[Financial and Business Summary](index=1&type=section&id=%E8%B2%A1%E5%8B%99%E8%88%87%E6%A5%AD%E5%8B%99%E6%91%98%E8%A6%81) [Financial Summary](index=1&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) The company achieved robust financial growth in H1 2024, with revenue up **10.3%** to **RMB 1.249 billion**, profit for the period increasing **29.6%** to **RMB 176 million**, and basic EPS rising **31.4%**, reflecting enhanced profitability Financial Summary for the Six Months Ended June 30, 2024 | Metric | Six Months Ended June 30, 2024 (RMB K) | Six Months Ended June 30, 2023 (RMB K) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,249,136 | 1,132,761 | +10.3% | | Gross Profit | 579,011 | 467,781 | +23.8% | | Profit Before Tax | 220,065 | 174,078 | +26.4% | | Profit for the Period | 175,873 | 135,700 | +29.6% | | Basic Earnings Per Share (cents) | 13.46 | 10.24 | +31.4% | [Business Summary](index=2&type=section&id=%E6%A5%AD%E5%8B%99%E6%91%98%E8%A6%81) In H1 2024, the Group achieved comprehensive business improvement with simultaneous growth in revenue, profit, and gross profit margin, driven by **18.9%** online and **6.5%** offline channel growth, while maintaining a stable **40.0%** interim dividend payout - Overall revenue steadily increased by **10.3%** to **RMB 1.249 billion**[2](index=2&type=chunk) - Both online and offline channels achieved growth, with online channel revenue increasing by **18.9%** year-on-year and offline channels growing by **6.5%**[2](index=2&type=chunk) - Profitability significantly improved, with profit for the period increasing by **29.6%** year-on-year and gross profit margin rising by **5.1** percentage points[2](index=2&type=chunk) - The Board resolved to declare an interim dividend of **RMB 0.0538** per share, maintaining a dividend payout ratio of **40.0%**[2](index=2&type=chunk) [Business Overview and Outlook](index=3&type=section&id=%E6%A5%AD%E5%8B%99%E6%A6%82%E8%A6%BD%E5%8F%8A%E5%B1%95%E6%9C%9B) [Business Overview](index=3&type=section&id=%E6%A5%AD%E5%8B%99%E6%A6%82%E8%A6%BD) In H1 2024, the Group achieved high-quality growth driven by **11.5%** revenue increase in home care products, rapid online channel development, and steady offline growth, with product innovation and supply chain reform enhancing profitability, and core insecticide and mosquito repellent products maintaining market leadership for ten consecutive years Revenue Breakdown by Product Category (Six Months Ended June 30, 2024) | Product Category | Revenue (RMB M) | Year-on-Year Change (%) | | :--- | :--- | :--- | | Home Care Products | 1,163.6 | +11.5% | | Pet and Pet Products | 47.6 | +5.3% | | Personal Care Products | 34.8 | -18.4% | Revenue Breakdown by Sales Channel (Six Months Ended June 30, 2024) | Sales Channel | Revenue (RMB M) | Year-on-Year Change (%) | | :--- | :--- | :--- | | Online Channels | 405.9 | +18.9% | | Offline Channels | 843.3 | +6.5% | - The Group achieved performance growth through multiple initiatives, including developing new e-commerce channels, strengthening offline distribution, product innovation to create high-margin bestsellers, and supply chain reform for cost reduction and efficiency improvement[3](index=3&type=chunk)[4](index=4&type=chunk) - According to NielsenIQ data, the Group's insecticide and mosquito repellent products have ranked first in overall market share in China for ten consecutive years[4](index=4&type=chunk) [Business Outlook](index=4&type=section&id=%E6%A5%AD%E5%8B%99%E5%B1%95%E6%9C%9B) Looking ahead to H2 2024, the company will continue its 'high-quality, sustainable, and stable profit' strategy, focusing on leveraging the peak home care season, developing new e-commerce, optimizing product and channel structures for profit, strengthening R&D, and actively seeking M&A opportunities while maintaining a high dividend payout - Revenue growth drivers include leveraging the peak season for home care products and continuing high-quality development of new e-commerce channels[5](index=5&type=chunk) - Profit growth drivers include increasing the sales proportion of high-margin products, optimizing channel investment efficiency, and reducing supply chain costs[6](index=6&type=chunk) - Strategic initiatives include strengthening technology R&D, team incentives, and actively pursuing M&A opportunities in the pet and fast-moving consumer goods industries[6](index=6&type=chunk) - Shareholder returns are prioritized through a commitment to high and stable dividend payout policies[6](index=6&type=chunk) [Management Discussion and Analysis](index=19&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) [Financial Review](index=19&type=section&id=%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) In H1 2024, Group revenue increased **10.3%** to **RMB 1.249 billion**, driven by **11.5%** growth in home care products; gross profit rose **23.8%**, with gross profit margin improving from **41.3%** to **46.4%**; selling and distribution expenses grew **20.0%**; and profit for the period increased **29.6%** to **RMB 176 million**, with net profit margin rising from **12.0%** to **14.1%** [Revenue Analysis](index=19&type=section&id=%E6%94%B6%E5%85%A5%E5%88%86%E6%9E%90) Total revenue increased **10.3%** year-on-year to **RMB 1.249 billion**, with core home care products growing **11.5%** and accounting for **93.1%** of total revenue, while online channels grew **18.9%** to **32.5%** of total revenue, and offline channels grew **6.5%** to **67.5%** Revenue by Product Category (Six Months Ended June 30) | Product Category | 2024 (RMB K) | 2023 (RMB K) | Change (%) | | :--- | :--- | :--- | :--- | | Home Care | 1,163,557 | 1,043,854 | +11.5% | | Pet and Pet Products | 47,633 | 45,243 | +5.3% | | Personal Care | 34,752 | 42,596 | -18.4% | | **Total** | **1,249,136** | **1,132,761** | **+10.3%** | Revenue by Sales Channel (Six Months Ended June 30) | Sales Channel | 2024 (RMB K) | 2023 (RMB K) | Change (%) | | :--- | :--- | :--- | :--- | | Online Channels | 405,854 | 341,297 | +18.9% | | Offline Channels | 843,282 | 791,464 | +6.5% | | **Total** | **1,249,136** | **1,132,761** | **+10.3%** | [Gross Profit and Gross Profit Margin Analysis](index=20&type=section&id=%E6%AF%9B%E5%88%A9%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87%E5%88%86%E6%9E%90) The Group's overall gross profit increased **23.8%** year-on-year to **RMB 579 million**, with gross profit margin significantly improving by **5.1** percentage points to **46.4%**, as all core business segments and channels, including home care, pet products, online, and offline, recorded margin growth - Overall gross profit margin increased from **41.3%** to **46.4%**, primarily due to enhanced brand power, optimized product category and channel structure, and improved supply chain operational efficiency[40](index=40&type=chunk) Gross Profit Margin by Product Category (Six Months Ended June 30) | Product Category | 2024 Gross Profit Margin (%) | 2023 Gross Profit Margin (%) | | :--- | :--- | :--- | | Home Care | 46.4% | 41.2% | | Pet and Pet Products | 49.5% | 45.4% | | Personal Care | 42.3% | 42.6% | Gross Profit Margin by Sales Channel (Six Months Ended June 30) | Sales Channel | 2024 Gross Profit Margin (%) | 2023 Gross Profit Margin (%) | | :--- | :--- | :--- | | Online Channels | 54.4% | 48.1% | | Offline Channels | 42.5% | 38.4% | [Operating Expenses and Other Gains/Losses Analysis](index=22&type=section&id=%E7%B6%93%E7%87%9F%E9%96%8B%E6%94%AF%E5%8F%8A%E5%85%B6%E4%BB%96%E6%90%8D%E7%9B%8A%E5%88%86%E6%9E%90) Selling and distribution expenses increased **20.0%** year-on-year to **RMB 318 million** due to business growth; administrative expenses slightly increased **2.6%** to **RMB 86.8 million** due to goodwill impairment; and other gains and losses recorded a **RMB 11.7 million** loss, compared to a **RMB 3.3 million** gain in the prior period, mainly due to fair value changes in investments and exchange rate fluctuations - Selling and distribution expenses increased by **20.0%** year-on-year to **RMB 317.7 million**, consistent with business growth[46](index=46&type=chunk) - Administrative expenses increased by **2.6%** year-on-year to **RMB 86.8 million**, primarily due to a goodwill impairment loss[47](index=47&type=chunk) - Other losses of **RMB 11.7 million** were recorded (compared to a gain of **RMB 3.3 million** in the prior period), mainly related to fair value changes in investments and exchange rate fluctuations[48](index=48&type=chunk) [Profit and Cash Flow Analysis](index=22&type=section&id=%E6%BA%A2%E5%88%A9%E8%88%87%E7%8F%BE%E9%87%91%E6%B5%81%E5%88%86%E6%9E%90) Benefiting from revenue growth and improved gross profit margin, profit before tax increased **26.4%** year-on-year to **RMB 220 million**; profit for the period grew **29.6%** to **RMB 176 million**, with net profit margin rising from **12.0%** to **14.1%**; and net cash outflow from operating activities was **RMB 160 million**, compared to an outflow of **RMB 74 million** in the prior period - Profit before tax increased by **26.4%** year-on-year to **RMB 220.1 million**[50](index=50&type=chunk) - Profit for the period increased by **29.6%** year-on-year to **RMB 175.9 million**, with net profit margin growing from **12.0%** to **14.1%**[52](index=52&type=chunk) - Net cash outflow from operating activities was **RMB 159.7 million**, compared to a net outflow of **RMB 74 million** in the prior period[53](index=53&type=chunk) [Financial Position and Capital Management](index=23&type=section&id=%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%88%87%E8%B3%87%E6%9C%AC%E7%AE%A1%E7%90%86) As of June 30, 2024, the Group maintained a robust financial position with total cash, cash equivalents, and time deposits of **RMB 2.665 billion**; the gearing ratio slightly increased from **1.0%** at year-end to **1.1%**, with no significant investments, asset pledges, or material contingent liabilities, and a stable treasury policy to maintain sufficient financial resources - As of June 30, 2024, total cash, cash equivalents, and time deposits amounted to **RMB 2.6647 billion**[55](index=55&type=chunk) - The gearing ratio slightly increased from **1.0%** at the end of 2023 to **1.1%** as of June 30, 2024[56](index=56&type=chunk) - The Group primarily operates in China, with most transactions settled in RMB, and foreign exchange risk mainly arises from USD and HKD deposits[60](index=60&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=6&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%90%8D%E7%9B%8A%E5%8F%8A%E5%85%B6%E4%BB%96%E5%85%A8%E9%9D%A2%E6%94%B6%E7%9B%8A%E8%A1%A8) During the reporting period, the company's revenue was **RMB 1.249 billion**, gross profit was **RMB 579 million**, selling and distribution expenses were **RMB 318 million**, administrative expenses were **RMB 86.79 million**, resulting in profit before tax of **RMB 220 million**, profit for the period of **RMB 176 million**, and profit attributable to owners of the Company of **RMB 179 million** Condensed Consolidated Statement of Profit or Loss (Six Months Ended June 30) | Item (RMB K) | 2024 (Unaudited) | 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 1,249,136 | 1,132,761 | | Cost of sales | (670,125) | (664,980) | | **Gross Profit** | **579,011** | **467,781** | | Selling and distribution expenses | (317,747) | (264,799) | | Administrative expenses | (86,789) | (84,581) | | **Profit before tax** | **220,065** | **174,078** | | Income tax expense | (44,192) | (38,378) | | **Profit for the period** | **175,873** | **135,700** | | **Profit attributable to owners of the Company** | **179,461** | **136,502** | [Condensed Consolidated Statement of Financial Position](index=7&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2024, the company's total assets were **RMB 3.67 billion**, total liabilities were **RMB 643 million**, and net assets were **RMB 3.027 billion**; current assets amounted to **RMB 2.983 billion**, predominantly comprising bank balances, cash, and time deposits, with current liabilities at **RMB 612 million**, indicating a healthy current ratio Summary of Condensed Consolidated Statement of Financial Position | Item (RMB K) | As of June 30, 2024 (Unaudited) | As of December 31, 2023 (Audited) | | :--- | :--- | :--- | | Non-current assets | 686,795 | 694,086 | | Current assets | 2,983,374 | 3,142,059 | | **Total assets** | **3,670,169** | **3,836,145** | | Current liabilities | 611,931 | 867,743 | | Non-current liabilities | 30,946 | 30,930 | | **Total liabilities** | **642,877** | **898,673** | | **Net assets** | **3,027,292** | **2,937,472** | | **Total equity** | **3,027,292** | **2,937,472** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) [Revenue and Segment Information](index=10&type=section&id=%E6%94%B6%E5%85%A5%E5%8F%8A%E5%88%86%E9%83%A8%E8%B3%87%E6%96%99) The company's revenue is recognized entirely at a point in time; home care products are the primary revenue source, accounting for over **93%**; the company primarily operates in China, with nearly all revenue and non-current assets located there; and revenue from the single largest related customer group (Customer A) was **RMB 114 million** during the reporting period - The Group identifies its business as a single operating segment, primarily conducting operations in the People's Republic of China[17](index=17&type=chunk)[18](index=18&type=chunk) - Revenue from major customer A (a group of entities under common control of the controlling shareholder) was **RMB 113.6 million**, accounting for approximately **9.1%** of total revenue[19](index=19&type=chunk) [Dividends](index=15&type=section&id=%E8%82%A1%E6%81%AF) The Board resolved to declare an interim dividend of **RMB 0.0538** per ordinary share for H1 2024, totaling approximately **RMB 71.73 million**, maintaining a dividend payout ratio of **40.0%**, consistent with the prior period - A final dividend of **RMB 0.0640** per share, totaling approximately **RMB 85.33 million**, was declared for the year ended December 31, 2023[27](index=27&type=chunk) - The Board resolved to declare an interim dividend of **RMB 0.0538** per ordinary share for the six months ended June 30, 2024, totaling approximately **RMB 71.73 million**[27](index=27&type=chunk) [Earnings Per Share](index=15&type=section&id=%E6%AF%8F%E8%82%A1%E7%9B%88%E5%88%A9) For the six months ended June 30, 2024, basic earnings per share were **RMB 13.46 cents**, a **31.4%** increase from **RMB 10.24 cents** in the prior period, calculated based on profit attributable to owners of the Company of **RMB 179 million** and a weighted average of **1.333 billion** ordinary shares Basic Earnings Per Share Calculation | Item | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Profit attributable to owners of the Company (RMB K) | 179,461 | 136,502 | | Weighted average number of ordinary shares (K shares) | 1,333,334 | 1,333,334 | | **Basic Earnings Per Share (RMB cents)** | **13.46** | **10.24** | [Other Information](index=25&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) [Use of Proceeds from Global Offering](index=25&type=section&id=%E5%85%A8%E7%90%83%E7%99%BC%E5%94%AE%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%85%E7%94%A8%E9%80%94) The company listed in March 2021, with net proceeds from the global offering of approximately **RMB 2.419 billion**; as of June 30, 2024, **RMB 616 million** had been utilized, with **RMB 1.802 billion** remaining unutilized, primarily earmarked for R&D, R&D center upgrades, overseas network and supply chain construction, and strategic acquisitions, with most expected to be fully utilized by the end of 2026 - Net proceeds from the global offering amounted to approximately **RMB 2.4188 billion**[64](index=64&type=chunk) - As of June 30, 2024, **RMB 616.4 million** had been cumulatively utilized, with **RMB 1.8024 billion** remaining unutilized[66](index=66&type=chunk) - Most of the unutilized net proceeds are deposited in reputable banks in Hong Kong or mainland China[66](index=66&type=chunk) [Corporate Governance and Other Disclosures](index=28&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%8F%8A%E5%85%B6%E4%BB%96%E6%8A%AB%E9%9C%B2) The company is committed to maintaining high corporate governance standards, complying with most code provisions during the reporting period, though the roles of Chairman and CEO are combined under Ms. Chen Danxia for leadership consistency and decision-making efficiency; the report also discloses post-reporting period events like director changes and confirms the audit committee's review of interim results - The roles of Chairman and Chief Executive Officer are not segregated, both held by Ms. Chen Danxia, an arrangement the Board believes ensures consistent leadership and efficient decision-making[69](index=69&type=chunk) - Changes occurred in executive directors and joint company secretaries subsequent to the reporting period[74](index=74&type=chunk) - The Audit Committee has reviewed these interim results, and the independent auditor has reviewed the interim financial information in accordance with relevant standards[75](index=75&type=chunk)

Share Award Scheme - The total number of restricted shares available for grant under the Restricted Share Award Scheme was 10,600,000 shares as of January 1, 2023, and increased to 15,400,000 shares by December 31, 2023[1] - The company is committed to transparency in accordance with the listing rules and has provided additional information regarding the share award scheme[1] - The increase in restricted shares may indicate a strategy to incentivize key personnel and align their interests with shareholders[1] Governance Structure - The board of directors consists of four executive directors and three independent non-executive directors, ensuring a diverse governance structure[1] - The executive director and chairman is Chen Danxia, highlighting leadership continuity[1] Compliance and Reporting - The announcement does not affect other information contained in the 2023 Annual Report, which remains unchanged[1] - The company adheres to the listing rules under Chapter 17, ensuring compliance with regulatory requirements[1] - The company emphasizes the importance of accurate and complete information dissemination to avoid potential liabilities[1] Communication with Stakeholders - The announcement was made on August 19, 2024, indicating ongoing communication with stakeholders[1] - The company is registered in the Cayman Islands, reflecting its international operational footprint[1]

Financial Data and Key Metrics Changes - The company achieved a total revenue of 1.6 billion yuan, representing a year-on-year growth of 12% [7] - Net profit reached 170 million yuan, showing a significant year-on-year increase of 200% [7] - Gross margin improved to 44.5% [7] - The company has over 2.9 billion yuan in cash and deposits, maintaining a dividend payout ratio of 80% and a dividend yield of approximately 8% [7][15] Business Line Data and Key Metrics Changes - The home cleaning product line is expected to grow by about 10% [2] - The pet business is viewed as a second growth curve, projected to account for 30% of total revenue in five years, with in-store revenue primarily from live pet sales [2][12] - The company maintains a leading position in the insecticide market for nine consecutive years, with a market share increase of 0.1-0.2% annually [19] Market Data and Key Metrics Changes - The company holds the second position in the home cleaning market, with a gap of about 10 percentage points from the market leader [4][6] - Online sales account for approximately 30% of total sales, with online growth slightly outpacing offline, although offline remains more profitable [8][21] Company Strategy and Development Direction - The company is pursuing a multi-category development strategy, focusing on enhancing market share in home cleaning products and expanding the pet product line [4][12] - Plans to open 100 new stores by the end of the year to strengthen market presence [11] - The company aims to reduce the proportion of insecticide sales to 40%, home cleaning to 30%, and pet products to 30% in the long term [12] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining market leadership and continuing to capture market share from smaller competitors [19] - The company anticipates further cost reductions of 1-2% due to ongoing supply chain reforms [18] - The focus will be on maintaining high-end product sales while ensuring stable growth across traditional and new products [15] Other Important Information - The company has successfully controlled costs through supply chain reforms, resulting in a 2.223% decrease in costs year-on-year and a 3.5 percentage point reduction in sales and management expense ratios [7][8] - The company is exploring investment and acquisition opportunities to enhance competitiveness in the consumer sector [8] Q&A Session Summary Question: What is the product structure for traditional incense and mosquito repellent products? - Management noted that traditional products still generate over 100 million yuan in sales annually, with slight growth observed [1] Question: What is the future strategy for home cleaning products? - The company aims to enhance market share and maintain a competitive edge through new product launches and channel expansion [5][24] Question: What are the main growth drivers for different business segments? - Growth will be driven by market share increases and stable growth in insecticide and home cleaning businesses, while the pet segment will expand through proprietary brands and store openings [12][16] Question: What are the pricing strategies for insecticide and mosquito repellent products? - The company offers a range of pricing from high to low-end products, targeting different consumer demographics [10][17] Question: Are there further cost reduction strategies in place? - A dedicated supply chain reform team is in place, with expectations for continued cost reductions [18] Question: What are the company's competitive advantages in the market? - The company holds the second position in home cleaning market share, with plans to enhance product offerings and expand channels [24]

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Financial Performance - Net profit increased by 164.0% from RMB 65.5 million in 2022 to RMB 172.8 million in 2023, with a net profit margin rising from 4.5% to 10.7%[46] - Pre-tax profit surged by 151.3% from RMB 86.5 million in 2022 to RMB 217.3 million in 2023[45] - Operating cash inflow increased significantly to RMB 326.9 million in 2023, compared to RMB 71.7 million in 2022[47] - Revenue for 2023 increased to 1,615,585 thousand RMB, up from 1,446,638 thousand RMB in 2022, representing an 11.7% year-over-year growth[81] - Net profit for 2023 rose to 172,817 thousand RMB, a significant increase from 65,456 thousand RMB in 2022, marking a 164% growth[81] - Gross profit for 2023 was 718,258 thousand RMB, up from 601,374 thousand RMB in 2022, reflecting a 19.4% increase[81] - Other income for 2023 surged to 123,471 thousand RMB, compared to 76,001 thousand RMB in 2022, a 62.5% increase[81] - Earnings per share (EPS) for 2023 stood at 13.13 RMB cents, up from 4.96 RMB cents in 2022, a 164.7% increase[81] - Profit for the year rose to RMB 175,016 thousand in 2023, compared to RMB 66,101 thousand in 2022[129] - Total comprehensive income for the year was RMB 193,653 thousand in 2023, compared to RMB 171,872 thousand in 2022[129] - Home care segment revenue grew to RMB 1,471,917 thousand in 2023, accounting for 91.1% of total revenue, up from 89.6% in 2022[135] - Total revenue increased to RMB 1,615,585 thousand in 2023, up from RMB 1,446,638 thousand in 2022[135] Cash Flow and Liquidity - Cash and cash equivalents, along with fixed deposits, totaled RMB 2,901.3 million as of December 31, 2023[48] - Cash and cash equivalents at the end of 2023 were 1,543,424 thousand RMB, up from 1,340,980 thousand RMB at the end of 2022, a 15.1% increase[83] - Investment activities used a net cash of 43,930 thousand RMB in 2023, significantly lower than the 1,289,423 thousand RMB used in 2022[83] - The company paid dividends of 84,000 thousand RMB in 2023, down from 96,133 thousand RMB in 2022[83] - Fixed deposits under current assets surged to RMB 1,737,883 thousand in 2023 from RMB 1,455,986 thousand in 2022[124] - Dividends recognized as distributions amounted to RMB 84,000 thousand in 2023, down from RMB 96,133 thousand in 2022[129] - Operating cash flow before working capital changes increased to RMB 190,776 thousand in 2023, up from RMB 48,693 thousand in 2022[132] - Net cash from operating activities rose to RMB 326,915 thousand in 2023, compared to RMB 71,681 thousand in 2022[132] Assets and Liabilities - As of December 31, 2023, the company had no pledged assets[25] - The company's capital gearing ratio increased from 0.6% in 2022 to 1.0% in 2023 due to the rise in lease liabilities and right-of-use assets[49] - The company's total assets minus current liabilities stood at 2,843,250 thousand RMB in 2023, up from 2,838,452 thousand RMB in 2022[66] - The company's non-current assets were 417,855 thousand RMB in 2023, slightly up from 417,853 thousand RMB in 2022[66] - Total assets increased to RMB 2,968,402 thousand in 2023, up from RMB 2,843,250 thousand in 2022[124] - Net current assets decreased to RMB 2,274,316 thousand in 2023 from RMB 2,425,395 thousand in 2022[124] - Total equity increased to RMB 2,937,472 thousand in 2023, up from RMB 2,824,568 thousand in 2022[126] - Trade and other receivables decreased to RMB 87,632 thousand in 2023 from RMB 97,231 thousand in 2022[124] - Inventory levels dropped to RMB 268,033 thousand in 2023 from RMB 319,177 thousand in 2022[124] - Non-current liabilities increased to RMB 30,930 thousand in 2023 from RMB 18,682 thousand in 2022[126] - Contract liabilities increased by RMB 89,866 thousand in 2023, up from RMB 74,653 thousand in 2022[132] Taxation and Financial Costs - Income tax expenses increased by 111.5% from RMB 21.0 million in 2022 to RMB 44.4 million in 2023, driven by higher pre-tax profits[45] - The company's effective tax rate was 20.5% in 2023, lower than the statutory rate of 25%, due to preferential tax rates for high-tech enterprises[45] - Financial costs remained relatively stable at RMB 1.0 million in 2023, compared to RMB 0.9 million in 2022[44] Corporate Governance and Board Structure - The company's board of directors includes three independent non-executive directors with diverse industry backgrounds, accounting for one-third of the board members[14] - The company's gender ratio (including senior management) was approximately 52% male and 48% female as of December 31, 2023[14] - The company encourages directors to participate in continuous professional development to update their knowledge and skills[15] - The company's directors and senior management received at least 15 hours of relevant professional training during the fiscal year ended December 31, 2023[96] - The company's internal control measures include establishing an audit committee, implementing policies to ensure compliance with listing rules, and conducting regular training for employees and management[95] - The company's directors' remuneration is determined based on the time commitment, responsibilities, and performance of the group, with details provided in the annual report[87] - The company's shareholder communication policy was reviewed for implementation and effectiveness during the fiscal year ended December 31, 2023[98] Acquisitions and Investments - The company acquired 100% equity of Guangdong Zhongke Research Cosmetics Technology Co., Ltd., which focuses on scientific analysis, research, and testing of cosmetics, maternal and infant care products, personal care products, and pet products[21] - The company acquired 100% equity of Guangdong Zhongke Research Cosmetics Technology Co., Ltd. for RMB 5.036 million in cash, which was fully paid on April 6, 2023[106] Inventory and Asset Management - The carrying value of finished goods as of December 31, 2023, was approximately RMB 216.786 million, with a provision of approximately RMB 1.982 million[103] - Inventory decreased by RMB 50,689 thousand in 2023, compared to a decrease of RMB 20,649 thousand in 2022[132] - Impairment losses on intangible assets amounted to RMB 9,323 thousand in 2023, with no such losses recorded in 2022[132] - Depreciation of property, plant, and equipment increased to RMB 25,655 thousand in 2023, up from RMB 24,490 thousand in 2022[132] Foreign Exchange and Risk Management - The company faces foreign exchange risks primarily due to deposits denominated in USD and HKD, and closely monitors exchange rate fluctuations while reviewing foreign exchange risk management strategies[24] - Other losses amounted to RMB 10.4 million in 2023, compared to other gains of RMB 9.8 million in 2022, primarily due to valuation changes in investments and exchange rate impacts[43] Revenue Recognition and Financial Reporting - The company's consolidated financial statements for the year ended December 31, 2023, include the impact of a business combination under common control, with revenue increasing by RMB 1.446 million and net profit increasing by RMB 1.371 million[112] - The company's financial statements for the year ended December 31, 2023, were audited by an independent auditor, with key audit matters including the provision for finished goods[101][103] - The company's financial statements reflect the application of revised International Accounting Standard 12, which narrows the scope of exemptions for recognizing deferred tax liabilities and assets[90] - The company recognizes revenue from customer contracts when control of goods is transferred according to agreed delivery terms, and at the point when customers obtain control of specific goods[179] - Goodwill from business acquisitions is recorded at cost established on the acquisition date, less any accumulated impairment losses[177] - The company measures lease liabilities at the present value of unpaid lease payments at the lease commencement date, using the incremental borrowing rate if the implicit lease rate is difficult to determine[181] - Intangible assets with finite useful lives acquired in business combinations are presented at cost less accumulated amortization and any accumulated impairment losses[186] - Deferred tax assets and liabilities are measured at the tax rates expected to apply when the liability is settled or the asset is realized, based on tax rates enacted or substantively enacted at the reporting date[191] - Variable consideration is included in the transaction price only if it is not likely to result in a significant revenue reversal when the uncertainty related to the variable consideration is subsequently resolved[189] - The company uses the effective interest method to calculate the amortized cost of financial assets or liabilities and allocate interest income or expense over the relevant period[173] - Non-controlling interests are initially measured at the proportionate share of the acquiree's identifiable net assets or at fair value, with the measurement basis selected on a transaction-by-transaction basis[171] - The company allocates goodwill to cash-generating units expected to benefit from the synergies of the business combination for impairment testing purposes[168] - The company consolidates subsidiaries from the date it obtains control and ceases consolidation when control is lost, with income and expenses of subsidiaries acquired during the year included from the date control is obtained[175] - The company expects to refund part or all of the consideration received from customers, and records a refund liability (included in trade and other payables)[198] - Revenue from transferred products is recognized based on the amount of consideration the company expects to be entitled to, and no revenue is recognized for products expected to be returned[199] - The consolidated financial statements notes are for the year ended December 31, 2023[200] Interest and Other Financial Metrics - Interest income rose to RMB 91,362 thousand in 2023, compared to RMB 48,065 thousand in 2022[132] - Trade and other receivables decreased by RMB 12,393 thousand in 2023, compared to an increase of RMB 22,921 thousand in 2022[132]

Summary of Conference Call Company/Industry Involved - The conference call is related to Huazhang Securities Research Institute, focusing on the futures investment sector Core Points and Arguments - The call is intended exclusively for a select group of clients, indicating a targeted approach to investor relations [1] - It emphasizes that the content of the meeting does not constitute investment advice, highlighting the importance of personal investment decision-making [1] - Participants are reminded that they bear the responsibility for any investment risks associated with the information provided during the call [1] - Huazhang Securities disclaims any liability for losses incurred by participants due to the use of the meeting content [1] Other Important but Possibly Overlooked Content - The call serves as a reminder of the regulatory framework surrounding futures investment and the importance of suitability management for investors [1]

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 2.90 [2][5]. Core Insights - The company has reversed its profit decline, achieving a net profit increase of 170.4% year-on-year to RMB 175 million in FY23, with a net profit margin of 10.8% [3][5]. - Revenue for FY23 reached RMB 1.62 billion, reflecting a year-on-year growth of 12.0%, driven by a recovery in the home care segment, which saw a revenue increase of 13.5% [3][6]. - The company is expanding its pet store operations, aiming to increase the number of stores to 80-100 in 2024, with expected revenue of RMB 60 million from this segment [4][5]. Financial Performance - The home care category accounted for 91.1% of total revenue in FY23, with a gross margin improvement to 44.5%, the highest since 2019 [3][6]. - The company has effectively reduced costs, with the ratio of sales and administrative expenses to revenue decreasing from 41.5% in FY22 to 37.9% in FY23 [3][5]. - The operating profit margin significantly improved from 6.0% to 13.5% in FY23, indicating enhanced operational efficiency [3][5]. Future Projections - The forecast for FY24 estimates a net profit of RMB 190 million, representing a 6.0% increase year-on-year, with an adjusted gross margin of 44.9% [5][6]. - The company maintains a high dividend payout ratio of approximately 80%, with a projected dividend yield of 7%-8% [5][6].

Investment Rating - The report maintains an "Outperform the Market" rating for the company [12]. Core Views - The company reported a significant recovery in profitability for 2023, achieving a net profit of 1.75 billion RMB, a year-on-year increase of 164.77% [12][17]. - The company has implemented a high dividend policy, with a dividend per share of 0.1050 RMB and a payout ratio of 80% [13]. - The company is actively expanding its offline pet service store layout, marking the first step in its offline thousand-store plan [10]. Financial Performance - In 2023, the company achieved a total revenue of 1.616 billion RMB, representing a year-on-year growth of 11.68% [12]. - The company's gross profit margin reached 44.5% in 2023, an increase of 2.9 percentage points compared to the previous year [17]. - The company expects net profits for 2024-2026 to be 1.83 billion, 1.94 billion, and 1.97 billion RMB, respectively, with growth rates of 4.3%, 6.0%, and 1.7% [12][15]. Business Segments - The company's home care product revenue in 2023 was 1.472 billion RMB, growing by 13.5% year-on-year [10]. - The pet products segment generated revenue of 0.77 billion RMB in 2023, with a modest growth of 0.5% [10]. - Personal care products revenue was 0.61 billion RMB, showing a decline of 4.6% year-on-year, but with a significant improvement in gross margin to 40.3% [10]. Market Positioning - The company is positioned as a leading player in household and personal cleaning products, with a reference PE valuation of 15-16 times for 2024, suggesting a reasonable value range of 2.05-2.19 RMB [12][18]. - The company has a concentrated ownership structure, with the largest shareholder holding 74.25% of the total shares, indicating strong control over dividend policies [13].

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected stock price increase of over 20% in the next six months [1][11]. Core Views - The company achieved an annual revenue of 1.616 billion yuan in 2023, representing a year-on-year growth of 11.68%, with a net profit of 173 million yuan, up 164.02% year-on-year [9]. - The company continues to maintain a high dividend payout ratio of 80% during the operational period, reflecting strong cash flow management [1]. - The home care segment shows steady growth, with online sales channels maintaining a stable proportion of total revenue [1]. Financial Performance - Revenue breakdown for 2023 includes home care at 1.472 billion yuan (up 13.49%), personal care at 61 million yuan (down 4.55%), and pet products at 77 million yuan (up 0.47%) [1]. - The company's gross margin and net margin for 2023 were 44.46% and 10.70%, respectively, both showing improvements of 2.89 and 6.17 percentage points year-on-year [1]. - The company’s cash and cash equivalents stood at 2.901 billion yuan as of December 31, 2023 [9]. Business Strategy - The home care segment remains the core business, with the company maintaining its leading market position in insecticides and home cleaning products while launching differentiated high-margin products [1]. - In the pet segment, the company is actively building its supply chain and distribution capabilities, expanding its presence through strategic partnerships and investments [1]. - The company is pursuing a multi-channel strategy, integrating online and offline sales to drive growth across various dimensions [1]. Earnings Forecast - Projected revenues for 2024, 2025, and 2026 are 1.788 billion yuan, 1.937 billion yuan, and 2.083 billion yuan, respectively, with corresponding net profits of 183 million yuan, 195 million yuan, and 210 million yuan [3][9]. - The expected earnings per share (EPS) for the same years are 0.14 yuan, 0.15 yuan, and 0.16 yuan, with price-to-earnings (P/E) ratios of 11.46, 10.80, and 10.02 [3][9].

Investment Rating - The report assigns an "Accumulate" rating for the company, marking its first coverage [1][19]. Core Insights - In 2023, the company achieved a revenue of 1.616 billion yuan, representing a year-on-year growth of 11.7%, and a net profit attributable to shareholders of 173 million yuan, reflecting a significant increase of 164% [1][19]. - The company's gross margin improved to 44.5%, up by 2.9 percentage points, while the net profit margin rose to 10.4%, an increase of 6.2 percentage points [1][19]. - The annual dividend payout ratio is approximately 80%, with a dividend yield of around 8%, indicating a strong commitment to returning value to shareholders [1][4]. Revenue and Growth - The company has successfully implemented a multi-brand and multi-category omnichannel strategy, achieving rapid growth both online and offline. Offline revenue reached 1.066 billion yuan, growing by 12.2% year-on-year, while online sales amounted to 550 million yuan, with a year-on-year increase of 10.7% [2][19]. - The home care segment continues to lead the market, with a steady increase in market share. The revenue from home care products was 1.472 billion yuan, up by 13.5% year-on-year, and the gross margin for this segment improved from 41.9% in 2022 to 45% in 2023 [17][19]. Future Projections - The company is expected to continue its growth trajectory, with projected revenues of 1.781 billion yuan, 1.973 billion yuan, and 2.198 billion yuan for 2024, 2025, and 2026, respectively. The net profit is forecasted to be 184 million yuan, 193 million yuan, and 205 million yuan for the same years [19][20]. - The report anticipates that the company will maintain a strong focus on product innovation and channel development, which will enhance profitability across various product lines and sales channels [19].