CHINA LESSO(02128)2024-09-24 02:33Financial Performance - Revenue decreased by 11.3% to RMB 13,563.5 million in H1 2024 compared to RMB 15,296.9 million in H1 2023[6] - Gross profit declined by 12.5% to RMB 3,727.8 million in H1 2024 from RMB 4,259.1 million in H1 2023[6] - Profit attributable to owners of the Company dropped by 30.2% to RMB 1,043.2 million in H1 2024 from RMB 1,493.7 million in H1 2023[6] - Revenue for the six months ended 30 June 2024 was RMB 13,563,523 thousand, a decrease from RMB 15,296,931 thousand in the same period in 2023[118] - Gross profit for the six months ended 30 June 2024 was RMB 3,727,786 thousand, down from RMB 4,259,138 thousand in the same period in 2023[118] - Profit before tax for the six months ended 30 June 2024 was RMB 1,283,304 thousand, compared to RMB 1,680,506 thousand in the same period in 2023[118] - Profit for the period ended 30 June 2024 was RMB 1,016,596 thousand, a decrease from RMB 1,435,599 thousand in the same period in 2023[118] - Total comprehensive income for the period ended 30 June 2024 was RMB 340,102 thousand, significantly lower than RMB 1,614,515 thousand in the same period in 2023[118] - Profit attributable to owners of the company was RMB 1,016,596 thousand, a decrease from RMB 1,435,599 thousand in the same period last year[122] - Total comprehensive income for the period attributable to owners of the company was RMB 340,102 thousand, significantly lower than RMB 1,614,515 thousand in the previous year[122] - Basic and diluted earnings per share attributable to owners of the company decreased to RMB 0.34 from RMB 0.49 in the same period last year[122] Assets and Liabilities - Total assets decreased by 0.7% to RMB 59,592.8 million as of June 30, 2024 compared to RMB 60,031.3 million as of December 31, 2023[6] - Cash and bank deposits increased by 2.3% to RMB 6,701.6 million as of June 30, 2024 from RMB 6,553.0 million as of December 31, 2023[6] - Total debts increased by 1.6% to RMB 21,034.0 million as of June 30, 2024 compared to RMB 20,695.6 million as of December 31, 2023[6] - Total non-current assets decreased to RMB 38,027,502 thousand from RMB 39,217,270 thousand compared to the previous year[124] - Total current assets increased to RMB 21,565,322 thousand from RMB 20,814,000 thousand compared to the previous year[124] - Total current liabilities decreased to RMB 21,023,447 thousand from RMB 24,512,720 thousand compared to the previous year[124] - Total non-current liabilities increased to RMB 14,679,907 thousand from RMB 11,207,472 thousand compared to the previous year[126] - Equity attributable to owners of the company decreased slightly to RMB 23,333,642 thousand from RMB 23,503,483 thousand compared to the previous year[126] - Non-controlling interests decreased to RMB 555,828 thousand from RMB 807,595 thousand compared to the previous year[126] - Reserves of the company stood at RMB 23,198,298 thousand as of 30 June 2024[128] - Non-controlling interests decreased by RMB 26,555 thousand to RMB 807,595 thousand[129] - Total equity increased by RMB 1,043,151 thousand to RMB 23,503,483 thousand[129] - Retained profits grew by RMB 1,043,151 thousand to RMB 20,408,075 thousand[129] - Exchange fluctuation reserve decreased by RMB 466,225 thousand to RMB (539,078) thousand[129] - Fair value reserve decreased by RMB 182,553 thousand to RMB (1,122,946) thousand[129] - Share premium remained unchanged at RMB 1,905,618 thousand[129] - Share capital remained unchanged at RMB 135,344 thousand[129] - Capital reserve decreased by RMB 7,121 thousand to RMB (91,756) thousand[129] - Statutory reserve decreased by RMB 13,558 thousand to RMB 2,862,310 thousand[129] - Share option reserve remained unchanged at RMB 0 thousand[129] - Total retained profits increased to RMB 19,649,086,000, reflecting a growth of RMB 1,493,672,000 compared to the previous period[131] - The company's total equity reached RMB 22,660,911,000, with a net increase of RMB 48,156,000[131] - Exchange fluctuation reserve improved by RMB 215,610,000, reducing the deficit to RMB (604,392,000)[131] - Fair value reserve decreased by RMB 58,918,000, resulting in a total of RMB (1,014,562,000)[131] - Statutory reserve increased to RMB 2,739,838,000, up by RMB 12,002,000[131] - Share premium remained stable at RMB 1,905,618,000 with no changes during the period[131] - Share capital stayed constant at RMB 135,344,000[131] - The company's total noncontrolling interests amounted to RMB 791,124,000, showing a slight decrease of RMB 3,135,000[131] - Employee defined benefit reserve remained unchanged at RMB 551,000[131] - Merger reserve stayed consistent at RMB 5,515,000[131] Operational Performance - The company operates over 30 advanced production bases across 19 provinces in China and foreign countries, with a network of 2,891 independent distributors[4] - Revenue from plastic piping systems accounted for 82.7% of total revenue in the first half of 2024, a slight increase from 80.0% in the same period in 2023[19] - Revenue from Southern China accounted for 44.7% of total revenue in the first half of 2024, down from 45.5% in the same period in 2023[17] - Revenue from outside China increased by 15.0% year-on-year to RMB 1,323 million in the first half of 2024[17] - The number of independent and exclusive first-tier distributors increased to 2,891 in the first half of 2024, up from 2,807 in the same period in 2023[18] - Revenue from building materials and home improvement products decreased by 19.4% year-on-year to RMB 1,080 million in the first half of 2024[19] - Revenue from other businesses decreased by 26.6% year-on-year to RMB 1,265 million in the first half of 2024[19] - Total revenue for the first half of 2024 was RMB 13.564 billion, a decrease from RMB 15.297 billion in the same period of 2023[22] - Gross profit for the first half of 2024 was RMB 3.728 billion, with a gross margin of 27.5%, slightly down from 27.8% in 2023[22] - EBITDA decreased by 15.1% year-on-year to RMB 2.644 billion, with an EBITDA margin of 19.5%, down from 20.4% in 2023[23] - Profit before tax decreased by 23.6% year-on-year to RMB 1.283 billion, with a profit margin of 7.5%, down from 9.4% in 2023[23] - Profit attributable to owners of the company decreased by 30.2% year-on-year to RMB 1.043 billion, with basic earnings per share of RMB 0.34, down from RMB 0.49 in 2023[23] - Revenue from the plastic piping systems business was RMB 11.219 billion, accounting for 82.7% of the Group's total revenue, down from RMB 12.233 billion in 2023[32] - Revenue from Southern China decreased by 8.6% to RMB 5.191 billion, while revenue from regions outside Southern China decreased by 9.0% to RMB 5.506 billion[28] - Revenue from water supply applications decreased by 9.0% to RMB 4.411 billion, while revenue from drainage applications decreased by 7.3% to RMB 4.131 billion[31] - The Group developed new products such as piping for hydrogen and oil transmission to diversify its product portfolio and reduce reliance on the property sector[32] - The Group leveraged its piping business to support rural revitalization, recording an uptrend in sales volume to the agricultural sector and rural villages[33] - Plastic piping systems business revenue was RMB 11.219 billion, accounting for 82.7% of the Group's total revenue[34] - The Group's annual designed production capacity for plastic piping systems was 3.25 million tonnes, with a capacity utilization rate of approximately 74.1%[38] - Sales volume of PVC products decreased by 5.4% year-on-year to 887,769 tonnes, while revenue from PVC products decreased by 8.4% to RMB 6.48 billion[45] - Sales volume of non-PVC products decreased by 6.3% year-on-year to 314,700 tonnes, with revenue decreasing by 8.1% to RMB 4.739 billion[45] - The average selling price of plastic piping products decreased by 2.8% year-on-year to RMB 9,330 per tonne, with a gross profit margin of 29.5%[46] - The Group launched "Anjiabao," a new one-stop solution for hidden installation of water, electricity, and heating mains, enhancing user experience and delivery efficiency[36] - The Group is expanding into new markets such as hydrogen and oil pipelines, and leveraging its pipeline technology in agriculture to support rural revitalization[34] - The Group is promoting intelligent manufacturing by integrating AI, 5G, IoT, and digitalized operations to establish smart factories, improving efficiency and reducing carbon emissions[38] - The Group optimized its client mix by strengthening partnerships with government departments and state-owned infrastructure enterprises, focusing on national development projects[37] - The Group maintained stable pricing and sales volume of piping systems despite intense competition and industry downtrend, keeping gross profit margins at a reasonable level[41] - The Group's production base in Vietnam is expected to start operation in the fourth quarter of 2024, enhancing its overseas market expansion[47] - The Group's building materials and home improvement business recorded revenue of RMB1,080 million, accounting for 8.0% of the Group's total revenue in the first half of 2024[49] - The Group's environmental protection business recorded revenue of RMB131 million in the first half of 2024, with plans to explore more government projects[54] - The Group's supply chain service platform business recorded revenue of RMB769 million in the first half of 2024, with a focus on the Southeast Asian market[55] - The Group successfully spun off its subsidiary, EDA Group Holdings Limited, through a separate listing on the main board of the Stock Exchange on 28 May 2024[55] - The Group is actively optimizing its client mix by shifting focus to government and state-owned enterprise-led projects, reducing reliance on civilian-owned enterprises[50] - The Group plans to diversify its sales channels and increase investment in product research and development to innovate and upgrade green products[50] - The Group is preparing to develop markets in Tanzania and Vietnam, with preliminary work for setting up factories in these countries progressing well[47] - The Group is pressing on with intelligent manufacturing to enhance sustainable development capability[47] - The Group's overseas market expansion strategy includes localizing production and sales in Indonesia, Cambodia, Thailand, and Malaysia[47] - Environmental business revenue for the first half of 2024 was RMB 131 million, impacted by reduced project activity and overcapacity in the industry[56] - Supply chain service platform business revenue for the first half of 2024 was RMB 769 million, with a focus on the Southeast Asian market and plans to optimize overseas assets[56] - New energy business revenue for the first half of 2024 was RMB 157 million, facing challenges from oversupply and intense competition in the photovoltaic industry[58] - The Group's total debt at the end of the reporting period was RMB 21.034 billion, with 58.9% denominated in RMB and 19.4% in USD[60] - The Group's gearing ratio stood at a healthy 46.8%, with current assets of RMB 21.565 billion and current liabilities of RMB 21.023 billion[60] - Cash and bank deposits, including restricted cash, amounted to RMB 6.702 billion, ensuring sufficient working capital for operations and future development[60] - The Group's capital expenditure for the reporting period was approximately RMB 1.559 billion, primarily used for automation improvements and production base expansions[60] - The Group's current ratio increased to 1.03 from 0.85, and the quick ratio rose to 0.68 from 0.57 as of December 31, 2023[60] - The Group plans to reduce investment in the new energy business and adjust its development strategy in response to market conditions[58] - The Group aims to expand its overseas market presence through localization of brand, production, and sales to enhance market penetration and income sources[58] - The Group employed approximately 21,000 employees at the end of the reporting period, with total staff costs amounting to RMB1,351 million[63] - Xingfa Aluminium recorded a revenue of RMB8,350 million and a profit attributable to shareholders of RMB378 million during the reporting period[69] - Keda recorded a revenue of RMB5,494 million and a profit attributable to shareholders of RMB454 million during the reporting period[70] - The Group's investment properties totaled RMB9,045 million at the end of the reporting period, with a decrease mainly due to construction costs of RMB185 million and a warehouse addition in Malaysia of RMB32 million[71][72] - The Group held long-term financial investments of approximately RMB1,783 million and short-term financial investments of RMB22 million at the end of the reporting period[75] - The Group recognized a fair value loss of approximately RMB32 million and a mark-to-market valuation net loss of approximately RMB169 million during the reporting period[75] - Income from the financial investment portfolio amounted to approximately RMB14 million, representing dividend and interest incomes[75] - The Group acquired an additional 1% shares in Keda for a consideration of RMB172 million during the reporting period[66][67] - The Group held 26.11% equity interest in Xingfa Aluminium and 8.01% in Keda at the end of the reporting period[66][67] - The Group's investment portfolio consisted of 12.5% listed equity securities, 6.8% listed debt securities, 6.1% unlisted securities, 70.7% unlisted equity securities, and 3.9% other investments[75] - China Lesso has resolved not to declare an interim dividend for the six months ended 30 June 2024 (1H2023: Nil)[80] - A final dividend of HK20 cents per share was paid on 18 July 2024 for the year ended 31 December 2023[80] - As of 30 June 2024, Wong Luen Hei holds 2,140,793,000 shares, representing 69.00% of the company's issued share capital[84] - Zuo Xiaoping directly holds 2,308,000 shares of the company[84] - Zuo Manlun holds 6,042,000 shares, representing 0.19% of the company's issued share capital[84] - Luo Jianfeng holds 1,927,000 shares, representing 0.06% of the company's issued share capital[84] - Tao Zhigang holds 30,000 shares of the company[84] - The company has adopted the Model Code for Securities Transactions by Directors, and all directors confirmed compliance during the reporting period[80] - No significant events occurred subsequent to 30 June 2024[80] - The company is committed to maintaining high standards of corporate governance and business ethics[79] - Zuo Manlun holds a 4.80% interest in Jiangsu Yongbao Environmental Technology Co., Ltd. with 3,840,000 shares[88] - Luo Jianfeng holds a 3.30% interest in Jiangsu Yongbao Environmental Technology Co., Ltd. with 2,640,000 shares[88] - Zuo Manlun and Luo Jianfeng jointly hold a 41.14% interest in EDA Group Holdings Limited with 180,974,000 shares[88] - Zuo Manlun holds a 1.76% interest in Guangzhou KingHing Construction Technology Ltd. with 3,054,475 shares[88] - Luo Jianfeng holds a 1.20% interest in Guangzhou KingHing Construction Technology Ltd. with 2,083,658 shares[88] - UBS Trustees (B.V.I.) Limited holds a 68.93% interest in the company with 2,138,485,000 shares[92] - The company's share award scheme holds 22,991,000 shares in trust as of 30 June 2024[97] - The share award scheme has a remaining life of approximately 4 years as of the report date[97] - No shares have been awarded under the share award scheme since its adoption in 2018[97] - The company and its subsidiaries did not purchase, sell, or redeem any listed securities during the reporting period[94] - The Controlling Shareholder, New Fortune, holds approximately 68.93% of the Company's issued share capital[99] - The Company established a share reward plan in 2018, with a trust holding 22,991,000 shares as of June 30, 2024[99] - The Company entered into a dual-currency syndicated term and revolving credit facility agreement for up to US$800 million at an interest rate of HIBOR +1.44% for HKD loans and SOFR +1.51% for USD loans[103] - The Wong family must maintain at least 51% beneficial shareholding in the Company's issued share capital, carrying at least 51% voting rights, to avoid default under the Facility Agreement I[103] - The Company entered into another