大成食品(03999) - 2024 - 中期业绩

Interim Results Announcement This section presents the financial highlights for the six months ended June 30, 2024, detailing key performance indicators Financial Highlights For the six months ended June 30, 2024, operating revenue and profit attributable to equity holders decreased, while gross profit and gross profit margin improved | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | Change % | | :----------------------------- | :------------------- | :------------------- | :--------- | | Operating Revenue | 2,794,444 | 3,142,785 | -11.1 | | Gross Profit | 362,471 | 338,920 | 6.9 | | Gross Profit Margin (%) | 13.0 | 10.8 | | | Profit Attributable to Equity Holders of the Company | 31,575 | 40,757 | -22.5 | | Basic Earnings Per Share (RMB) | 0.031 | 0.040 | | Consolidated Financial Statements This section provides the consolidated financial statements, including the statement of profit or loss, comprehensive income, and financial position Consolidated Statement of Profit or Loss For the six months ended June 30, 2024, the Group reported operating revenue of RMB 2,794,444 thousands and profit attributable to equity holders of RMB 31,575 thousands | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | | :----------------------------- | :------------------- | :------------------- | | Operating Revenue | 2,794,444 | 3,142,785 | | Cost of Sales | (2,431,973) | (2,803,865) | | Gross Profit | 362,471 | 338,920 | | Operating Profit | 68,266 | 70,361 | | Profit Before Tax | 56,652 | 63,324 | | Profit for the Period | 48,028 | 56,236 | | Profit Attributable to Equity Holders of the Company | 31,575 | 40,757 | | Basic Earnings Per Share (RMB) | 0.031 | 0.040 | Consolidated Statement of Comprehensive Income For the six months ended June 30, 2024, the Group's profit for the period was RMB 48,028 thousands, with total comprehensive income of RMB 46,782 thousands | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | | :-------------------------------------------- | :------------------- | :------------------- | | Profit for the Period | 48,028 | 56,236 | | Exchange Differences | (1,246) | (6,035) | | Total Comprehensive Income for the Period | 46,782 | 50,201 | | Total Comprehensive Income Attributable to Equity Holders of the Company | 30,197 | 34,012 | Consolidated Statement of Financial Position As of June 30, 2024, the Group's total assets less current liabilities were RMB 2,727,818 thousands, and net assets were RMB 2,427,795 thousands | Indicator | 2024 June 30 (RMB thousands) | 2023 Dec 31 (RMB thousands) | | :-------------------------------------------- | :--------------------------- | :-------------------------- | | Total Non-current Assets | 2,110,890 | 2,045,539 | | Total Current Assets | 1,626,445 | 1,738,411 | | Total Current Liabilities | 1,009,517 | 1,111,299 | | Net Current Assets | 616,928 | 627,112 | | Total Assets Less Current Liabilities | 2,727,818 | 2,672,651 | | Total Non-current Liabilities | 300,023 | 291,638 | | Net Assets | 2,427,795 | 2,381,013 | | Total Equity Attributable to Equity Holders of the Company | 2,145,511 | 2,115,314 | Notes to the Financial Statements This section provides detailed notes to the financial statements, covering presentation basis, accounting policy changes, segment reporting, and other financial details Basis of Presentation This interim financial report is prepared in accordance with HKEX Listing Rules and IAS 34, adopting consistent accounting policies with the prior year, except for noted changes - This interim financial report complies with the HKEX Listing Rules and International Accounting Standard 34[6] - The report adopts the same accounting policies as the 2023 annual financial statements, except for changes detailed in Note 2[6] Changes in Accounting Policies Several amendments to International Financial Reporting Standards were applied, none of which had a significant impact on the Group's financial performance or position - The Group has applied several amendments, including those to International Accounting Standard 1 and International Financial Reporting Standard 16[7] - All changes in accounting policies had no significant impact on the Group's results and financial position[7] Operating Revenue and Segment Reporting The Group's business is divided into three reportable segments: processed food, livestock feed, and meat products, with their respective operating revenues for the six months ended June 30, 2024 - The Group primarily operates in three business segments: processed food, livestock feed, and meat products[9] | Segment | 2024 Operating Revenue (RMB thousands) | 2023 Operating Revenue (RMB thousands) | | :--------------- | :----------------------------------- | :----------------------------------- | | Processed Food | 1,249,661 | 1,123,488 | | Livestock Feed | 827,086 | 1,114,113 | | Meat Products | 717,697 | 905,184 | | Total | 2,794,444 | 3,142,785 | Processed Food Segment The processed food segment primarily engages in the processing, reprocessing, or production and distribution of ready-to-eat meat products, mainly chicken - The processed food segment produces and distributes reprocessed or ready-to-eat chicken products[11] Livestock Feed Segment The livestock feed segment produces and distributes various feeds for pigs, laying hens, broiler chickens, ducks, and breeding poultry under multiple brands - The livestock feed segment produces various brands of feed for pigs, chickens, ducks, and other animals, including 'Dr. Buck,' 'DaChan,' and 'Green Knight'[11] Meat Products Segment The meat products segment covers broiler breeder farming, broiler hatching, contract farming, and the processing and trading of chilled and frozen chicken meat - The meat products segment engages in broiler breeder farming, hatching, contract farming, and the processing and trading of chilled/frozen chicken meat[11] Other Operating Income and Other Net Gains In the first half of 2024, other operating income was RMB 10,717 thousands, mainly from interest income, government grants, and rental income, while other net gains were RMB 755 thousands, primarily from net foreign exchange gains | Other Operating Income | 2024 (RMB thousands) | 2023 (RMB thousands) | | :------------------- | :------------------- | :------------------- | | Interest Income | 4,441 | 4,615 | | Government Grants | 2,509 | 3,229 | | Rental Income | 3,767 | 2,891 | | Total | 10,717 | 10,735 | | Other Net Gains/(Losses) | 2024 (RMB thousands) | 2023 (RMB thousands) | | :----------------------- | :------------------- | :------------------- | | Foreign Exchange Gains/(Losses) | 1,858 | (261) | | Net Loss on Disposal of Property, Plant and Equipment | (1,738) | (1,383) | | Others | 635 | 1,785 | | Total | 755 | 141 | Profit Before Tax Profit before tax is influenced by factors such as finance costs, depreciation, amortization, impairment of trade receivables, and inventory write-downs, with finance costs significantly increasing and inventory write-downs turning into a reversal in H1 2024 Finance Costs For the six months ended June 30, 2024, interest expense on bank borrowings significantly increased to RMB 13,008 thousands from RMB 7,103 thousands in the prior year | Finance Costs | 2024 (RMB thousands) | 2023 (RMB thousands) | | :---------------------- | :------------------- | :------------------- | | Interest on Bank Borrowings | (13,008) | (7,103) | Other Items Other items affecting profit before tax include amortization of prepaid lease payments, depreciation of property, plant and equipment, impairment provision for trade receivables, and net reversal of inventory write-downs | Other Items | 2024 (RMB thousands) | 2023 (RMB thousands) | | :---------------------------------------- | :------------------- | :------------------- | | Amortization of Prepaid Lease Payments | (2,163) | (2,160) | | Depreciation of Property, Plant and Equipment | (78,822) | (55,842) | | Impairment (Provision)/Net Reversal of Trade Receivables | (619) | 716 | | Net Reversal/(Recognition) of Inventory Write-downs | 13,111 | (676) | Income Tax The Group's income tax expense, totaling RMB 8,624 thousands in H1 2024, comprises current and deferred tax, with varying rates applied across different regions and entities | Income Tax Items | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--------------- | :------------------- | :------------------- | | Current Tax | (6,404) | (6,294) | | Deferred Tax | (2,220) | (794) | | Total | (8,624) | (7,088) | - Hong Kong profits tax rate is 16.5%, with certain eligible subsidiaries taxed at 8.25% for the first HKD 2 million[16] - Mainland China corporate income tax rate is 25%, with Northeast Agriculture and Animal Husbandry (Changchun) Co., Ltd. enjoying a preferential rate of 15% as a high-tech enterprise[16] Earnings Per Share As of June 30, 2024, the Company's basic earnings per share was RMB 0.031, calculated based on profit attributable to ordinary equity holders and weighted average shares outstanding, with no difference between basic and diluted earnings - Basic earnings per share for the first half of 2024 was RMB 0.031, a decrease from RMB 0.040 in the same period last year[18] - The weighted average number of ordinary shares outstanding was 1,016,189,000 shares, consistent with the prior year[18] - There were no potential dilutive ordinary shares during the period, thus diluted earnings per share is the same as basic earnings per share[18] Property, Plant and Equipment In the first half of 2024, the Group's capital expenditure for property, plant and equipment significantly decreased to RMB 98,284 thousands, and disposal of assets resulted in a net loss of RMB 1,738 thousands | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | | :-------------------------------------- | :------------------- | :------------------- | | Cost of Purchases of Property, Plant and Equipment | 98,284 | 263,525 | | Net Book Value of Property, Plant and Equipment Disposed | 1,145 | 2,258 | | Loss on Disposal | 1,738 | 1,383 | Trade Receivables As of June 30, 2024, total trade receivables were RMB 258,695 thousands, a decrease from 2023 year-end, with the Group generally granting 30-60 day credit terms and a small proportion of overdue accounts - The Group generally grants customers credit terms of 30-60 days[17] | Aging | 2024 June 30 (RMB thousands) | 2023 Dec 31 (RMB thousands) | | :-------------------- | :--------------------------- | :-------------------------- | | Current | 245,050 | 263,074 | | Overdue 1 to 180 days | 13,727 | 14,598 | | Overdue 181 to 365 days | 3,108 | 306 | | Overdue over 365 days | 4,454 | 4,838 | | Provision for Doubtful Debts | (7,644) | (7,247) | | Total | 258,695 | 275,569 | Other Receivables and Prepayments As of June 30, 2024, total other receivables and prepayments amounted to RMB 269,653 thousands, primarily consisting of recoverable value-added tax, deposits, and prepayments | Item | 2024 June 30 (RMB thousands) | 2023 Dec 31 (RMB thousands) | | :---------------------------------- | :--------------------------- | :-------------------------- | | Recoverable Value-Added Tax | 247,426 | 259,039 | | Deposits and Prepayments | 92,422 | 94,318 | | Advances to Employees | 4,470 | 4,174 | | Others | 13,484 | 7,265 | | Less: Non-current Recoverable Value-Added Tax | 88,149 | 88,149 | | Total | 269,653 | 276,647 | Trade Payables As of June 30, 2024, total trade payables significantly decreased to RMB 340,923 thousands from RMB 506,995 thousands at the end of 2023 | Aging | 2024 June 30 (RMB thousands) | 2023 Dec 31 (RMB thousands) | | :-------------------- | :--------------------------- | :-------------------------- | | Current | 168,617 | 221,009 | | Overdue less than 30 days | 136,254 | 169,074 | | Overdue 31 to 60 days | 23,398 | 46,042 | | Overdue 61 to 90 days | 5,671 | 34,738 | | Overdue over 90 days | 6,983 | 36,132 | | Total | 340,923 | 506,995 | Other Payables As of June 30, 2024, total other payables were RMB 298,065 thousands, primarily comprising salaries, wages, bonuses, other accrued benefits, accrued expenses, and performance deposits | Item | 2024 June 30 (RMB thousands) | 2023 Dec 31 (RMB thousands) | | :---------------------------------- | :--------------------------- | :-------------------------- | | Sales Rebates | 15,383 | 22,554 | | Salaries, Wages, Bonuses and Other Accrued Benefits | 51,016 | 102,689 | | Accrued Expenses | 104,092 | 60,810 | | Performance Deposits | 59,998 | 57,450 | | Payables for Purchase of Property, Plant and Equipment | 21,678 | 5,276 | | Amounts Due to Related Parties | 42,600 | 42,600 | | Others | 3,298 | 17,365 | | Total | 298,065 | 308,744 | Dividends The Company did not declare an interim dividend for the six months ended June 30, 2024, consistent with the prior year - No interim dividend was declared for the first half of 2024[24] Management Discussion and Analysis This section provides management's perspective on the Group's overall performance, segment-specific results, financial position, and human resources Overall Performance Overview and Outlook In H1 2024, operating revenue and profit attributable to equity holders decreased due to falling chicken prices, but domestic processed food performed well, with the Company optimizing its business model to focus on processed food and reduce inputs in other areas | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | Change % | | :----------------------------- | :------------------- | :------------------- | :--------- | | Operating Revenue | 2,794,444 | 3,142,785 | -11.1 | | Gross Profit | 362,471 | 338,920 | 6.9 | | Gross Profit Margin (%) | 13.0 | 10.8 | | | Profit Attributable to Equity Holders of the Company | 31,575 | 40,757 | -22.5 | - Performance decline primarily attributed to falling chicken prices due to supply-demand imbalance in the broiler industry[25] - Domestic processed food business revenue and gross profit increased by 11.9% and 21% year-on-year, respectively[25] - The Company will focus investments on processed food capacity, R&D, supply chain, and marketing, while reducing resources in broiler farming, slaughtering, and feed processing[26] - Looking ahead to the second half, the Company will promote scaled food production, diversified feed products, and value-added meat products, while steadily advancing digital transformation[27] Segment Performance Review In H1 2024, the processed food business grew in revenue and gross profit, becoming the main profit driver, while livestock feed revenue declined but gross profit slightly increased, and meat products faced significant declines - Processed food, livestock feed, and meat products segments accounted for 44.7%, 29.6%, and 25.7% of total operating revenue, respectively[28] - The processed food segment was the Company's largest profit source, contributing 74.1% of total gross profit[28] Processed Food The processed food business saw an 11.2% year-on-year increase in operating revenue and a 19.5% rise in gross profit in H1, driven by domestic sales growth and direct customer focus, with export business also expanding | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | Change % | | :------------------------ | :------------------- | :------------------- | :--------- | | Total Operating Revenue | 1,249,661 | 1,123,488 | 11.2 | | Total Gross Profit | 268,719 | 224,891 | 19.5 | | Total Gross Profit Margin (%) | 21.5 | 20.0 | | - Domestic food sales continued to grow, with domestic revenue increasing by 11.9% and gross profit by 21.0% year-on-year[29] - Export business revenue and gross profit increased by 6.3% and 7.2% respectively, with continued expansion into new categories, channels, and customers[29] Livestock Feed The livestock feed business's operating revenue decreased by 25.8% year-on-year in H1 due to declining pig feed sales, but gross profit still grew by 2.4%, with the Company diversifying products and controlling costs | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | Change % | | :-------------------- | :------------------- | :------------------- | :--------- | | Operating Revenue | 827,086 | 1,114,113 | -25.8 | | Gross Profit | 69,205 | 67,595 | 2.4 | | Gross Profit Margin (%) | 8.4 | 6.1 | | - Pig feed sales declined due to hog industry capacity reduction, prompting the Company to increase R&D and channel development for ruminant and niche feed products[30] - Strengthening cooperation with medium to large-scale farms and reducing feed costs through platform integration to enhance competitiveness[30] Meat Products The meat products business experienced a 20.7% year-on-year decrease in operating revenue and a 47.1% drop in gross profit in H1, primarily due to oversupply in the white feather broiler industry and limited consumer demand recovery | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | Change % | | :-------------------- | :------------------- | :------------------- | :--------- | | Operating Revenue | 717,697 | 905,184 | -20.7 | | Gross Profit | 24,547 | 46,434 | -47.1 | | Gross Profit Margin (%) | 3.4 | 5.1 | | - Oversupply in the white feather broiler industry led to falling prices for chicks, live broilers, and chicken meat, resulting in losses for broiler farming and slaughtering operations[31] - The meat products team is transforming to a customer-demand-driven model, focusing on refined processing and differentiated products, and collaborating with the processed food business to develop high-quality customers[31] Financial Review This section reviews the Group's key financial status for the first half of 2024, including other operating income, liquidity, capital expenditure, exchange rate impact, interest expenses, pledge of assets, and capital commitments Other Operating Income and Other Net Gains In the first half of 2024, other operating income was RMB 10,717 thousands, primarily from interest income and government grants, while other net gains were RMB 755 thousands, mainly comprising net foreign exchange gains - Other operating income primarily consisted of interest income and government grants, remaining stable year-on-year[32] - Other net gains primarily included net foreign exchange gains and net loss on disposal of property, plant and equipment[32] Liquidity, Financial Resources and Capital Structure As of June 30, 2024, cash and bank balances were RMB 504,106 thousands, interest-bearing borrowings increased to RMB 609,503 thousands, and the interest-bearing borrowings to equity ratio rose to 25.1%, while the current ratio remained robust at 1.61 times | Indicator | 2024 June 30 (RMB thousands) | 2023 Dec 31 (RMB thousands) | | :-------------------------------------- | :--------------------------- | :-------------------------- | | Cash and Bank Balances | 504,106 | 526,940 | | Interest-bearing Borrowings | 609,503 | 530,079 | | Interest-bearing Borrowings to Equity Ratio | 25.1% | 22.3% | | Current Ratio | 1.61 times | 1.56 times | Capital Expenditure In the first half of 2024, the Group's capital expenditure for the purchase of property, plant and equipment was RMB 98,284 thousands, primarily funded by long-term bank loans - Capital expenditure for the first half of 2024 was RMB 98,284 thousands[34] - Capital expenditure was primarily funded by long-term bank loans[34] Exchange Rates During the review period, the RMB depreciated by 0.62% against the US dollar, which had no significant impact on the Group's operations - The RMB depreciated by 0.62% against the US dollar, with no significant impact on operations[35] Interest In the first half of 2024, interest expense significantly increased by 83.1% to RMB 13,008 thousands, mainly due to interest on borrowings for the new Bengbu plant being expensed after it commenced production - Interest expense increased by 83.1% year-on-year to RMB 13,008 thousands[36] - The increase in interest expense was mainly due to interest on borrowings related to the Bengbu new plant being expensed rather than capitalized[36] Pledge of Assets As of June 30, 2024, the Group had no assets pledged as security for bank credit facilities - The Group has no assets pledged[37] Capital Commitments As of June 30, 2024, the Group's contracted but unprovided capital expenditure was RMB 265,068 thousands, and authorized but uncontracted capital expenditure was RMB 113,246 thousands | Capital Commitment Items | Amount (RMB thousands) | | :----------------------- | :--------------------- | | Contracted but not provided for | 265,068 | | Authorized but not contracted for | 113,246 | Employee Remuneration and Training As of June 30, 2024, the Group had 8,229 employees, offering competitive remuneration and emphasizing training and development to enhance skills and industry knowledge - As of June 30, 2024, the Group's total number of employees was 8,229, an increase from 7,972 at the end of 2023[39] - The Company provides competitive remuneration and benefits, with policies regularly reviewed[39] - Emphasis is placed on employee training and development, offering various programs to enhance work skills and industry knowledge[39] Other Information This section covers corporate governance practices, directors' securities transactions, share dealings, audit committee functions, and board composition Corporate Governance Code In H1 2024, the Company complied with the Corporate Governance Code, except for the combined roles of Chairman and CEO, which the Board believes enhances business strategy execution and operational efficiency - The Company complied with the Corporate Governance Code, except for the combined roles of Chairman and Chief Executive Officer held by Mr. Wei Chun Hsien, deviating from code provision C.2.1[40] - The Board believes this combined structure facilitates the execution of the Group's business strategies and enhances operational efficiency, with a highly independent Board providing sufficient checks and balances[40] Model Code for Securities Transactions by Directors The Company has adopted a model code for directors' securities transactions, and all directors confirmed their compliance throughout the review period - The Company has adopted the Model Code for Securities Transactions by Directors, and all Directors confirmed compliance[41] Purchase, Redemption or Sale of Listed Securities of the Company For the six months ended June 30, 2024, neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities - Neither the Company nor its subsidiaries engaged in any purchase, redemption, or sale of listed securities during the reporting period[42] Audit Committee The Audit Committee, comprising independent non-executive directors, reviewed the interim results and found no disagreement with the accounting treatments adopted - The Audit Committee has reviewed the Company's interim results and has no disagreement with the accounting treatments adopted[43] - The Audit Committee members include Mr. Ting Yu Shan (Chairman), Mr. Hsia Li Yen, Ms. Tsai Yu Ling, and Mr. Kao Kung Lien, all of whom are independent non-executive directors[43] Board of Directors As of the announcement date, the Board of Directors comprises two executive directors, five non-executive directors, and four independent non-executive directors - Executive Directors: Mr. Wei Chun Hsien (Chairman), Mr. Han Chia Yin[44] - Non-executive Directors: Mr. Han Chia Yu, Mr. Han Chia Chen, Mr. Han Chia Huan, Mr. Chao Tien Hsing, Mr. Wei An Ning[44] - Independent Non-executive Directors: Mr. Ting Yu Shan, Mr. Hsia Li Yen, Ms. Tsai Yu Ling, Mr. Kao Kung Lien[44]