26] - The net amount of accounts receivable after expected credit loss provisions was RMB 396,950 thousand, down 18.4% from RMB 486,662 thousand as of December 31, 2023[26] - The total liabilities as of June 30, 2024, amounted to RMB 730,123 thousand, a decrease of 12.5% from RMB 834,593 thousand as of December 31, 2023[30] - The total equity as of June 30, 2024, was RMB 1,393,954 thousand, reflecting an increase from RMB 1,292,432 thousand as of December 31, 2023[28] Revenue Segmentation - The segment revenue breakdown includes RMB 313,993 thousand from flavor enhancers, RMB 90,286 thousand from food flavors, and RMB 256,132 thousand from electronic cigarette products[19] - The revenue from the electronic cigarette segment was approximately RMB 256.1 million, a significant decline of 21.6% from RMB 326.5 million in the prior year[57] - The flavor enhancer segment generated revenue of approximately RMB 308.1 million, slightly increasing by 0.7% from RMB 306 million in the previous year[53] - The food flavor segment reported revenue of approximately RMB 90.3 million, an increase of 3.4% from RMB 87.3 million in the same period last year[55] - The daily flavor segment's revenue was approximately RMB 69.6 million, up 12.3% from RMB 62 million in the previous year[56] - The investment property segment saw revenue of approximately RMB 26.9 million, an increase of 15.0% from RMB 23.4 million in the previous year[58] Expenses and Costs - Employee benefits expenses increased to RMB 96,929,000, up 11.5% from RMB 87,114,000[39] - Depreciation and amortization expenses decreased to RMB 56,326,000, down 18.2% from RMB 68,855,000[39] - Sales and marketing expenses were approximately RMB 23.6 million, representing about 3.1% of total revenue, a decrease of 33.3% compared to RMB 35.4 million in the same period last year[63] - Administrative expenses for the same period were approximately RMB 168.5 million, accounting for about 22.4% of total revenue, an increase of 2.2% from RMB 164.9 million year-on-year[63] - The net financial cost for the six months ended June 30, 2024, was RMB (28,007,000), an improvement from RMB (34,373,000) in the same period of 2023[41] Strategic Plans and Developments - The company plans to focus on new product development and market expansion strategies in the upcoming quarters[6] - The company plans to continue expanding its market presence in China and Asia, focusing on the production and sales of flavors, fragrances, and electronic cigarette products[12] - The group plans to implement new strategies in the second half of 2024, including corporate restructuring and establishing new product branding teams to adapt to the growing e-cigarette market[66] - The group has obtained production licenses for e-cigarette oil and products, ensuring compliance with national standards[66] Corporate Governance and Compliance - The company has maintained the same accounting policies as the previous fiscal year, ensuring consistency in financial reporting[14] - The company has not adopted any new accounting standards that would significantly impact its financial performance for the current or future reporting periods[15] - The company continues to evaluate its accounting estimates and judgments, which may affect reported asset and liability amounts[17] - The audit committee, composed of four independent non-executive directors, has reviewed the unaudited interim condensed consolidated financial statements for the six months ending June 30, 2024[91] - The remuneration committee is responsible for considering and approving the remuneration arrangements for senior employees, including salary and bonus plans[92] - The nomination committee reviews the board's structure and diversity, making recommendations for appointments and succession planning[93] - The company has adhered to the corporate governance code throughout the reporting period, except for the separation of the roles of chairman and CEO[94] - All directors confirmed compliance with the standard code of conduct for securities trading during the six-month period ending June 30, 2024[95] Shareholder Information - Major shareholders include Mr. Wang Mingfan with 729,456,226 shares (67.51% of issued share capital), Chuanghua Limited with 348,320,509 shares (32.24%), and Full Ashley Enterprises Limited with 19,318,234 shares (1.79%)[88] - The company has adopted a new share option plan effective from December 12, 2023, allowing for the issuance of up to 10% of the issued shares, which totals 108,051,214 shares[83] - The company has adopted a share incentive plan approved by shareholders on December 11, 2023, allowing for the issuance of ordinary shares at a par value of HKD 0.10 to eligible employees without payment at the time of grant or vesting[85] - As of June 30, 2024, there are 396,000 shares held by the trustee under the share incentive plan that have not yet been granted, with no shares granted during the reporting period[85] - The board does not recommend the distribution of interim dividends for the six months ending June 30, 2024[74] Legal and Regulatory Matters - The company completed the sale of a 51% stake in Mons Co., Ltd. and Boton Medical Co., Ltd. to an independent third party in August 2023[22] - There are ongoing legal proceedings related to the acquisition of Kimree, Inc., involving claims against former sellers for breaching non-competition agreements[79] - The company’s wholly-owned subsidiary in Shenzhen is in discussions regarding compensation for land expropriation by the government for public interest, with no specific compensation amount disclosed yet[78] - As of June 30, 2024, the company reported no significant contingent liabilities[77]

Financial Performance - For the six months ended June 30, 2024, the company reported revenue of RMB 750,975,000, a decrease of 6.7% compared to RMB 805,245,000 for the same period in 2023[5]. - The gross profit for the same period was RMB 305,631,000, reflecting a gross margin of approximately 40.7%, down from RMB 328,105,000 in 2023[5]. - Operating profit decreased to RMB 109,237,000, compared to RMB 139,670,000 in the previous year, indicating a decline of 21.8%[5]. - The net profit attributable to the owners of the company for the period was RMB 44,332,000, down 32.2% from RMB 65,355,000 in 2023[5]. - The total comprehensive income for the period was RMB 59,390,000, down from RMB 99,231,000 in 2023, reflecting a decline of 40.2%[6]. - Basic earnings per share for the period were RMB 0.04, compared to RMB 0.06 for the same period in 2023, reflecting a decrease in profit attributable to owners of the company to RMB 44,332,000 from RMB 65,355,000[35]. - The company reported a fair value loss of RMB 400,000 on investment properties, compared to a gain of RMB 6,200,000 in the same period of 2023[29]. Assets and Liabilities - Total assets as of June 30, 2024, were RMB 5,869,289,000, a decrease from RMB 6,006,867,000 at the end of 2023[3]. - Total liabilities decreased to RMB 2,458,964,000 from RMB 2,630,640,000, representing a reduction of 6.5%[3]. - Cash and cash equivalents amounted to RMB 319,895,000, down from RMB 349,794,000, indicating a decrease of 8.6%[2]. - The net accounts receivable as of June 30, 2024, is 396,950, a decrease from 486,662 as of December 31, 2023[19]. - Total borrowings as of June 30, 2024, amount to 1,522,939, a slight decrease from 1,555,257 as of December 31, 2023[26]. - The company's total borrowings were approximately RMB 1.52 billion as of June 30, 2024, with a debt-to-equity ratio of 44.7%, down from 46.1% as of December 31, 2023[58]. Revenue Segmentation - Total revenue for the six months ended June 30, 2024, was $999.615 million, with a segment revenue of $807.925 million from five divisions[15]. - Revenue from the electronic cigarette segment was approximately RMB 256.1 million, a significant decline of 21.6% from RMB 326.5 million in the previous year due to intense market competition[47]. - Revenue from the flavor enhancer segment was approximately RMB 308.1 million, slightly increasing by 0.7% from RMB 306 million year-on-year[44]. - Revenue from the food flavor segment was approximately RMB 90.3 million, an increase of 3.4% from RMB 87.3 million in the previous year[45]. - Revenue from the daily flavor segment was approximately RMB 69.6 million, up 12.3% from RMB 62 million year-on-year[46]. - Revenue from investment properties increased by 15.0% to approximately RMB 26.9 million from RMB 23.4 million in the previous year[48]. Operational Highlights - The company continues to focus on the production and sales of flavors, fragrances, and electronic cigarette products in China and Asia[7]. - The operating profit for the electronic cigarette segment was a loss of $15.034 million, while the total operating profit across all segments was $109.237 million[15]. - The company plans to launch new electronic cigarette products in the second half of 2024 to restore growth momentum in this segment[47]. - New strategies will be implemented in the second half of 2024, including corporate restructuring and the establishment of new product branding teams to adapt to the evolving electronic cigarette market[56]. - The company has made a significant investment in a construction project on land in Huizhou, Guangdong, with a total fixed asset investment planned at approximately RMB 400 million[67]. Financial Management and Risks - The company faced financial risks including market risk, credit risk, and liquidity risk, which are detailed in the annual financial statements[11]. - The net financial costs for the period were $28.007 million, indicating a need for ongoing financial management[15]. - The net financial cost for the six months ended June 30, 2024, was RMB 28,007,000, a reduction from RMB 34,373,000 in the previous year[32]. - The company recorded a foreign exchange net gain of approximately RMB 700,000 for the six months ended June 30, 2024, compared to a foreign exchange loss of RMB 1.4 million in the same period of 2023[61]. Corporate Governance - The company adheres to high corporate governance standards, complying with all provisions of the Corporate Governance Code, except for the separation of the roles of Chairman and CEO[75]. - All directors confirmed compliance with the standard code of conduct for securities trading during the six-month period ending June 30, 2024[76]. - The Audit Committee, consisting of four independent non-executive directors, reviewed the unaudited interim consolidated financial statements for the six months ending June 30, 2024[72]. - The Remuneration Committee is responsible for considering and approving the compensation arrangements for senior employees, including salary and bonus plans[73]. - The Nomination Committee reviews the board's structure and diversity, making recommendations for director appointments and succession planning[74]. Legal and Regulatory Matters - The company is involved in two legal lawsuits related to the acquisition of Kimree, Inc. and its subsidiaries, with ongoing proceedings against the sellers for breaching non-competition clauses[70]. - The company is in discussions regarding compensation for land acquisition by the Shenzhen government, which is intended for public interest projects[69]. - The company has no significant contingent liabilities other than those disclosed in the management discussion and analysis section[68]. Employee and Operational Changes - The company has a total of 1,080,512 shares issued and fully paid as of June 30, 2024[21]. - The company has a total of 1,259 employees as of June 30, 2024, down from 1,981 employees as of December 31, 2023[66].

Summary of Conference Call Company and Industry Involved - The conference call is related to Tianfang Securities and its mid-term listing conference for 2024, focusing on the Chinese market [1] Core Points and Arguments - The call begins with a welcome message and a reminder that all participants are muted [1] - A disclaimer is provided stating that the meeting is private and cannot be recorded or shared without permission from Tianfang Securities [1] - Tianfang Securities reserves the right to pursue legal action against any violations of this confidentiality requirement [1] Other Important but Possibly Overlooked Content - The emphasis on confidentiality and legal rights indicates the importance of proprietary information in the financial services industry [1]

Financial Performance - Revenue for 2023 was RMB 2,063,746 thousand, a decrease from RMB 2,324,807 thousand in 2022[35] - Gross profit for 2023 was RMB 798,110 thousand, compared to RMB 786,864 thousand in 2022[35] - Operating profit for 2023 was RMB 249,029 thousand, up from RMB 158,063 thousand in 2022[35] - Net profit attributable to the company's owners for 2023 was RMB 146,370 thousand, compared to RMB 48,317 thousand in 2022[35] - Basic and diluted earnings per share for 2023 were RMB 0.14, up from RMB 0.04 in 2022[35] - Annual profit for 2023 reached RMB 140,630 thousand, a significant increase from RMB 84,481 thousand in 2022[36] - Total comprehensive income for 2023 was RMB 145,083 thousand, compared to RMB 97,943 thousand in 2022[36] - The company's total comprehensive income attributable to the company's owners was RMB 148,936 thousand in 2023, compared to RMB 57,635 thousand in 2022[36] - Total revenue for the year ended December 31, 2023, was approximately RMB 2,063.7 million, a decrease of 11.2% compared to the previous year[133][137][139] - Net profit for the year was approximately RMB 140.6 million, an increase of 66.5% year-over-year, primarily due to the sale of two South Korean subsidiaries, which generated a gain of approximately RMB 62.8 million[133][137] - Excluding the gain from the sale of subsidiaries, the net profit would have been approximately RMB 77.8 million, a decrease of 7.9% compared to the previous year[133][137] - The company's gross profit increased slightly by 1.4% to approximately RMB 798.1 million[137] Subsidiaries and Equity Holdings - The company holds 100% equity in Boton Flavors & Fragrances (Hong Kong) Limited, with a paid-up capital of HKD 1[2] - The company holds 100% equity in Zhongxiang Fragrance (Shenzhen) Co., Ltd., with a registered capital of HKD 15,000,000[2] - The company holds 51% equity in Shenzhen Huachang Industrial Co., Ltd., with a registered capital of RMB 9,803,921[2] - The company holds 53% equity in PT DBFF Boton Indonesia Co., Ltd., with a paid-up capital of USD 3,400,000[2] - The company holds 100% equity in Boton (Hubei) Biotechnology Co., Ltd., with a registered capital of RMB 500,000,000 and a paid-up capital of RMB 130,700,000[2] - The company holds 51% equity in Fuzhou Yuangelin Technology Co., Ltd., with a paid-up capital of RMB 11,200,000[2] - The company holds 66% equity in Huizhou Babo Technology Co., Ltd., with a paid-up capital of RMB 5,000,000[2] - The company sold two South Korean subsidiaries in May 2023 for RMB 100,000 thousand, which strengthened liquidity and reduced administrative expenses[116] - The company became the exclusive manufacturer and supplier of certain e-cigarettes in the South Korean market following the sale of its subsidiaries[116] Cash and Financial Position - The company's cash and bank balances subject to foreign exchange control regulations in Asian countries (including China) amounted to RMB 276,763,000 in 2023, down from RMB 362,645,000 in 2022[3] - Capital commitments for property, plant, and equipment as of 2023 were RMB 320,517 thousand, significantly higher than RMB 28,247 thousand in 2022[22] - Short-term lease commitments for 2023 were RMB 313 thousand, compared to RMB 256 thousand in 2022[22] - The company's bank loans were secured by property, plant, and equipment with a book value of RMB 808,407 thousand as of December 31, 2023, up from RMB 601,016 thousand in 2022[43] - The company's total equity as of December 31, 2023, was RMB 3,376,227 thousand, up from RMB 3,262,120 thousand at the beginning of the year[62] - The company's distributable reserves as of December 31, 2023, were approximately RMB 548.8 million (2022: RMB 602.1 million)[199] - The company's share capital consists of 1,080,512,146 ordinary shares with a par value of HKD 0.10 each as of December 31, 2023[197] - The company's cash and cash equivalents at the end of 2023 were RMB 106,249 thousand for Dongguan Boton and RMB 27,102 thousand for Huizhou Babo[99] Assets and Liabilities - Right-of-use assets for land use rights and buildings amounted to RMB 154,235 thousand in 2023, an increase from RMB 119,906 thousand in 2022[45] - Lease liabilities decreased to RMB 6,949 thousand in 2023 from RMB 11,688 thousand in 2022[45] - The company's total fixed assets at the end of 2023 amounted to RMB 1,528,866,000, with significant additions of RMB 122,993,000 during the year[67] - Depreciation expenses for 2023 were RMB 75,785,000, allocated to cost of sales (RMB 9,726,000), sales and marketing (RMB 692,000), and administrative expenses (RMB 65,367,000)[67] - The company's bank borrowings were secured by land use rights with a book value of RMB 25,313,000 as of December 31, 2023[70] - Total lease cash outflows for 2023 were RMB 4,699,000, a decrease from RMB 6,995,000 in 2022[70] - The company's right-of-use assets increased to RMB 154,235,000 at the end of 2023, up from RMB 119,906,000 at the beginning of the year[70] - The company's total fixed assets cost at the end of 2023 was RMB 2,090,532,000 with accumulated depreciation of RMB 561,666,000[67] - Accounts receivable decreased from RMB 913,025 thousand in 2022 to RMB 728,106 thousand in 2023, a decrease of 20.3%[77] - Expected credit loss provision for accounts receivable increased from RMB 86,015 thousand in 2022 to RMB 241,444 thousand in 2023, a significant increase of 180.7%[77] - The company's inventory net value at the end of 2023 was RMB 330,619 thousand, a decrease from RMB 360,818 thousand in 2022[104] - Inventory cost recognized as expenses and included in cost of sales for 2023 was RMB 1,168,262 thousand, a decrease from RMB 1,426,976 thousand in 2022[104] Revenue Segments - Revenue from e-cigarettes and accessories decreased by 22.6% from RMB 1,164,900 thousand in 2022 to RMB 901,600 thousand in 2023 due to new regulations on e-cigarette flavor sales in China[90] - The electronic cigarette products segment contributed approximately 43.7% of total revenue, a decrease of 22.6% compared to the previous year[140] - The flavor enhancer segment contributed approximately 37.3% of total revenue, a decrease of 3.4% compared to the previous year[140] - The food flavor segment revenue increased by 6.0% to approximately RMB 182.0 million, driven by support from existing customers[141] - The daily-use flavor segment revenue increased by 10.7% to approximately RMB 165.8 million, supported by new and long-term customers[141] Corporate Governance and Management - The total remuneration for directors and senior executives in 2023 was RMB 4,949,000, including salaries, retirement benefits, and share-based payments[16] - Total remuneration for directors in 2023 was RMB 4,948 thousand, with the highest paid being the CEO, Mr. Wang Mingfan, at RMB 1,905 thousand[25] - The company's risk management and internal control systems were deemed effective and sufficient by the board of directors[31] - The company emphasizes diversity in its board composition and workforce, aiming to leverage different skills and backgrounds for long-term development[33] - The company appointed Ms. Yin Shuzhen as a non-executive director on December 29, 2023, to enhance board diversity[57] - The audit committee consists of four independent non-executive directors responsible for financial oversight and governance[73] - The company secretary ensures compliance with legislative, regulatory, and corporate governance developments[74] - The Board of Directors did not recommend the payment of any dividends for the year ended December 31, 2023 (2022: none)[192] Strategic Initiatives and Market Focus - The company revised its short-term strategy to focus on international markets with its own brand and customized e-cigarette products due to new regulations in China[90] - The company plans to continue focusing on strict cost control and expanding market share in the flavor and fragrance industry[134][140] - The company implemented strict cost control measures across all business segments and departments in 2023[116] - The company streamlined its corporate structure and established a central working committee to improve efficiency in 2023[116] - The company will continue to develop its e-cigarette business in China and other countries and explore the feasibility of applying e-cigarette atomizers in the healthcare field[190] Intangible Assets and Goodwill - The total amortization expense for intangible assets in 2023 was RMB 48,197,000, compared to RMB 48,383,000 in 2022[148] - The net book value of intangible assets at the end of 2023 was RMB 1,721,629,000, a decrease from RMB 1,768,882,000 at the end of 2022[148] - The net book value of goodwill remained unchanged at RMB 1,625,741,000 from 2022 to 2023[148] - The net book value of customer relationships decreased from RMB 102,675,000 in 2022 to RMB 72,736,000 in 2023[148] - The net book value of patents, formulas, and trademarks decreased from RMB 29,555,000 in 2022 to RMB 16,888,000 in 2023[148] - The net book value of non-compete agreements decreased from RMB 6,283,000 in 2022 to RMB 4,908,000 in 2023[148] - The net book value of computer software increased from RMB 623,000 in 2022 to RMB 1,181,000 in 2023[148] - The total cost of intangible assets increased slightly from RMB 2,081,863,000 in 2022 to RMB 2,082,807,000 in 2023[148] - The accumulated amortization of intangible assets increased from RMB 309,883,000 in 2022 to RMB 358,080,000 in 2023[148] - The goodwill from the acquisition of Kimree, Inc. is allocated to the e-cigarette product segment, amounting to RMB 426,373[170] - The goodwill from the acquisition of four businesses is allocated to the flavor enhancer segment, amounting to RMB 1,199,368[170] Investment Properties and Valuation - The fair value of investment properties is determined based on active market prices, adjusted for specific asset characteristics, location, or condition. If active market prices are unavailable, alternative valuation methods such as discounted cash flow forecasts are used[147] - The market rent for investment properties in 2023 is RMB 53 to RMB 95 per square meter per month, compared to RMB 54 to RMB 101 in 2022, with higher market rents leading to higher fair values[162] - The periodic yield for investment properties remains at 2%-6%, with higher yields leading to lower fair values[162] - The reversionary yield for investment properties remains at 4%-7%, with higher yields leading to lower fair values[162] - A 5% increase or decrease in market rent would result in a RMB 25,000,000 change in the value of investment properties[162] Subsidiary Performance - Dongguan Boton's revenue increased from RMB 321,589 thousand in 2022 to RMB 347,786 thousand in 2023, an increase of 8.1%[98] - Huizhou Babo's revenue increased from RMB 153,341 thousand in 2022 to RMB 183,790 thousand in 2023, an increase of 19.9%[98] - Net current assets of Dongguan Boton increased from RMB 159,337 thousand in 2022 to RMB 252,605 thousand in 2023, an increase of 58.5%[95] - Net current assets of Huizhou Babo increased from RMB 15,583 thousand in 2022 to RMB 36,152 thousand in 2023, an increase of 132.0%[95] - Operating cash flow for Dongguan Boton in 2023 was RMB 88,073 thousand, a significant increase from RMB 33,207 thousand in 2022[99] Environmental, Social, and Governance (ESG) - The company's environmental policies and performance, as well as compliance with relevant laws and regulations, are detailed in the 2023 Environmental, Social, and Governance (ESG) Report[190] - The company's financial performance and key risk factors for the year under review are analyzed in the "Management Discussion and Analysis" section of the annual report[190] Other Financial Information - The company paid RMB 7,480 thousand in audit fees to PricewaterhouseCoopers for the fiscal year 2023[56] - The company's property, plant, and equipment changes during the year are detailed in Note 6 of the financial statements[196] - The company's reserves and equity changes during the year are detailed in Notes 19, 20, and 38(a) and the consolidated statement of changes in equity[198]

| --- | --- | --- | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------|----------------------------------------------------------------------------------------------------------| | 中国波顿（ ...

智通财经APP获悉，中国波顿(03318)尾盘涨幅扩大近60%，截至发稿，涨56.8%，报2.65港元，成交额1155.75万港元。 消息面上，中国波顿发布公告，深圳市南山区政府拟征收子公司深圳波顿拥有深圳市的一幅土地，旨在建设高速铁路枢纽及相关工程，相关部门已向深圳波顿提供补偿方案。 天风证券指出，根据公司公告，公司拟投入更多资源开发电子雾化器，并已成功收购广东省惠州市仲恺区土地用于建造电子雾化器智能制造基地，该项目为公司扩展电子烟产品分部的战略举措，建设期为2023-2025年。该行认为，征地补偿金额将增加公司资金储备，有望加速公司业务扩张。此外，随着国内监管的落地，公司产业链一体化布局优势突出，有望进一步推动国内外的渠道网络布局。 ...

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 1.68 HKD, expecting a relative return of over 20% within the next six months [1]. Core Views - The company has experienced a revenue decline of 11.2% year-on-year, totaling 2.064 billion RMB in 2023, while net profit increased by 66.5% to 141 million RMB, primarily due to significant profit improvements from corporate restructuring [1]. - The electronic cigarette segment faced a revenue drop of 22.6%, contributing 9.02 billion RMB, while flavor enhancers and food flavors showed slight declines and growth, respectively [1]. - The company is focusing on expanding its international market presence in flavor and electronic cigarette products, supported by a complete industrial chain layout and strong R&D capabilities [1]. Summary by Sections Revenue and Profitability - The company reported a gross profit of 798 million RMB with a gross margin of 38.7%, an increase of 4.8 percentage points year-on-year [1]. - The restructuring efforts and the sale of two subsidiaries in South Korea contributed to the net profit increase, despite a decline when excluding these gains [1]. Business Segments - Electronic cigarette products accounted for 43.7% of total revenue but reported a net loss of 73 million RMB due to new regulatory policies affecting flavor sales [1]. - Flavor enhancers generated 769 million RMB, with an operating profit margin of 31.4%, while food flavors and daily-use flavors showed positive growth [1]. Future Outlook - The company anticipates revenue growth of 10% annually for its Dongguan subsidiary from 2020 to 2024, with projected revenues of 2.52 billion, 2.76 billion, and 3.07 billion RMB for 2024-2026 [1]. - The report highlights the potential for improved industry dynamics due to regulatory clarity in the electronic cigarette market, which is expected to enhance competitive positioning and market concentration [1].

Revenue Performance - Total revenue for the year was 2,324,807 million, a decrease from 2,063,746 million in the previous year, representing a decline of approximately 3.5%[2] - Revenue from external customers in the e-cigarette segment reached 1,164,858 million, contributing significantly to overall revenue[2] - For the year ended December 31, 2023, the group's total revenue was approximately RMB 2,063,700,000, a decrease of 11.2% compared to RMB 2,324,800,000 in 2022[19] - The company reported a revenue of RMB 2,063,746,000 for the year ending December 31, 2023, a decrease of 11.2% from RMB 2,324,807,000 in 2022[79] - The revenue from electronic cigarette products was approximately RMB 901.6 million, down 22.6% from RMB 1,164.9 million in the previous year, primarily due to new regulatory policies affecting sales in the local market[125] Profitability - Operating profit for the year was 158,063 million, compared to 112,214 million in the previous year, indicating an increase of approximately 40.9%[2] - The annual net profit was approximately RMB 140,600,000, an increase of 66.5% compared to RMB 84,500,000 in 2022, primarily due to the sale of two Korean subsidiaries generating a profit of approximately RMB 62,800,000[19] - The net profit attributable to the company's owners was RMB 146,370,000, compared to RMB 48,317,000 in the previous year, representing a significant increase[79] - The company recorded a profit attributable to owners of the company of RMB 146.4 million for the year, significantly up from RMB 48.3 million in 2022, resulting in a basic earnings per share of RMB 0.14[140] Expenses and Costs - Administrative expenses were approximately RMB 342,600,000, accounting for 16.6% of total revenue, down from 15.5% in 2022, reflecting a decrease of 4.7% from RMB 359,400,000[25] - Sales and marketing expenses increased to RMB 108.8 million, representing 5.3% of total revenue, compared to 4.4% in the previous year, driven by increased incentive bonuses related to sales in South Korea[127] - The company reported a financial asset impairment loss of RMB 156,889,000 for the year, compared to RMB 13,438,000 in 2022, indicating a significant increase in financial challenges[79] Investments and Capital Expenditures - Capital expenditures totaled 170,000 million, with significant investments in e-cigarette product development[2] - The group invested approximately RMB 160.7 million in fixed assets and construction projects during the year, compared to RMB 170 million in 2022[163] - The company has committed to a fixed asset investment of approximately RMB 400 million on the newly acquired land use rights[194] Financial Position - The company’s accounts receivable decreased to 728,106 million from 913,025 million, reflecting improved collection efforts[8] - The total liabilities decreased to 834,593 million from 1,025,274 million, indicating a reduction in financial obligations[11] - As of December 31, 2023, total equity was approximately RMB 3,376,200,000, an increase from RMB 3,262,100,000 in 2022, while total borrowings decreased to approximately RMB 1,555,300,000 from RMB 1,665,900,000[30] - The net current assets as of December 31, 2023, were approximately RMB 100.6 million, down from RMB 189.3 million in 2022, mainly due to decreases in accounts receivable and cash[186] Strategic Plans and Future Outlook - The company plans to expand its market presence and invest in new product development to drive future growth[2] - The company plans to enter the international market with high-quality designed electronic cigarette products through its own brand and customized designs[125] - The group plans to develop electronic vaporizer products to enhance shareholder returns, indicating a strategic initiative for expansion in the electronic cigarette segment[169] - The company aims to accelerate the development of its e-cigarette business by entering international markets following the sale of two Korean subsidiaries[185] Regulatory and Market Risks - The company faces risks including adverse market conditions, changes in consumer trends, and regulatory changes that may significantly impact its financial condition and operational performance[130] Employee and Operational Changes - The group had a total of 1,334 employees as of December 31, 2023, down from 1,522 employees in the previous year due to the sale of two Korean subsidiaries[164] Environmental and Compliance Efforts - The group has established environmental policies and procedures to comply with applicable laws and regulations, aiming to minimize operational impacts on the environment[159]

Financial Performance - For the six months ended June 30, 2023, the company reported revenue of RMB 805,245,000, a decrease of 23.6% compared to RMB 1,055,226,000 in the same period of 2022[15] - Gross profit for the same period was RMB 328,105,000, down 19.6% from RMB 408,381,000 year-over-year[15] - Operating profit decreased to RMB 139,670,000, a decline of 26.8% from RMB 190,708,000 in the previous year[15] - The net profit attributable to the company's owners was RMB 65,355,000, down 32.2% from RMB 96,312,000 in the prior year[15] - The company’s earnings per share for the period was RMB 0.06, down from RMB 0.09 in the same period last year[15] - The company reported a net profit of RMB 85,888 thousand for the six months, reflecting a strong performance across its business segments[39] - Total comprehensive income for the period was RMB 99,231,000, down 28.2% from RMB 138,170,000 year-on-year[18] - Profit from continuing operations for the period was approximately RMB 83.3 million, a decrease of 33.6% compared to RMB 125.4 million in the same period last year[92] - Net profit for the period was RMB 83.3 million, down 33.6% from RMB 125.4 million year-on-year, with a net profit margin of approximately 10.3%[107] Assets and Liabilities - Total assets as of June 30, 2023, were RMB 6,438,181,000, slightly down from RMB 6,451,006,000 at the end of 2022[11] - Total liabilities decreased to RMB 3,074,445,000 from RMB 3,188,886,000 at the end of 2022, reflecting a reduction of 3.6%[11] - The company had a total equity of RMB 3,363,736,000 as of June 30, 2023, compared to RMB 3,304,583,000 at the end of June 2022[20] - The group’s cash and bank borrowings stood at approximately RMB 536.1 million as of June 30, 2023, down from RMB 706.7 million as of December 31, 2022[117] - The group’s debt ratio decreased slightly to 50.4% as of June 30, 2023, compared to 51.1% as of December 31, 2022[118] Cash Flow and Investments - Cash and cash equivalents were reported at RMB 240,023,000, a significant decrease from RMB 433,015,000 at the end of 2022[8] - The company reported a net cash inflow from operating activities of RMB 8,371,000, slightly down from RMB 8,749,000 in the previous year[23] - Cash used in investing activities amounted to RMB 195,983,000, significantly higher than RMB 86,575,000 in the same period last year[23] - The group recorded operating cash outflow of RMB 6,976,000 for the six months ended June 30, 2023, compared to an inflow of RMB 4,512,000 in the previous year[58] - The group invested approximately RMB 19.7 million in fixed assets during the six months ended June 30, 2023, compared to RMB 19.2 million in the same period of the previous year[125] Market and Product Development - The company plans to focus on market expansion and new product development to drive future growth[25] - The company is expanding into the e-cigarette market, which has been a focus since 2016, targeting over 20 countries including the USA and EU[25] - The company plans to allocate sufficient resources for the development of e-cigarette products in the coming year[91] - The company aims to enhance the quality of flavor enhancer products for the traditional tobacco industry and improve formulations in the food and daily fragrance segments to adapt to changing market demands[114] - The company is considering strategic acquisitions to bolster its product offerings and market presence, with a budget of $H million allocated for potential deals[185] Revenue Breakdown - Total revenue for the six months ended June 30, 2023, was RMB 996,935 thousand, with revenue from external customers amounting to RMB 805,245 thousand[38] - Revenue from flavor enhancers was RMB 306 million, down 5.5% from RMB 323.8 million year-on-year, attributed to downstream customers strictly controlling inventory[95] - Revenue from food flavors slightly increased by 0.6% to RMB 87.3 million from RMB 86.8 million in the previous year, supported by the development of new flavors[96] - Revenue from daily fragrances decreased by 5.3% to RMB 62 million, impacted by reduced demand post-COVID-19 pandemic[97] - Revenue from electronic cigarette products fell by 41.2% to RMB 326.5 million from RMB 555.7 million, primarily due to new policies and tax rates in China[98] Corporate Governance and Compliance - The audit committee consists of four independent non-executive directors and has reviewed the unaudited interim consolidated financial statements for the six months ending June 30, 2023[165] - The company has adopted the corporate governance code and has complied with all relevant provisions during the reporting period, except for the separation of the roles of chairman and CEO[171] - The board of directors did not recommend the payment of an interim dividend for the six months ended June 30, 2023[127] Legal and Regulatory Matters - The company has issued a subpoena against six guarantors related to false statements in the Kimree acquisition matter[142] - The company has reached an agreement to pay Mr. Liu and Mr. Xiang a total of RMB 250 million in installments due to a legal dispute regarding a loan agreement[137] Future Outlook - The company provided a future outlook with a revenue guidance of $B billion for the next quarter, representing a C% growth year-over-year[185] - New product launches are expected to contribute an additional $D million in revenue, with a focus on expanding into the E market[185] - Market expansion efforts are projected to increase market share by G% in the upcoming fiscal year[185] - The overall performance in the last quarter showed a revenue increase of I% year-over-year, totaling $J billion[185]