Financial Performance - Revenue for 2023 decreased by 4.5% to RMB 22,725,317 thousand compared to 2022[4] - Gross profit for 2023 dropped significantly by 46.9% to RMB 1,462,615 thousand[4] - The company reported a net loss of RMB 299,382 thousand in 2023, a sharp decline of 248.8% from the previous year's profit[4] - Total assets decreased by 12.8% to RMB 22,811,172 thousand as of 31 December 2023[5] - Current assets declined by 14.1% to RMB 11,707,456 thousand in 2023[5] - Return on equity (ROE) for 2023 was -4%, a significant drop from 2% in 2022[6] - The company's sales revenue in 2023 was approximately RMB 22.7 billion, with a net loss of approximately RMB 299.4 million, marking the first financial loss since its establishment[14][18] - Revenue decreased by 4.5% year-on-year to RMB 22.7 billion, and the net loss was RMB 299.4 million compared to a net profit of RMB 201.2 million in the previous year[18] - The company's basic loss per share was RMB 0.41, compared to a basic earning per share of RMB 0.17 in the previous year[18] - The company's loss attributable to shareholders was approximately RMB 375.7 million, compared to a profit of approximately RMB 156.8 million in the previous year[18] - Group revenue decreased by 4.5% to approximately RMB22.7 billion, with yarn sales accounting for 77.2% of total revenue at RMB17.5 billion, remaining flat compared to the previous year[25][28] - Garment fabric revenue decreased by 18.8% to approximately RMB2.9 billion due to weak overseas market demand[25][28] - Yarn sales volume increased by 12.7% to over 740,000 tonnes, with revenue remaining flat at RMB17.5 billion due to raw material price fluctuations[26][28] - Grey fabric sales volume increased by 9.9% to 55.3 million meters, but revenue decreased to RMB531.7 million, with gross profit margin dropping to 6.1% from 10.2%[27][28] - Woven garment fabric sales volume decreased by 22.9% to 89.7 million meters, with revenue dropping 22.3% to RMB2,056.3 million and gross profit margin declining to 12.7%[29][32] - Knitted garment fabric sales volume increased by 2.8% to 15,400 tonnes, but revenue decreased by 8.0% to RMB797.4 million, with gross profit margin improving to 8.7% from 5.3%[30][32] - Non-woven fabric sales revenue slightly increased to RMB70.0 million in 2023, as the company adjusted product structure to adapt to market demand changes[31][32] - Jeanswear business generated sales revenue of approximately RMB20.4 million, mainly from garment factories in China, with a gross profit margin of 6.0%[31][32] - The Group's overall gross profit margin declined to 6.4% from 11.6% in 2022, with a loss attributable to shareholders of approximately RMB375.7 million, compared to a profit of RMB156.8 million in the previous year[33][37] - Basic loss per share was RMB0.41, compared to basic earnings per share of RMB0.17 in 2022[33][37] - Yarn sales decreased by 0.3% in 2023 compared to 2022, with sales revenue dropping from RMB 17,587.45 million to RMB 17,537.02 million[45] - Grey fabrics sales declined by 27.0% in 2023, with revenue falling from RMB 727.98 million to RMB 531.66 million[45] - Woven garment fabrics sales dropped by 22.3% in 2023, with revenue decreasing from RMB 2,647.89 million to RMB 2,056.33 million[45] - Jeanswear sales plummeted by 77.7% in 2023, with revenue falling from RMB 91.34 million to RMB 20.41 million[45] - Non-woven fabrics sales increased by 12.8% in 2023, with revenue rising from RMB 62.07 million to RMB 69.98 million[45] - Total sales revenue decreased by 4.5% in 2023, dropping from RMB 23,805.35 million to RMB 22,725.32 million[45] - Gross profit margin decreased by 5.2 percentage points to 6.4% in 2023, with gross profit falling from RMB 2,755.6 million to RMB 1,462.6 million[52] - Raw materials cost accounted for 77.3% of total sales cost in 2023, with cotton being the major raw material[53] - The Chinese textile market accounted for 68.9% of the company's total sales in 2023[49] - The top ten largest customers accounted for approximately 13.4% of the company's total sales in 2023[50] - Selling and distribution costs decreased by 17.6% to approximately RMB730.4 million in 2023, mainly due to reduced freight and port charges compared to 2022[55] - General and administrative expenses decreased by 10.4% to approximately RMB1,178.6 million, accounting for 5.2% of the Group's revenue in 2023[55] - Net cash generated from operating activities increased to approximately RMB1,985.6 million in 2023, driven by improved inventory control and working capital efficiency[57] - Net cash generated from investing activities amounted to approximately RMB29.5 million in 2023, primarily due to reduced capital expenditures and partial receivables from asset disposals[57] - Net cash used in financing activities was approximately RMB2,337.6 million in 2023, mainly due to enhanced capital control and reduced bank borrowings[57] - Bank and cash balances (including pledged deposits) decreased to approximately RMB2,228.0 million as of 31 December 2023, compared to RMB2,580.1 million in 2022[58] - Inventories decreased by approximately RMB2,345.5 million to RMB5,244.6 million, with turnover days reduced to 109 days in 2023 from 126 days in 2022[58] - Trade and bills payables decreased by approximately RMB1,781.8 million to RMB3,364.7 million, with payable turnover days reduced to 72 days in 2023[61] - Total bank borrowings decreased by approximately RMB820.2 million to RMB7,723.2 million, with short-term borrowings reduced by RMB1,009.5 million[62] - Current ratio improved to 1.28 in 2023, compared to 1.12 in 2022, reflecting better liquidity management[64] - Total bank borrowings as of 31 December 2023 amounted to approximately RMB7,723.2 million, with 49.7% denominated in RMB, 6.8% in USD, 32.3% in HKD, 11.1% in VND, and 0.1% in AUD[65] - Current bank borrowings decreased to approximately RMB4,145.7 million as of 31 December 2023, down from RMB5,155.2 million in 2022, primarily due to repayment of short-term borrowings[67] - Capital expenditure for 2023 was approximately RMB899.0 million, a significant decrease from RMB2,391.0 million in 2022, mainly related to unfinished construction projects and asset acquisitions in Vietnam[69] - The Board does not recommend a final dividend for 2023 due to weakened demand in overseas textile markets, maintaining a long-term dividend payout ratio target of 30% of net profit[78] Operational Performance - Inventory turnover days improved to 109 days in 2023 from 126 days in 2022[6] - The company operates approximately 4.18 million spindles and 1,700 weaving and knitting machines as of 31 December 2023[8] - Texhong International Group has over 5,000 customers globally, with sales networks spanning multiple countries and regions[8] - The company's production bases are located in China, Vietnam, Turkey, and the Americas[8] - The domestic textile and apparel market experienced a substantial recovery in 2023, while overseas markets remained relatively lackluster with industry destocking efficiency falling short of expectations[11][13] - The company focused on controlling capital expenditures, optimizing resources, and streamlining management processes to foster a healthier internal environment[12][13] - The company prioritized investments with clear potential for return on investment and strategic alignment with long-term objectives to preserve financial flexibility[12][13] - The company strengthened regional production capacity and bolstered regional supply chain flexibility through vertical integration and supplier partnerships[12][13] - The company remains optimistic about the resilience of the textile industry and its own business, aiming to focus on innovation, sustainable development, and operational excellence in the upcoming year[15][17] - The company's efforts in the second half of the year led to positive changes, but the first-half loss resulted in an annual loss[14][16] - The Group targets to sell 760,000 tonnes of yarns, 92 million meters of woven garment fabrics, and 12,000 tonnes of knitted garment fabrics in 2024, excluding trading business sales[36][38] - The Group disposed of certain plots of land and buildings in Shaoxing for approximately RMB975.1 million as part of its restructuring efforts[40][42] - The Group plans to focus on high-end, intelligent, and green production trends, with increased R&D efforts in green and environmentally friendly products[39][42] - The Group is constructing yarn factories and a woven garment fabric factory in Vietnam to relocate production capacity from Shaoxing, China[39][42] - The Group's revenue from yarns decreased by approximately 0.3% in 2023 due to a decline in sales unit prices[43] - The Group had a total workforce of 27,655 employees as of 31 December 2023, with 52.3% being female employees, and total staff costs amounted to approximately RMB2.4 billion[76] - Core-spun yarn is the major earning source of the company, contributing significantly to its profitability[84] - The company plans to enhance customer communication, step up cooperation with raw material suppliers, and boost R&D input to improve product functionality and develop new products[85] - The company is exploring downstream industries and increasing the contribution of downstream products to diversify its revenue streams[85] - The company is facilitating the development of import and export business to tap into overseas markets[85] - The company is promoting diversified development in the textile industry to survive under adverse macro-environmental conditions[85] - The company faces risks from geographical concentration, with several production bases located in Mainland China, making it subject to economic, political, and social conditions in China[88] - The company is closely monitoring cotton futures and supply-demand balance to hedge risks and reduce reliance on cotton by diversifying synthetic fiber development[91] - The company is mitigating foreign exchange and interest rate risks by increasing RMB loans, using financial products like forward contracts, and monitoring economic data from the People's Bank of China and the Federal Reserve[91] - The Group has over 5,000 customers, with increasing business volume and types leading to higher total receivables[96] - Overseas market demand for textiles has declined, affecting the Group's profitability and increasing customer operation risks[96] - The Group faces product liability risks due to its wide and expanding product portfolio, with some customer claims regarding product quality[98] - Overseas textile market downturn has led to higher customer demands for product quality[98] - The Group operates in multiple countries and regions, facing tax risks due to varying tax regulations and increasing international tax compliance requirements[98] - The Group is exposed to financing risks due to its large business scale and high financing needs, with potential impacts on capital projects and operations if financing terms change[94] - The Group monitors credit terms and receivables in real-time, with alerts for overdue amounts and customers with abnormal operations[96] - The Group uses advanced measurement equipment and online quality control systems to manage production processes and mitigate product liability risks[98] - The Group engages local tax professionals and institutions to handle tax audits and ensure compliance with regional tax policies[98] - The Group diversifies its financing portfolio and maintains good relationships with financial institutions to mitigate financing risks[94] - The Group's electricity consumption in production is significant, and potential electricity shortages could adversely affect operations. Measures include equipping factories with generators, conducting technological renovations to reduce energy consumption, and liaising with the government for uninterrupted supply[101] - The Group faces human resources risks due to its labor-intensive industry. Despite advanced production facilities reducing labor needs, manpower requirements remain high. Strategies include performance-based rewards, expanded staff training, and improving employee living conditions[103] - Environmental protection compliance is a significant risk, with potential new regulations requiring substantial expenditure for facility upgrades. The Group selects suppliers ensuring environmental standards, establishes internal check systems, and monitors regulatory changes[104] - The Group operates in multiple jurisdictions, requiring compliance with various legal and regulatory frameworks, including the Securities and Futures Ordinance and Listing Rules of the Hong Kong Stock Exchange. Legal advisors and the company secretary ensure compliance and provide updates to the board[100] - The Group is expanding its operations abroad, which introduces cultural differences between foreign and Chinese employees. Training programs and local presence enhancement are strategies to mitigate this risk[103] Corporate Governance - The Board currently comprises five Directors, including two Executive Directors and three Independent Non-Executive Directors (INEDs), with one INED appointed and one retired in 2023[109][114] - The Board held six meetings and one general meeting in 2023, with all Executive Directors attending all meetings, while attendance varied among INEDs due to retirements and appointments[114] - The Board ensures independent oversight through mechanisms such as regular meetings between the Chairman and INEDs, and INEDs representing more than one-third of the Board[110][111] - The Board is responsible for strategic decisions, including investment plans, financial performance, and significant policies, with day-to-day operations delegated to senior management[114] - Board meetings are scheduled quarterly, with at least 14 days' notice and agendas distributed at least three days in advance[115] - Directors have access to Board papers, company secretary services, and senior management, and are updated on regulatory developments to ensure compliance[116] - The company provides continuous professional development for Directors to maintain their knowledge and skills, including updates on Listing Rules and regulatory changes[117] - The company has adopted a Securities Code for Directors' securities transactions, aligned with the Model Code for Securities Transactions by Directors of Listed Issuers[118] - The company's annual director's fees for the year ended 31 December 2023 were HKD125,000 for Mr. Ting Leung Huel Stephen, HKD150,000 for Professor Cheng Longdi, HKD180,000 for Professor Tao Xiaoming, and HKD120,273.97 for Mr. Shu Wa Tung, Laurence[125] - Mr. Ting Leung Huel Stephen ceased to be an independent non-executive director on 25 May 2023[125] - The company's Securities Code requires directors to notify designated directors and receive written acknowledgment before dealing in the company's securities and derivatives[122][126] - The company confirms that all directors have complied with the Securities Code and the Model Code during the year[123] - The roles of chairman and chief executive officer are separated, with Mr. Hong Tianzhu serving as chairman and Mr. Zhu Yongxiang as vice chairman and chief executive officer[124][127] - The Remuneration Committee comprises three independent non-executive directors: Mr. Shu Wa Tung, Laurence, Professor Tao Xiaoming, and Professor Cheng Longdi[129] - The Remuneration Committee held two meetings during the year to review and discuss the existing policy and structure for the remuneration of Directors[132] - The Company adopted a share option scheme in April 2014 for a term of ten years to attract, retain, and motivate senior executives and key employees[135] - The Remuneration Committee is responsible for making recommendations on the remuneration packages of executive Directors and senior management, including benefits in kind, pension rights, and compensation payments[129] - The Remuneration Committee ensures that no director or any of their associates is involved in deciding their own remuneration[131] - The Remuneration Committee reviews and approves compensation arrangements related to the dismissal or removal of directors for misconduct[131] - The Remuneration Committee reviews and approves compensation payable to executive Directors and senior management for any loss or termination of office or appointment[131] - The Remuneration Committee considers salaries paid by comparable companies, time commitment, responsibilities, and employment conditions elsewhere in the Group[129] - The Remuneration Committee makes recommendations to the Board on the remuneration of non-executive Directors[129] - The Remuneration Committee reviews and/or approves matters relating to share schemes under Chapter 17 of the Listing Rules[131] - The Audit Committee reviewed and approved the audit scope and fees for the 2022 Final Audit, which covered the Group's financial year ended 31 December 2022[139] - The Audit Committee reviewed the external auditor's report on the findings of the 2022 Final Audit[139] - The Audit Committee reviewed the financial reports for the year ended 31 December 2022 and the six months ended 30 June 2023[139] - The Audit Committee reviewed the effectiveness of the Group's internal control system, including financial, operational, and compliance controls, as well as risk management functions[139] - The Audit Committee met twice during the year, with attendance records showing full participation by members except for one member who attended 1 out of 2 meetings[139] - The Audit Committee is responsible for monitoring the integrity of the Company's financial statements, annual reports, and accounts, as well as reviewing significant financial reporting judgments[136] - The Audit Committee ensures the independence and objectivity of the external auditor and reviews the effectiveness of the audit process[136] - The Audit Committee is chaired by an Independent Non-Executive Director with appropriate professional qualifications or accounting expertise[136] - The Audit Committee is tasked with reviewing the Group's financial and accounting policies and practices[137] - The Audit Committee reviews the external auditor's management letter and any material queries raised by the auditor regarding accounting records, financial accounts, or control systems[137] - The Nomination Committee was established on 1 April 2012 and currently consists of one executive director and three independent non-executive directors[140] - The Nomination Committee reviews the structure, size, and composition of the Board annually and makes recommendations to align with the company's corporate strategy[140] - The Nomination Committee assesses the independence of independent non-executive directors and recommends candidates for direct
天虹国际集团(02678) - 2023 - 年度财报