Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 5.4, indicating a potential upside of 38% from the current price of HKD 3.89 [4][2][8]. Core Insights - The company reported a strong revenue growth of 66% year-on-year for the first half of 2024, reaching HKD 770 million, with a net profit of HKD 107 million, up 26% year-on-year [1][2]. - The acquisition of a 42% stake in CQV has positively impacted revenue, with a comparable growth rate of 31.5% when excluding the consolidation effect [1]. - The company has expanded its production capacity with the commissioning of a new plant, expected to contribute an additional 6,000 tons of pearl pigment output in 2024 [1][2]. Revenue Performance - Revenue for the first half of 2024 was HKD 770 million, a 66% increase compared to the previous year [1]. - The revenue from synthetic mica pearlescent pigments was HKD 269 million, up 46%, while natural mica pearlescent pigments generated HKD 278 million, a 37% increase [1]. - The sales volume of pearlescent pigments reached 11,400 tons, a 24% increase, with an average selling price of HKD 61,000 per ton, up 7.5% [1]. Profitability Metrics - The gross margin improved to 50.1%, an increase of 1.6 percentage points year-on-year, driven by lower raw material costs and an enhanced product mix [1]. - Selling expenses increased, with a ratio of 6.5% of revenue, reflecting higher costs associated with the CQV acquisition [1]. - The report forecasts net profits for 2024, 2025, and 2026 to be HKD 300 million, HKD 350 million, and HKD 430 million, respectively, with corresponding EPS of HKD 0.20, HKD 0.24, and HKD 0.30 [2][3]. Capacity Expansion - The company’s existing production capacity for pearlescent pigments is 18,000 tons, nearing full capacity, with a new plant launched in February 2024 designed for 30,000 tons [1]. - The new facility is noted to be the largest and most advanced in the world, focusing on high-end automotive and cosmetic-grade pearlescent pigments [1]. Valuation Analysis - The report employs comparable company analysis and DCF methods for valuation, suggesting a target price of HKD 5.4 based on a PE multiple of 20x for 2025 [8]. - The DCF analysis estimates a market value of HKD 7.076 billion, translating to a target price of HKD 5.9, considering a WACC of 7.7% and growth rates of 5% in the short term and 2% in the long term [8][10].

Financial Performance - Revenue for the first half of 2024 was approximately RMB 774.6 million, an increase of about 66.8% compared to RMB 464.3 million in the first half of 2023[2] - Gross profit for the first half of 2024 was approximately RMB 388.0 million, up approximately 72.8% from RMB 224.5 million in the first half of 2023, with gross margins of 50.1% and 48.4% respectively[2] - Profit for the period was approximately RMB 144.5 million, a 52.7% increase from RMB 94.7 million in the first half of 2023[2] - Profit attributable to owners of the company was approximately RMB 107.1 million, an increase of about 26.4% from RMB 84.7 million in the first half of 2023[2] - Basic and diluted earnings per share for the first half of 2024 were both RMB 0.09, compared to RMB 0.07 in the first half of 2023[3] - The company reported total revenue of RMB 774,622,000 for the six months ended June 30, 2024, representing a 66.7% increase from RMB 464,324,000 in the same period of 2023[20] - The net profit for the first half of 2024 was approximately RMB 144.5 million, reflecting a year-on-year growth of about 52.7%[42] - The EBITDA for the first half of 2024 was approximately RMB 266.8 million, an increase of about 63.1% compared to approximately RMB 163.6 million in the first half of 2023[42] Revenue Breakdown - Revenue from pearl pigment products reached RMB 701,155,000, up from RMB 421,943,000, indicating a growth of 66.1% year-over-year[20] - Revenue from the Chinese business operations accounted for approximately 78.8% of total revenue in the first half of 2024, with an increase of about 31.5% to approximately RMB 610.4 million[49] - The company recorded revenue of approximately RMB 164.3 million from its Korean operations, contributing about 21.2% to total revenue in the first half of 2024[49] - The company's external customer revenue from China operations was RMB 610,370,000 and from South Korea operations was RMB 164,252,000 for the reporting period[18] Assets and Liabilities - Total assets as of June 30, 2024, amounted to RMB 5,863.4 million, an increase from RMB 5,155.3 million as of December 31, 2023[6] - Current assets totaled RMB 4,268.9 million as of June 30, 2024, compared to RMB 3,835.3 million at the end of 2023[6] - The company's total equity attributable to owners was RMB 4,213.6 million as of June 30, 2024, up from RMB 4,085.1 million at the end of 2023[7] - Non-current liabilities increased to RMB 801.995 million as of June 30, 2024, compared to RMB 698.570 million at the end of 2023[7] - The company's debt-to-asset ratio increased to approximately 23.2% as of June 30, 2024, compared to 17.5% as of December 31, 2023, mainly due to increased borrowings[85] Expenses - Administrative expenses increased to RMB 24,442,000 from RMB 13,915,000, indicating a rise in operational costs[16] - Interest expenses rose slightly to RMB 15,349,000 compared to RMB 14,310,000 in the previous year[16] - The company's income tax expense for the six months ended June 30, 2024, was RMB 39,292,000, compared to RMB 20,524,000 for the same period in 2023, representing an increase of 91.2%[21] - Research and development expenses for the six months ended June 30, 2024, amounted to RMB 34,138,000, up from RMB 24,381,000 in the same period in 2023, reflecting an increase of 40%[23] - Selling expenses rose by approximately 107.0% from about RMB 24.2 million in the first half of 2023 to about RMB 50.0 million in the first half of 2024[62] - Administrative and other operating expenses increased by approximately 63.9% from about RMB 65.4 million in the first half of 2023 to about RMB 107.2 million in the first half of 2024[63] - Financial costs increased by approximately 98.8% from about RMB 21.5 million in the first half of 2023 to about RMB 42.7 million in the first half of 2024[64] Corporate Actions and Investments - The company acquired 42.45% of CQV Co., Ltd., expanding its operations into South Korea, which is now recognized as a separate reporting segment[12] - The company has signed contracts for capital commitments amounting to RMB 684.841 million for property, plant, and equipment as of June 30, 2024[40] - The company issued a total of KRW 15 billion in non-listed unsecured convertible bonds with a 2% coupon rate, maturing on June 28, 2027[33] - On July 25, 2024, the company entered into an agreement to acquire the global surface solutions business for a total price of EUR 665 million (approximately RMB 5.187 billion)[41] - The company has a patent infringement lawsuit with a claim of approximately RMB 1.057 million, which is not expected to have a significant impact on its financial position[39] Strategic Focus and Development - The company is focusing on internationalization strategies and has achieved collaborative development with QVC in various areas, including product innovation and supply chain management[45] - The company aims to deepen its presence in the surface performance materials industry and explore international market promotion in 2024, focusing on high-quality development and creating a "growth + return" value-oriented enterprise[77] - The company is committed to promoting synergistic development among its business segments and subsidiaries, optimizing resource allocation and enhancing capabilities through accelerated business integration[79] - The company plans to establish a functional structure for its Asia-Pacific headquarters, focusing on centralized financial management, global currency settlement, leading R&D, global talent management, and marketing management[81] - The company is increasing its investment in R&D across five strategic directions: new materials, new products, new processes, new equipment, and new applications, while enhancing its intellectual property portfolio[82] Corporate Governance - The company is committed to high standards of corporate governance, ensuring shareholder interests and transparency, and has adopted the corporate governance code applicable for the first half of 2024[98] - The audit committee has reviewed the accounting principles and discussed risk management and internal controls, with the unaudited condensed consolidated financial statements for the first half of 2024 reviewed but not audited[97] - The board believes that the current balance of power and authority is not compromised, and the structure allows for swift and effective decision-making[98] - The company has adopted the standard code for securities transactions by directors and confirmed compliance for the first half of 2024[99] Employment and Workforce - As of June 30, 2024, the group employed 670 staff in mainland China, 10 in Hong Kong, and 179 in South Korea, reflecting an increase from 589, 9, and 171 respectively as of December 31, 2023[93] Risk Management - The group faces foreign currency risk primarily from transactions denominated in USD and JPY related to its South Korean operations, but management believes this risk is manageable and has not adversely affected operations or liquidity[94]

Investment Rating - The report upgrades the investment rating to "Buy" for the company [2][3]. Core Views - The company plans to acquire Merck's global surface solutions business for €665 million (approximately RMB 51.87 billion), which is expected to significantly expand its global business footprint and increase revenue and EBIT by nearly threefold and 1.6 times, respectively [2][3]. - The acquisition is anticipated to enhance cost efficiency through supply chain synergies and leverage Merck's advanced technology to expand the application of pearlescent materials, potentially replacing traditional organic and metallic pigments [3]. - The company has been executing a dual strategy of organic growth and external expansion, with recent acquisitions positioning it to become a leader in the global pearlescent pigment market [3]. Financial Summary - **Revenue Projections**: The company expects revenues of RMB 1,435 million in 2024, RMB 1,700 million in 2025, and RMB 1,934 million in 2026, reflecting year-on-year growth rates of 34.8%, 18.5%, and 13.8%, respectively [2][5]. - **Net Profit Projections**: The projected net profit for 2024 is RMB 210 million, increasing to RMB 267 million in 2025 and RMB 308 million in 2026, with growth rates of 15.8%, 26.8%, and 15.8% [2][5]. - **Profitability Metrics**: The gross margin is expected to remain stable at 49.7%, while the net margin is projected to be 18.5% in 2024, improving to 20.2% by 2026 [2][5][7]. - **Return on Equity (ROE)**: The ROE is forecasted to increase from 5.2% in 2023 to 7.7% by 2026 [2][5][7]. Market Data - As of August 6, 2024, the closing price of the company's stock is HKD 3.85, with a total share capital of 1.2 billion shares and net assets amounting to RMB 3.2 billion [1].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 5.4, indicating a potential upside of 33% from the current price of HKD 4.03 [3][4]. Core Insights - The company has signed an agreement to acquire Merck's global surface solutions business for EUR 660 million (approximately RMB 5.2 billion), which is seen as a significant milestone for future growth [1]. - The acquisition is expected to enhance the company's market share, particularly in high-end applications such as automotive and cosmetics, where Merck holds a 22% global market share in pearlescent pigments [1]. - The report projects net profits for the years 2024, 2025, and 2026 to be RMB 310 million, RMB 400 million, and RMB 510 million, respectively, with corresponding EPS of HKD 0.25, HKD 0.32, and HKD 0.40 [1][7]. Summary by Sections Acquisition Details - The acquisition of Merck's surface solutions business is expected to significantly increase the company's market share and enhance its competitive edge in high-end markets [1]. - The transaction is valued at EUR 660 million, with an EV/EBITDA multiple of 10.6x, which is considered reasonable compared to industry averages [1][8]. Financial Projections - Revenue projections for the company are as follows: RMB 1.06 billion in 2023, RMB 1.53 billion in 2024, RMB 1.76 billion in 2025, and RMB 2.02 billion in 2026, reflecting a growth rate of 16.06% in 2024 and 15.10% in 2025 [2][7]. - The company expects to maintain a gross margin around 49% to 51% over the forecast period [2][7]. Valuation Analysis - The report employs both comparable company analysis and DCF methods for valuation, concluding a target price of HKD 5.4 based on a PE multiple of 22x and a WACC of 7.4% [8][10]. - The DCF analysis estimates the company's market value at HKD 59 billion, supporting the target price of HKD 5.4 [8][10].

Investment Rating - The report maintains an "Outperform" rating for Global New Material International Holdings (6616 HK) with an expected relative benchmark increase of over 10% in the next 12-18 months [3][41]. Core Insights - The company intends to acquire Merck's global surface solutions business for 665 million euros, with the transaction expected to enhance its market coverage, product system, and technological capabilities [1][3]. - The acquisition is based on a valuation of 10.6x the target company's pre-tax profit of 62.7 million euros for the year ending December 31, 2023 [1][3]. - The company has achieved significant results in collaborative integration with CQV, becoming its largest shareholder with a 42.45% stake, which is expected to enhance product synergy and market expansion [1][3]. - The second phase of the pearl material factory has commenced production, with a designed annual capacity of 30,000 tons, focusing on high-end applications [2][3]. - The company invested 75 million RMB in R&D in the fiscal year 2023, representing 7.1% of its operating revenue, and has made advancements in new energy projects in collaboration with Zhejiang University [1][3]. Summary by Sections Acquisition Details - The company announced the acquisition of Merck's global surface solutions business for 665 million euros, with the target company generating 405 million euros in revenue and 62.7 million euros in pre-tax profit for 2023 [1][3]. Collaborative Integration - The integration with CQV has led to improved product collaboration, sales channel synergy, and enhanced R&D capabilities, positioning the company as a leader in the global pearlescent pigment market [1][3]. Production Capacity - The second phase of the pearl material factory is operational, designed to produce high-end automotive and cosmetic-grade materials, utilizing advanced intelligent production systems [2][3]. Research and Development - The company has increased its R&D investment, resulting in new patents and breakthroughs in energy-related projects, contributing to its growth strategy [1][3].

Business Performance - The company achieved a significant milestone in the fiscal year 2023, becoming one of the top three global players in the pearlescent pigment industry by sales volume[5]. - In fiscal year 2023, the company focused on expanding production capacity for pearlescent materials and enhancing R&D capabilities, leading to steady business growth[5]. - The company reported a strong performance in high-end pearlescent materials, synthetic mica, and new energy materials, continuously creating new market opportunities[5]. - In the fiscal year 2023, the company's revenue was approximately RMB 1,064.1 million, an increase of about 16.1% year-on-year[9]. - The net profit for the fiscal year 2023 was approximately RMB 213.3 million, a decrease of about 9.8% compared to RMB 236.5 million in the fiscal year 2022[9]. - The EBITDA for the fiscal year 2023 was approximately RMB 369.6 million, an increase of about 13.9% from RMB 324.4 million in the fiscal year 2022[9]. - Total revenue increased from approximately RMB 916.8 million in the fiscal year 2022 to approximately RMB 1,064.1 million in the fiscal year 2023, representing a year-on-year growth of about 16.1%[18]. - Total sales for the year 2023 reached approximately RMB 1,064.1 million, an increase of about 16.1% compared to RMB 916.8 million in 2022[22]. - Sales of pearlescent pigment products increased from approximately RMB 850.7 million in 2022 to about RMB 964.0 million in 2023, representing a growth of approximately RMB 113.3 million or 13.3%[24]. - Sales of mica functional fillers rose from approximately RMB 644 million in 2022 to about RMB 838 million in 2023, an increase of approximately RMB 19.4 million or 30.2%[25]. Strategic Initiatives - The acquisition of CQV Co., Ltd. in August 2023 marked an important step towards global expansion, integrating operations across products, sales channels, R&D, production, and procurement[6]. - The company has adopted a strategy of "internal development and external expansion," focusing on core business areas and strategic layout[5]. - The internationalization process of the company is accelerating, expanding its collaborative network significantly[6]. - The company aims to achieve its internationalization and group operation goals in 2024, marking a critical year for its strategic development[8]. - The company successfully integrated CQV into its operations post-acquisition, focusing on technology, product, sales channels, and supply chain synergies[15]. - The company aims to strengthen its position as a leading player in the global pearlescent pigment market through enhanced R&D capabilities and market expansion strategies[15]. Research and Development - The company launched 100+ new high-end pearlescent materials in fiscal year 2023, enhancing user experience and value[9]. - Research and development expenses amounted to RMB 75.0 million, representing approximately 7.1% of revenue, with a year-on-year increase of about 4.3%[12]. - The company obtained 16 new patents and applied for 3 additional patents in fiscal year 2023, enhancing its intellectual property portfolio[12]. - The R&D department will focus on three key areas: pearlescent pigments, synthetic mica functional fillers, and new energy battery materials[49]. - The company will increase its investment in R&D and enhance collaboration with universities and research institutions[49]. Financial Position - The company has maintained a high-quality development trend, driven by market-oriented strategies and customer-centric approaches[5]. - The gross profit for the year 2023 was approximately RMB 528.3 million, up about 16.0% from RMB 455.3 million in 2022, maintaining a gross margin of approximately 49.7%[28]. - Financing costs surged by approximately 369.6%, increasing from about RMB 11.0 million in 2022 to approximately RMB 51.4 million in 2023, primarily due to increased interest expenses on bank loans and bonds[33]. - Other income and gains for 2023 amounted to approximately RMB 28.0 million, up from RMB 18.3 million in 2022, mainly due to foreign exchange gains recorded in 2023[29]. - Administrative and other operating expenses increased by approximately 47.3%, rising from about RMB 128.0 million in 2022 to approximately RMB 188.6 million in 2023, largely due to costs associated with the acquisition of CQV[32]. - As of December 31, 2023, the company's cash and bank balances were approximately RMB 3,203.5 million, up from RMB 1,882.7 million on December 31, 2022[57]. - The company's total liabilities to equity ratio increased to approximately 26.2% as of December 31, 2023, compared to 24.1% on December 31, 2022, primarily due to increased bank loans and the issuance of initial bonds[58]. - The company's net assets were approximately RMB 4,085.1 million as of December 31, 2023, compared to RMB 2,543.3 million on December 31, 2022, with net asset value per share increasing to approximately RMB 2.55 from RMB 1.98[59]. Corporate Governance - The board is committed to maintaining high standards of corporate governance to protect shareholder interests and enhance corporate value[112]. - The company has adopted the principles and code provisions of the Corporate Governance Code as the basis for its corporate governance practices[112]. - The board consists of a balanced mix of executive and non-executive directors, ensuring strong independence and effective decision-making[115]. - The company has established a corporate culture based on four core values: integrity, innovation, leadership, and harmony[109]. - The board has confirmed that it has complied with the standards of the Securities Trading Code throughout the fiscal year 2023[113]. - The company has established three board committees: Audit Committee, Remuneration Committee, and Nomination Committee, each with specific written terms of reference[126]. - The Audit Committee held three meetings to review the financial performance and reports for the fiscal year 2023, focusing on risk management and internal control effectiveness[127]. - The company has established a shareholder communication policy to promote effective communication with shareholders and encourage active participation in company affairs[151]. Environmental, Social, and Governance (ESG) - The company has actively contributed to sustainable development, with its chairman being selected as one of the "30 ESG Entrepreneurs in the Greater Bay Area" for 2023[5]. - The company emphasizes the importance of effective governance structures for integrating and managing sustainable development within its business[159]. - The board is responsible for overseeing the company's ESG strategies, policies, and performance, regularly analyzing risks and opportunities[159]. - The company achieved a reduction in air pollutant emissions density by 10% per production unit, targeting a 20% reduction in hazardous and non-hazardous waste density, and a 30% reduction in water consumption density by 2027, based on 2021 levels[181]. - The company has established an Environmental, Social, and Governance (ESG) committee to identify environmental risks and opportunities, setting clear environmental goals[182]. - The company has received a gold rating from EcoVadis for its sustainability efforts, evaluated across 21 criteria in four main themes: environment, fair labor and human rights, ethics, and sustainable procurement[181]. - The group has identified 28 significant environmental, social, and governance (ESG) issues, categorized into four areas: environment, employment and labor practices, operational practices, and community[173]. - The ESG report follows the guidelines set out in the Securities Listing Rules and is based on four reporting principles: materiality, quantification, balance, and consistency[161]. Risks and Challenges - The company faces significant risks related to reliance on the Chinese and global economies, with potential adverse impacts from any major economic downturns[88]. - Demand and supply levels for pearlescent pigments and synthetic mica powder are influenced by macroeconomic factors and production capacities of other manufacturers, which are beyond the company's control[88]. - The company's financial performance is dependent on effective inventory management, which is susceptible to changes in overall customer demand and consumer preferences[88]. - The company has confirmed that there are no significant uncertainties that may cast doubt on its ability to continue as a going concern[143].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 4.9, indicating a potential upside of 33% from the current price of HKD 3.68 [4][2][8]. Core Insights - The company reported a revenue of RMB 1.06 billion in 2023, representing a year-on-year growth of 16%. However, the net profit attributable to shareholders decreased by 18.9% to RMB 180 million due to increased administrative and financial expenses [1][2]. - The company has adjusted its net profit forecasts for 2024, 2025, and 2026 to RMB 310 million, RMB 400 million, and RMB 510 million, respectively, with corresponding EPS of HKD 0.25, HKD 0.32, and HKD 0.40 [1][2]. - The new production capacity from the second-phase factory, which commenced operations in February 2024, is expected to enhance market supply, particularly for high-end products [1][2]. Revenue Performance - In 2023, the company achieved a revenue of RMB 1.06 billion, with a comparable growth rate of 13% after excluding the impact of the CQV acquisition [1][2]. - The sales volume of pearlescent pigments reached 18,700 tons, a 4% increase year-on-year, with an average selling price of RMB 52,000 per ton, up 8.9% [1][2]. Cost and Profitability - The administrative expenses rose by 47% to RMB 188 million, while financial expenses increased by RMB 40 million to RMB 51 million, primarily due to the acquisition of CQV and the establishment of a new M&A team [1][2]. - The gross profit margin for 2023 was approximately 49.7%, with a net profit margin of 20% [3][14]. Future Growth Prospects - The company anticipates rapid growth in its Korean operations following the acquisition of CQV, which has alleviated raw material supply constraints and reduced costs [2][1]. - The second-phase factory is expected to contribute an additional 6,000 tons of pearlescent pigment production in 2024, enhancing the company's ability to meet market demand [1][2]. Valuation Analysis - The report employs both comparable company analysis and DCF methods for valuation, assigning a PE multiple of 20x based on expected high growth and market conditions [8][10]. - The estimated market value of the company is projected to be HKD 5.0 billion, corresponding to a target price of HKD 4.9, reflecting a 33% upside potential [8][10].

Financial Performance - The company's revenue for the fiscal year 2023 was approximately RMB 1,064.1 million, representing an increase of about 16.1% compared to RMB 916.8 million in fiscal year 2022[2] - Gross profit for fiscal year 2023 was approximately RMB 528.3 million, up about 16.0% from RMB 455.3 million in fiscal year 2022, with a gross margin of approximately 49.7% for both years[2] - Profit attributable to owners of the company decreased to approximately RMB 181.6 million, down about 18.9% from RMB 223.8 million in fiscal year 2022, resulting in a net profit margin of approximately 20.0% compared to 25.8% in the previous year[2] - Basic and diluted earnings per share for fiscal year 2023 were RMB 0.15, down from RMB 0.22 in fiscal year 2022[3] - The company reported a total comprehensive income of approximately RMB 209.9 million for fiscal year 2023, down from RMB 236.5 million in fiscal year 2022[6] - Net profit for the fiscal year 2023 was approximately RMB 213.3 million, a decrease of about 9.8% compared to RMB 236.5 million in fiscal year 2022[40] - EBITDA for the fiscal year 2023 was approximately RMB 369.6 million, an increase of about 13.9% from RMB 324.4 million in fiscal year 2022[40] Assets and Liabilities - Total assets as of December 31, 2023, amounted to approximately RMB 5,155.3 million, compared to RMB 3,156.9 million as of December 31, 2022[7] - Non-current assets increased to approximately RMB 1,319.9 million in fiscal year 2023 from RMB 823.9 million in fiscal year 2022[7] - Current assets rose to approximately RMB 3,835.3 million in fiscal year 2023, up from RMB 2,332.9 million in fiscal year 2022[7] - The company's total equity attributable to owners increased to approximately RMB 4,085.1 million in fiscal year 2023 from RMB 2,543.3 million in fiscal year 2022[8] - The total liabilities of the reported segments rose to RMB 738,500 thousand in 2023, compared to RMB 308,201 thousand in 2022, which is an increase of approximately 139%[23] - The company's total liabilities to equity ratio increased to approximately 26.2% as of December 31, 2023, up from 24.1% a year earlier, primarily due to increased bank loans and the issuance of the initial bonds[88] Revenue Breakdown - The revenue breakdown includes RMB 964,003,000 from pearlescent pigment products, RMB 89,433,000 from mica functional fillers and related products, and RMB 10,593,000 from trading pigments[16] - Revenue from external customers in China for 2023 was RMB 961,325 thousand, compared to RMB 896,477 thousand in 2022, reflecting a growth of approximately 7.2%[24] - Revenue from the China operations accounted for approximately 90.3% of total revenue in fiscal year 2023, generating about RMB 960.9 million, an increase of approximately 4.8% from RMB 916.8 million in fiscal year 2022[51] - The Korean operations, which were integrated after the acquisition of CQV, generated revenue of approximately RMB 103.1 million in fiscal year 2023, accounting for about 9.7% of total revenue[51] Strategic Developments - The company acquired 42.45% of CQV Co., Ltd., a South Korean producer and seller of pearlescent pigments, expanding its operations into Korea[17] - Following the acquisition of CQV, the company has identified two reportable segments: China operations and Korea operations, reflecting a strategic shift from a single business model[18] - The company’s strategic focus includes enhancing its product portfolio and expanding market presence through acquisitions and new product development[17] - The integration of CQV has led to significant collaborative achievements in product, sales channels, and R&D, enhancing the company's position in the global pearlescent pigment market[47] Research and Development - Research and development expenses amounted to RMB 75.0 million, representing about 7.1% of operating income, with a year-on-year increase of approximately 4.3%[43] - The company successfully added 16 new authorized patents and filed 3 new patent applications during the fiscal year 2023, bringing the total to 151 patents[43] - The company has developed several new energy battery insulation and flame-retardant materials based on synthetic mica, achieving high-temperature resistance of up to 1,150℃ and high-voltage breakdown resistance of 20KV/mm[53] Operational Efficiency - The company has strengthened its marketing channels and brand influence by participating in various global exhibitions, including ECS2023 in Germany and CHINACOAT2022 in China[45][46] - The company plans to strengthen its international talent integration and enhance collaboration among subsidiaries to drive growth[80] - The company aims to establish a regional headquarters in the Asia-Pacific to centralize financial control and enhance operational efficiency[83] Financial Management - The company has not early adopted any new IFRS that are issued but not yet effective, with the next expected changes taking effect on January 1, 2024[14] - The company’s financial statements are prepared in accordance with International Financial Reporting Standards and comply with the relevant listing rules and disclosure requirements[10] - The company has adopted a share option plan approved by shareholders to reward eligible participants for their contributions[98] Corporate Governance - The company has adopted the corporate governance code as its own, ensuring high standards of governance to protect shareholder interests and enhance corporate value[100] - The roles of the Chairman and CEO are currently held by the same individual, which the board believes ensures consistent leadership and effective strategic planning[101] - The audit committee, composed of three independent non-executive directors, has reviewed the audited consolidated financial statements for the fiscal year 2023[103] Future Outlook - The company intends to leverage capital market platforms for strategic acquisitions to enhance core competitiveness and accelerate business expansion[85] - The company will focus on R&D in three key areas: pearlescent pigments, synthetic mica functional fillers, and new energy battery materials[84]

Financial Performance - For the first half of 2023, the group's revenue reached RMB 464.3 million, an increase of 21.5% year-on-year, while net profit was RMB 94.7 million, a decrease of 14.5%[7]. - EBITDA for the first half of 2023 was RMB 163.6 million, up 8.0% compared to RMB 151.5 million for the same period in 2022[7]. - In the first half of 2023, the company's revenue reached RMB 464.3 million, a year-on-year increase of 21.5%, while net profit was RMB 94.7 million, a decrease of 14.5%[11]. - The net profit for the six months ended June 30, 2023, was RMB 94,664,000, down from RMB 110,777,000 in the previous year, indicating a decrease of approximately 14.6%[73]. - The company reported a total comprehensive income of RMB 106,289 thousand for the six months ended June 30, 2023, compared to RMB 110,777 thousand for the same period in 2022, showing a slight decrease of about 4.5%[78]. - The company reported a basic earnings per share of RMB 0.07 for the first half of 2023, compared to RMB 0.09 in the same period of 2022[73]. Product Development and Innovation - The group launched 16 new natural mica-based pearlescent pigment products, 37 new synthetic mica-based products, and 3 new glass flake-based products, bringing the total to 1,032 types of pearlescent pigments by June 30, 2023[8]. - The company is focusing on expanding production capacity for high-end pearlescent pigments and enhancing R&D capabilities as part of its strategic goals[11]. - The group is focusing on R&D in three key areas: pearlescent pigments, functional mica fillers, and new energy materials, with an emphasis on innovation across five aspects including new substrates and applications[66]. - The company has successfully commercialized several new energy materials developed in collaboration with Zhejiang University, creating a second growth curve[17]. - The company has developed new energy materials based on synthetic mica, with high-temperature resistance reaching 1,150°C and high-voltage breakdown resistance of 20KV/mm[22]. Acquisitions and Expansion - The group completed the acquisition of CQV, the largest pearlescent pigment manufacturer in South Korea, enhancing its international presence[7]. - The company completed the acquisition of CQV, a leading global manufacturer of pearlescent pigments, on August 22, 2023, marking a significant step in its internationalization strategy[11]. - The acquisition of CQV is anticipated to enhance the company's R&D capabilities and expand its market share in the international pearlescent pigment sector[14]. - The total consideration for the CQV acquisition was 85.9 billion KRW, equivalent to RMB 465.7 million or HKD 531.6 million, with RMB 135.5 million paid in cash[57]. - The company plans to enhance its production capacity for high-end pearlescent pigments, particularly in the automotive and cosmetics industries, following the CQV acquisition[64]. Financial Position and Capital Management - As of June 30, 2023, the company's cash and bank balances were RMB 2,141.4 million, an increase from RMB 1,882.7 million as of December 31, 2022[44]. - The company's total borrowings increased to RMB 253.4 million as of June 30, 2023, up from RMB 203.3 million as of December 31, 2022[44]. - The debt-to-equity ratio rose to 30.0% as of June 30, 2023, compared to 24.1% as of December 31, 2022, primarily due to increased borrowings[45]. - The company plans to allocate RMB 539.5 million for the construction of the second-phase production plant, with an expected completion by Q1 2025[40]. - As of June 30, 2023, the company's capital commitments amounted to RMB 398.5 million, down from RMB 441.9 million as of December 31, 2022, related to property, plant, and equipment purchases[55]. Market Presence and Sales - The company achieved a market presence primarily in China, with 98.7% of total sales generated domestically, amounting to RMB 458.31 million[25]. - Sales to trade company customers accounted for 74.1% of total revenue, while sales to end-user customers made up 16.8%[24]. - Revenue from natural mica-based pearlescent pigments was RMB 202.86 million, accounting for 43.7% of total revenue, while synthetic mica-based pigments generated RMB 183.84 million, representing 39.6%[21]. - Revenue from pearlescent pigment products was RMB 421,943,000, up 12.8% from RMB 374,078,000 in the previous year[89]. - The sales volume of pearlescent pigment products rose from 7,963 tons in the first half of 2022 to 9,185 tons in the first half of 2023, an increase of 15.3%[30]. Corporate Governance and Shareholding - The company adheres to high standards of corporate governance to protect shareholder interests and enhance corporate value[126]. - The roles of Chairman and CEO are currently held by the same individual, Mr. Su, to ensure consistent leadership and efficient strategic planning[126]. - The company has a significant concentration of shareholding, with Mr. Su and Mr. Jin being the primary stakeholders[115]. - The company has disclosed the interests of major shareholders as of June 30, 2023, in accordance with the Securities and Futures Ordinance[117]. - The company’s stock option plan aims to reward eligible participants for their contributions to the group[121].

Financial Performance - Revenue for the first half of 2023 was RMB 464.3 million, an increase of 21.5% compared to RMB 382.0 million in the first half of 2022[2] - Gross profit for the first half of 2023 was RMB 224.5 million, up 14.8% from RMB 195.6 million in the first half of 2022, with a gross margin of 48.4% compared to 51.2% in the previous year[2] - Profit for the period was RMB 94.7 million, a decrease of 14.5% from RMB 110.8 million in the first half of 2022[2] - Profit attributable to owners of the company was RMB 84.7 million, down 20.3% from RMB 106.3 million in the first half of 2022, with a net profit margin decreasing from 29.0% to 20.4%[2] - The group reported a total tax expense of RMB 20,524 thousand for the six months ended June 30, 2023, compared to RMB 19,150 thousand for the same period in 2022, representing an increase of 7.1%[16] - The company’s EBITDA for the first half of 2023 was RMB 163.6 million, an increase of 8.0% compared to RMB 151.5 million in the same period of 2022[36] - Net profit decreased by 14.5% to RMB 94.7 million in the first half of 2023 from RMB 110.8 million in the first half of 2022, resulting in a net profit margin decline to 20.4% from 29.0%[57] Assets and Equity - Total assets as of June 30, 2023, amounted to RMB 3,431.98 million, an increase from RMB 3,156.87 million as of December 31, 2022[7] - Cash and cash equivalents as of June 30, 2023, were RMB 2,141.36 million, up from RMB 1,882.73 million at the end of 2022[7] - Non-current assets totaled RMB 840.02 million as of June 30, 2023, compared to RMB 823.99 million at the end of 2022[7] - Current assets increased to RMB 2,591.96 million as of June 30, 2023, from RMB 2,332.88 million at the end of 2022[7] - Total equity attributable to owners of the company was RMB 2,638.03 million as of June 30, 2023, compared to RMB 2,543.33 million at the end of 2022[8] - The company's net asset value increased to RMB 2,638.0 million as of June 30, 2023, compared to RMB 2,543.3 million as of December 31, 2022[70] Dividends and Shareholder Returns - The board has decided not to declare any interim dividend for the first half of 2023, consistent with the previous year[2] - The group did not declare any interim dividend for the six months ended June 30, 2023, consistent with the previous year[19] - The company has not made any dilution adjustments to the reported basic earnings per share due to the impact of convertible bonds[20] Revenue Breakdown - Revenue from pearlescent pigment products was RMB 421,943 thousand, up from RMB 374,078 thousand, reflecting a growth of 12.8% year-over-year[15] - Revenue from mica functional fillers and related products surged to RMB 42,381 thousand, compared to RMB 7,971 thousand in the previous year, marking a significant increase of 431.5%[15] - The company’s total revenue for the first half of 2023 reached RMB 464.3 million, compared to RMB 382.0 million in the same period of 2022[46] - The sales revenue from trade company customers for pearlescent pigment products was RMB 343.9 million, accounting for 74.1% of total sales in the first half of 2023[48] Production and Capacity Expansion - The company completed the acquisition of CQV, the largest pearlescent pigment manufacturer in South Korea, enhancing its international presence and product portfolio[35] - The company has expanded its production capacity, with the first phase of the second production plant completed and trial production commenced[36] - The company is expanding its production capacity with the second phase of its factory aiming for an annual output of 30,000 tons of pearlescent materials, with the first phase already in trial production[42] - The company plans to allocate RMB 539.5 million (55.6%) for the construction of a second-phase production facility, with expected completion before Q1 2025[59] - The company has allocated RMB 300.0 million for investment opportunities in the pearlescent pigment and synthetic mica industry, with expected completion by the end of 2023[61] Research and Development - Research and development expenses for the period were RMB 24,381 thousand, slightly up from RMB 23,702 thousand, indicating a year-over-year increase of 2.9%[18] - The company holds 39 patents, 33 registered trademarks, and 4 software copyrights as of June 30, 2023, indicating a strong focus on R&D[41] - The R&D department will focus on three main areas: new pearlescent pigment products, functional mica fillers, and new energy materials, with increased collaboration with CQV to meet global market demands[65] Corporate Governance and Compliance - The company has adopted corporate governance practices based on the principles and code provisions of the Corporate Governance Code applicable in Hong Kong[82] - The board believes that the current balance of power and authority is not compromised, allowing for swift and effective decision-making[83] - All directors confirmed compliance with the required standards of the Securities Trading Code during the first half of 2023[84] Market and Strategic Initiatives - The company is aligned with national policies supporting the new materials industry, which is recognized as a strategic emerging industry in China[37] - The company anticipates stable growth in the pearlescent pigment industry, particularly in the cosmetics and automotive sectors, following the acquisition of CQV, which enhances production capacity for high-end products[63] - The company plans to expand global sales channels by promoting new pearlescent pigment products and establishing a marketing sub-center in Shenzhen to enhance its international presence[64] - The company participated in several global exhibitions to enhance brand influence and marketing channels, including ECS2023 in Germany and CHINACOAT2022 in Guangzhou[42] Financial Liabilities and Debt - The company issued RMB 300,000,000 of convertible bonds with a 3.5% coupon rate on December 30, 2022, with a conversion price of HKD 7.6 per share[24] - The fair value of the liability portion of the convertible bonds as of June 30, 2023, was approximately RMB 305,609,000, an increase from RMB 294,217,000 as of December 31, 2022[27] - The company's debt increased to RMB 253.4 million as of June 30, 2023, from RMB 203.3 million as of December 31, 2022, due to new bank loans[68] - The debt-to-equity ratio as of June 30, 2023, was 30.0%, up from 24.1% as of December 31, 2022, mainly due to increased borrowings[69] Employee and Workforce - As of June 30, 2023, the group had 590 employees in China and 8 employees in Hong Kong, an increase from 581 and 5 respectively as of December 31, 2022[78]