Financial Performance - Revenue for the first half of 2021 reached RMB 6,953,406 thousand, representing a 79.2% increase compared to RMB 3,880,518 thousand in the same period of 2020[23] - Gross profit for the same period was RMB 3,818,784 thousand, a 100.9% increase from RMB 1,900,512 thousand year-on-year[23] - Profit before tax surged to RMB 3,396,859 thousand, marking a significant increase of 1,012.5% from RMB 305,329 thousand in the previous year[23] - The gross profit margin improved to 54.9%, up 5.9 percentage points from 49.0% in the prior year[23] - Adjusted net profit for the period was RMB 2,975,225 thousand, a 127.5% increase from RMB 1,307,973 thousand in the same period of 2020[24] - The adjusted net profit margin rose to 42.8%, an increase of 9.1 percentage points compared to 33.7% in the previous year[23] - Total comprehensive income for the period was RMB 2,878,816 thousand, a dramatic rise of 3,655.3% compared to RMB 76,661 thousand in the same period last year[191] Assets and Liabilities - Total assets increased by 38.7% to RMB 20,497,014,000 compared to RMB 14,773,809,000 in the previous period[26] - Total equity rose by 43.6% to RMB 17,807,707,000 from RMB 12,399,721,000[26] - Cash and cash equivalents grew by 5.2% to RMB 10,053,906,000, up from RMB 9,557,802,000[26] - The debt-to-asset ratio decreased by 3.0 percentage points to 13.1% from 16.1%[26] - The current ratio improved by 99.7 percentage points to 689.7% from 590.0%[26] - The company’s total liabilities were RMB 2,436.9 million, up from RMB 2,108.4 million at the end of 2020[122] Production and Capacity - The company has launched a new generation of automated production lines, achieving a record production efficiency of 7,200 standard atomizers per hour[19] - The production capacity for enterprise customer products was increased to 2,815.0 million standard units per year as of June 30, 2021[47] - The company plans to enhance automation and smart production lines based on customer and product characteristics to improve operational efficiency[49] - The group is expanding production capacity according to established plans, with the first phase of the industrial park in Jiangmen progressing smoothly[49] Research and Development - The company continues to enhance its research and development capabilities, particularly in the medical aerosol field, by recruiting top talent[19] - Research and development expenses increased by approximately 13.1% compared to the same period last year, with a focus on in-depth research of atomization mechanisms and applications in healthcare[43] - The company established a research institute in the United States during the review period, enhancing its global research capabilities and talent acquisition[43] - The company continues to focus on R&D in atomization technology, particularly in the medical field, to enhance its long-term competitiveness[189] Market and Revenue Contribution - Revenue contribution from new tobacco products in China was 45.4% as of June 30, 2021[34] - Revenue contribution from Hong Kong was 25.5% as of June 30, 2021[36] - Revenue contribution from Japan was 1.2% as of June 30, 2021[37] - Revenue contribution from the EU was 2.5% as of June 30, 2021[38] - Revenue from products sold to enterprise customers recorded an increase of approximately 86.2%, driven by the global recognition of the FEELM brand ceramic atomization technology[48] Shareholder Information - The company declared an interim dividend of HKD 0.21 per share for the six months ended June 30, 2021, compared to zero for the same period in 2020[94] - Major shareholders include Zhao Zihan with 39.18% and SMR & Alon Limited with 33.34% of total shares[100] - The company has a significant concentration of ownership, with the top five shareholders holding over 70% of the total shares[100] - The company continues to explore strategic initiatives to enhance shareholder value through equity incentives[103] Corporate Governance - The company has established an internal audit mechanism to independently assess the effectiveness of its risk management and internal control systems[89] - All directors confirmed compliance with the securities trading code for the six months ended June 30, 2021[90] - The company has a remuneration committee responsible for recommending compensation policies for directors and senior management[87] - The company has a nomination committee that reviews the board's structure and composition regularly[88] Financial Management - The company raised approximately HKD 7,909.9 million from its IPO, with net proceeds allocated as follows: 50% for capacity enhancement, 25% for automation implementation, and 20% for R&D investments[111] - The company plans to allocate 55% of its funds, approximately HKD 2,445.0 million, to expand production capacity by the end of 2026[114] - The company is investing HKD 1,582.0 million in R&D, including the establishment of a research institute in Shenzhen[112] Risk Management - The board believes that the foreign exchange risk is acceptable and will closely monitor the related risks[75] - If the USD/CNY exchange rate increases by 10%, the group's after-tax profit would increase by approximately RMB 81,274 thousand[76]

Financial Performance - Total revenue for 2020 reached RMB 10,009,937 thousand, representing a gross margin of 52.9%[7] - Adjusted net profit for 2020 was RMB 3,893,428 thousand, an increase from RMB 2,265,391 thousand in 2019[8] - The company reported a significant increase in adjusted comprehensive income, totaling RMB 2,399,921 thousand for 2020[8] - Gross margin increased to 52.9% in 2020, up from 44.0% in 2019[10] - Adjusted net profit margin rose to 38.9% in 2020, compared to 29.8% in 2019[10] - The company's revenue for the year 2020 was approximately RMB 10,009,937 thousand, representing a growth of about 31.5% compared to 2019[48] - Gross profit for the fiscal year was approximately RMB 5,295,813 thousand, up approximately 58.0% from RMB 3,352,352 thousand in 2019, with a gross margin of 52.9% compared to 44.0% in the previous year[57] - Adjusted net profit for the fiscal year was approximately RMB 3,893,428 thousand, reflecting a year-on-year increase of 71.9%[57] - The total comprehensive income for the year was approximately RMB 2,399,921 thousand, a 10.4% increase from RMB 2,173,789 thousand in 2019, with adjusted net profit rising by 71.9% to RMB 3,893,428 thousand[76] Assets and Liabilities - Non-current assets as of December 31, 2020, amounted to RMB 2,333,221 thousand, while current assets were RMB 12,440,588 thousand[7] - The total assets reached RMB 14,773,809 thousand, with total liabilities of RMB 2,108,440 thousand[7] - The company's cash and cash equivalents stood at RMB 9,557,802 thousand as of December 31, 2020[7] - The current ratio improved to 590.0% in 2020, up from 105.9% in 2019[10] - The debt-to-asset ratio significantly decreased to 16.1% in 2020 from 77.8% in 2019[10] - As of December 31, 2020, the group's current assets net amounted to RMB 10,332,148 thousand, significantly up from RMB 120,497 thousand in 2019, with cash and bank balances reaching RMB 9,557,802 thousand[77] - The debt-to-asset ratio was approximately 19.1% as of December 31, 2020, a significant decrease from 349.4% in 2019, reflecting improved financial stability[79] - The total capital expenditure for property, plant, and equipment was approximately RMB 413,024 thousand, up from RMB 396,793 thousand in 2019, supporting production scale expansion and R&D activities[83] Market and Growth Strategy - The company plans to focus on expanding its market presence and enhancing product development in the upcoming year[9] - The company aims to leverage its strong financial position to explore potential mergers and acquisitions in the market[9] - The company plans to increase R&D investment in aerosol technology and expand applications in healthcare and medical fields[13] - The company aims to diversify its revenue across different countries and regions while expanding its product portfolio[38] - The company is focused on promoting the application of electronic vaporization technology in the healthcare sector[38] - The company plans to expand its product categories in 2021, including the market development of heated non-combustible (HNB) products[55] - The company plans to establish industrial parks in Jiangmen and Shenzhen by the end of 2026, utilizing approximately HKD 3,954.9 million for this purpose[180] Research and Development - Research and development expenses amounted to approximately RMB 419,806 thousand, an increase of about 51.3%, representing about 4.2% of total revenue[49] - The company submitted pre-market tobacco applications (PMTA) to the FDA by the deadline of September 9, 2020, becoming one of the earliest manufacturers to do so[49] - A total of 740 new patent applications were filed during the reporting period, including 341 invention patents, enhancing the company's technological leadership in the vaporization field[49] - The company has established an internal control system that is deemed effective and adequate in all material aspects as of December 31, 2020[120] Regulatory Environment - Regulatory changes, such as the PACT Act, will impact the transportation of electronic nicotine delivery systems and require close monitoring[19] - The PACT Act requires online retailers to comply with state tax laws and adult identity verification for shipping electronic nicotine delivery systems, posing significant compliance challenges for distributors and online retailers[20] - As of December 31, 2020, there were no significant new laws or regulations affecting the company's operations in China, Japan, or the EU[25][26] - In France, new regulations effective January 1, 2021, require manufacturers to participate in waste management for tobacco products, including heated tobacco devices[27] - The UK will implement new reporting requirements for manufacturers of electronic cigarettes and nicotine products starting January 1, 2021, following Brexit[32] - The company plans to continue monitoring global regulatory developments and adjust its R&D and production activities accordingly to ensure compliance[38] Corporate Governance - The board proposed a final dividend of HKD 0.27 per ordinary share for the year ended December 31, 2020[9] - The board consists of executive directors, non-executive directors, and independent non-executive directors, ensuring a diverse and experienced leadership team[97] - The board retains decision-making authority on significant matters, including policies, strategies, and major transactions[99] - The board consists of seven members, including three independent non-executive directors, ensuring a balance of power[100] - The company emphasizes strong corporate governance practices, adhering to the corporate governance code and maintaining transparency and accountability to shareholders[177] - The company has engaged auditors to report on the related transactions in accordance with the Hong Kong Listing Rules[94] Shareholder Information - The company raised approximately HKD 7,909.9 million from its IPO, with net proceeds allocated as follows: 50% for capacity enhancement, 25% for automation implementation, 20% for R&D investment, and 5% for operational funding[179] - The company has maintained a public float of at least 25% of its total issued share capital as of the report date[181] - Shareholders holding at least 10% of the paid-up capital have the right to request the board to convene a special general meeting[127] - The company encourages shareholders to communicate their opinions and suggestions during the annual general meeting[124] Risk Management - The company emphasizes the importance of risk management and internal control systems to achieve business objectives and mitigate risks[119] - The overall risk management process is integrated into daily operations, with management responsible for identifying and responding to risks[119] - The board is committed to reviewing the effectiveness of risk management and internal control systems regularly[119] Audit and Compliance - The audit committee consists of three independent non-executive directors, enhancing the oversight of financial and accounting practices[183] - The consolidated financial statements for the year ended December 31, 2020 were audited by Deloitte, ensuring compliance with Hong Kong Financial Reporting Standards[184] - The auditors maintained professional skepticism and identified risks of material misstatement due to fraud or error during the audit process[195] - The auditors communicated the planned audit scope, timing, and significant audit findings to the governance personnel[195] Employee and Management Information - The company has independent non-executive directors who have confirmed their independence according to the listing rules[152] - The company’s executive directors have extensive experience in the electronic atomization industry, with the CEO having over 10 years of experience[153] - The CFO has over 20 years of experience in financial management and has served as a director and senior management in publicly listed companies[154] - The company’s strategic planning and daily operations are led by the executive directors, ensuring alignment with business objectives[154]

Financial Performance - Revenue for the six months ended June 30, 2020, was RMB 3,880,518 thousand, representing an 18.5% increase from RMB 3,273,653 thousand in 2019[32]. - Gross profit for the same period was RMB 1,900,512 thousand, a 39.9% increase compared to RMB 1,358,449 thousand in 2019[32]. - The adjusted net profit for the period was RMB 1,307,973 thousand, which is a 40.4% increase from RMB 931,343 thousand in the previous year[33]. - The total comprehensive income for the period was RMB 76,661 thousand, a significant decrease of 91.7% from RMB 920,998 thousand in 2019[32]. - Revenue for the second quarter increased by approximately 38.9% year-on-year, contributing to a total revenue growth of about 18.5% for the first half of 2020[61]. - The net profit for the period was RMB 76,661 thousand, a significant decrease from RMB 1,096,606 thousand in the previous year, reflecting a decline of approximately 93%[157]. - The group reported a segment profit of RMB 1,388,916 thousand, an increase of 25.5% compared to RMB 1,106,951 thousand in the previous year[180]. Profitability Metrics - The gross margin improved to 49.0%, up 7.5 percentage points from 41.5% in 2019[32]. - The adjusted net profit margin increased to 33.7%, up 5.3 percentage points from 28.4% in the previous year[32]. - Gross profit increased by 39.9% to RMB 1,900,512 thousand, with a gross margin rising from 41.5% to 49.0%[77]. Assets and Liabilities - Total assets increased by 39.1% to RMB 4,592,715,000 as of June 30, 2020, compared to RMB 3,301,903,000 as of December 31, 2019[37]. - Total equity rose by 30.7% to RMB 960,384,000 from RMB 734,673,000 year-over-year[37]. - Cash and cash equivalents surged by 120.2% to RMB 1,610,245,000, up from RMB 731,394,000[37]. - The asset-liability ratio increased to 79.1%, up by 1.3 percentage points from 77.8%[37]. - Current ratio improved significantly to 194.5%, an increase of 88.6 percentage points from 105.9%[37]. - Total liabilities decreased to RMB 1,756,283 thousand from RMB 2,049,243 thousand, reflecting a reduction of about 14.3%[159]. Market and Sales Performance - Approximately 45.1% of the gross profit for the six months ended June 30, 2020, was derived from products sold in the U.S. market[44]. - Sales of electronic nicotine delivery system products in the US market increased by approximately 110.5% compared to the same period in 2019[46]. - Revenue from enterprise customers accounted for 89.9% of total revenue, increasing by 32.3% year-on-year, while revenue from retail customers decreased by 38.5%[73]. - Sales to the top three customers, who adjusted their product offerings to comply with flavor bans, still grew by about 149.1% in the four months ending June 30, 2020, compared to the same period in 2019[46]. - Revenue from electronic vaporization devices and components (excluding APV) reached RMB 3,489,724 thousand, up 32.4% from RMB 2,637,881 thousand in 2019[179]. Regulatory Environment - The regulatory landscape for electronic vaporization devices is evolving, with potential health risks under scrutiny and various regulations being considered[41]. - The company is actively preparing tobacco premarket applications for its products in compliance with U.S. regulations, with two major customers already in the process[44]. - The Hong Kong government proposed a bill to ban the import, manufacture, sale, distribution, and advertising of alternative smoking products, including electronic vapor products[49]. - The company has not been aware of any significant violations regarding flavor bans as of June 30, 2020[46]. Research and Development - The company plans to continue investing in research and development, particularly in atomization technology, to support sustainable growth[30]. - Research and development expenses increased by approximately 117.4% compared to the same period last year, focusing on product safety and user experience improvements[60]. - The company plans to continue investing in R&D, focusing on product safety, health, and consumer experience, and aims to submit PMTA applications for several proprietary brand products by September 9, 2020[70]. Operational Challenges and Responses - The company faced a production challenge in Q1 due to COVID-19, resulting in a production decrease of approximately one-third from planned levels[29]. - The company successfully restored production capacity to normal levels after the initial COVID-19 disruptions, meeting customer order demands[29]. - The company has established a COVID-19 prevention center and implemented strict measures to ensure employee safety, with no reported infections as of June 30, 2020[69]. Corporate Governance - The board consists of seven directors, including three independent non-executive directors, ensuring sufficient checks and balances[123]. - The internal audit mechanism has been established to independently assess the effectiveness of the risk management and internal control systems[124]. - The company has adopted a shareholder communication policy and procedures for nominating director candidates[128]. - The company has complied with the Corporate Governance Code since its listing on July 10, 2020[123]. IPO and Capital Utilization - The company raised approximately HKD 7,122.0 million from its initial public offering (IPO) and approximately HKD 6,875.8 million in net proceeds[149]. - Approximately 50% of the IPO proceeds will be used to expand production capacity, including establishing industrial parks in Jiangmen and Shenzhen[147]. - The company completed its IPO on July 10, 2020, issuing 574,352,000 shares at a price of HKD 12.4 per share[150]. - As of the report date, the company has not utilized the net proceeds, which are held in licensed banks in Hong Kong or mainland China as short-term deposits[149].