WANT WANT CHINA(00151)2023-07-20 08:31Company Listing and Stock Information - Want Want China Holdings Limited is listed on The Stock Exchange of Hong Kong Limited with stock code 0151[1] Board of Directors and Committees - The company's executive directors include Mr. Tsai Eng-Meng as Chairman and CEO, Mr. Tsai Shao-Chung, Mr. Tsai Wang-Chia as COO, Mr. Huang Yung-Sung as CMO, and Mr. Chu Chi-Wen as CFO[4] - The company's independent non-executive directors include Dr. Pei Kerwei, Mr. Hsieh Tien-Jen, Mr. Lee Kwok Ming, Mr. Pan Chih-Chiang, and Mrs. Kong Ho Pui King, Stella[4] - The company's audit and risk management committee is chaired by Mr. Lee Kwok Ming, with members including Dr. Pei Kerwei, Mr. Hsieh Tien-Jen, Mr. Pan Chih-Chiang, and Mrs. Kong Ho Pui King, Stella[4] - The company's remuneration committee is chaired by Mr. Hsieh Tien-Jen, with members including Dr. Pei Kerwei, Mr. Tsai Shao-Chung, Mr. Lee Kwok Ming, Mr. Pan Chih-Chiang, and Mrs. Kong Ho Pui King, Stella[4] - The company's nomination committee is chaired by Dr. Pei Kerwei, with members including Mr. Tsai Shao-Chung, Mr. Hsieh Tien-Jen, Mr. Lee Kwok Ming, Mr. Pan Chih-Chiang, and Mrs. Kong Ho Pui King, Stella[5] - The company's strategy committee is chaired by Mr. Tsai Eng-Meng, with members including Mr. Liao Ching-Tsun, Mr. Tsai Shao-Chung, Mr. Tsai Wang-Chia, Mr. Huang Yung-Sung, Mr. Chu Chi-Wen, Mr. Tsai Ming-Hui, Ms. Lai Hong Yee, Dr. Pei Kerwei, Mr. Hsieh Tien-Jen, Mr. Lee Kwok Ming, Mr. Pan Chih-Chiang, and Mrs. Kong Ho Pui King, Stella[5] - The company's ESG committee is chaired by Mr. Tsai Wang-Chia, with members including Mr. Chu Chi-Wen, Dr. Pei Kerwei, Mr. Lee Kwok Ming, Mrs. Kong Ho Pui King, Stella, Ms. Cao Yong-Mei, Mr. Chen Chien-Chen, Mr. Yu Ching Lun, and Mr. Lee Ming-Chun[6] Auditors and Legal Advisors - The company's auditor is Ernst & Young Certified Public Accountants, and its legal advisor is Sullivan & Cromwell (Hong Kong) LLP[6] Principal Banks - The company's principal banks include Bank of China (Hong Kong) Limited, China Merchants Bank Co., Limited, Citigroup Inc., and CTBC Bank Co., Ltd, Hong Kong Branch[6] Overseas Expansion and Production - The company's Vietnam production base commenced construction in 2020 to strengthen overseas market expansion and future development strategy[8] - In 2022, the new factory in Tiền Giang province, Vietnam commenced production, marking the first step towards the company's "Dream of the World"[8] - Want Want's Vietnam factory officially commenced production, marking the first step towards the "Dream of the World"[40] - The Group's factory in Vietnam officially commenced production, representing the first step towards the "Dream of the World"[40] Operational Overview - As of 31 March 2023, the company had 422 sales offices, 35 production bases, and 81 factories in the Chinese mainland, working with over 10,000 distributors[9] - The company's principal activities include manufacturing, distribution, and sale of rice crackers, dairy products, beverages, and snack foods[9] - The company's operations are primarily located in the Chinese mainland, with an extensive nationwide sales and distribution network, and exports to North America, East Asia, Southeast Asia, and Europe[9] Financial Performance - Annual profit for 2022FY was RMB 3,362,711 thousand, a decrease from RMB 4,189,114 thousand in 2021FY[29] - Revenue for 2023FY was RMB 22,928,219 thousand, compared to RMB 23,984,891 thousand in 2022FY[31] - Basic earnings per share for 2023FY were RMB 28.35 cents, down from RMB 35.16 cents in 2022FY[31] - Total assets decreased to RMB 25,974,077 thousand in 2023FY from RMB 29,857,981 thousand in 2022FY[32] - Total equity declined to RMB 14,704,070 thousand in 2023FY from RMB 16,708,778 thousand in 2022FY[32] - Current liabilities increased to RMB 8,774,979 thousand in 2023FY from RMB 9,248,528 thousand in 2022FY[32] - Non-current assets remained stable at RMB 13,168,233 thousand in 2023FY compared to RMB 13,269,649 thousand in 2022FY[32] - Profit before income tax for 2023FY was RMB 4,779,950 thousand, down from RMB 5,734,383 thousand in 2022FY[31] - Dividends attributable to equity holders of the company were RMB 2,652,397 thousand in 2023FY, compared to RMB 4,691,334 thousand in 2022FY[31] - Shares repurchased and cancelled in 2023FY amounted to RMB 81,105 thousand, a significant decrease from RMB 819,493 thousand in 2022FY[31] Awards and Recognitions - Want Want's "Research and Application of Low Carbon, Energy Saving, and Automation Technologies" project won the Project Award at the 7th China Grand Awards for Industry[37] - Hot-Kid Baby Mum-Mum Organic Gentle Teething Wafers Super Berries and Want Want Lactoferrin Laboratory Lactoferrin Yogurt – Original Flavor won Monde Selection Gold Quality Awards[33] - Want Want Lactoferrin Laboratory Lactoferrin Yogurt – Original Flavor Reinforced Version won Monde Selection Silver Quality Award[33] - Research on fruit yogurt technology won the Second Prize of the Technology Advancement Award from the China Dairy Industry Association[34] - Fix XBody Soba Noodles and Low GI Chia Seed Crackers were awarded 2021-2022 Excellent Innovative Products of China Instant Food Industry[35] - Want Want Zhejiang Ming Want Dairy Plant won the "Award for Excellence in Consistent TPM Commitment – 2022"[38] - Want Want continues to be one of the top 25 Best Taiwan Global Brands and was ranked third[38] - Want Won the 2022 China Dairy Industry High Quality Development Enterprise Award[34] Revenue and Market Performance - Total revenue for 2022FY declined by 4.4% year-on-year to RMB22,928.2 million[44][45] - Gross profit margin decreased by 0.9 percentage points to 43.9% in 2022FY, but rebounded to 44.9% in the second half of the year, up 1.9 percentage points year-on-year[46][50] - Profit attributable to equity holders of the Company decreased by 19.8% year-on-year to RMB3,371.6 million in 2022FY[44][46] - Revenue from rice crackers and snack foods segments maintained mid-to-high single-digit growth, contributing 51% of total revenue[45][49] - Emerging content e-commerce channels experienced rapid growth, while overseas markets recorded double-digit growth[45][49] - New products launched within the past five years contributed a near double-digit percentage of the Group's revenue in 2022FY[45] - The Group plans to deepen product and channel diversification strategies, expand emerging channels and overseas markets, and increase point-of-sale coverage[47][50] - Traditional distribution channels saw low-to-mid single-digit growth in rice cracker and snack foods segments despite a decline in dairy product sales[49][51] - The Group will launch a series of small-pack products to enhance product mix and convenience for consumers[51] - The popsicles sub-category and beans, jellies, and other snack foods sub-category achieved double-digit growth in 2022FY[45] - The Group plans to enhance the penetration rate of convenience store channels and launch a new dairy product, "Daily Milk," made from raw cow milk to meet diversified consumer needs[52] - In 2022FY, the Group achieved revenue growth in rice crackers and snack foods segments despite reduced consumer traffic due to pandemic restrictions, driven by new product combinations and active development of emerging channels[52] - The Group's overseas business achieved double-digit growth in 2022FY, with balanced growth rates across all three key product segments, supported by improved supply chain efficiency and expansion into overseas Chinese markets[52] - The Group will increase the number of vending machines and expand theme stores to promote the rapid development of maternity, OEM, and special channels, aiming to serve more end-consumers with diversified shopping choices[52] - The Group launched new brands such as "Baby Mum-Mum," "Fix XBody," "Mr. Hot," "Mr. Bond," "Queen Alice," and "Got Rice" to meet the needs of different consumer age groups[55][56][57][58] - The Group actively developed new e-commerce models like content e-commerce and social e-commerce, which contributed to substantial growth[52] - The Vietnam factory's commencement of production will leverage cost and geographical advantages to complement the Group's existing production and supply chain networks[52] - Five new overseas subsidiaries in Southeast Asia, America, and Europe have started operations to support the Group's strategy of expanding into overseas markets[52] - Total revenue for 2022FY declined by 4.4% year-on-year to RMB22,928.2 million, with rice crackers and snack foods segments growing by 4.5% and 7.8% respectively, while dairy products and beverages segment decreased by 13.5%[60][64] - Revenue from the rice crackers segment grew by 4.5% year-on-year to RMB5,843.3 million, driven by channel diversification and double-digit growth in overseas markets[61][65] - Revenue from the dairy products and beverages segment decreased by 13.5% year-on-year to RMB11,130.5 million, with "Hot-Kid Milk" recording a double-digit decline but resuming growth in Q4 2022FY[63][66] - New products in the rice crackers segment launched within the past five years contributed a mid-to-high single-digit percentage of the segment's revenue in 2022FY[62][65] - Revenue from the snack foods segment grew by 7.8% year-on-year to RMB5,820.3 million, with popsicles and beans/jellies sub-categories achieving double-digit growth[69] - The Group launched "Hot-Kid Milk in Little Red Bottle" (PET-bottled), generating over RMB80 million in revenue in 2022FY[67] - New flavored milk products like "Nut Milk" and "Chocolate Milk" exceeded RMB200 million in revenue in 2022FY[67] - The Group obtained 94 patents in 2022FY and won the "7th China Industry Award" for its low-carbon and automation technology research[59] - Revenue from new products in the dairy products and beverages segment launched within the past five years exceeded RMB700 million in 2022FY[63][66] - The Group achieved double-digit growth in emerging channels, including content e-commerce and smart vending machines, enhancing point-of-sale coverage[62][65] - Revenue from the candies sub-category increased by mid-single digit year-on-year, reaching a new all-time record high, with double-digit growth in modern channels[70] - The Group launched "Want Want QQ Juice 100," an innovative product with "chewable juice," which was well-received by consumers[70] - Revenue from the dairy and beverages category exceeded RMB 80 million in 2022FY, with new products like "Nut Milk" and "Chocolate Milk" contributing to a record high of over RMB 200 million[71] - Snack foods revenue reached RMB 5.8203 billion in 2022FY, a year-on-year increase of 7.8%, with double-digit growth in ice cream and beans/jellies sub-categories[72] - The "Frozen Delight" product achieved revenue of nearly RMB 300 million in 2022FY, driven by high summer temperatures and increased freezer penetration[72] - The Group's cost of sales in 2022FY was RMB 12.8572 billion, a year-on-year decrease of 2.9%, despite increases in raw material costs such as whole milk powder and sugar[73] - Gross profit margin decreased by 0.9 percentage points to 43.9% in 2022FY, but improved by 2.1 percentage points in the second half of the year to 44.9%[73] - The gross profit margin for rice crackers increased by 1.2 percentage points to 42.6% in 2022FY, with a significant improvement to 45.3% in the second half due to high-margin gift pack sales[74] - The dairy and beverages segment's gross profit margin decreased by 1.9 percentage points to 44.8% in 2022FY, impacted by an 18% year-on-year increase in the unit cost of imported whole milk powder[75] - The snack foods segment's gross profit margin decreased by 0.8 percentage points to 43.4% in 2022FY, but improved to 44.7% in the second half due to cost optimizations[76] - The gross profit margin for the leisure food category in 2022FY was 43.4%, a decrease of 0.8 percentage points year-on-year, mainly due to double-digit cost increases in raw materials such as white sugar, skimmed milk powder, and eggs[79] - Distribution costs for 2022FY decreased by RMB115.1 million to RMB3,018.1 million, with distribution costs as a percentage of revenue increasing by 0.1 percentage point to 13.2%[80] - Administrative expenses for 2022FY increased by RMB114.5 million to RMB2,849.2 million, representing a 4.2% increase compared to 2021FY, with administrative expenses as a percentage of revenue rising by 1.0 percentage point to 12.4%[81] - The Group's operating profit for 2022FY decreased by 11.2% to RMB4,846.7 million, with the operating profit margin declining by 1.7 percentage points to 21.1%[82] - Income tax expense for 2022FY was RMB1,417.2 million, with the income tax rate increasing by 2.7 percentage points to 29.6%[83] - Profit attributable to equity holders of the Company for 2022FY decreased by 19.8% to RMB3,371.6 million, with the margin decreasing by 2.8 percentage points to 14.7%[84] - As of 31 March 2023, the Group's net cash decreased by RMB1,783.3 million to RMB8,317.3 million compared to 31 March 2022, mainly due to dividend payments[89] - Total borrowings as of 31 March 2023 decreased by RMB1,559.9 million to RMB5,342.3 million compared to 31 March 2022, primarily due to repayment of borrowings using the Group's own funds[89] - The Group's net gearing ratio as of 31 March 2023 was -0.57 times, compared to -0.61 times in 2022[90] - Net cash inflow from operating activities in 2022FY was RMB4,218.7 million, primarily driven by a profit before income tax of RMB4,780.0 million[90] - Net cash outflow for financing activities in 2022FY was RMB7,428.7 million, including RMB2,129.7 million for borrowings and RMB5,078.9 million for dividend payments[90] - Net cash outflow for investing activities in 2022FY was RMB3,153.5 million, mainly due to RMB2,664.7 million placed in bank deposits with original maturity of more than three months[90] - Cash and cash equivalents as of 31 March 2023 amounted to RMB5,047.9 million, with total liquidity reaching RMB13,659.6 million including long-term bank deposits[90] - Capital expenditure for 2022FY was RMB531.3 million, with significant investments in production plants and equipment for key product segments[90] - Inventory turnover days increased by 11 days to 90 days in 2022FY, primarily due to higher raw material inventory levels in response to pandemic uncertainties[93] - Trade receivables turnover days remained stable at 15 days for both 2022FY and 2021FY[96] - Trade payables turnover days increased slightly to 29 days in 2022FY, compared to 28 days in 2021FY[96] - No assets of the Group were pledged as of 31 March 2023[96] - Average number of employees for 2022FY was approximately 41,229, a decrease of 36 employees compared to the previous year[97] - Total remuneration expenses for 2022FY amounted to RMB4,564.0 million[97] - The Group's functional currency is USD, with over 90% of operating activities conducted in mainland China, where the functional currency is RMB[97] - The Board recommended a final dividend of US2.10 cents per share for 2022FY, amounting to approximately US135.5 million (RMB934.7 million)[97] - Total dividends for 2022FY amounted to US3.24 cents per share, representing approximately 79% of the profit attributable to equity holders[97] - The Group used hedging products to mitigate foreign exchange risks during 2022FY[97] Corporate Governance - The Company is committed to maintaining high standards of corporate governance practices and procedures[98] - The Company complied with the Corporate Governance Code of the Hong Kong Stock Exchange Listing Rules, except for a deviation from code provision C.2.1[99] - Directors confirmed compliance with the Model Code for Securities Transactions throughout the year ended 31 March 2023[100] - The Board consists of 15 Directors as of March 31, 2023, including 7 executive Directors, 3 non-executive Directors, and 5 independent non-executive Directors[105] - The Board is responsible for overseeing the Group's operating and financial performance, approving annual operating