侨洋国际控股(08070) - 2024 - 中期财报

Company Information Board of Directors and Key Management The Board of Directors, comprising executive and independent non-executive members, is supported by audit, nomination, remuneration, and risk management committees - Executive Directors include Mr. Zhong Zhiheng (Chairman), Mr. Zhong Tiancheng, and Mr. Huang Shihui[4] - Independent Non-Executive Directors include Mr. Zhang Yide, Mr. Li Zhongbang, and Mr. Lin Chunlei[4] - The company has an Audit Committee (Chairman: Mr. Zhang Yide), Nomination Committee (Chairman: Mr. Li Zhongbang), Remuneration Committee (Chairman: Mr. Lin Chunlei), and Risk Management Committee (Chairman: Mr. Zhong Tiancheng)[4] Company Contact and Registration Information The company is registered in the Cayman Islands with primary operations in Heyuan, Guangdong, China, and Hong Kong, audited by Viven CPA Limited, and banking with HSBC and DBS Bank (Hong Kong) - Registered office is located at Cricket Square, Cayman Islands[4] - Primary place of business in China is Heyuan High-tech Development Zone, Guangdong Province[4] - Hong Kong share registrar is Union Registrars Limited[6] Management Discussion and Analysis Business Review The Group designs, develops, produces, and sells transformers, switching power supplies, electronic healthcare products, and other electronic components, experiencing revenue decline due to reduced transformer orders and economic downturn, yet improved operating profit margins from higher product prices and lower production costs, with electronic components sales significantly increasing - Main business involves the design, development, production, and sale of transformers, switching power supplies, electronic healthcare products, and other electronic components[7] - For the six months ended June 30, 2024, transformer sales accounted for approximately 35.7% (2023: 48.0%), and electronic components for approximately 62.7% (2023: 50.8%)[7] - Revenue decline primarily due to slower transformer purchase orders and weakened demand from general economic downturn[7] - Operating profit margin increased year-on-year, mainly benefiting from higher product selling prices and reduced production waste and overall production costs[7] Financial Review For the six months ended June 30, 2024, Group revenue significantly decreased by 41.5% to HK$127.1 million due to economic downturn, but gross profit margin rose from 12.3% to 20.4% due to strict cost control and higher product prices, resulting in a slight increase in profit for the period to HK$10.1 million Key Financial Indicators for the Six Months Ended June 30, 2024 | Metric | 2024 (HK$ Thousand) | 2023 (HK$ Thousand) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 127,072 | 217,271 | -41.5% | | Cost of Sales | (101,197) | (190,466) | -46.9% | | Gross Profit | 25,875 | 26,805 | -3.5% | | Gross Profit Margin | 20.4% | 12.3% | +8.1pp | | Other Income | 2,156 | 1,875 | +15.0% | | Other Gains | 850 | 3,572 | -76.2% | | Selling and Distribution Expenses | (2,587) | (3,901) | -33.7% | | Administrative Expenses | (14,559) | (15,664) | -7.1% | | Finance Costs | (1,043) | (1,516) | -31.2% | | Income Tax Expense | (583) | (1,307) | -55.4% | | Profit for the Period | 10,109 | 9,864 | +2.5% | - Revenue decrease primarily due to weakened customer demand from economic downturn[8] - Gross profit margin increase primarily due to strict control over material costs and higher product selling prices compared to the same period in 2023[8] - Other gains decrease primarily due to losses from hedging policies leading to reduced investment income[8] Outlook Facing global economic recession, the Group actively seeks growth in clean energy electronic components (e.g., inverters) and EV markets (e.g., high-frequency inductors), plans to establish Southeast Asian production bases to mitigate tariffs, and continuously enhances production efficiency to control costs - Will seek clients in clean energy electronic components (especially inverters) and collaborate with European clients to develop new models[10] - Has utilized existing technology to develop and produce high-frequency inductors for the electric vehicle market, expected to account for a significant portion of future revenue[10] - Plans to seek strategic partners in Southeast Asia for an offshore production base outside China to mitigate US tariff impacts and enhance competitiveness[10] - Committed to improving production process efficiency and effectiveness to minimize production costs[10] Liquidity and Financial Resources As of June 30, 2024, the Group maintained a sound financial position with net assets increasing to HK$107.3 million and net current assets at HK$67.0 million, significant growth in bank and cash balances, and a debt-to-asset ratio decrease to 0.07 due to reduced bank borrowings and increased cash Liquidity and Financial Resources Overview | Metric | June 30, 2024 (HK$ Thousand) | December 31, 2023 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Net Assets | 107,262 | 98,136 | +9,126 | | Net Current Assets | 67,037 | 63,169 | +3,868 | | Shareholders' Funds | 107,262 | 98,136 | +9,126 | | Current Assets | 192,810 | 175,507 | +17,303 | | Current Liabilities | 125,773 | 112,338 | +13,435 | | Bank and Cash Balances | 22,700 | 11,711 | +10,989 | | Net Assets Per Share | HK$0.54 | HK$0.49 | +HK$0.05 | | Debt-to-Asset Ratio | 0.07 | 0.26 | -0.19 | - Debt-to-asset ratio decreased primarily due to reduced bank borrowings and increased bank and cash balances from operating activities[11] Capital Expenditure For the six months ended June 30, 2024, the Group's capital expenditure was approximately HK$7.8 million, primarily for property, plant, and equipment, a significant decrease from HK$23.7 million in the prior period Capital Expenditure Overview | Period | Amount (HK$ Thousand) | Primary Use | | :--- | :--- | :--- | | For the six months ended June 30, 2024 | 7,800 | Additions to property, plant and equipment | | For the six months ended June 30, 2023 | 23,700 | Additions to property, plant and equipment | | For the year ended December 31, 2023 | 26,500 | Additions to property, plant and equipment | Capital Structure The Group maintains prudent funding and treasury policies, with its capital structure primarily comprising bank borrowings and equity attributable to owners, where bank borrowings are denominated in HKD and secured by pledged bank deposits and trade receivables - Capital structure includes bank borrowings and equity attributable to owners of the Group (comprising issued share capital and retained earnings)[13] - Bank borrowings are denominated in HKD and secured by the Group's pledged bank deposits and trade receivables[13] Foreign Exchange Risk The Group's sales are primarily USD-denominated, with some