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]

Financial Performance - The company achieved a revenue of RMB 916.8 million in 2022, representing a year-on-year increase of 36.9%[41] - Net profit for the year reached RMB 236.5 million, marking a 39.9% increase compared to the previous year[41] - The company's revenue for the fiscal year 2022 was RMB 916.8 million, representing a year-on-year growth of 36.9%, while profit attributable to shareholders increased by 38.1% to RMB 223.8 million[46] - The profit for the fiscal year 2022 was RMB 236.5 million, an increase of 39.9% compared to RMB 169.1 million in 2021, with net profit margins of 25.8% and 25.3% respectively[72] - Gross profit increased from RMB 334.6 million in 2021 to RMB 455.3 million in 2022, a growth of 36.1%[65] - Other income and gains rose to RMB 18.3 million in 2022 from RMB 7.2 million in 2021, mainly due to interest income from idle assets[66] - Selling expenses increased by 64.6% from RMB 34.4 million in 2021 to RMB 56.7 million in 2022, driven by higher sales personnel costs and marketing expenses[68] - Administrative and other operating expenses grew by 25.4% from RMB 102.1 million in 2021 to RMB 128.0 million in 2022, primarily due to increased R&D expenditures[69] - Financing costs slightly decreased from RMB 11.4 million in 2021 to RMB 11.0 million in 2022, a reduction of 3.5%[70] - Income tax expenses increased from RMB 22.0 million in 2021 to RMB 38.0 million in 2022, attributed to an increase in profit before tax[71] Product Development and Innovation - The company has developed various new energy battery insulation and flame-retardant materials based on synthetic mica, creating a second growth avenue[41] - The company launched 46 natural mica-based, 51 synthetic mica-based, 13 glass flake-based, and 3 silica-based pearlescent pigment products, bringing the total to 976 products by December 31, 2022[43] - The company is focusing on optimizing its product structure towards mid-to-high-end pearlescent pigments in response to rising raw material costs[42] - The company has successfully developed new energy battery insulation and flame-retardant materials based on synthetic mica, achieving high-temperature resistance of 1,150°C and high-voltage breakdown resistance of 20KV/mm[46] - The R&D department is focusing on developing automotive weather-resistant, cosmetic-grade, and functional pearlescent pigment products, with ongoing collaboration with Zhejiang University[81] - The company aims to enhance its core competitiveness through international acquisitions and collaboration with CQV, focusing on production capacity expansion and R&D capabilities[44] Market Expansion and Acquisitions - The company plans to acquire CQV, the largest pearlescent pigment company in South Korea, to strengthen its global expansion strategy in 2023[41] - The company announced the acquisition of Korean CQV, a renowned pearlescent pigment company, on January 27, 2023, marking a significant step in its international expansion[43] - The company plans to complete the acquisition of CQV in the second quarter of 2023, which is expected to enhance R&D capabilities and expand international market share[53] - The acquisition of CQV shares is expected to be completed in Q2 2023, enhancing the company's market share and product supply in the international pearlescent pigment industry[83] Environmental and Sustainability Initiatives - The company was honored as a "National Green Factory" in 2022, aligning with China's "dual carbon" strategy[41] - The company is committed to adopting more environmentally friendly production technologies and materials to replace traditional chemical pigments[45] - The company maintains a commitment to environmental sustainability, implementing measures to reduce carbon emissions in its operations[115] - The group emphasizes sustainable development, ensuring that all products and production processes are non-toxic and environmentally friendly[192] - The group has established governance structures, including an ESG committee, to oversee and implement its ESG strategies and policies[193] - The ESG report highlights the company's commitment to sustainable development and effective risk management in ESG matters[185] Financial Strategy and Investments - The company issued RMB 300 million in offshore convertible bonds to invest in opportunities within the pearlescent pigment and synthetic mica industries[41] - The company issued offshore RMB 300 million convertible bonds to fund investment opportunities in the pearlescent pigment and synthetic mica industries[43] - The company aims to pursue overseas investment opportunities through mergers and acquisitions to enhance growth potential and shareholder value[83] - The net proceeds from the global offering amounted to HKD 970.2 million, with 55.6% allocated for the construction of the second-phase production plant and 34.1% for the construction of the Lvzai synthetic mica plant[73][74] Corporate Governance - The company is committed to high standards of corporate governance to protect shareholder interests and enhance corporate value[139] - The board consists of a balanced mix of executive and non-executive directors, ensuring strong independence and effective decision-making[141] - The company has adopted the principles and code provisions of the Corporate Governance Code as the basis for its corporate governance practices[139] - The board has established three committees: Audit, Remuneration, and Nomination, each with defined terms of reference to oversee specific aspects of the company's affairs[152] - The board plans to appoint at least one female director, currently holding 11% female representation and 89% male representation[159] Shareholder Relations - The company has established a shareholder communication policy to promote effective communication with shareholders and encourage their active participation[178] - The company ensures that all resolutions presented at the annual general meeting are voted on by shareholders according to the number of shares held[177] - The company has established multiple channels for ongoing communication with shareholders, including company communications and announcements as per listing rules[179] Risk Management - The company faces various risks including reliance on the Chinese and global economies, which could adversely affect its business and financial performance during significant economic downturns[113] - The company is exposed to various financial risks, including foreign exchange risk, credit risk, liquidity risk, and interest rate risk[113] - The board is responsible for assessing the nature and extent of risks the company is willing to accept in achieving its strategic objectives[168] Employee and Gender Diversity - The company emphasizes gender diversity across all levels, with a current employee gender ratio reflecting this commitment[158] - Total employee gender distribution is 30.65% female and 69.35% male, with 179 female employees and 405 male employees[159] - Senior management is 100% male, with no female representation[159] Miscellaneous - The company made charitable donations amounting to RMB 100 million during the fiscal year 2022[110] - The company has not engaged in any major investments, acquisitions, or disposals during the fiscal year 2022, aside from those disclosed in the annual report[102] - The company has not converted any of the A batch convertible bonds into shares as of December 31, 2022[96]

Financial Performance - The company's revenue for the fiscal year 2022 was RMB 916.8 million, an increase of 36.9% compared to RMB 669.7 million in the fiscal year 2021[2]. - Gross profit for the fiscal year 2022 was RMB 455.3 million, up 36.1% from RMB 334.6 million in the fiscal year 2021, with gross margins of 49.7% and 50.0% respectively[2]. - Profit attributable to owners of the company was RMB 223.8 million, a 38.1% increase from RMB 162.0 million in the fiscal year 2021, with net profit margins of 25.8% and 25.3% respectively[2]. - Operating profit for the fiscal year 2022 was RMB 285.4 million, an increase from RMB 202.5 million in the fiscal year 2021[4]. - The company reported a total comprehensive income of RMB 236.5 million for the fiscal year 2022, compared to RMB 169.1 million in the fiscal year 2021[6]. - The net profit for the fiscal year 2022 was RMB 223.79 million, compared to RMB 162.03 million in 2021, reflecting a growth of 38%[25]. - The profit for the fiscal year 2022 was RMB 236.5 million, a growth of 39.9% compared to RMB 169.1 million in the fiscal year 2021[58]. Dividend Policy - The company decided not to declare any final dividend for the fiscal year 2022, compared to a dividend of HKD 0.035 per share in the fiscal year 2021[2]. - The board has decided not to declare any final dividend for the fiscal year 2022, compared to a final dividend of HKD 0.035 per share for the fiscal year 2021[90]. Assets and Liabilities - Total assets as of December 31, 2022, were RMB 3,156.9 million, compared to RMB 2,604.4 million as of December 31, 2021[7]. - Current assets increased to RMB 2,332.9 million in 2022 from RMB 1,965.6 million in 2021, with cash and cash equivalents at RMB 1,882.7 million[7]. - The company's total equity attributable to owners was RMB 2,357.4 million, up from RMB 2,169.5 million in the previous year[8]. - Non-current liabilities decreased to RMB 432.4 million in 2022 from RMB 6.7 million in 2021[9]. - Trade receivables increased to RMB 319.1 million in 2022 from RMB 245.2 million in 2021, with an allowance for doubtful accounts of RMB 10.99 million[26]. - Trade payables decreased to RMB 23.6 million in 2022 from RMB 37.6 million in 2021, with the majority (RMB 22.5 million) aged 0 to 90 days[31]. - The group's debt increased to RMB 203.3 million as of December 31, 2022, from RMB 157.9 million in 2021, due to new bank loans and other borrowings[71]. - The group's debt-to-equity ratio rose to 24.1% as of December 31, 2022, compared to 11.2% in 2021, mainly due to the issuance of convertible bonds[72]. - The group's net assets increased to RMB 2,543.3 million as of December 31, 2022, from RMB 2,342.7 million in 2021, with net asset value per share rising to RMB 1.98 from RMB 1.82[73]. Revenue Breakdown - Revenue from external customers in China reached RMB 896.48 million, representing a 40% increase from RMB 641.66 million in 2021[19]. - The revenue from pearl pigment products was RMB 850.70 million, up 27% from RMB 667.71 million in the previous year[17]. - The company’s natural mica-based pearlescent pigments generated revenue of RMB 412.954 million, accounting for 45.0% of total revenue in 2022[43]. - The company’s synthetic mica-based pearlescent pigments generated revenue of RMB 378.814 million, representing 41.3% of total revenue in 2022[43]. - The sales revenue of pearlescent pigment products increased from RMB 667.7 million in the fiscal year 2021 to RMB 850.7 million in the fiscal year 2022, representing an increase of RMB 183.0 million or 27.4%[48]. - The sales of mica functional fillers surged from RMB 2.0 million in the fiscal year 2021 to RMB 64.4 million in the fiscal year 2022, an increase of RMB 62.4 million or 3,085.7%[49]. - The sales of new energy materials amounted to RMB 1.7 million in the fiscal year 2022, compared to none in the fiscal year 2021[50]. Research and Development - The company's R&D expenses for the fiscal year 2022 amounted to RMB 71.92 million, an increase of 48% from RMB 48.46 million in 2021[22]. - R&D efforts will focus on automotive-grade, cosmetic-grade, and functional pearlescent pigments, with collaboration with Zhejiang University to strengthen innovation capabilities[68]. - The company is actively developing new product lines and applications, including high-temperature resistant materials for new energy batteries[39]. Capital Expenditure and Investments - The company issued RMB 300 million in offshore convertible bonds to fund investment opportunities in the pearlescent pigment industry[34]. - The allocation of the net proceeds includes HKD 539.5 million (55.6%) for the construction of the second-phase production plant, with HKD 197.8 million utilized as of December 31, 2022[60]. - The construction of the Lvzai synthetic mica plant is allocated HKD 330.8 million (34.1%), with no funds utilized in the fiscal year 2022 due to relocation issues[61]. - Investment in R&D facilities and testing equipment is budgeted at HKD 68.9 million (7.1%), with HKD 21.0 million utilized by December 31, 2022[60]. 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[84]. - The board believes that the current arrangement of roles between the chairman and CEO, held by Mr. Su, ensures consistent leadership and effective strategic planning[85]. - The company has established an audit committee composed of three independent non-executive directors to oversee financial reporting and risk management[87]. Market Outlook - The company anticipates the global automotive pearlescent pigment market to reach RMB 4.5 billion by the end of 2025, with a CAGR of 47.1%[65]. - The Chinese cosmetics market reached RMB 71.595 billion in 2022, with a year-on-year growth of 9.05%, and is projected to grow at an annual rate of 7.5% to RMB 111.3 billion by 2028[37]. Shareholder Information - The annual general meeting will be held on June 27, 2023, with a suspension of share transfer registration from June 21 to June 27, 2023[91]. - The company’s financial statements for the fiscal year 2022 have been reviewed and are consistent with the amounts in the audited consolidated financial statements[92]. - The annual report for the fiscal year 2022 will be sent to shareholders and published on the stock exchange and the company's website[93].

Financial Performance - For the first half of 2022, the company reported a revenue of RMB 382.0 million, representing a year-on-year increase of 24.4%[5] - The net profit for the first half of 2022 reached RMB 110.8 million, reflecting a year-on-year growth of 12.8%[5] - In the first half of 2022, the company's revenue reached RMB 382.0 million, an increase of 24.4% year-on-year, while net profit was RMB 110.8 million, up 12.8% year-on-year[8] - Gross profit increased from RMB 161.9 million in the first half of 2021 to RMB 195.6 million in the first half of 2022, representing a growth of 20.8%[25] - Gross margin for the first half of 2022 was 51.2%, compared to 52.7% in the first half of 2021, showing no significant difference[25] - Operating profit increased to RMB 134,888 thousand, a rise of 15.9% compared to RMB 116,416 thousand in the previous year[59] - Profit before tax reached RMB 129,927 thousand, reflecting a 17.8% increase from RMB 110,343 thousand in 2021[59] - Net profit attributable to the owners of the company was RMB 106,289 thousand, up 12.9% from RMB 94,115 thousand in the prior year[61] - Basic earnings per share for the period was RMB 0.09, unchanged from the previous year[59] Market Position - The company holds a market share of 11.01% in the Chinese market for pearlescent pigments, making it the largest producer in the region[5] - Globally, the company ranks as the fourth largest producer of pearlescent pigments with a market share of 3.09%[5] - The global market for pearlescent materials is projected to grow at a compound annual growth rate (CAGR) of 14.4% from 2022 to 2025, reaching RMB 37.6 billion by 2025[10] - The global automotive pearlescent pigment market is projected to reach RMB 4.5 billion by the end of 2025, with a compound annual growth rate (CAGR) of 47.1%[48] Product Development - The company launched 23 new natural mica-based, 22 synthetic mica-based, and 7 glass flake-based pearlescent pigment products in the first half of 2022, increasing the total product offerings to 915[5] - The company has achieved significant progress in the development of new energy battery materials, with high-temperature resistance reaching 1,150℃ and high-voltage breakdown resistance at 20KV/mm[8] - Research and development efforts are focused on automotive weather-resistant, cosmetic-grade, and functional pearlescent materials, with significant progress reported in new energy materials based on synthetic mica[50] Production Capacity - The first phase of the new production facility is expected to commence commercial production in Q3 2022, adding 6,000 tons of production capacity[6] - The planned new production facility is estimated to cover an area of 148,713.7 square meters with a designed annual output of 30,000 tons for pearlescent pigments[8] - The second phase of the production plant is expected to add 6,000 tons of capacity, focusing on high-end automotive and cosmetic-grade products[13] - The company’s production facility in Guangxi has a designed annual capacity of 18,740 tons for pearlescent pigments and 12,470 tons for synthetic mica powder[8] Financial Position - As of June 30, 2022, the company had cash and bank balances of RMB 1,644.2 million, up from RMB 1,605.5 million as of December 31, 2021[35] - The debt-to-equity ratio as of June 30, 2022, was 11.7%, slightly up from 11.2% as of December 31, 2021[36] - The net asset value per share increased from RMB 1.82 as of December 31, 2021, to RMB 1.91 as of June 30, 2022[37] - Total assets as of June 30, 2022, amounted to RMB 2,740,182 thousand, an increase from RMB 2,604,373 thousand at the end of 2021[62] - Current assets totaled RMB 2,042,680 thousand, compared to RMB 1,965,566 thousand at the end of 2021, indicating a growth of 3.9%[62] - Total equity as of June 30, 2022, was RMB 2,453,430 thousand, up from RMB 2,342,653 thousand at the end of 2021[63] Expenses and Costs - The cost of goods sold increased by 28.2% from RMB 143.1 million in the first half of 2021 to RMB 183.5 million in the first half of 2022[24] - Selling expenses rose by 48.5%, from RMB 12.5 million in the first half of 2021 to RMB 18.5 million in the first half of 2022, mainly due to increased rental expenses[27] - Administrative and other operating expenses increased by 11.4%, from RMB 40.9 million in the first half of 2021 to RMB 45.6 million in the first half of 2022, driven by a rise in R&D expenses[28] - Research and development expenses for the six months ended June 30, 2022, amounted to RMB 23,702,000, an increase of 31.5% compared to RMB 17,966,000 in the same period of 2021[76] Corporate Governance - The company is committed to maintaining high standards of corporate governance to protect shareholder interests and enhance corporate value[102] - 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[102] - The board of directors has reviewed the accounting principles and internal control systems, and the unaudited condensed consolidated financial statements for the first half of 2022 were reviewed by external auditors[101] Investments and Shareholding - The company holds a significant stake in Hongzun International Investment Group Limited, with 298,546,800 shares representing approximately 25.05% ownership[93] - Guangxi Guidong Power Co., Ltd. is another major investment, with 108,000,000 shares held, accounting for about 9.06% of the company[93] - The company has a diversified investment portfolio, including stakes in various controlled corporations, ensuring a broad market presence[92] - The company’s major shareholders include several investment management firms, each holding around 6.44% of the shares, indicating strong institutional support[93]

Financial Performance - The company's revenue for the first half of 2021 was RMB 307.027 million, a 25.3% increase from RMB 245.008 million in the same period of 2020[58]. - Gross profit for the same period was RMB 161,934,000, compared to RMB 119,079,000 in 2020, indicating a year-over-year increase of about 36%[58]. - Operating profit reached RMB 116,416,000, up from RMB 83,692,000 in the previous year, reflecting a growth of approximately 39.2%[58]. - The net profit for the period was RMB 98,181,000, compared to RMB 62,728,000 in 2020, marking an increase of around 56.4%[58]. - Profit for the period increased from RMB 62.7 million in the first half of 2020 to RMB 98.2 million in the first half of 2021, an increase of 56.5%[42]. - Total revenue for the six months ended June 30, 2021, was RMB 307,027,000, an increase of 25.3% from RMB 245,008,000 in the same period of 2020[67]. - Revenue from pearlescent pigments was RMB 306,115,000, up 25.9% from RMB 243,223,000 in the previous year[68]. - The sales volume of pearlescent pigment products rose from 6,083 tons in the first half of 2020 to 7,717 tons in the first half of 2021, an increase of 26.9%[34]. - Overall gross profit increased from RMB 119.1 million in the first half of 2020 to RMB 161.9 million in the first half of 2021, a growth of 36.0%[35]. Market Position and Growth - The company became one of the largest producers of pearlescent pigments in China, holding an 11.0% market share based on 2020 revenue[9]. - The company holds an 11.0% market share in the Chinese pearlescent pigment market, making it the largest producer in the country, and a 3.0% share globally, ranking fourth[17]. - The Chinese automotive pearlescent pigment market is projected to reach RMB 1.7029 billion by 2025, with a CAGR of 52.4%[11]. - The cosmetics pearlescent pigment market in China is expected to reach RMB 2.3 billion by 2025, with a CAGR of 34.0%[11]. - The demand for pearlescent pigments in China increased significantly due to improved economic conditions, with a 14.5% growth in the production level of major chemical materials[16]. Research and Development - The company successfully obtained 16 patents and submitted two patent applications in China during the first half of 2021[10]. - The company is enhancing R&D efforts for new pearl pigment products and applications to meet industry trends and customer demands[24]. - Research and development expenses for the period were RMB 17,966,000, representing a significant increase of 67.5% compared to RMB 10,722,000 in the prior period[72]. - The company aims to enhance production capacity, strengthen R&D capabilities, and improve brand awareness as part of its strategic focus[11]. Production and Capacity Expansion - The construction of the second-phase production plant is ongoing, with commercial production expected to start in Q4 2021[10]. - The company plans to expand production capacity with the second phase of the production facility expected to commence commercial production in Q4 2021[23]. - The company plans to allocate RMB 539.5 million (55.6% of total net proceeds) for the construction of a second-phase production facility, expected to be completed by Q1 2025[48]. - An additional RMB 330.8 million (34.1% of total net proceeds) is designated for the construction of a synthetic mica plant, anticipated to be completed by Q2 2025[48]. Financial Position and Cash Flow - The company's cash and bank balances were RMB 740.9 million as of June 30, 2021, down from RMB 747.6 million as of December 31, 2020[43]. - The debt-to-equity ratio was 16.5% as of June 30, 2021, compared to 18.3% as of December 31, 2020[44]. - The company generated net cash from operating activities of RMB 86,432,000, significantly higher than RMB 12,737,000 in the same period last year, showing an increase of 578.5%[63]. - The company's total assets increased to RMB 1,683,991,000 as of June 30, 2021, compared to RMB 1,594,304,000 at the end of 2020, reflecting a growth of 5.6%[61]. - The total equity attributable to the owners of the company was RMB 1,275,353,000, compared to RMB 1,181,239,000 at the end of 2020, reflecting an increase of 8.0%[61]. Shareholder Structure and Corporate Governance - The company successfully listed on the Hong Kong Stock Exchange on July 16, 2021, raising a net amount of HKD 970.2 million from the global offering[47]. - The company’s major shareholders include Mr. Su, holding 25.05% of the shares, indicating a concentrated ownership structure[85]. - The company has adopted a corporate governance code based on the principles and provisions of the corporate governance code, which will apply from the listing date[98]. - The roles of the Chairman and CEO are currently held by the same individual, Mr. Su, to ensure consistent leadership and efficient strategic planning[98]. - The audit committee has been established to oversee financial reporting and risk management, consisting of three independent non-executive directors[97]. Market Trends and Industry Standards - The introduction of new industry standards in 2021 is expected to further promote the use of pearlescent pigments in cosmetics and automotive coatings[14]. - The COVID-19 pandemic has led to a reduction in natural mica supply, prompting a shift towards synthetic mica, which may help the company expand its market share[20]. - Government support has been received for projects related to high-quality cosmetic-grade pearlescent pigments and water-based environmentally friendly coatings[19].