| RESEARCH 5 Apr, 2024 EEKA Fashion | 03709.HK COMPANY UPDATE Stable development with new catalysts H F NGO, Brian, CFA STOCK RATING TARGET PRICE SENIOR ANALYST BUY HK$ 16.78 brianngo@westbullsec.com.hk EEKA Fashion (03709.HK) reported a YoY 22.1% growth in revenue to RMB 6.9bn, and its gross +852 3896 2965 margin slightly surged to 75.3%, leading to a YoY 121.8% increment in the bottom-line. The Group 2701 – 2703, 27/F, Infinitus Plaza, 199 Des Voeux Rd also announced a dividend of HKD 0.7/share, amounting ...

OJacntuoabrey r1 12,22,0 21051 0 BuildFinogo dM, Baetevreiraalsge | &C oTombpa 公accn 司oy | 研R Ce 究osme paarcnhy Research 纺织服装 | 公司研究 业绩符合预期，渠道优化推动店效表现亮眼 2024年3月31日 赢家时尚 (03709:HK) 公司发布2023年业绩，业绩表现符合预期。2023年公司收入同比增长22.1%至69.1亿元，归 买入 母净利润同比增长119%至8.4 亿元（数据来源于公司公告，下同），业绩表现符合预期。公司 每股派息0.7港元，派息比率达51%，股息率约为5%，连续4年派息率在50%及以上。 维持 各品牌均实现快速增长，同店提升为核心驱动。1）主力品牌稳健增长。23 年 Koradior 品牌收 入增长21%至23.9亿元，收入占比35%，门店数净减少24家至714家，表明同店销售增长强 市场数据：2024年3月28日 劲。NAERSI收入同比增长18%至14.6亿，收入占比21%，门店数净减少24家至454家。NEXY.CO 收盘价（港币） 13.36 收入增长28 ...

Investment Rating - The report maintains a "Buy-B" rating for the company [3][7] Core Views - The company's revenue and net profit in 2023 exceeded the levels of 2021, with net profit growth significantly outpacing revenue growth due to positive operating leverage [1] - The company achieved a retail turnover of 8 8 billion yuan in 2023, a year-on-year increase of 25 71% [1] - The company's gross margin has steadily increased for five consecutive years, reaching 75 3% in 2023, up 0 18 percentage points year-on-year [4][6] - The company's net profit margin improved to 12 05% in 2023, an increase of 4 3 percentage points year-on-year [6] - The company aims to achieve a retail turnover of 10 5 billion yuan in 2024 [7] Revenue and Profit Performance - In 2023, the company achieved revenue of 6 912 billion yuan, a year-on-year increase of 22 05%, and net profit attributable to shareholders of 838 million yuan, a year-on-year increase of 119 17% [1][3] - The company's basic earnings per share (EPS) in 2023 was 1 24 yuan, a year-on-year increase of 69 23% [3] - The company declared a final dividend of 70 HK cents per share, with a full-year dividend payout ratio of 51% [3] Channel Performance - Offline channels demonstrated strong endogenous growth, with revenue from direct-operated stores increasing by 25 33% year-on-year to 5 56 billion yuan, accounting for 80 4% of total revenue [2] - The average store efficiency of direct-operated stores increased by 28% year-on-year to 3 65 million yuan per store [2] - Online channels achieved revenue of 969 million yuan, a year-on-year increase of 8 46%, with strong growth in the Douyin channel, which saw a 38 69% increase in revenue [2] Brand Performance - The Koradior, NAERSI, and NEXY CO brands each achieved revenue exceeding 1 billion yuan in 2023, collectively accounting for approximately 70% of the company's total revenue [4] - The NEXY CO brand achieved revenue of 1 004 billion yuan, a year-on-year increase of 27 91% [4] - The FUUNNY FEELLN brand grew relatively slowly, with revenue increasing by 11 95% year-on-year to 136 million yuan [4] Financial Data and Valuation - The company's inventory turnover days decreased by 23 days to 233 days in 2023 [6] - The company's operating cash flow in 2023 was 1 569 billion yuan, a year-on-year decrease of 7 8% [6] - The company's P/E ratio for 2024-2026 is estimated at 8 5x, 7 4x, and 6 7x, respectively [7] - The company's ROE improved to 18 3% in 2023, up from 9 4% in 2022 [8]

Investment Rating - The report maintains a "Buy" rating for the company, indicating strong investment potential [2][12]. Core Insights - The company reported exceptional performance in 2023, with total revenue reaching 6.912 billion RMB, a year-on-year increase of 22%, and net profit of 833 million RMB, up 122% year-on-year [1]. - The gross margin for 2023 was 75.3%, reflecting a slight increase, while the net profit margin improved significantly to 12.05% [1]. - The company is positioned as a leading player in the domestic mid-to-high-end women's apparel market, with expectations for steady growth in 2024 driven by product efficiency and store expansion [1]. Financial Performance - Revenue for 2023 was 6.912 billion RMB, with a year-on-year growth rate of 22.1% [5]. - Net profit for 2023 was 838 million RMB, representing a year-on-year increase of 119.2% [5]. - The company expects revenue growth of 15% to 20% and profit growth of around 20% in 2024 [1]. Brand Performance - The company's core brands performed well, with Koradior generating 2.39 billion RMB in revenue (up 21% year-on-year) and NEXY.CO achieving a 28% increase in revenue to 1 billion RMB [1]. - The company has a strong focus on product design that resonates with its target demographic, leading to successful new product launches [1]. Channel Strategy - The company primarily operates through direct sales channels, which have shown significant growth, with direct sales revenue increasing by 25.3% in 2023 [1]. - The total number of direct stores decreased slightly to 1,525, but the company anticipates stable growth in store numbers in 2024 [1]. Future Outlook - The company is expected to continue optimizing inventory management, with inventory increasing by 13% to 1.15 billion RMB by the end of 2023 [1]. - The report forecasts that the company's earnings for 2024 to 2026 will be 1.003 billion RMB, 1.174 billion RMB, and 1.36 billion RMB, respectively, with consistent year-on-year growth rates [5].

Financial Performance - For the year ended December 31, 2023, the group's revenue and gross profit reached RMB 6,912.30 million and RMB 5,204.99 million, representing increases of 22.05% and 22.34% respectively compared to the year ended December 31, 2022[2]. - The profit for the year was RMB 832.63 million, an increase of 121.78% or RMB 457.20 million compared to RMB 375.43 million for the year ended December 31, 2022[2]. - The net profit margin for the year ended December 31, 2023, was 12.05%, up from 6.63% in 2022[2]. - Basic earnings per share for the year were RMB 1.24, compared to RMB 0.57 in 2022[2]. - The group's pre-tax profit for 2023 reached RMB 994,601,000, a significant increase from RMB 464,368,000 in 2022, representing a growth of approximately 114%[30]. - Total revenue from other income and gains amounted to RMB 237,083,000 in 2023, compared to RMB 127,546,000 in 2022, marking an increase of about 86%[24]. - The total tax expense for the year was RMB 161,969,000, up from RMB 88,943,000 in 2022, representing an increase of about 82%[29]. - The gross profit for the year ended December 31, 2023, was RMB 5,204.99 million, a 22.34% increase from RMB 4,254.42 million in 2022[44]. - Net profit attributable to the owners of the parent company for the year ended December 31, 2023, was RMB 838.17 million, a 119.17% increase from RMB 382.43 million in 2022[50]. Revenue Breakdown - All revenue was generated from the sale of clothing and accessories in mainland China, with no significant revenue from other regions[22]. - Direct retail sales accounted for approximately 80.43% of total revenue in 2023, up from 78.33% in 2022[42]. - E-commerce revenue for the year ended December 31, 2023, was RMB 968.78 million, an increase of 8.46% from RMB 893.23 million in 2022[42]. - The two main brands, Koradior and NAERSI, generated sales revenue exceeding RMB 3.85 billion, ranking among the top ten brands in the Chinese industry[57]. - Revenue from distributor-operated retail stores reached RMB 383.90 million, up 14.86% year-over-year, due to increased order confidence from distributors[64]. - The revenue from the East China region was RMB 1,943.67 million, accounting for 32.70% of total revenue, while the Southwest region contributed RMB 1,050.69 million (17.68%)[67]. Expenses and Costs - The cost of goods sold for the year was RMB 1,707,313,000, up from RMB 1,409,010,000 in 2022, reflecting a rise of approximately 21%[26]. - Operating expenses for the year ended December 31, 2023, were RMB 3,778.11 million, an increase of 16.78% from RMB 3,235.18 million in 2022[46]. - Research and development expenses for 2023 totaled RMB 183,134,000, compared to RMB 169,497,000 in 2022, indicating an increase of about 8%[26]. - The company's brand and marketing expenses (excluding promotional expenses) for the year ended December 31, 2023, amounted to RMB 198.42 million, representing 2.87% of total revenue, an increase of RMB 27.59 million or 16.15% compared to RMB 170.83 million in 2022[74]. - Total salary and benefits expenses for the year ended December 31, 2023, were RMB 1,413.73 million, accounting for 20.45% of total revenue, up from RMB 1,178.29 million (20.81% of total revenue) in 2022, reflecting an increase of RMB 235.44 million or 19.98%[76]. Assets and Liabilities - Total non-current assets as of December 31, 2023, were RMB 3,480.14 million, down from RMB 3,623.13 million in 2022[7]. - Current assets totaled RMB 3,549.66 million as of December 31, 2023, compared to RMB 2,634.55 million in 2022[7]. - Total liabilities as of December 31, 2023, were RMB 1,989.27 million, an increase from RMB 1,648.88 million in 2022[7]. - The total equity attributable to owners of the parent as of December 31, 2023, was RMB 4,561.42 million, compared to RMB 3,987.50 million in 2022[9]. Corporate Governance - The company is committed to maintaining high corporate governance standards and has adhered to relevant codes, although the roles of Chairman and CEO are currently held by the same individual[87]. - The company has adopted a standard code for securities trading by directors and confirmed compliance by all directors for the year ending December 31, 2023[88]. - The audit committee, established on June 6, 2014, consists of three independent non-executive directors, chaired by Mr. Zhang Guodong[89]. - The audit committee reviewed the group's annual performance for the year ended December 31, 2023[89]. Future Outlook - The company aims to achieve retail revenue targets of RMB 10.5 billion to RMB 11.5 billion in 2024, driven by a strategy of multi-brand and multi-category expansion[78]. - The company plans to focus on the growth of seven high-end brands in 2024, including Koradior and NEXY.CO, while also stabilizing the development of the mid-range brand FUUNNY FEELLN[79]. - The company will deepen its product development capabilities by leveraging digital infrastructure and big data support to enhance product vitality and structure in 2024[81]. - The company will continue to implement a long-term strategy focused on "multi-brand, multi-category, omni-channel, and platformization" to refine its business operations[78]. - The external economic environment in China is expected to show significant recovery in 2023, with GDP growth targets set at around 5% or more for major provinces in 2024[77].

Investment Rating - The report initiates coverage with a "Buy" rating for the company [2]. Core Viewpoints - The company is a leading player in the domestic mid-to-high-end women's fashion market, with a strong brand matrix and impressive financial performance, including a total revenue of 5.69 billion yuan in 2022 and a net profit of 382 million yuan [1][13]. - The company is expected to achieve a revenue growth rate of no less than 20% and a net profit growth rate of no less than 120% in 2023, driven by improved store efficiency and a recovering consumer environment [1][19]. Summary by Sections Company Overview - The company operates a diverse brand matrix including Koradior, NAERSI, and NEXY.CO, with a total of 2,006 stores as of 2022, of which 1,555 are direct-operated [1][13]. - The company has achieved a compound annual growth rate (CAGR) of 20.8% from 2017 to 2022 [1][13]. Competitive Advantages - The company has a clear multi-brand strategy that allows it to effectively compete in the fragmented mid-to-high-end women's fashion market, with a market share estimated to be in the low single digits [1][30]. - The core customer base consists of women aged 30-45 with purchasing power, and the company has successfully differentiated its brands to cater to various consumer preferences [1][30]. Financial Analysis and Profit Forecast - The company’s revenue is projected to grow at a CAGR of 19% from 2022 to 2025, with expected revenues of 8.68 billion yuan in 2023, 10.37 billion yuan in 2024, and 12.19 billion yuan in 2025 [1][5]. - The gross profit margin was 75.1% in 2022, showing a steady increase over the past five years, while the net profit margin is expected to improve as operational efficiency increases [1][5]. Valuation and Investment Recommendations - The report estimates a reasonable stock price of approximately 18.7 HKD per share, corresponding to a market capitalization of about 13.1 billion HKD, with a price-to-earnings (P/E) ratio of 11.5 times for 2024 [1][5].

[Company Overview](index=3&type=section&id=Company%20Overview) This section introduces EEKA Fashion Holdings Limited, a leading and fast-growing high-end women's apparel enterprise with a diverse brand portfolio and extensive sales network [About EEKA Fashion](index=3&type=section&id=About%20EEKA%20Fashion) EEKA Fashion Holdings Limited is a leading and rapidly growing mid-to-high-end women's apparel enterprise with an eight-brand portfolio and a comprehensive sales network across China - The company is a leading and fast-growing mid-to-high-end women's apparel enterprise in China, boasting an **eight-brand portfolio**[17](index=17&type=chunk) - The brand portfolio includes proprietary high-end brands Koradior, La Koradior, ELSEWHERE, FUUNNY FEELLN, and acquired brands CADIDL, NAERSI, NAERSILING, NEXY.CO[17](index=17&type=chunk) - The sales network covers **31 provinces, autonomous regions, and municipalities in China**, primarily through directly operated retail stores and third-party e-commerce platforms such as Tmall, Vipshop, Douyin, and EEKA Fashion Mall[18](index=18&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) This section details the company's governance structure, including its board of directors and committees, along with registration and contact information [Board of Directors and Committees](index=4&type=section&id=Board%20of%20Directors%20and%20Committees) The company's Board of Directors comprises executive and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure robust corporate governance - Executive Directors include **Mr. Jin Ming (Chairman and CEO)**, **Ms. He Hongmei**, and **Mr. Jin Rui**[19](index=19&type=chunk) - Independent Non-Executive Directors include **Mr. Zhou Xiaoyu**, **Mr. Zhong Ming**, and **Mr. Zhang Guodong**[19](index=19&type=chunk) - The company has an Audit Committee (Chairman: Mr. Zhang Guodong), a Remuneration Committee (Chairman: Mr. Zhou Xiaoyu), and a Nomination Committee (Chairman: Mr. Jin Ming)[19](index=19&type=chunk) [Registration and Contact Information](index=4&type=section&id=Registration%20and%20Contact%20Information) The company's registered office is in the Cayman Islands, with its headquarters in Shenzhen, China, and a principal place of business in Tsim Sha Tsui, Hong Kong - The registered office is in the **Cayman Islands**, with headquarters and principal place of business in Futian District, Shenzhen, Guangdong Province, China[19](index=19&type=chunk)[20](index=20&type=chunk) - The principal place of business in Hong Kong is located at Gateway Tower, Harbour City, Canton Road, Tsim Sha Tsui, Kowloon[20](index=20&type=chunk) - Principal bankers include The Hongkong and Shanghai Banking Corporation Limited, Ping An Bank Shenzhen Branch, and China Merchants Bank Shenzhen Branch[20](index=20&type=chunk) [Financial Highlights](index=5&type=section&id=Financial%20Highlights) This section presents key financial performance indicators and liquidity ratios for the reporting period, demonstrating the company's financial health and operational efficiency [Key Financial Indicators](index=5&type=section&id=Key%20Financial%20Indicators) For the six months ended June 30, 2023, revenue increased by 15.36% to RMB 3,340.90 million, with net profit surging by 71.57% to RMB 442.20 million Key Financial Data for the Six Months Ended June 30, 2023 | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | Year-on-Year Growth Rate | | :--- | :--- | :--- | :--- | | Revenue | 3,340,896 | 2,895,977 | +15.36% | | Gross Profit | 2,514,285 | 2,167,467 | +16.00% | | Net Profit | 442,199 | 257,742 | +71.57% | | Net Cash Flow from Operating Activities | 914,610 | 980,819 | -6.75% | | Basic Earnings Per Share (RMB cents) | 65.9 | 38.5 | +71.17% | | Diluted Earnings Per Share (RMB cents) | 64.8 | 37.8 | +71.43% | | Gross Profit Margin | 75.26% | 74.84% | +0.42pp | | Net Profit Margin | 13.24% | 8.90% | +4.34pp | - As of June 30, 2023, net assets were **RMB 4,165,831 thousand**, an increase from **RMB 3,987,500 thousand** as of December 31, 2022[21](index=21&type=chunk)[26](index=26&type=chunk) [Liquidity and Capital Ratios](index=5&type=section&id=Liquidity%20and%20Capital%20Ratios) As of June 30, 2023, the company maintained a current ratio of 1.64 times, with a debt-to-asset ratio of 10.67% and interest coverage of 22.65 times, indicating robust liquidity and solvency Liquidity and Capital Ratios as of June 30, 2023 | Indicator | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Current Ratio (times) | 1.64 | 1.60 | | Trade and Bills Receivables Turnover Days | 28.20 | 34.52 | | Trade and Bills Payables Turnover Days | 96.61 | 86.60 | | Inventory Turnover Days | 210.55 | 255.88 | | Debt-to-Asset Ratio | 10.67% | 10.79% | | Interest Coverage Ratio (times) | 22.65 | 9.25 | - The current ratio increased from **1.60 times** as of December 31, 2022, to **1.64 times** as of June 30, 2023, indicating improved liquidity[22](index=22&type=chunk) - The debt-to-asset ratio decreased from **10.79%** as of December 31, 2022, to **10.67%** as of June 30, 2023, indicating a slight reduction in financial leverage[22](index=22&type=chunk) [Chairman's Report](index=7&type=section&id=Chairman%27s%20Report) This report reviews the company's strong first-half performance, strategic channel development, and commitment to corporate social responsibility, highlighting its transformation into a luxury brand management group [First Half Performance Review](index=8&type=section&id=First%20Half%20Performance%20Review) In the first half of 2023, the company achieved record-high revenue of RMB 3,340.90 million and net profit of RMB 442.20 million, driven by strong market recovery and effective strategic execution - In the first half of 2023, China's GDP grew by **5.5%**, with total retail sales of consumer goods increasing by **8.2%** year-on-year, and apparel, footwear, and textiles growing by **12.8%**[29](index=29&type=chunk) Key Financial Performance in H1 2023 | Indicator | Amount (RMB millions) | Year-on-Year Growth Rate | | :--- | :--- | :--- | | Revenue | 3,340.90 | +15.36% | | Net Profit | 442.20 | +71.57% | Key Brand Growth Rates in H1 2023 | Brand | Year-on-Year Growth Rate | | :--- | :--- | | Koradior | +11.14% | | NAERSI | +8.91% | | NEXY.CO | +24.71% | | CADIDL | +17.67% | | ELSEWHERE | +16.62% | | La Koradior | +30.04% | | NAERSILING | +22.76% | | FUUNNY FEELLN | +18.09% | [Channel and Strategic Development](index=9&type=section&id=Channel%20and%20Strategic%20Development) Directly operated retail stores saw revenue grow by 19.44% to RMB 2,722.99 million, while e-commerce platforms achieved 4.58% growth, with a 50% increase in live-streaming penetration Channel Revenue Performance in H1 2023 | Channel | Revenue (RMB millions) | Year-on-Year Growth Rate | | :--- | :--- | :--- | | Directly Operated Retail Stores | 2,722.99 | +19.44% | | E-commerce Platforms | 463.72 | +4.58% | - As of June 30, 2023, the Group operated **1,980 retail stores**, comprising **1,543 directly operated stores** and **437 dealer-operated stores**[30](index=30&type=chunk) - E-commerce platform live-streaming efficiency improved, achieving a **50% increase in live-streaming penetration**[31](index=31&type=chunk) - The company adheres to its long-term strategy of 'multi-brand, omni-channel, platform-based, upstream and downstream integration,' earning accolades such as '2022 Fashion Model Brand' (Koradior) and '2022 Top Ten Influential Brand' (La Koradior)[31](index=31&type=chunk) [Corporate Development and Social Responsibility](index=10&type=section&id=Corporate%20Development%20and%20Social%20Responsibility) The company has established a robust talent development framework, earned recognition as a 'China's Best Learning Enterprise,' and actively promotes sustainable fashion through its ELSEWHERE brand's environmental initiatives - The company has established a three-pillar talent development framework encompassing leadership, product excellence, and sales capabilities, earning the title of '2022 China's Best Learning Enterprise'[32](index=32&type=chunk) - Actively fulfilling corporate social responsibility, the ELSEWHERE brand collaborated with 'New Paradise' magazine to launch an online art exhibition, promoting marine environmental art and sustainable fashion[32](index=32&type=chunk) - The company has successfully transformed from a 'leading enterprise in China's mid-to-high-end women's apparel industry' to a '**China luxury brand management group**'[32](index=32&type=chunk) [Management Discussion and Analysis](index=11&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a detailed analysis of the company's revenue, costs, profits, financial position, and liquidity for the reporting period [Revenue Analysis](index=12&type=section&id=Revenue%20Analysis) Total revenue for the period reached RMB 3,340.90 million, a 15.36% year-on-year increase, driven by strong growth in directly operated retail stores and e-commerce platforms, particularly Douyin Revenue Sources and Growth in H1 2023 | Revenue Source | 2023 (RMB millions) | 2022 (RMB millions) | Year-on-Year Growth Rate | | :--- | :--- | :--- | :--- | | Total Revenue | 3,340.90 | 2,895.98 | +15.36% | | Directly Operated Retail Stores | 2,722.99 | 2,279.81 | +19.44% | | Distributors | 142.81 | 162.23 | -11.97% | | E-commerce Platforms | 463.72 | 443.40 | +4.58% | | - Tmall | 115.29 | 106.91 | +7.84% | | - Vipshop | 208.79 | 196.12 | +6.46% | | - EEKA Fashion Mall | 36.70 | 80.46 | -54.39% | | - Douyin | 97.48 | 58.51 | +66.60% | - The total number of retail stores decreased from **2,006** as of January 1, 2023, to **1,980** as of June 30, 2023, a net reduction of **26 stores**[34](index=34&type=chunk)[37](index=37&type=chunk) Revenue Growth by Brand in H1 2023 | Brand | 2023 (RMB thousands) | 2022 (RMB thousands) | Year-on-Year Growth Rate | | :--- | :--- | :--- | :--- | | Koradior | 1,126,736 | 1,013,756 | +11.14% | | La Koradior | 217,049 | 166,908 | +30.04% | | ELSEWHERE | 273,118 | 234,191 | +16.62% | | CADIDL | 215,497 | 183,134 | +17.67% | | FUUNNY FEELLN | 71,996 | 60,967 | +18.09% | | NAERSI | 704,565 | 646,901 | +8.91% | | NAERSILING | 252,221 | 205,462 | +22.76% | | NEXY.CO | 479,714 | 384,658 | +24.71% | [Cost and Profit Analysis](index=14&type=section&id=Cost%20and%20Profit%20Analysis) Cost of sales increased by 13.47% to RMB 826.61 million, while gross profit rose by 16.00% to RMB 2,514.29 million, leading to a significant 71.57% surge in net profit to RMB 442.20 million Cost and Profit Data in H1 2023 | Indicator | 2023 (RMB millions) | 2022 (RMB millions) | Year-on-Year Growth Rate | | :--- | :--- | :--- | :--- | | Cost of Sales | 826.61 | 728.51 | +13.47% | | Gross Profit | 2,514.29 | 2,167.47 | +16.00% | | Gross Profit Margin | 75.26% | 74.84% | +0.42pp | | Operating Expenses | 2,081.93 | 1,902.53 | +9.43% | | Selling and Distribution Expenses | 1,792.03 | 1,642.93 | +9.08% | | Administrative and Other Operating Expenses | 289.90 | 259.60 | +11.67% | | Finance Costs | 23.37 | 26.96 | -13.32% | | Income Tax Expense | 63.81 | 36.01 | +77.20% | | Net Profit | 442.20 | 257.74 | +71.57% | | Net Profit Margin | 13.24% | 8.90% | +4.34pp | - The increase in administrative and other operating expenses was primarily due to higher staff salaries and benefits, and increased research and development costs for product design enhancement[45](index=45&type=chunk) - The decrease in finance costs was mainly attributable to the reduced impact of IFRS 16[46](index=46&type=chunk) [Financial Position and Liquidity](index=16&type=section&id=Financial%20Position%20and%20Liquidity) As of June 30, 2023, the Group maintained a sound capital structure with total current assets of RMB 2,931.11 million, a current ratio of 1.64 times, and a debt-to-asset ratio of 10.67% Financial Position in H1 2023 | Indicator | June 30, 2023 (RMB millions) | December 31, 2022 (RMB millions) | | :--- | :--- | :--- | | Total Current Assets | 2,931.11 | 2,634.55 | | Total Current Liabilities | 1,786.85 | 1,648.88 | | Current Ratio (times) | 1.64 | 1.60 | | Cash and Cash Equivalents | 392.72 | 361.46 | | Net Cash Inflow from Operating Activities | 914.61 | 980.82 | | Debt-to-Asset Ratio | 10.67% | 10.79% | - The Group's interest-bearing bank loans are denominated in HKD and RMB, including a term loan of **HKD 45 million** and fixed-rate loans of **RMB 403 million** repayable within one year[49](index=49&type=chunk) - The Group adopts a prudent treasury and funding policy, primarily operating in China, thus exchange rate fluctuation risk is not significant[51](index=51&type=chunk) [Other Important Information](index=18&type=section&id=Other%20Important%20Information) This section covers human resources, significant events, future outlook, corporate governance practices, and the company's shareholding structure [Human Resources and Remuneration](index=18&type=section&id=Human%20Resources%20and%20Remuneration) As of June 30, 2023, the Group's employee count increased to 10,137, with total staff costs of RMB 703.78 million, representing 21.07% of revenue Human Resources Data in H1 2023 | Indicator | June 30, 2023 | June 30, 2022 | | :--- | :--- | :--- | | Number of Employees | 10,137 | 10,058 | | Total Staff Costs (RMB millions) | 703.78 | 612.48 | | Total Staff Costs as % of Revenue | 21.07% | 21.15% | - The Group has established share option schemes and share award schemes to incentivize and reward employee contributions, alongside providing training and retirement benefits[53](index=53&type=chunk) [Material Matters and Outlook](index=19&type=section&id=Material%20Matters%20and%20Outlook) The company reported no major acquisitions or disposals, invested approximately RMB 327 million in wealth management products, and maintains an optimistic outlook for the second half, focusing on quality enhancement and strategic investments - No material acquisitions or disposals of any subsidiaries, associates, or joint ventures occurred during the reporting period[55](index=55&type=chunk) - The company's subsidiaries subscribed to wealth management products totaling approximately **RMB 327 million**[55](index=55&type=chunk) - Looking ahead to the second half, the company will adhere to a comprehensive 'quality enhancement' strategy, improving quality, store, and personnel efficiency, while strengthening brand building, product innovation, supply chain integration, and online channel investments (e.g., Xiaohongshu, Video Accounts, Tmall, JD.com)[57](index=57&type=chunk) - The company is confident in achieving its established operational goals and has transformed from a 'leading enterprise in China's mid-to-high-end women's apparel industry' to a '**China luxury brand management group**'[57](index=57&type=chunk) [Corporate Governance and Shareholding Structure](index=20&type=section&id=Corporate%20Governance%20and%20Shareholding%20Structure) The Board resolved not to declare an interim dividend, maintains compliance with corporate governance codes, and details share award scheme expenses and major shareholder equity interests - The Board has resolved not to declare any interim dividend for the six months ended June 30, 2023[59](index=59&type=chunk) - The company complies with the Corporate Governance Code, though the roles of Chairman and Chief Executive Officer are combined and held by Mr. Jin Ming, an arrangement the Board believes ensures consistent leadership and decision-making efficiency[59](index=59&type=chunk) - A total of **40,973,000 award shares** were granted under the share award scheme, with an expense of **RMB 11,165,000** recognized during the reporting period[62](index=62&type=chunk) Major Shareholder Holdings (as of June 30, 2023) | Shareholder Name/Entity | Capacity | Number of Shares Held | Approximate % of Share Capital | | :--- | :--- | :--- | :--- | | Mr. Jin Ming | Settlor of Discretionary Trust | 247,715,000 | 35.18% | | Ms. He Hongmei | Beneficial Owner | 925,493 | 0.13% | | Mr. Jin Rui | Settlor of Discretionary Trust | 198,713,195 | 28.22% | | Koradior Investments Limited | Beneficial Owner | 247,715,000 | 35.18% | | Apex Noble Holdings Limited | Beneficial Owner | 198,713,195 | 28.22% | | BOS Trustee Limited | Trustee | 446,428,195 | 63.41% | [Condensed Consolidated Financial Statements](index=24&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the condensed consolidated financial statements, including the statement of profit or loss, financial position, changes in equity, and cash flows for the reporting period [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=24&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2023, the company reported revenue of RMB 3,340,896 thousand, gross profit of RMB 2,514,285 thousand, and profit for the period of RMB 442,199 thousand Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 3,340,896 | 2,895,977 | | Gross Profit | 2,514,285 | 2,167,467 | | Profit Before Tax | 506,010 | 293,754 | | Income Tax Expense | (63,811) | (36,012) | | Profit for the Period | 442,199 | 257,742 | | Net Other Comprehensive Income/(Loss) | (25,921) | 575 | | Total Comprehensive Income for the Period | 416,278 | 258,317 | - Profit attributable to owners of the parent was **RMB 445,227 thousand**, while loss attributable to non-controlling interests was **RMB 3,028 thousand**[73](index=73&type=chunk) [Condensed Consolidated Statement of Financial Position](index=26&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2023, total non-current assets were RMB 3,531,726 thousand, total current assets were RMB 2,931,106 thousand, and net assets amounted to RMB 4,165,831 thousand Summary of Condensed Consolidated Statement of Financial Position (as of June 30, 2023) | Indicator | June 30, 2023 (RMB thousands) | December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Total Non-current Assets | 3,531,726 | 3,623,133 | | Total Current Assets | 2,931,106 | 2,634,550 | | Total Current Liabilities | 1,786,849 | 1,648,876 | | Total Non-current Liabilities | 510,152 | 621,307 | | Net Assets | 4,165,831 | 3,987,500 | | Total Equity | 4,165,831 | 3,987,500 | - Inventories decreased from **RMB 1,023,962 thousand** as of December 31, 2022, to **RMB 909,887 thousand** as of June 30, 2023[77](index=77&type=chunk) - Trade and bills receivables increased from **RMB 472,233 thousand** as of December 31, 2022, to **RMB 574,469 thousand** as of June 30, 2023[77](index=77&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=28&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2023, total equity attributable to owners of the parent increased from RMB 3,997,449 thousand to RMB 4,178,808 thousand, driven by profit for the period and share award scheme expenses Summary of Changes in Equity Attributable to Owners of the Parent | Item | 2023 H1 (RMB thousands) | | :--- | :--- | | As at January 1 | 3,997,449 | | Profit for the Period | 445,227 | | Total Other Comprehensive Income | 419,306 | | Share Award Scheme Arrangements | 11,165 | | 2022 Final Dividend Paid | (249,112) | | As at June 30 | 4,178,808 | - Non-controlling interests changed from **RMB (2,949) thousand** at the beginning of the period to **RMB (12,977) thousand** at the end of the period[80](index=80&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=30&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2023, net cash from operating activities was RMB 914,610 thousand, with a net increase in cash and cash equivalents of RMB 30,837 thousand Summary of Condensed Consolidated Statement of Cash Flows | Cash Flow Category | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 914,610 | 980,819 | | Net Cash Used in Investing Activities | (236,946) | (316,843) | | Net Cash Used in Financing Activities | (646,827) | (924,864) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 30,837 | (260,888) | | Cash and Cash Equivalents as at June 30 | 392,715 | 251,996 | - Proceeds from bank loans amounted to **RMB 373,000 thousand**, while repayment of bank loans totaled **RMB 360,149 thousand**[82](index=82&type=chunk) - Dividends paid to equity holders of the company amounted to **RMB 248,910 thousand**[82](index=82&type=chunk) [Notes to the Unaudited Interim Financial Report](index=31&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) This section provides detailed notes on the accounting policies, segment reporting, revenue and other income breakdown, profit before tax, income tax, earnings per share, balance sheet items, share capital, reserves, related party transactions, and fair value measurement of financial instruments [Accounting Policies and Segment Reporting](index=31&type=section&id=Accounting%20Policies%20and%20Segment%20Reporting) The interim financial statements are prepared in accordance with HKEX Listing Rules and IAS 34, with no material impact from newly adopted IFRS, and no segment analysis presented due to a single business segment in China - These interim financial statements are prepared in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and International Accounting Standard 34[85](index=85&type=chunk) - The Group has adopted new and revised International Financial Reporting Standards effective from January 1, 2023, with no material impact on the financial statements[86](index=86&type=chunk) - The Group operates a single business segment in China, namely the retail and wholesale of women's apparel, thus no segment analysis is presented[88](index=88&type=chunk) [Details of Revenue and Other Income](index=32&type=section&id=Details%20of%20Revenue%20and%20Other%20Income) Revenue primarily derived from directly operated retail stores (RMB 2,722,989 thousand), wholesale to distributors (RMB 142,813 thousand), and e-commerce platforms (RMB 463,715 thousand), with total other income and gains amounting to RMB 105,947 thousand Revenue Composition in H1 2023 | Revenue Source | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Directly Operated Retail Stores | 2,722,989 | 2,279,809 | | Wholesale to Distributors | 142,813 | 162,225 | | E-commerce Platforms | 463,715 | 443,399 | | Others | 11,379 | 10,544 | | **Total** | **3,340,896** | **2,895,977** | Composition of Other Income and Gains in H1 2023 | Item | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Bank Interest Income | 1,746 | 736 | | Subsidy Income | 43,076 | 48,118 | | Other Interest Income from Financial Assets at FVTPL | 12,704 | 9,588 | | Rental Income | 5,575 | 6,073 | | Net Exchange Gain | 34,665 | 920 | | Others | 8,181 | 4,159 | | **Total** | **105,947** | **69,594** | [Profit Before Tax and Income Tax](index=33&type=section&id=Profit%20Before%20Tax%20and%20Income%20Tax) Profit before tax was RMB 506,010 thousand, after deducting costs of inventories sold, depreciation, amortization, lease payments, and employee benefits, with income tax expense of RMB 63,811 thousand primarily from China corporate income tax Key Deductions for Profit Before Tax in H1 2023 | Item | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Cost of Inventories Sold | 826,611 | 728,510 | | Depreciation of Property, Plant and Equipment | 66,354 | 77,167 | | Depreciation of Right-of-Use Assets | 404,371 | 390,486 | | Total Employee Benefit Expenses | 703,779 | 612,476 | | Net Exchange Gain | (34,665) | (920) | | Impairment of Trade Receivables | 5,425 | 1,657 | | (Reversal of)/Write-down of Inventories to Net Realizable Value | (1,988) | 4,704 | Income Tax Expense in H1 2023 | Item | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Current Tax (PRC Corporate Income Tax) | 81,723 | 47,739 | | Deferred Tax | (17,912) | (11,727) | | **Total** | **63,811** | **36,012** | - Certain subsidiaries (e.g., Dongfang Susu, Jianmo, Shenzhen Koradior, NAERSI, Shenzhen Dikolai Technology Development Co., Ltd.) enjoy preferential tax rates of **15%** for high-tech enterprises or a **50% reduction** in corporate income tax[96](index=96&type=chunk) [Earnings Per Share and Balance Sheet Notes](index=35&type=section&id=Earnings%20Per%20Share%20and%20Balance%20Sheet%20Notes) Basic earnings per share were RMB 65.9 cents and diluted earnings per share were RMB 64.8 cents, with detailed notes on property, plant and equipment, inventories, trade and other receivables, trade and other payables, and interest-bearing bank borrowings Earnings Per Share in H1 2023 | Indicator | Six Months Ended June 30, 2023 (RMB cents) | Six Months Ended June 30, 2022 (RMB cents) | | :--- | :--- | :--- | | Basic Earnings Per Share | 65.9 | 38.5 | | Diluted Earnings Per Share | 64.8 | 37.8 | - For the six months ended June 30, 2023, the Group acquired property, plant and equipment totaling **RMB 36,771 thousand**[104](index=104&type=chunk) - Inventories primarily consist of **finished goods (RMB 752,584 thousand)**, **raw materials (RMB 148,179 thousand)**, and **work-in-progress (RMB 9,124 thousand)**[105](index=105&type=chunk) - Total trade and bills receivables amounted to **RMB 574,469 thousand**, with **RMB 336,948 thousand** due within one month[107](index=107&type=chunk)[109](index=109&type=chunk) - Total trade and bills payables amounted to **RMB 423,065 thousand**, including **RMB 260,500 thousand** in bills payable[115](index=115&type=chunk) - Total interest-bearing bank borrowings amounted to **RMB 444,490 thousand**, all repayable within one year[119](index=119&type=chunk) [Share Capital, Reserves, and Related Party Transactions](index=41&type=section&id=Share%20Capital%2C%20Reserves%2C%20and%20Related%20Party%20Transactions) The company's issued share capital is 704,050,195 shares, with reserves including share premium and capital reserves, and details of significant related party transactions with Winner Fashion Group - The company's issued share capital comprises **704,050,195 shares** with a par value of **RMB 5,766 thousand**[121](index=121&type=chunk) - Capital reserve primarily arises from differences in equity acquisitions of subsidiaries, such as Shenzhen Koradior, Shanghai Kedi Brand Management Co., Ltd., Mondale, and Shenzhen Fangfu[124](index=124&type=chunk) - The Group entered into processing agreements with Winner Fashion Group (owned by Ms. Chen Lingmei and Mr. Jin Jingquan), paying processing fees of **RMB 160,858 thousand** in H1 2023[129](index=129&type=chunk) - As of June 30, 2023, the outstanding balance payable to Winner Fashion Group was **RMB 100,038 thousand**, and receivables from Winner Fashion Group amounted to **RMB 9,928 thousand**[130](index=130&type=chunk) [Fair Value Measurement of Financial Instruments](index=45&type=section&id=Fair%20Value%20Measurement%20of%20Financial%20Instruments) The Group's financial instruments are measured across three fair value hierarchy levels, with equity investments at FVTOCI of RMB 31,883 thousand (Level 1) and financial assets at FVTPL of RMB 828,341 thousand (Level 1 and 2) Fair Value Measurement of Financial Instruments as of June 30, 2023 | Item | Level 1 (RMB thousands) | Level 2 (RMB thousands) | Level 3 (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Equity Investments Designated at FVTOCI | 31,883 | – | – | 31,883 | | Financial Assets at FVTPL | 207,211 | 621,130 | – | 828,341 | | **Total** | **239,094** | **621,130** | **–** | **860,224** | - The fair value of unlisted equity investments is based on the most recent market transactions, while unlisted wealth management products are estimated using discounted cash flow valuation models[135](index=135&type=chunk)[136](index=136&type=chunk)

Financial Data and Key Metrics Changes - The company reported significant changes in financial metrics during the mid-year earnings call, indicating a strong performance in the first half of 2023 [1] Business Line Data and Key Metrics Changes - Specific business lines showed varied performance, with some segments outperforming expectations while others faced challenges [1] Market Data and Key Metrics Changes - The company highlighted changes in market dynamics, including shifts in consumer preferences and competitive pressures that impacted overall performance [1] Company Strategy and Development Direction - The management outlined strategic initiatives aimed at enhancing market share and improving operational efficiency, focusing on innovation and customer engagement [1] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a favorable operating environment and potential for growth despite existing challenges [1] Other Important Information - Additional insights included updates on new product launches and partnerships that are expected to drive future revenue growth [1] Q&A Session Summary Question: What are the expectations for the second half of the year? - Management indicated that they anticipate continued growth, driven by strong demand and effective marketing strategies [1] Question: How is the company addressing competitive pressures? - The company is focusing on innovation and customer service enhancements to differentiate itself from competitors [1]

Financial Performance - For the six months ended June 30, 2023, revenue was RMB 3,340.90 million, an increase of 15.36% or RMB 444.92 million compared to RMB 2,895.98 million for the same period in 2022[2] - Net profit for the same period was RMB 442.20 million, representing a significant increase of 71.57% or RMB 184.46 million from RMB 257.74 million in the prior year[2] - Basic earnings per share for the six months ended June 30, 2023, was RMB 0.66, up from RMB 0.39 for the same period in 2022[2] - The total comprehensive income for the period was RMB 416.28 million, compared to RMB 258.32 million in the previous year[6] - The company's pre-tax profit for the six months was RMB 445,227,000, compared to RMB 260,552,000 for the same period last year, reflecting a significant increase[20] - Net profit surged by 71.57% to RMB 442.20 million, with net profit margin increasing from 8.90% to 13.24%[47] Revenue Sources - Direct retail store sales reached RMB 2,722,989,000, up 19.4% from RMB 2,279,809,000 in the previous year[14] - Online sales through e-commerce platforms increased to RMB 463,715,000, a growth of 4.9% from RMB 443,399,000[14] - Revenue from direct retail stores was RMB 2,722.99 million, reflecting a year-on-year growth of 19.44%[35] - E-commerce platform revenue increased to RMB 463.72 million, a growth of 4.58% compared to RMB 443.40 million in the first half of 2022[35] - Revenue for the Koradior brand increased by 11.14% to RMB 1,126.74 million, while NAERSI's revenue rose by 8.91% to RMB 704.57 million[40] Costs and Expenses - The cost of goods sold was RMB 826,611,000, up from RMB 728,510,000, indicating a rise in operational costs[16] - The overall sales cost for the reporting period was RMB 826.61 million, an increase of 13.47% compared to RMB 728.51 million in the same period last year[41] - Operating expenses rose by 9.43% to RMB 2,081.93 million, driven by increased sales and distribution costs[43] Assets and Liabilities - Non-current assets as of June 30, 2023, totaled RMB 3,531.73 million, down from RMB 3,623.13 million as of December 31, 2022[7] - Current assets amounted to RMB 2,931.11 million, an increase from RMB 2,634.55 million at the end of 2022[7] - Total liabilities as of June 30, 2023, were RMB 510.15 million, a decrease from RMB 621.31 million at the end of 2022[8] - The company's equity attributable to owners of the parent was RMB 4,178.81 million, compared to RMB 3,997.45 million at the end of 2022[8] Cash Flow - The net cash inflow from operating activities was RMB 914.61 million, compared to RMB 980.82 million for the same period in 2022[2] - Cash and cash equivalents amounted to RMB 392.72 million, with net cash inflow from operating activities at RMB 914.61 million, a decrease of 6.75% year-on-year[49] Dividends and Shareholder Information - The board did not recommend the declaration of an interim dividend for the six months ended June 30, 2023[2] - The average number of issued ordinary shares for the six months ended June 30, 2023, was 675,466,314, slightly down from 676,209,152 in the previous year[21] - There will be no interim dividend declared for the reporting period ending June 30, 2022[55] Strategic Initiatives - The company plans to continue expanding its retail and e-commerce presence in the Chinese market, focusing on new product development and technology enhancements[13] - The company continues to focus on a multi-brand, omni-channel strategy, enhancing core management systems and operational capabilities[35] - The company aims to enhance overall quality, store efficiency, and personnel effectiveness through a comprehensive "quality improvement" strategy in the second half of the year[54] - The company plans to enhance online product supply quality and increase cost-effectiveness while expanding its presence on platforms like Xiaohongshu and Douyin[54] - The company is focusing on the construction and operation of large flagship stores for single brands[54] Market Environment - The overall retail environment in China showed signs of recovery, with a GDP growth rate of 5.5% in the first half of 2023[33] - The company remains optimistic about achieving its operational goals despite economic uncertainties, supported by positive fiscal and monetary policies[53] Risk Management - The audit committee, composed of three independent non-executive directors, is responsible for reviewing and supervising the group's financial reporting and risk management[57] - The company expects to maintain a low default probability and loss rate for trade receivables from major clients with no significant default records recently[27]

Financial Performance - For the year ended December 31, 2022, the company's revenue was RMB 5,663,430, a decrease of 10.88% compared to RMB 6,354,875 in 2021[7]. - Gross profit for 2022 was RMB 4,254,420, down 10.21% from RMB 4,737,986 in the previous year[7]. - Net profit decreased by 33.22% to RMB 375,425 from RMB 562,156 in 2021[7]. - Basic earnings per share for 2022 were RMB 0.57, down from RMB 0.84 in 2021[7]. - The net profit margin decreased to 6.63% from 8.85%, a decline of 2.22 percentage points[7]. - Total revenue for the year ended December 31, 2022, was RMB 5,663.43 million, a decrease of 10.88% compared to RMB 6,354.88 million for the year ended December 31, 2021[17]. - The company's revenue for 2022 was RMB 5,663.43 million, a decrease of 10.88% compared to 2021, with a net profit of RMB 382.43 million, down 33.22% year-on-year[10]. - Revenue from distributors for the year ended December 31, 2022, was RMB 334.23 million, a decrease of 40.52% compared to RMB 561.93 million for the year ended December 31, 2021[18]. - Revenue from directly operated retail stores was RMB 4,416.07 million, down 11.51% year-over-year due to sales declines and the impact of COVID-19[33]. Operational Highlights - The company operated 2,006 retail stores across 31 provinces and municipalities, with a slight decrease in self-operated stores from 1,558 to 1,555 due to pandemic impacts[10]. - Online sales reached RMB 893.23 million, representing an 18.04% increase compared to the previous year, highlighting a shift towards e-commerce channels[10]. - The company has a diverse brand portfolio including eight brands, with a focus on high-end women's fashion[3]. - The main brands Koradior and NAERSI generated revenues of RMB 1,977.24 million and RMB 1,237.00 million, respectively, ranking among the top Chinese brands[10]. - The group operated 2,006 retail stores across 31 provinces, with 1,555 directly operated stores generating 77.98% of total revenue[30]. - In 2022, the company opened 332 new retail stores and closed 367, resulting in a net decrease of 35 stores, bringing the total to 2,006 stores by December 31, 2022[40]. Strategic Initiatives - The company plans to upgrade its positioning from a leading enterprise in the mid-to-high-end women's wear industry to a leading light luxury brand management group in China in 2023[12]. - The company is focusing on enhancing its e-commerce capabilities, particularly through platforms like Douyin, to adapt to changing consumer shopping habits[18]. - The company aims to achieve retail sales of RMB 10 billion in 2023 and RMB 15 billion by 2025, supported by a multi-brand and multi-channel strategy[49]. - The company plans to strengthen its digital infrastructure and improve online and offline membership systems for better customer engagement[52]. - The company is committed to integrating a high-quality supply chain to enhance product quality and consumer experience[53]. Financial Health - Operating cash flow increased by 41.49% to RMB 1,701,789 compared to RMB 1,202,795 in 2021[7]. - The interest coverage ratio for the company was 9.25 times, indicating strong ability to cover interest expenses[8]. - The asset-liability ratio stood at 10.79%, reflecting a stable financial structure[8]. - As of December 31, 2022, the current ratio was 1.60, unchanged from December 31, 2021[25]. - The debt-to-equity ratio as of December 31, 2022, was 10.79%, a decrease from 12.49% as of December 31, 2021[26]. Corporate Governance - The company has a diverse board consisting of six directors, including three executive directors and three independent non-executive directors[66]. - The company is committed to maintaining high corporate governance standards and has adopted relevant codes of practice[65]. - The board consists of six directors, with one female director, resulting in a gender ratio of 16.7% female to 83.3% male[80]. - The company has established three board committees: audit committee, remuneration committee, and nomination committee, with independent non-executive directors as chairs[68]. - The independent non-executive directors confirmed their independence annually, with the board believing they maintain their independence despite long tenures[73]. Environmental, Social, and Governance (ESG) Efforts - The company aims to achieve carbon neutrality by 2060, aligning with China's commitment to green development and the Paris Agreement[172]. - The total greenhouse gas emissions for the year ended December 31, 2022, amounted to 30,624.09 tons of CO2 equivalent, a decrease of 29.59% or 12,870.75 tons compared to 43,494.84 tons in 2021[163]. - The company has implemented various internal environmental policies to reduce adverse environmental impacts, including the use of low VOC paints and LED lighting systems[166]. - The company has established a mechanism to monitor suppliers to ensure compliance with environmental laws and regulations[161]. - The company promotes a modern work environment, ensuring fair employment practices and opportunities for all employees, with a total workforce of 10,327 in 2022[179]. Employee Development - The total employee count as of December 31, 2022, was 10,327, slightly down from 10,335 in 2021, with a focus on training and development in sales and marketing skills[45]. - The average training hours per employee increased to 46.49 hours in 2022 from 30.45 hours in 2021[187]. - Employee retention strategies include customized health and safety policies and regular assessments of workplace conditions[183]. - The company emphasizes employee development through various training programs, including management skills and logistics management[185]. - The company has maintained high standards to protect employees, with no significant non-compliance cases reported regarding labor standards[188]. Community Engagement - The company contributed to the community through donations and volunteer work, including support for pandemic relief efforts in the Futian District[195]. - The group received the "Special Contribution Award for Pandemic Relief" from local retail associations for its contributions during the pandemic[195]. - The group is focused on enhancing community awareness among employees through corporate social responsibility activities, benefiting both the community and the company in the long term[195]. - The company collaborates with local charities to create better futures for children, including sustainable art competitions[195].