Company Overview and Operations - The Group currently has approximately 92,030 employees, with factory areas covering over 6.35 million sq.m. and floor areas exceeding 4.77 million sq.m., producing about 420 million pieces of knitwear annually[6] - The Group's major clients include international renowned brands such as NIKE, UNIQLO, ADIDAS, and PUMA, with markets spread across Mainland China, Japan, Asia Pacific, Europe, and the US[6] - Shenzhou International was listed on the Main Board of The Stock Exchange of Hong Kong Limited in November 2005, with the stock code 2313[7] - The Group was included in the Hang Seng Composite Index, Hang Seng Composite Industry Index (Consumer Goods), and Hang Seng Composite MiddleCap Index effective from 8 March 2010[7] - Shenzhou International has been included in the MSCI Index since 1 June 2013 and in the Hang Seng Corporate Sustainability Benchmark Index Series since September 2015[7] - The Group became a constituent stock of the Hang Seng China Enterprises Index from 5 March 2018 and the Hang Seng Index from 10 September 2018[7] - In April 2018, the Group was selected as a constituent stock of the CES Belt and Road Index by China Exchanges Services Company Limited[7] - Shenzhou International was included in the Hang Seng Stock Connect Hong Kong Top Shareholding 50 Index effective from March 2021[8] - The Group has won "Best IR Company (Largecap)" at the Hong Kong Investor Relations Awards from 2017 to 2023[10] - Shenzhou International was named one of the winners in the "Listed Company Awards" by Hong Kong Economic Journal from 2019 to 2023[12] Financial Performance - Sales for 2023 decreased to RMB 24,969,792 thousand, down 10.1% from RMB 27,781,412 thousand in 2022[14] - Profit before income tax for 2023 was RMB 4,995,501 thousand, a 5.1% decrease from RMB 5,262,073 thousand in 2022[14] - Net profit margin improved to 18.3% in 2023, up from 16.4% in 2022[14] - Sportswear accounted for 72.2% of total revenue in 2023, down from 75.1% in 2022[17] - Revenue from the European market decreased to RMB 5,027,285 thousand in 2023, down 19.1% from RMB 6,215,018 thousand in 2022[20] - Revenue from the US market declined to RMB 3,879,987 thousand in 2023, a 20.4% decrease from RMB 4,873,358 thousand in 2022[20] - Cash and cash equivalents increased significantly to RMB 11,596,453 thousand in 2023, up 57.4% from RMB 7,369,498 thousand in 2022[14] - Gearing ratio increased to 36.8% in 2023, up from 29.9% in 2022[14] - Revenue from the China domestic market grew to RMB 7,124,052 thousand in 2023, a 0.7% increase from RMB 7,074,146 thousand in 2022[20] - Inventory turnover period increased to 120 days in 2023, up from 109 days in 2022[14] - Annual sales for 2023 amounted to approximately RMB24,969,792,000, a decrease of 10.1% compared to 2022[36] - Profit attributable to owners of the parent for 2023 was approximately RMB4,557,263,000, a slight decrease of 0.1% from 2022[36] - Earnings per share for 2023 were RMB3.03[36] - Cash and cash equivalents as of 31 December 2023 were approximately RMB11,596,453,000[36] - Sales revenue in 2023 was approximately RMB24,969,792,000, a decrease of 10.1% compared to 2022[69][71][77] - Profit attributable to owners of the parent in 2023 was RMB4,557,263,000, a slight decrease of 0.1% compared to 2022[69][71] - Gross profit margin in 2023 increased by 2.2 percentage points to 24.3%, with the second half of the year reaching 25.8%, up 3.4 percentage points from the first half[69][71] - The company's net profit and cash flow have shown solid growth, ensuring long-term sustainable development and sound returns for shareholders[124][126] Market and Industry Trends - The Group faced a challenging external environment with declining demand and high inventories in traditional developed markets, leading to a significant drop in export value[35] - Some orders shifted to Southeast Asia, South Asia, Turkey, and Mexico, increasing pressure on China's garment exporters[35] - China's textile and apparel exports in 2023 decreased by 8.1% year-on-year, with exports to the US, EU, and Japan falling by 11.2%, 17.6%, and 14.1% respectively[38] - The total decline in exports to major economies (US, EU, Japan) accounted for approximately 65% of the total export decline[38] - Vietnam's garment industry relies heavily on imported fabrics, but its industrial chain is rapidly improving, forming regional advantages[39][40] - Cambodia's garment industry benefits from low or zero import tariffs when exporting to EU countries[39][40] - Indonesia has potential advantages in population size, labor costs, and domestic market consumption, making it a potential next hub for the textile and apparel industry[39][40] - The textile and apparel industry is expected to recover as inflationary pressures in developed economies ease and interest rates are gradually lowered[41] - Total export value of China's textile and clothing in 2023 was approximately $293.64 billion, a decrease of 8.1% compared to 2022[51] - Export value of textile products in 2023 was approximately $134.5 billion, a decrease of 8.3% compared to 2022[51] - Export value of garments and apparel accessories in 2023 was approximately $159.14 billion, a year-on-year decrease of 7.8%[51] - Export value of knitwear in 2023 was approximately $70.56 billion, accounting for 44.3% of total apparel products export value[51] - Export value of apparel products to the US, EU, Japan, and UK in 2023 accounted for 48.8% of total export value, with decreases of 12.0%, 19.5%, 13.2%, and 15.7% respectively[51] - Total retail sales of apparel, footwear, headwear, knitwear, and textile in China in 2023 amounted to approximately RMB1,409.48 billion, a year-on-year increase of 12.9%[53] - Retail sales of apparel products in China in 2023 amounted to approximately RMB1,035.29 billion, a year-on-year increase of 15.4%[53] - National online retail sales of products in the wearing segment in China in 2023 saw a year-on-year increase of approximately 10.8%[53] - China's foreign trade import and export value in 2023 was $5,936.83 billion, a decrease of 5.0% compared to 2022[55] - Trade surplus of textile and apparel products in 2023 was $272.12 billion, accounting for 33.1% of total external trade surplus[55] - Vietnam's textile industry export value in 2023 was approximately USD37.68 billion, a decrease of 10.9% compared to 2022[57] - Textile and clothing exports to the US, Japan, and Korea were USD14.47 billion, USD4.06 billion, and USD3.05 billion respectively, with declines of 16.7%, 0.4%, and 7.9% compared to 2022[57] - Yarn exports to China in 2023 were USD2.32 billion, accounting for 53.2% of total yarn exports, an increase of 6.2% compared to 2022[57] - Vietnam imported USD13.02 billion of fabrics in 2023, a decrease of 11.5% compared to 2022, with 64.0% sourced from Mainland China[57] - Textile and clothing exports to RCEP member countries were USD10.62 billion, accounting for 31.8% of total exports, an increase of 2.3 percentage points compared to 2022[59] - The central parity rate of RMB against USD depreciated by 1.7% at the end of 2023 compared to 2022, with a narrowing trend in depreciation[61] - China's total population at the end of 2023 was approximately 1.41 billion, a decrease of 2.08 million compared to 2022, marking the second consecutive year of negative population growth[62] - The population aged 60 and above accounted for 21.1% of China's total population in 2023, an increase of 16.93 million compared to 2022[62] - The labor force aged 16 to 59 decreased by approximately 10.75 million in 2023, posing challenges for labor-intensive manufacturing enterprises[62] - China's total population decreased by 2.08 million in 2023, marking the second consecutive year of negative growth, with the elderly population aged 60 and above increasing by 16.93 million to 21.1% of the total population[63] - China's cotton planting area decreased by 210,000 hectares in 2023, with cotton output dropping by 6.1% to 5.62 million tons[64][65] - Global cotton production in 2023/24 is estimated to decrease by 2.8% to 24.59 million tons, while consumption increased by 1.6% to 24.59 million tons[65] - China's cotton imports in 2023 totaled 1.96 million tons, a 1.1% increase, with imports from the US dropping by 33.6% to 752,000 tons[65] - The average price of imported cotton in China decreased by 21.3% to $2,128.9/ton in 2023, with total import value dropping by 20.5% to $4.17 billion[65] - China's cotton inventory in 2023 was estimated at 8.76 million tons, accounting for 48% of global inventory[65] - The China Cotton Index (CCIndex3128B) averaged RMB16,767/ton in 2023, down 11% year-on-year, with a peak of RMB18,433/ton on September 4[65] - Global inflation is expected to decrease in 2024, with developed economies likely to lower interest rates, potentially leading to a slight rebound in cotton prices[65] - China's textile industry is undergoing green transformation, with policies aiming to reduce energy consumption and emissions, and achieve technological upgrades by 2026[66][67] - The EU's sustainable textile strategy requires all textile products entering the EU market to be durable and recyclable by 2030, driving global green transformation in the industry[67] Strategic Initiatives and Future Plans - The Group maintained a reasonable recruitment mechanism and employment scale, focusing on stabilizing existing employees and expanding new clientele[35] - The Group strengthened its transformation to a green and low-carbon production model and improved the operating performance of overseas plants[35] - The Group resolved to transform towards diversified and high-end products[35] - The Group is confident in achieving sustainable business growth through future strategic measures[35] - The company plans to accelerate industry upgrading, improve green and low-carbon development systems, and expand overseas production capacity[42][45] - The company will strengthen talent pool development and enhance management and innovation capabilities[45] - The company aims to optimize global resource allocation through overseas production capacity expansion[45] - The Group is actively considering expanding overseas production capacity beyond existing bases in Vietnam and Cambodia to better meet customer procurement needs[113] - The Group plans to accelerate the application of intelligent manufacturing and digital management, improve green and low-carbon development systems, and promote diversified and high-end products[114] - The Group aims to reduce resource consumption per unit of output and increase the proportion of clean energy in its energy mix, including photovoltaic power, wind power, and natural gas[117] - The Group will increase investment in R&D for innovative and functional products, focusing on new fiber materials for high-end textile fabrics[119] - The Group plans to implement the "Young Seedlings Plan" to recruit and cultivate outstanding on-site management officials, improving production site management[120] - The Group expects business to return to growth in 2024 despite industry challenges and uncertainties[120] - The Group will optimize its salary system to enhance employee performance incentives under a fair and transparent system[120] - The Group is committed to strengthening sustainable development capabilities and enhancing long-term competitiveness in the industry[121] Corporate Governance and Board Structure - The Board adopted its own Code of Corporate Governance, covering all code provisions and most recommended best practices since 9 October 2005[127] - The Board complied with the requirement of having at least three independent non-executive directors, with one-third of the Board being independent non-executive directors[129][131] - Directors received continuous professional development training, including seminars and updates on Listing Rules and legal requirements[132][133] - The company adopted a corporate governance function policy effective from 1 April 2012, focusing on policy development, training, and compliance[134][135] - The company invited external auditors to the 2023 AGM to address shareholder questions on audit, accounting policies, and auditor independence[137] - The Board comprises 5 Executive Directors and 4 Independent Non-executive Directors, with independent directors accounting for approximately 44.4% of the Board[139][147] - The Company held 4 full Board meetings in 2023, with all Board members attending[149] - The Board will hold at least 4 meetings annually, with additional meetings convened as necessary to determine strategic directions and approve financial results[150] - The Chairman held separate meetings with all independent non-executive Directors to address business issues and concerns[150] - The Board is responsible for formulating the Group's business strategies, supervising management, and evaluating the effectiveness of management strategies[140] - The Chairman and Group General Manager have separate roles, with the Chairman responsible for significant operational decisions and the Group General Manager managing day-to-day operations[146] - Directors have full and timely access to relevant information about the Group and can seek independent professional advice at the Group's expense[141] - The Company has adopted a Board diversity policy, considering factors such as gender, age, cultural background, and industry experience when appointing or reappointing Directors[151] - As of the report date, the Board consists of 7 male and 2 female members, exceeding the stock exchange's gender ratio requirements[151] - Significant related party transactions involving Directors or their associates are disclosed in the financial statements[145] - The Board currently comprises 9 members, with 7 male and 2 female members, representing a gender ratio higher than the Stock Exchange requirement[152] - Approximately 77.8% of Directors and 27.7% of the total workforce (including senior management) are male as of the report date[153][155] - The Remuneration Committee held one meeting in 2023, reviewing the remuneration of Directors and senior management[157][160] - The senior management's remuneration for 2023 includes 4 individuals in the RMB 1,000 to 2,000 thousand band and 7 individuals above RMB 2,000 thousand[161] - The Nomination Committee held one meeting in 2023, reviewing and approving the appointment and reappointment of Directors[162][164] - The overall attendance rate of Directors at Board meetings in 2023 was 100.00%[171] - The Audit Committee met with external auditors twice in 2023 to discuss audit procedures and accounting issues[171] - The Audit Committee comprises four independent non-executive Directors: Ms. Liu Chunhong, Mr. Liu Xinggao, Mr. Zhang Bingsheng, and Ms. Wang Feirong[168][169] - Ms. Wang Feirong was appointed as the chairwoman of the Audit Committee on 1 April 2024, following Mr. Jiang Xianpin's resignation[168][169] - The Audit Committee reviewed the Group's financial statements for the year ended 31 December 2023[171] - The Board acknowledges its responsibility to prepare true and fair financial reports in accordance with Hong Kong accounting standards[175] - The Group's risk management system aims to provide reasonable assurance against material misstatement or loss[177] - The Board is responsible for assessing and determining the nature and degree of risks the company is willing to take to achieve strategic goals[176] - The risk management and internal control system is designed to enhance operating effectiveness and efficiency[177] - The Board ensures accurate and timely reporting of the company's state of affairs to shareholders and the public[176] - The Group's internal audit department has unrestricted access to information and conducts regular audits on major activities and processes, reporting directly to the Audit Committee and senior management[180] - The Board reviewed the effectiveness of the risk management and internal control system for the year ended 31 December 2023, considering it effective and adequate[181] - The Group's external auditor, Ernst & Young, received RMB3,700,000 for audit services and RMB960,000 for non-audit services in 2023, primarily for tax advisory fees[183][185] - The Group has a written inside information disclosure policy adopted on 27 March 2017 to standardize the responsibility and procedure of information disclosure[182] - The Investor Relations Department received the Best Investor Relations Awards (Large-cap) from the Hong Kong Investor Relations Association in 2023[189] - The Company Secretary, Mr. Chan Tak Hing Kenji, undertook not less than 15 hours of professional training during the year to update his skills and knowledge[188] - The Board ensures compliance with the Securities Trading Code, with all Directors confirming strict adherence throughout 2023[186] - The Group's risk management process includes setting contingency plans to minimize the impact of unpredictable events, with findings reported to the Audit Committee and Board[178] - The internal audit function plays a key role in monitoring governance, conducting special reviews or investigations of areas of concern identified by management or the Audit Committee[179] - The Board, through the Audit Committee, assesses the effectiveness of the risk management and internal control system by reviewing management reports and internal audit results[181] - The company has a policy of open communication and fair disclosure to enhance corporate governance standards, providing shareholders with necessary information for judgment and feedback[192] - Shareholders holding at least one-tenth of the
申洲国际(02313) - 2023 - 年度财报