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]

Financial Performance - Revenue for the year ended December 31, 2022, was RMB 2,324,807,000, an increase of 1.6% compared to RMB 2,286,102,000 in 2021[19] - Gross profit for the same period was RMB 786,864,000, down 12% from RMB 892,337,000 in the previous year[19] - Operating profit decreased to RMB 158,063,000 from RMB 359,967,000, reflecting a decline of 56% year-over-year[19] - Net profit attributable to the owners of the company was RMB 48,317,000, a significant drop of 73.7% from RMB 183,512,000 in 2021[19] - The company's revenue for 2022 was RMB 2,324.8 million, a 1.7% increase from RMB 2,286.1 million in 2021[45] - The gross profit margin for electronic cigarette products decreased by 4.0%, contributing 50.1% to total revenue in 2022[45] - The company reported a profit attributable to owners of the company of RMB 48.3 million in 2022, down from RMB 183.5 million in 2021, leading to a basic earnings per share of RMB 0.04[34] - Net profit for the year ended December 31, 2022, was approximately RMB 84,500,000, a significant decrease of 62.5% from RMB 225,600,000 in 2021, with a net profit margin dropping to about 3.6% from 9.9%[84] - The group's gross profit for the year ended December 31, 2022, was approximately RMB 786.9 million, down 11.8% from RMB 892.3 million in 2021, with a gross margin decline from 39.0% to 33.8%[162] - The electronic cigarette and flavor enhancer segments contributed approximately 84.3% to the total revenue[185] Assets and Liabilities - Total assets as of December 31, 2022, increased to RMB 6,451,006,000 from RMB 6,311,610,000, representing a growth of 2.2%[3] - Total borrowings as of December 31, 2022, amounted to RMB 1,665.9 million, up from RMB 1,395.9 million in 2021, resulting in a debt-to-equity ratio of 51.1%[56] - The total liabilities as of December 31, 2022, were 3,188,886 million, slightly up from 3,142,041 million in 2021, reflecting a growth of about 1.5%[138] - As of December 31, 2022, total receivables amounted to RMB 913,025,000, a decrease from RMB 1,100,191,000 in the previous year[132] - The company’s accounts payable decreased to RMB 554.97 million in 2022 from RMB 792.87 million in 2021[37] Cash Flow and Investments - Cash and cash equivalents rose to RMB 433,015,000, up from RMB 330,484,000, indicating a 31% increase[3] - Fixed asset investments for the year were approximately RMB 169,600,000, with RMB 13,500,000 allocated for the purchase of factories and machinery[105] - The company is committed to strict credit control on accounts receivable to enhance cash flow and improve liquidity ratios[87] - The group’s cash and bank borrowings amounted to RMB 706.7 million, up from RMB 531.9 million in 2021, maintaining a current ratio of 1.1[169] Market Strategy and Future Plans - The company plans to continue expanding its market presence and invest in new product development to drive future growth[27] - The company plans to accelerate the development of its e-cigarette business in response to the international market expansion starting in 2023[86] - The company has obtained a series of licenses related to e-cigarette oil and production, and plans to adjust its business direction to overcome challenges and restore growth momentum in 2023[86] - The company plans to continue implementing prudent operational and financial policies to address uncertainties in the market[53] - The group plans to continue developing new flavors from natural resources to expand its market share within the industry[160] Employee and Operational Metrics - The number of employees decreased to 1,464 as of December 31, 2022, from 1,674 in 2021, primarily due to reduced labor demand in production facilities[59] - Selling and marketing expenses were approximately RMB 102.1 million, representing 4.4% of revenue, down 29.2% from RMB 144.2 million in 2021[163] - Administrative expenses were approximately RMB 359,400,000, accounting for about 15.5% of total revenue, a slight increase from 15.7% in the previous year[190] Legal and Compliance - The company incurred litigation provisions of RMB 143,141,000 during the year, indicating potential legal challenges[126] - The group has obtained necessary licenses from the National Tobacco Monopoly Bureau for e-cigarette oil production and private label e-cigarettes, complying with new regulations effective October 1, 2022[157] - The company has adhered to the corporate governance code throughout the fiscal year ending December 31, 2022, with one exception noted[113] Environmental and Social Responsibility - The company has established an environmental policy to comply with applicable laws and regulations, aiming to minimize adverse impacts on the environment[85] - The company is committed to sustainable development and enhancing its resilience in line with its long-term goals[195] - The company aims to improve the quality of life and become a symbol of quality[195]

Financial Performance - Revenue for the six months ended June 30, 2022, was RMB 1,199,325 thousand, representing an increase of 10.9% compared to RMB 1,081,825 thousand for the same period in 2021[11] - Gross profit for the same period was RMB 436,011 thousand, with a gross margin of approximately 36.3%, compared to RMB 429,486 thousand in 2021[11] - Operating profit increased to RMB 204,319 thousand, up from RMB 197,716 thousand in the previous year, reflecting a growth of 3.1%[11] - Net profit attributable to the owners of the company was RMB 96,312 thousand, compared to RMB 103,245 thousand in the same period last year, indicating a decrease of 6.5%[11] - The company reported a basic and diluted earnings per share of RMB 0.09, down from RMB 0.10 in the same period last year[11] - The company's profit for the six months ended June 30, 2022, was RMB 136,412 thousand, compared to RMB 134,601 thousand for the same period in 2021, representing an increase of 1.34%[14] - Total comprehensive income for the period was RMB 138,170 thousand, up from RMB 136,839 thousand in the previous year, indicating a growth of 0.97%[14] - Total expenses for the six months ended June 30, 2022, amounted to RMB 986,290,000, an increase of 14.1% from RMB 864,987,000 in 2021[14] - Financial costs netted RMB (27,967,000) for the six months ended June 30, 2022, compared to RMB (24,699,000) in 2021, reflecting an increase in financial costs[69] - Income tax expense for the six months ended June 30, 2022, was RMB 39,940,000, slightly higher than RMB 38,416,000 in 2021[70] Assets and Liabilities - Total assets as of June 30, 2022, were RMB 6,220,939 thousand, a slight decrease from RMB 6,311,610 thousand at the end of 2021[6] - Total liabilities decreased to RMB 2,916,356 thousand from RMB 3,142,041 thousand, showing a reduction of 7.2%[9] - Cash and cash equivalents amounted to RMB 297,934 thousand, down from RMB 330,484 thousand at the end of 2021[6] - The total equity attributable to the owners of the company as of June 30, 2022, was RMB 3,002,709 thousand, an increase from RMB 2,836,839 thousand at the end of the previous year, representing a growth of 5.85%[16] - The total borrowings as of June 30, 2022, were RMB 1,448,458 thousand, an increase of 3.8% from RMB 1,395,955 thousand as of December 31, 2021[56] - The company's current liabilities, including accounts payable, totaled RMB 966,335 thousand as of June 30, 2022, down from RMB 1,171,935 thousand as of December 31, 2021, indicating a decrease of approximately 17.5%[59] Cash Flow - The net cash generated from operating activities was RMB 8,749 thousand, a significant decrease from RMB 78,035 thousand in the prior year, reflecting a decline of 88.8%[19] - The company reported a net cash outflow from investing activities of RMB 86,575 thousand, compared to RMB 14,333 thousand in the previous year, marking an increase in cash outflow of 504.0%[19] - The financing activities generated a net cash inflow of RMB 45,763 thousand, contrasting with a net cash outflow of RMB 73,222 thousand in the previous year[19] - The cash and cash equivalents at the end of the period were RMB 297,934 thousand, compared to RMB 251,469 thousand at the end of the previous year, showing an increase of 18.4%[19] Market and Product Development - The company plans to continue expanding its market presence and investing in new product development to drive future growth[11] - The segment revenue from electronic cigarette products was RMB 699,802 thousand, which accounted for approximately 58.4% of total revenue, showing strong market demand[37] - Revenue from electronic cigarette products was approximately RMB 699.8 million, representing a 16.5% increase from RMB 600.6 million in the previous year, driven by contributions from a subsidiary distributing the brand "Meike" across over 30 major cities in China[97] - Revenue from flavor enhancers was approximately RMB 323.8 million, an increase of 7.8% from RMB 300.3 million in the previous year, attributed to stable growth in China[94] - Revenue from food flavors decreased by 4.6% to approximately RMB 86.8 million due to strict transportation controls and community lockdowns caused by new COVID-19 variants[95] - The group has obtained tobacco production licenses for e-cigarette oil, allowing for domestic sales and exports, and is in the process of applying for additional licenses for other e-cigarette products[110] Employee and Governance - The number of employees increased to 1,518 as of June 30, 2022, from 1,267 in the previous year, reflecting the company's growth[123] - The company did not recommend an interim dividend for the six months ended June 30, 2022, consistent with the previous year[81] - The board of directors did not recommend the distribution of an interim dividend for the six months ended June 30, 2022[122] - The company has adhered to all provisions of the Corporate Governance Code during the six-month period ending June 30, 2022, except for provision C.2.1[152] - The company believes that the current structure of having the same individual serve as both Chairman and CEO provides strong and continuous leadership for long-term business planning and strategy[152] Investments and Acquisitions - The company acquired a property in Hong Kong for HKD 156,335,000, with an estimated usable area of approximately 6,869 square feet[128] - The acquisition was completed on July 8, 2022, with an initial deposit of HKD 15,633,500 and a remaining balance of HKD 140,701,500 paid[129] - The group has no significant investments as of June 30, 2022[124] Risks and Compliance - The company continues to face various financial risks, including market risk, credit risk, and liquidity risk, which are detailed in the annual financial statements[34] - Management's estimates and judgments in preparing the financial statements remain consistent with those applied in the previous fiscal year, indicating stability in financial reporting practices[33] - All directors confirmed compliance with the standards set out in the Model Code for Securities Transactions by Directors during the six-month period ending June 30, 2022[153]

Financial Performance - For the year ended December 31, 2021, the group's annual revenue was approximately RMB 2,286,100,000, an increase of 23.4% compared to the previous year[8]. - The net profit for the same period was RMB 225,600,000, reflecting a growth of 30.3% year-on-year[8]. - The total revenue for the year ended December 31, 2021, was approximately RMB 2,286,100,000, representing a 23.4% increase from RMB 1,852,900,000 in 2020[16]. - Gross profit increased to approximately RMB 892,300,000, up 15.2% from RMB 774,300,000 in the previous year, while the gross margin decreased from 41.8% to 39.0%[28]. - Net profit for the year was RMB 225,600,000, a significant increase of 30.3% compared to RMB 173,200,000 in 2020[16]. - The electronic cigarette segment generated revenue of approximately RMB 1,213,400,000, a substantial increase of 51.5% from RMB 800,900,000 in the previous year[26]. - The flavor enhancer segment contributed approximately RMB 729,200,000 to total revenue, showing a slight increase of 1.5% from RMB 718,200,000 in 2020[22]. - The food flavor segment recorded revenue of approximately RMB 165,500,000, reflecting a 13.7% increase from RMB 145,600,000 in the previous year[23]. - The daily flavor segment saw a revenue decrease of 9.8%, totaling approximately RMB 138,300,000 compared to RMB 153,400,000 in 2020[24]. Challenges and Market Conditions - The group is facing challenges due to increased taxes on electronic cigarettes in South Korea, which may raise product costs in that market[7]. - New regulations on electronic cigarettes were announced in China, indicating a shift towards a more regulated market for e-cigarettes[8]. - The global economic recovery remains uneven, influenced by various factors including supply chain disruptions and inflation pressures[7]. Strategic Goals and Initiatives - The group aims to maintain its industry leadership in China while developing innovative proprietary fragrance and e-cigarette products[11]. - The management emphasizes strict cost control measures and long-term goals including green economy and carbon reduction[11]. - The group is committed to providing customized services in the e-cigarette market, leveraging its strong foundation in the industry[8]. - The group plans to adapt to new regulations in the electronic cigarette industry, which will be enforced starting in 2022, positioning itself as a strong participant in a regulated market[39]. - The group aims to enhance its financial management and maintain a robust financial position while addressing funding pressures from past acquisitions[45]. - The group is committed to sustainable development goals, including green economy and carbon reduction initiatives[40]. Financial Position and Assets - As of December 31, 2021, the group's net current assets were approximately RMB 138.8 million, up from RMB 63.6 million in 2020, with a current ratio of 1.1 compared to 1.0 in the previous year[41]. - The total equity of the group as of December 31, 2021, was approximately RMB 3.17 billion, an increase from RMB 2.94 billion in 2020, while the debt ratio improved to 44.0% from 49.3%[42]. - The group recorded a net foreign exchange loss of approximately RMB 6.3 million in 2021, compared to a net gain of RMB 3.3 million in 2020[47]. - Capital expenditure for fixed assets was approximately RMB 111.2 million for the year ended December 31, 2021, down from RMB 167.7 million in 2020[48]. - The total accounts receivable amounted to RMB 1,100,191,000, representing approximately 17.4% of the total assets[177]. - The expected credit loss provision for accounts receivable was RMB 72,577,000 as of December 31, 2021[177]. - Total assets increased to RMB 6,311,610 thousand in 2021, up from RMB 5,489,194 thousand in 2020, representing a growth of approximately 15%[194]. - Current assets rose to RMB 2,239,455 thousand in 2021, compared to RMB 1,406,812 thousand in 2020, marking an increase of about 59%[194]. - Total liabilities increased to RMB 3,142,041 thousand in 2021, up from RMB 2,548,858 thousand in 2020, reflecting a growth of around 23%[197]. - Non-current assets decreased slightly to RMB 4,072,155 thousand in 2021 from RMB 4,082,382 thousand in 2020, a decline of about 0.25%[194]. Corporate Governance - The company has maintained a high level of corporate governance to enhance transparency and protect shareholder interests[71]. - The board of directors consists of experienced individuals, including executive directors and independent non-executive directors, ensuring effective management[74]. - The company has adopted policies and procedures to ensure proper corporate governance and continuous improvement[71]. - The financial planning and management are overseen by the Chief Financial Officer, who has over 20 years of experience in the financial sector[66]. - The company has a commitment to maintaining compliance with the corporate governance code as per the listing rules[72]. - The independent non-executive directors bring over 30 years of experience in financial services and investment banking[66]. - The company has established various board committees to enhance governance and oversight[71]. - The board held four meetings during the fiscal year ending December 31, 2021, with a 100% attendance rate from all directors[77]. - The board is committed to reviewing its composition and diversity at least annually to enhance decision-making and leverage diverse backgrounds[76]. - The company maintains a commitment to transparency by providing all directors access to necessary information for informed decision-making[84]. Employee and Shareholder Engagement - The company has adopted a comprehensive and competitive compensation and benefits plan for its employees, including retirement plans and stock option schemes[50]. - The company emphasizes effective communication to enhance transparency and accountability to shareholders[111]. - The annual general meeting is scheduled for May 20, 2022, providing shareholders an opportunity to express their opinions[112]. - The company has received annual independence confirmation from each independent non-executive director, affirming their independent status[126]. Legal and Compliance Matters - The group is involved in legal proceedings against two sellers related to a previous acquisition, seeking to enforce non-competition clauses[59]. - The company has not entered into any arrangements that would allow directors to profit from acquiring shares or debt securities of the company or any other entity[136]. - There are no significant contracts involving the company or its subsidiaries where directors have a substantial interest[146]. - The company confirmed that there were no other related transactions or continuing related transactions as defined by the listing rules during the fiscal year[149]. Investments and Acquisitions - The company acquired 100% equity of Kimree, Inc. for RMB 427,000,000 and also acquired the businesses of four tobacco companies for RMB 1,199,000,000 in July 2016[173]. - The goodwill recognized by the company amounts to RMB 1,626,000,000, primarily due to the acquisition of Kimree, Inc. in April 2016[173]. - The company is required to assess the impairment of goodwill as of December 31, 2021, which involves identifying cash-generating units[173]. - The audit identified key audit matters including goodwill impairment assessment, fair value assessment of investment properties, and expected credit loss assessment of receivables[172]. Shareholder Equity and Dividends - The board does not recommend the distribution of any dividends for the year ended December 31, 2021, consistent with the previous year[117]. - The board has the discretion to declare and pay dividends based on various factors, including financial performance and future expansion plans[118]. - The distributable reserves as of December 31, 2021, were approximately RMB 733,100,000, a decrease from RMB 755,200,000 in 2020[122]. - As of December 31, 2021, the total equity held by Mr. Wang Mingfan is 729,456,226 shares, representing 67.51% of the issued share capital[129].