香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完整性亦不發表任何 聲明，並明確表示概不就因本公告全部或任何部份內容而產生或因依賴該等內容而引致的任何損失承擔任何責任。 CHINA STARCH HOLDINGS LIMITED 中國澱粉控股有限公司 ( 於開曼群島註冊成立之有限公司 ) (股份代號: 3838) 中國澱粉控股有限公司 (「本公司」) 之董事會 (「董事會」) 謹此宣佈將於 二 零二 五 年 八月 二 十(星 期三 ) 舉 行 董 事會 會 議，藉以 （其中包括）批准刊發本公司及其附屬公司截至 二零 二 五年 六 月三 十 日止 六個 月 之中 期 業績 及考 慮 派發 中 期股 息(如 有)。 承董事會命 中國澱粉控股有限公司 主席 田其祥 中華人民共和國，壽光，二零二五年八月八日 於本公告日期，本公司董事為： 執行董事： 田其祥先生（主席） 高世軍先生（行政總裁） 于英泉先生 劉象剛先生 獨立非執行董事： 花強教授 孫明導先生 施得安女士 董事會會議通知 ...

股份發行人及根據《上市規則》第十九B章上市的香港預託證券發行人的證券變動月報表 截至月份: 2025年7月31日 狀態: 新提交 致：香港交易及結算所有限公司 公司名稱: 中國澱粉控股有限公司 呈交日期: 2025年8月1日 I. 法定/註冊股本變動 | 1. 股份分類 | 普通股 | 股份類別 | 不適用 | | | 於香港聯交所上市 (註1) | | 是 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 證券代號 (如上市) | 03838 | 說明 | | | | | | | | | | | 法定/註冊股份數目 | | | 面值 | | | 法定/註冊股本 | | | 上月底結存 | | | 10,000,000,000 | HKD | | 0.1 | HKD | | 1,000,000,000 | | 增加 / 減少 (-) | | | | | | | HKD | | | | 本月底結存 | | | 10,000,000,000 | HKD | | 0.1 | HKD | | 1,000,000,000 | 本月底法 ...

Core Insights - The global starch and starch products market is projected to have significant growth, with China expected to hold a substantial market share by 2025 [2] - The report provides a comprehensive analysis of the starch market, including production, sales, consumption, and the impact of COVID-19 on future developments in China [2][3] - Major companies in the starch industry include Archer Daniels Midland Company, Roquette Freres Co, Cargill, Emsland Group, Ingredion, Agrana Group AG, Avebe U.A., and Tate & Lyle [2][3] Industry Overview - The report categorizes the starch and starch products industry into various segments, focusing on production, consumption data, and future trends across regions such as China, the US, Europe, Japan, Southeast Asia, and India [3] - Different types of starch products are analyzed, including corn starch, cassava starch, potato starch, wheat starch, and others, with insights into their pricing, production volume, market share, and growth trends [3] Market Dynamics - The report outlines the supply and demand conditions for starch and starch products globally, including capacity, production, utilization rates, and development trends [5] - It also discusses the competitive landscape, highlighting the production volume, market share, and revenue of major companies in the starch sector from 2018 to 2025 [5] Regional Analysis - The report provides detailed insights into the market size and growth rates of starch and starch products in various regions, including China, the US, Europe, Japan, Southeast Asia, and India [5][6] - It emphasizes the importance of downstream applications for starch products, such as textiles, paper and plywood, and adhesives, detailing consumption volumes and market shares in these sectors [3][6] Impact of COVID-19 - The report assesses the overall development status of the starch industry in various countries, including the effects of the COVID-19 pandemic on the market [6] - It highlights the international trade environment and policy factors that have influenced the starch and starch products industry during the pandemic [6]

Core Viewpoint - The corn starch industry in China is a crucial pillar of the agricultural product deep processing sector, exhibiting a mature supply-demand system with a balanced state in 2024, where production is projected to reach 37.99 million tons and apparent demand at 37.97 million tons, indicating a tight balance overall [1][13]. Group 1: Industry Overview - The corn starch industry has established a stable supply-demand structure, with production and demand closely aligned, reflecting a trend of "stable total volume and optimized structure" [1][13]. - The industry is transitioning from traditional scale expansion to high-quality development, with an increasing proportion of high-value-added products, demonstrating resilience [1][13]. - The corn starch is derived from corn kernels through various processes and is categorized into three types: regular corn starch, modified starch, and specialty corn starch, widely used in food processing, pharmaceuticals, textiles, and biodegradable materials [2][4]. Group 2: Policy Support - Recent national policies have significantly supported the corn starch industry, emphasizing green manufacturing and high-end product development, with specific encouragement for bio-based products and functional food additives [4]. - Local governments are also promoting the development of the corn starch deep processing industry, aiming for a stable planting area and a substantial industry scale by 2027 [4]. Group 3: Industry Chain - The corn starch industry in China features a complete industrial chain with a "dispersed upstream, concentrated midstream, and diversified downstream" structure [6]. - The midstream processing segment is highly concentrated, with key regions like Shandong and Hebei forming industrial clusters, while downstream applications are diversifying into traditional and emerging sectors [6]. Group 4: Market Dynamics - The corn production in China is vital, with a total output exceeding 294.92 million tons in 2024, accounting for over 40% of the total grain production, supported by increased planting area and yield [9]. - The demand for corn starch is robust across various sectors, with the food industry being the largest consumer, followed by starch sugar, paper, pharmaceuticals, and chemicals [11]. Group 5: Competitive Landscape - The competitive landscape of the corn starch industry is characterized by a concentration of leading firms, with the top five companies holding approximately 45% market share, while smaller firms focus on niche markets [19]. - The industry is evolving towards a "technology-driven, chain collaboration, and scenario-focused" competitive model, with leading companies integrating their operations from corn to starch to bio-based materials [19]. Group 6: Future Trends - The corn starch industry is undergoing a transformation driven by technological innovation, with advancements in smart manufacturing and green production methods [21]. - Market demand is shifting towards high-end and diversified applications, particularly in biodegradable materials and health-oriented products, with significant growth expected in these areas [22][23]. - The industry is also seeing increased integration and globalization, with leading firms expanding their operations and establishing a presence in international markets [24].

Revenue and Business Segments - The Group's revenue is derived from two business segments: upstream products and fermented and downstream products, with production activities carried out in the People's Republic of China (PRC) [5]. - Total revenue for the Group decreased slightly by 3.2% to approximately RMB11,415,755,000, while gross profit increased significantly from approximately RMB556,572,000 to RMB1,163,247,000 [91]. - Revenue from fermented and downstream products rose significantly by 37.7% to RMB4,407,871,000 (2023: RMB3,200,671,000) [105]. - Lysine revenue increased by 51.5% to RMB3,427,579,000 (2023: RMB2,261,792,000), with sales volume reaching 578,095 tonnes, a 69.7% increase [107]. - The annual production capacity for starch and lysine reached 2,800,000 tonnes and 560,000 tonnes, respectively, an increase from 2,700,000 tonnes and 500,000 tonnes in 2023 [77]. Financial Performance - Profit after taxation increased over fourfold to RMB625,589,000, with basic earnings per share rising to RMB0.0808 [92]. - The Group's gross profit for upstream products increased by 230.4% to RMB429,334,000, despite a substantial decrease in market prices for corn kernel and upstream products [83]. - The profitability of the corn-refined industry improved despite a decline in market prices for starch and lysine, as raw corn kernel prices dropped significantly [75]. - Total cost of sales for 2024 was approximately RMB10,252,508,000, an 8.8% decrease from RMB11,240,962,000 in 2023, primarily due to lower raw material prices [110]. - The average corn kernel cost for 2024 was about RMB2,071 per tonne (2023: RMB2,543), reflecting a significant decrease [111]. Dividends and Shareholder Returns - The Board recommends a final dividend of HK0.98 cents per share for the year ended 31 December 2024, expected to be paid on or about 16 July 2025 if approved at the AGM [13]. - The total shareholder return for 2024 was 44.8%, a significant recovery from a negative return of -36.5% in 2023 [132]. - The Company had reserves available for distribution to shareholders amounting to approximately RMB126,115,000 as of December 31, 2024 [140]. Corporate Governance and Compliance - Related party transactions for the year ended 31 December 2024 are fully exempt connected transactions as defined in the Listing Rules [8]. - No significant transactions, arrangements, or contracts involving Directors' material interests were reported during the financial year [25]. - The Directors and other officers are indemnified against losses and liabilities incurred in the execution of their duties, excluding those arising from fraud and dishonesty [26]. - The company has maintained appropriate directors' and officers' liability insurance for indemnifying against losses from legal actions [36]. - There were no incidents of non-compliance with relevant laws and regulations during the year under review, indicating a strong adherence to legal standards [198]. Environmental and Sustainability Efforts - The Group is committed to complying with all environmental policies and has an internal laboratory to monitor product quality to ensure compliance with national standards, including food safety standards [7]. - The Group's environmental and sustainability efforts are detailed on pages 20 to 31, highlighting compliance and stakeholder relationships [6]. - The report highlights the company's commitment to environmental sustainability and compliance with local regulations [164]. - The company recognizes the significance of ESG (Environmental, Social, and Governance) issues and integrates them into its business operations [168]. Risk Management - The Risk Review Report on pages 32 to 36 provides a comprehensive review of principal risks and uncertainties facing the Group [6]. - The Group does not consider foreign exchange risk significant, as most transactions are denominated in Renminbi [148]. Employee and Training Initiatives - The number of employees in 2024 is 2,205, a decrease of 2.6% from 2,263 in 2023 and 6.6% from 2,360 in 2022 [194]. - The staff turnover ratio for all grades in 2024 is 3.6%, down from 4.7% in 2023 and 5.8% in 2022 [194]. - Mandatory in-house training is provided to all staff, enhancing awareness of anti-corruption and conflict of interest situations [197]. - The training hours per month for general staff increased to 15.0 hours in 2024 from 14.6 hours in 2023 [194]. Share Option Scheme - The Share Option Scheme was adopted on May 19, 2017, to incentivize directors and employees [40]. - The Company has not granted any share options under the Share Option Scheme since its adoption [48]. - Eligible participants of the Share Option Scheme include employees, non-executive directors, suppliers, customers, and other contributors to the Group's growth [45]. - Any grant of options to a director or substantial shareholder exceeding 0.1% of the issued shares or valued over HK$5 million requires shareholder approval [46]. Production and Operational Efficiency - The Group's production volume increased due to technological upgrades and improved operational efficiency [74]. - The modified starch business recorded increased sales supported by enhancements in sewage treatment capabilities and increased customer orders [90]. - New thermal power facilities are expected to enhance operational efficiency and reduce energy costs over time [80]. - The management anticipates continued stock competition in 2025 and is exploring opportunities to extend the industrial chain and diversify its business layout [76].

Core Viewpoint - China Starch reported a significant increase in net profit for the fiscal year ending December 31, 2024, despite a slight decline in revenue, indicating strong operational improvements and cost management strategies [1] Financial Performance - The company achieved a net profit attributable to shareholders of RMB 482 million, representing a year-on-year increase of 346.7% [1] - Total revenue for the year was RMB 11.416 billion, reflecting a decrease of 3.2% compared to the previous year [1] - Basic earnings per share were reported at RMB 0.0808, with a proposed final dividend of HKD 0.0098 per share [1] Operational Highlights - The company increased production across various product lines due to technological upgrades, reduced maintenance cycles, and stable production processes [1] - The expansion of lysine production capacity at the end of the previous year contributed to the overall increase in output [1] Market Conditions - The decline in corn prices, driven by increased domestic corn production and reduced demand from the animal feed and farming sectors, positively impacted profitability in the corn deep processing industry [1] - The market for starch and lysine saw price declines that were less severe than the drop in corn prices, leading to improved profitability for the company [1] Strategic Outlook - Management anticipates that the market will remain competitive in 2025, focusing on extending the industrial chain and diversifying operations as a key development strategy [1]

Financial Performance - Revenue for the year ended December 31, 2024, was RMB 11,415,755, a decrease of 3.2% compared to RMB 11,797,534 in 2023[2] - Gross profit increased by 109.0% to RMB 1,163,247 from RMB 556,572 in the previous year[2] - Operating profit surged by 418.2% to RMB 815,941, up from RMB 157,470 in 2023[2] - Net profit for the year reached RMB 625,589, a significant increase of 297.5% compared to RMB 157,396 in 2023[2] - Shareholders' profit attributable to the company was RMB 482,253, reflecting a growth of 346.7% from RMB 107,959[2] - Basic earnings per share rose by 348.9% to RMB 0.0808 from RMB 0.0180 in the previous year[2] - Proposed final dividend per share increased by 42.0% to HKD 0.98 from HKD 0.69[2] Assets and Liabilities - Total assets as of December 31, 2024, amounted to RMB 6,958,889, up from RMB 5,352,626 in 2023[6] - Current assets increased significantly to RMB 4,419,363 from RMB 2,697,624 in the previous year[6] - Total liabilities rose to RMB 2,465,234 from RMB 1,416,073, indicating a growth in financial obligations[6] Revenue Breakdown - Revenue from external customers in China for the reporting period was RMB 10,702,521,000, while revenue from other countries was RMB 713,234,000, compared to RMB 10,856,939,000 and RMB 940,595,000 in the previous year[9] - Revenue from fermentation and downstream products rose significantly by 37.7% to RMB 4,407,871,000, up from RMB 3,200,671,000 in 2023[31] - Lysine revenue increased significantly by 51.5% to RMB 3,427,579,000 in 2024, compared to RMB 2,261,792,000 in 2023[32] - Lysine export volume increased to approximately 72,921 tons in 2024, compared to 59,383 tons in 2023, despite a challenging market environment[26] - Starch sugar revenue was approximately RMB 500,583,000, up from RMB 472,198,000 in 2023, with sales volume increasing by 21.1% to 217,581 tons[32] Cost and Expenses - Cost of goods sold decreased to RMB 8,809,092,000 in 2024 from RMB 10,044,812,000 in 2023, while research expenses dropped significantly to RMB 89,669,000 from RMB 160,490,000[11] - Sales cost decreased by 8.8% to RMB 10,252,508,000 in 2024, down from RMB 11,240,962,000 in 2023, primarily due to a significant drop in corn prices[34] - Average cost of corn in 2024 was RMB 2,071 per ton, compared to RMB 2,543 per ton in 2023[34] - Administrative expenses increased to RMB 217,323,000 in 2024 from RMB 194,551,000 in 2023, driven by higher government fees and employee costs[36] Tax and Income - The income tax expense for 2024 was RMB 212,551,000, a substantial increase from RMB 19,437,000 in 2023, primarily due to the introduction of current income tax in China[12] Shareholder Information - The proposed final dividend for 2024 is HKD 0.98 per share, amounting to HKD 58,452,000, compared to HKD 41,183,000 in 2023[15] - The company reported a total shareholder return rate of 44.8% in 2024, compared to -36.5% in 2023[42] - The company has available reserves for distribution to shareholders of approximately RMB 126,115,000 as of December 31, 2024[46] - The board proposed a final dividend of HKD 0.98 per share for the year ended December 31, 2024, subject to shareholder approval at the 2025 Annual General Meeting[47] Operational Capacity - The production capacity for starch and lysine reached 2,800,000 tons and 560,000 tons respectively by the end of 2024, up from 2,700,000 tons and 500,000 tons in 2023[22] - The company announced two projects aimed at expanding long-term capacity, including upgrading existing starch production facilities to increase annual capacity from 1,000,000 tons to 1,550,000 tons[23] - The company is actively researching to extend its industrial chain and diversify its development direction in response to ongoing market competition[22] - The company plans to enhance production efficiency and customer satisfaction through resource investment and operational optimization[22] Employee and Financial Management - The company employed approximately 2,209 full-time employees as of December 31, 2024, down from 2,267 in 2023, with total employee costs around RMB 283,737,000[39] - The leverage ratio as of December 31, 2024, increased significantly to 21.3% from 10.5% in 2023, primarily due to working capital needs and favorable bank interest rates[43] - Total bank borrowings amounted to approximately RMB 1,420,301,000, all of which were short-term loans as of December 31, 2024[43] - The company has implemented financial risk management policies to ensure all payables are settled within the relevant credit periods[18] Compliance and Governance - The company has complied with the corporate governance code as per the listing rules, except for the absence of the chairman at the 2024 Annual General Meeting due to other business commitments[51] - The 2024 annual report will be published around April 11, 2025, containing all information required by the listing rules[54] Miscellaneous - The company has no recorded losses for trade receivables in both 2024 and 2023, indicating stable credit management[16] - Trade receivables decreased to RMB 82,970,000 in 2024 from RMB 136,797,000 in 2023, with the aging analysis showing a significant drop in receivables aged 0-30 days[16] - Trade payables increased to RMB 157,694,000 in 2024 from RMB 132,443,000 in 2023, with the average credit period for purchases remaining at 80 days[18] - The company pledged assets with a total book value of RMB 1,281,000,000 to secure various credit facilities from banks[44] - As of December 31, 2024, the company had no significant contingent liabilities[45] - The company repurchased a total of 4,075,000 shares at a total cost of approximately HKD 607,000 during the year ended December 31, 2024[50]

[Financial Statements](index=3&type=section&id=Financial%20Statements) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=3&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) In H1 2024, revenue slightly decreased by 2.9%, but a significant drop in cost of sales led to a 189.4% surge in gross profit, achieving a net profit of RMB 267.48 million and a positive basic EPS, reversing prior period losses Key Consolidated Statement of Profit or Loss Data (For the six months ended June 30) | Indicator | H1 2024 (RMB thousands) | H1 2023 (RMB thousands) | Year-on-year Change | | :--- | :--- | :--- | :--- | | **Revenue** | 5,645,514 | 5,814,323 | -2.9% | | **Gross Profit** | 507,180 | 175,247 | +189.4% | | **Operating Profit/(Loss)** | 342,483 | (45,735) | Turned profitable | | **Profit/(Loss) for the period** | 267,482 | (28,959) | Turned profitable | | **Profit/(Loss) attributable to owners of the Company** | 214,659 | (37,754) | Turned profitable | | **Basic EPS** | 0.0360 RMB | (0.0063) RMB | Turned profitable | [Consolidated Statement of Financial Position](index=4&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, total assets slightly increased to RMB 5.44 billion, while total liabilities decreased to RMB 1.29 billion due to reduced borrowings, optimizing the balance sheet structure with total equity rising to RMB 4.15 billion Key Consolidated Statement of Financial Position Data | Indicator | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | 5,439,704 | 5,352,626 | +1.6% | | Non-current Assets | 2,549,859 | 2,655,002 | -4.0% | | Current Assets | 2,889,845 | 2,697,624 | +7.1% | | **Total Liabilities** | 1,290,656 | 1,416,073 | -8.9% | | Current Liabilities | 1,022,749 | 1,192,374 | -14.2% | | **Total Equity** | 4,149,048 | 3,936,553 | +5.4% | | **Cash and Cash Equivalents** | 1,094,537 | 899,830 | +21.6% | [Consolidated Statement of Changes in Equity](index=6&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2024, total equity increased to RMB 4.15 billion, primarily driven by a net profit of RMB 267.48 million for the period, partially offset by RMB 37.56 million in dividends paid and RMB 0.55 million from share repurchases - Beginning total equity was **RMB 3.937 billion**, with profit for the period increasing it by **RMB 267.48 million**, offset by **RMB 37.56 million** in 2023 final dividends paid and **RMB 0.55 million** from share repurchases, resulting in an ending total equity of **RMB 4.149 billion**[6](index=6&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) In H1 2024, net cash inflow from operating activities was RMB 482.68 million, up 20.7%, while investing activities turned to a net inflow of RMB 215.81 million, and financing activities saw a significant net outflow of RMB 503.78 million primarily for loan repayments, increasing period-end cash and cash equivalents to RMB 1.095 billion Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Item | H1 2024 (RMB thousands) | H1 2023 (RMB thousands) | | :--- | :--- | :--- | | **Net cash inflow from operating activities** | 482,678 | 399,882 | | **Net cash from/(used in) investing activities** | 215,812 | (212,027) | | **Net cash used in financing activities** | (503,783) | (88,019) | | **Net increase in cash and cash equivalents** | 194,707 | 99,836 | | **Cash and cash equivalents at end of period** | 1,094,537 | 1,102,821 | [Notes to the Unaudited Interim Financial Report](index=8&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) [3 SEGMENT INFORMATION](index=9&type=section&id=3%20SEGMENT%20INFORMATION) The company operates in two segments: Upstream Products and Fermentation & Downstream Products; in H1 2024, Upstream Products saw reduced revenue but turned profitable with RMB 98.34 million in segment results, while Fermentation & Downstream Products significantly grew both revenue and results to RMB 255.95 million, becoming the core profit driver Segment Results (For the six months ended June 30) | Segment | H1 2024 (RMB thousands) | H1 2023 (RMB thousands) | | :--- | :--- | :--- | | **Upstream Products** | | | | External sales | 3,524,090 | 4,349,545 | | Segment results | 98,337 | (93,324) | | **Fermentation and Downstream Products** | | | | External sales | 2,121,424 | 1,464,778 | | Segment results | 255,951 | 58,500 | [8 DIVIDENDS](index=12&type=section&id=8%20DIVIDENDS) The Board does not recommend an interim dividend for the six months ended June 30, 2024, while the 2023 final dividend of HK 0.69 cents per share remained consistent with 2022 - The Board does not recommend an interim dividend for 2024 (2023 corresponding period: nil)[20](index=20&type=chunk)[21](index=21&type=chunk) [12 SHARE CAPITAL](index=14&type=section&id=12%20SHARE%20CAPITAL) During the reporting period, the company repurchased 4.075 million shares on the Stock Exchange for approximately HKD 0.607 million, all of which have been cancelled, resulting in 5,964,492,043 ordinary shares issued as of June 30, 2024 - The company repurchased a total of **4,075,000 shares** in March and April 2024 for a total consideration of **HKD 0.607 million**, which have been cancelled[28](index=28&type=chunk)[29](index=29&type=chunk) [14 BORROWINGS](index=16&type=section&id=14%20BORROWINGS) As of June 30, 2024, total borrowings significantly decreased by 86.9% to **RMB 73.32 million** from **RMB 559.37 million** at the end of 2023, with all borrowings classified as short-term and due within one year Borrowings | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | **Borrowings repayable within one year** | 73,316 | 559,365 | | Of which: Bank borrowings | 29,508 | 518,585 | | Of which: Other borrowings | 43,808 | 40,780 | [Management Discussion and Analysis](index=17&type=section&id=Management%20Discussion%20and%20Analysis) [INDUSTRY OVERVIEW AND COMPANY DEVELOPMENT](index=17&type=section&id=INDUSTRY%20OVERVIEW%20AND%20COMPANY%20DEVELOPMENT) In H1 2024, the corn starch and lysine markets improved as oversupply was absorbed, while the company focused on enhancing production efficiency through improved wastewater treatment, strict personnel cost control, optimized equipment operation, and reduced energy consumption - Market conditions improved as the corn starch and lysine markets absorbed last year's oversupply in 2024[36](index=36&type=chunk) - Production efficiency was enhanced by improving wastewater treatment capacity, controlling headcount, optimizing equipment operation, and upgrading energy-saving equipment to reduce unit production costs[36](index=36&type=chunk) - The Shouguang production facility expansion project was completed in 2023, with lysine sales projected to reach a new record in 2024[36](index=36&type=chunk) [BUSINESS REVIEW](index=18&type=section&id=BUSINESS%20REVIEW) Upstream products saw significantly improved profit margins due to a substantial drop in corn prices, while downstream products, particularly lysine, achieved significant revenue growth by expanding overseas markets with nearly doubled export volumes, modified starch experienced both volume and price increases, and starch sugar business profitability slightly improved - Upstream products recorded increased profit margins despite lower selling prices, benefiting from a significant reduction in corn kernel costs[37](index=37&type=chunk) - Lysine products faced domestic oversupply but achieved substantial revenue growth by aggressively expanding overseas markets, with export volume increasing from **23,204 tons** to **45,708 tons**[37](index=37&type=chunk) - Modified starch saw growth in both sales volume and selling price, primarily due to enhanced wastewater treatment capacity and reduced corn costs[37](index=37&type=chunk) [FINANCIAL PERFORMANCE](index=19&type=section&id=FINANCIAL%20PERFORMANCE) Despite a slight decrease in total revenue due to lower average product selling prices, the significant decline in corn kernel costs to a new low since 2021, exceeding the product price drop, led to substantial increases in both gross profit and net profit, successfully turning the group profitable - Key to performance turnaround: The decrease in raw material costs (corn kernels) was greater than the decrease in product selling prices, leading to a significant increase in gross profit[39](index=39&type=chunk) Upstream Products Segment Performance (For the six months ended June 30) | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | **Revenue (RMB thousands)** | 3,524,090 | 4,349,545 | | **Gross Profit Margin** | 5.6% | 0.4% | Fermentation and Downstream Products Segment Performance (For the six months ended June 30) | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | **Revenue (RMB thousands)** | 2,121,424 | 1,464,778 | | **Gross Profit Margin** | 14.6% | 10.9% | - Total lysine product sales volume was approximately **273,256 tons**, a **71.1% year-on-year increase** (2023: 159,682 tons), serving as the primary driver for downstream business growth[44](index=44&type=chunk) - The average cost of the main raw material, corn kernels, was approximately **RMB 2,135 per ton**, a **16.4% year-on-year decrease** (2023: RMB 2,554 per ton)[47](index=47&type=chunk) [REVIEW OF OTHER OPERATIONS](index=21&type=section&id=REVIEW%20OF%20OTHER%20OPERATIONS) During the reporting period, the company effectively controlled various expenses, with slight decreases in distribution and administrative costs, and a significant **53.5% year-on-year reduction** in research expenses to **RMB 43.69 million** due to fewer research projects - Distribution expenses slightly decreased to **RMB 82.22 million**, and administrative expenses decreased to **RMB 96.21 million**[48](index=48&type=chunk)[51](index=51&type=chunk) - Research expenses significantly decreased from **RMB 94.06 million** to **RMB 43.69 million**, primarily due to a reduction in the number of research projects[53](index=53&type=chunk) [Liquidity, financial resources and capital structure](index=23&type=section&id=Liquidity%2C%20financial%20resources%20and%20capital%20structure) The company maintains a healthy financial position with ample working capital, showing improved key financial ratios including enhanced current and quick ratios, while the leverage ratio (borrowings to total assets) significantly decreased from **10.5% to 1.3%**, indicating reduced financial risk and a more robust capital structure Key Financial Performance Indicators | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Current Ratio** | 2.8 times | 2.3 times | | **Quick Ratio** | 1.9 times | 1.6 times | | **Leverage Ratio (Borrowings/Total Assets)** | 1.3% | 10.5% | - As of June 30, 2024, the Group's total number of employees was **2,267**, a decrease from **2,310** in 2023[55](index=55&type=chunk) [Disclosure of Additional Information](index=24&type=section&id=Disclosure%20of%20Additional%20Information) [INTERIM DIVIDEND](index=24&type=section&id=INTERIM%20DIVIDEND) The Board has decided not to declare an interim dividend for the first half of 2024 - The Board does not recommend an interim dividend for the six months ended June 30, 2024 (2023: nil)[57](index=57&type=chunk)[59](index=59&type=chunk) [PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES](index=26&type=section&id=PURCHASE%2C%20SALE%20OR%20REDEMPTION%20OF%20THE%20COMPANY%27S%20LISTED%20SECURITIES) In H1 2024, the company repurchased **4,075,000** of its own shares on the Stock Exchange for approximately **HKD 0.607 million**, with all repurchased shares cancelled by May 30, 2024 Share Repurchase Details (2024) | Month | Number of Shares | Price per Share (HKD) | Total Paid (HKD thousands) | | :--- | :--- | :--- | :--- | | **March** | 2,000,000 | 0.146 - 0.150 | 296 | | **April** | 2,075,000 | 0.145 - 0.150 | 311 | | **Total** | **4,075,000** | | **607** | [CORPORATE GOVERNANCE](index=26&type=section&id=CORPORATE%20GOVERNANCE) During the reporting period, the company complied with the Corporate Governance Code under the Listing Rules, and the Audit Committee reviewed the unaudited interim financial statements for the period - The company complied with the applicable code provisions set out in Part 2 of Appendix C1 to the Listing Rules during the reporting period[69](index=69&type=chunk) - The Audit Committee has reviewed the unaudited condensed consolidated interim financial statements for the six months ended June 30, 2024[72](index=72&type=chunk) [Corporate Information](index=28&type=section&id=Corporate%20Information) [Corporate Information](index=28&type=section&id=Corporate%20Information) This section provides essential company information including core management, Board members, registered address, principal place of business, auditors, legal advisors, principal bankers, and share registrar

[Financial Statements](index=1&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=1&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) In the first half of 2024, the Group's performance significantly improved, turning losses into profits, with revenue slightly decreasing year-on-year but gross profit increasing by 189.4% due to cost control, resulting in a profit of RMB 267 million for the period compared to a loss of RMB 28.96 million in the prior year period | Indicator | Six Months Ended June 30, 2024 (RMB '000) | Six Months Ended June 30, 2023 (RMB '000) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 5,645,514 | 5,814,323 | -2.9% | | Gross Profit | 507,180 | 175,247 | +189.4% | | Operating Profit/(Loss) | 342,483 | (45,735) | Turned Loss to Profit | | Profit/(Loss) for the Period | 267,482 | (28,959) | Turned Loss to Profit | | Profit/(Loss) Attributable to Owners of the Company | 214,659 | (37,754) | Turned Loss to Profit | | Basic Earnings/(Loss) Per Share (RMB) | 0.0360 | (0.0063) | Turned Loss to Profit | [Consolidated Statement of Financial Position](index=2&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, the company's total assets were RMB 5.44 billion, a slight increase from the end of 2023, with total equity growing by 5.4% to RMB 4.15 billion and total liabilities decreasing by 8.9% to RMB 1.29 billion, indicating a more stable financial structure and enhanced solvency | Indicator | June 30, 2024 (RMB '000) | December 31, 2023 (RMB '000) | Period Change | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 2,549,859 | 2,655,002 | -4.0% | | Total Current Assets | 2,889,845 | 2,697,624 | +7.1% | | **Total Assets** | **5,439,704** | **5,352,626** | **+1.6%** | | **Total Equity** | **4,149,048** | **3,936,553** | **+5.4%** | | Total Non-current Liabilities | 267,907 | 223,699 | +19.8% | | Total Current Liabilities | 1,022,749 | 1,192,374 | -14.2% | | **Total Liabilities** | **1,290,656** | **1,416,073** | **-8.9%** | [8. Dividends](index=6&type=section&id=8.%20Dividends) The Board decided not to declare an interim dividend for the first half of 2024, consistent with the prior year's policy, while the final dividend for 2023 was approved in May 2024 - The Board did not recommend the payment of an interim dividend for the six months ended June 30, 2024 (2023: nil)[11](index=11&type=chunk)[32](index=32&type=chunk) - On May 21, 2024, shareholders approved the declaration of a final dividend of **HKD 0.0069 per share** for 2023[11](index=11&type=chunk) [Management Discussion and Analysis](index=8&type=section&id=Management%20Discussion%20and%20Analysis) [Industry Overview and Company Development](index=8&type=section&id=Industry%20Overview%20and%20Company%20Development) In the first half of 2024, the business environment for corn starch and lysine improved as the market gradually absorbed oversupply, with the company focusing on enhancing production efficiency and expanding capacity to achieve competitive low unit production costs through measures like improved wastewater treatment, strict labor cost control, and optimized equipment energy consumption - Lysine production significantly increased due to the completion of the Shouguang production facility expansion project in 2023, with management confident that **lysine sales volume in 2024** will set a new record[15](index=15&type=chunk) - The company implemented multiple measures to enhance production efficiency, including: - Improving wastewater treatment capacity and reducing treatment costs - Strictly controlling employee numbers and wages through job restructuring - Optimizing equipment operating efficiency and replacing high-energy-consuming equipment to reduce utility costs[15](index=15&type=chunk) [Business Review](index=8&type=section&id=Business%20Review) The Upstream Products segment significantly improved gross margin due to lower raw material costs, while the Fermentation and Downstream Products segment saw substantial revenue growth driven by a near doubling of lysine export volume through successful overseas market expansion, offsetting domestic market weakness [Upstream Products](index=8&type=section&id=Upstream%20Products) Despite lower market prices for corn starch and its by-products during the review period compared to the prior year, the segment's gross margin significantly increased due to a substantial drop in the price of the main raw material, corn kernels, with lower product prices regaining attractiveness to end-users and market share from substitutes - The gross margin of the Upstream business segment increased due to a significant decrease in corn kernel prices[16](index=16&type=chunk) - Management believes that in the short term, the performance of this business segment will primarily be affected by raw material costs[16](index=16&type=chunk) [Fermentation and Downstream Products](index=9&type=section&id=Fermentation%20and%20Downstream%20Products) Despite the domestic lysine market remaining oversupplied, the company achieved substantial revenue growth by vigorously expanding overseas markets, with lysine export volume increasing from 23,000 tons in the prior year period to approximately 46,000 tons, while profitability and sales volume for starch sugar and modified starch businesses also improved - Through overseas market expansion, lysine product revenue recorded substantial growth, with export volume approximately **45,708 tons**, compared to **23,204 tons** in the first half of 2023[17](index=17&type=chunk) - The starch sugar business saw a slight improvement in profitability due to rising market prices[17](index=17&type=chunk) - Sales volume and selling prices for the modified starch business both increased, primarily benefiting from improved wastewater treatment capacity[17](index=17&type=chunk) [Financial Performance Analysis](index=9&type=section&id=Financial%20Performance) The Group's overall financial performance was strong, with total revenue slightly decreasing due to lower average selling prices, but a greater decline in the cost of the main raw material, corn kernels, drove a significant increase in gross profit and gross margin, ultimately turning losses into profits [Overall Financial Performance](index=9&type=section&id=Financial%20Performance-Overview) In the first half of 2024, revenue was RMB 5.646 billion, a slight decrease of 2.9% year-on-year; however, due to a greater decline in raw material costs than product selling prices, gross profit significantly increased by 189.4% to RMB 507 million, and the Group achieved a post-tax profit of RMB 267 million, compared to a loss of RMB 28.96 million in the prior year period | Indicator | Six Months Ended June 30, 2024 (RMB '000) | Six Months Ended June 30, 2023 (RMB '000) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 5,645,514 | 5,814,323 | -2.9% | | Gross Profit | 507,180 | 175,247 | +189.4% | | Profit/(Loss) Before Tax | 355,294 | (38,300) | Turned Loss to Profit | | Profit/(Loss) After Tax | 267,482 | (28,959) | Turned Loss to Profit | [Segment Performance](index=9&type=section&id=Segment%20Performance) The Upstream Products segment's gross margin significantly improved from 0.4% to 5.6%, while the Fermentation and Downstream Products segment performed exceptionally well, with revenue increasing by 44.8% year-on-year and gross margin rising from 10.9% to 14.6%, primarily driven by a substantial increase in lysine sales volume Upstream Products Segment Performance | Indicator | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Revenue (RMB '000) | 3,524,090 | 4,349,545 | | Gross Profit (RMB '000) | 198,370 | 16,051 | | Gross Margin | 5.6% | 0.4% | Fermentation and Downstream Products Segment Performance | Indicator | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Revenue (RMB '000) | 2,121,424 | 1,464,778 | | Gross Profit (RMB '000) | 308,810 | 159,196 | | Gross Margin | 14.6% | 10.9% | - Total lysine product sales volume was approximately **273,256 tons**, a year-on-year increase of **71.1%** (2023 corresponding period: **159,682 tons**), with export sales significantly increasing by **163%** to **RMB 471 million**[20](index=20&type=chunk) [Cost of Sales and Expenses](index=10&type=section&id=Cost%20of%20Sales) The core driver of the significant gross profit increase was a substantial drop in the market price of the main raw material, corn kernels, with average costs decreasing by 16.4% year-on-year, while the company effectively controlled expenses, leading to a 53.5% year-on-year decrease in research expenses due to fewer projects - The average cost of the main raw material, corn kernels, was approximately **RMB 2,135 per ton**, a significant decrease from **RMB 2,554 per ton** in the prior year period[21](index=21&type=chunk) - Research expenses significantly decreased from **RMB 94.056 million** to **RMB 43.689 million** due to a reduction in the number of projects[24](index=24&type=chunk) [Liquidity and Financial Resources](index=12&type=section&id=Liquidity%2C%20Financial%20Resources%20and%20Capital%20Structure) The Group's financial position is healthy with ample working capital, and key financial ratios show strong performance, particularly the leverage ratio which significantly decreased from 10.5% to 1.3%, indicating reduced financial risk and enhanced solvency, while current and quick ratios also improved to 2.8 times and 1.9 times respectively | Key Financial Performance Indicators | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Accounts Receivable Turnover Days | 15 | 12 | | Inventory Turnover Days | 29 | 26 | | Current Ratio | 2.8 times | 2.3 times | | Quick Ratio | 1.9 times | 1.6 times | | Leverage Ratio (Borrowings/Total Assets) | 1.3% | 10.5% | [Other Disclosures](index=13&type=section&id=Other%20Disclosures) [Purchase, Sale or Redemption of the Company's Listed Securities](index=13&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) To protect shareholder value, the company actively repurchased shares during the reporting period, buying back a total of **4.075 million** of its own shares on the Stock Exchange in March and April 2024 for a total consideration of approximately **HKD 0.607 million**, with all repurchased shares subsequently cancelled | Repurchase Month (2024) | Number of Shares | Price Paid Per Share (HKD) | Total Paid (HKD '000) | | :--- | :--- | :--- | :--- | | March | 2,000,000 | 0.146 - 0.150 | 296 | | April | 2,075,000 | 0.145 - 0.150 | 311 | | **Total** | **4,075,000** | | **607** | [Corporate Governance](index=13&type=section&id=Corporate%20Governance) The company complied with the Corporate Governance Code in the Hong Kong Stock Exchange Listing Rules during the reporting period, and the Audit Committee, comprising all independent non-executive directors, reviewed the unaudited condensed consolidated interim financial statements for this period - The company complied with the applicable code provisions of the Listing Rules during the reporting period, except for the Chairman's absence from the Annual General Meeting due to other commitments[34](index=34&type=chunk) - The Audit Committee reviewed the unaudited condensed consolidated interim financial statements for the six months ended June 30, 2024[35](index=35&type=chunk)

Financial Performance - For the year ended December 31, 2023, the total revenue was RMB 11,797,534, a decrease of 1.26% from RMB 11,948,852 in 2022[5] - Gross profit for the year was RMB 556,572, down 53.3% from RMB 1,190,475 in the previous year[5] - Operating profit decreased significantly to RMB 157,470, a decline of 74.0% compared to RMB 607,326 in 2022[5] - The net profit attributable to shareholders was RMB 107,959, down 69.4% from RMB 352,009 in the prior year[5] - Basic and diluted earnings per share were RMB 0.0180, compared to RMB 0.0587 in 2022, reflecting a decrease of 69.3%[5] - For the fiscal year ending December 31, 2023, the company's revenue was RMB 11,797,534,000, a decrease of 1.3% compared to RMB 11,948,852,000 in 2022[26] - Gross profit for 2023 was RMB 556,572,000, reflecting a significant decline of 53.2% from RMB 1,190,475,000 in the previous year[26] - Operating profit dropped by 74.1% to RMB 157,470,000 in 2023, down from RMB 607,326,000 in 2022[26] - The net profit attributable to shareholders for 2023 was RMB 107,959,000, a decrease of 69.3% compared to RMB 352,009,000 in 2022[26] - The total revenue for the year ended December 31, 2023, decreased by 1.3% to approximately RMB 11,797,534,000 compared to RMB 11,948,852,000 in 2022[70] - The gross profit significantly dropped by 53.2% to approximately RMB 556,572,000 from RMB 1,190,475,000 in the previous year[70] Assets and Liabilities - Total assets increased to RMB 5,352,626, up from RMB 5,105,848 in 2022, representing a growth of 4.84%[6] - Non-current assets rose to RMB 2,655,002, an increase of 8.84% from RMB 2,439,327 in the previous year[6] - Current assets totaled RMB 2,697,624, slightly up from RMB 2,666,521 in 2022, indicating a growth of 1.16%[6] - The total liabilities increased to RMB 1,416,073,000 in 2023 from RMB 1,284,065,000 in 2022, indicating a rise in financial obligations[29] - Deferred income decreased to RMB 164,751,000 in 2023 from RMB 244,722,000 in 2022, reflecting changes in revenue recognition[29] Sales and Market Performance - The company reported a substantial increase in sales volume of modified starch during the review period, despite challenges from urban wastewater treatment policies[24] - The average market prices of agricultural products, including soybeans, wheat, and corn, were lower in 2023 compared to 2022, indicating a global economic downturn[22] - The company's sales to external customers in China amounted to RMB 10,856,939,000, while sales to other countries were RMB 940,595,000 in 2023[33] - Total revenue from upstream products slightly decreased, with corn starch average selling price down 2% to RMB 2,816 per ton, while sales volume increased to approximately 2,007,204 tons from 1,953,563 tons in 2022[50] - Revenue from lysine products decreased to RMB 2,261,792,000 from RMB 2,424,684,000, despite an increase in sales volume to approximately 340,746 tons from 314,179 tons, indicating an average selling price drop to RMB 6,638 per ton from RMB 7,718 per ton[51] - The upstream product segment accounted for about 72.9% of the annual revenue, indicating its critical role in the company's performance[67] - Revenue from lysine and corn protein powder, key raw materials for animal feed, was significantly impacted due to oversupply in the pork market[68] - The average selling price of starch sugar increased by 15.5% to RMB 2,629 per ton, while sales volume decreased by 24.4% to 179,598 tons[74] - Other fermentation products saw a substantial revenue increase of 42.4% to approximately RMB 115,098,000, attributed to the full-year impact after trial operations in 2022[75] Expenses and Cost Management - Distribution expenses reduced to RMB 157,175,000 from RMB 171,044,000, primarily due to decreased delivery costs[54] - Research expenses significantly decreased to RMB 160,490,000 from RMB 324,108,000, attributed to a reduction in the number of research projects[55] - The total sales cost rose to RMB 11,240,962,000 from RMB 10,758,377,000 in the previous year, with stable corn grain costs at RMB 2,543 per ton[75] Shareholder Information - The company plans to distribute a final dividend of HKD 0.69 per share, totaling RMB 41,183,000, pending shareholder approval[14] - The proposed final dividend for the fiscal year ending December 31, 2023, is 0.69 HKD per share, subject to shareholder approval at the 2024 annual general meeting[92] - The company maintained a reserve of approximately RMB 125,739,000 available for distribution to shareholders as of December 31, 2023[83] - The total shareholder return rate for 2023 was -36.5%, compared to 9.4% in 2022[90] - The company repurchased a total of 25,565,000 shares at an approximate cost of 3,375,000 HKD during the fiscal year ending December 31, 2023[95] Financial Ratios and Credit Management - The company's current ratio decreased to 2.3 in 2023 from 2.8 in 2022, while the quick ratio also declined from 1.9 to 1.6[90] - The leverage ratio increased to 10.5% in 2023 from 5.6% in 2022[90] - Accounts receivable turnover days increased to 12 days in 2023 from 11 days in 2022, while accounts payable turnover days decreased to 5 days from 7 days[90] - The company did not mortgage any leased land or buildings for bank credit as of December 31, 2023[91] - The company provided RMB 500,000,000 in deposits and RMB 18,585,000 in bank acceptance notes as collateral for bank credit and payables[91] - As of December 31, 2023, total bank borrowings amounted to approximately RMB 518,585,000, primarily short-term loans[82] Future Outlook and Developments - The company is collaborating closely with local governments to establish a lactic acid ester production facility, with further announcements to be made in accordance with the listing rules[21] - The company anticipates market consolidation in the corn deep processing industry, aiming for a new supply-demand balance in the coming year[42] - The company has completed the construction of pilot production lines for polylactic acid and other products, which will be used for new product development and market research[44] - The company plans to publish its annual report containing all required information on or around April 16, 2024[98] - The board of directors has reviewed the audited consolidated results for the fiscal year ending December 31, 2023[97]