叶氏化工集团(00408) - 2024 - 中期业绩

Performance Overview Despite a challenging macroeconomic environment, the Group's turnover slightly decreased by 0.6% to HKD 1.56 billion, while profit attributable to shareholders significantly increased by 109% to HKD 34 million, maintaining a robust financial position Performance Highlights Despite a challenging macroeconomic environment, the Group's turnover slightly decreased by 0.6% to HKD 1.56 billion, while profit attributable to shareholders significantly increased by 109% to HKD 34 million, maintaining a robust financial position Performance Summary | Metric | H1 2024 (Unaudited) | H1 2023 (Unaudited) | Change | | :--- | :--- | :--- | :--- | | Turnover (HKD billion) | 1.557 | 1.567 | -0.6% | | Sales Volume (tons) | 136,000 | 143,000 | -5% | | Profit Attributable to Shareholders (HKD million) | 34.06 | 16.26 | +109% | | Earnings Per Share (HKD) | 0.06 | 0.029 | +107% | | Interim Dividend Per Share (HKD) | 0.03 | 0.02 | +50% | | Gearing Ratio | 18.3% | 0.1% | +18.2 percentage points | - Affected by the sluggish Chinese economy, the Group's sales growth was limited, with turnover slightly decreasing by 0.6% year-on-year and sales volume falling by 5% year-on-year[1] - Business gross profit margins showed divergence: ink and lubricants businesses saw year-on-year increases of 2.6 and 2.8 percentage points respectively, but the coatings business was pressured by the depressed real estate market, leading to a slight 0.8 percentage point decrease in the Group's overall gross profit margin to 23.1%[1] Management Discussion and Analysis This section provides a comprehensive review of the Group's operational performance, financial position, and future outlook, as discussed by management Chairman's Report The Chairman's report highlights the Group's resilient performance amidst a challenging operating environment, stable financial health, and strategic focus on core business development and M&A opportunities - The operating environment faced multiple challenges, including Western countries' suppression of China, a slower transformation of China's economic growth model, geopolitical tensions, and an unclear recovery in the real estate market, leading to intense market competition, especially in the architectural coatings sector[3] - Despite challenges, the Group's overall business performance in the first half was close to expectations, with turnover slightly decreasing by 0.6% to HKD 1.56 billion, while profit attributable to shareholders increased to HKD 34 million[3] - The Group's financial position is sound, with the gearing ratio maintained at a low level of 18.3%. The Board resolved to declare an interim dividend of HKD 0.03 per share and initiated a share repurchase program for the first time[4] - Looking ahead to the second half, the Group will focus more on improving and developing core businesses, and leverage its experience and capital strength in fine chemicals to actively seek M&A and investment opportunities for rapid business development[5] CEO's Report The CEO's report details the Group's profit growth through cost control and strategic adjustments, analyzing divergent segment performance and outlining future growth strategies Key Business Highlights The Group's turnover and sales volume saw slight declines, but improved gross margins in some segments and stable associate contributions led to a 109% increase in profit attributable to shareholders, maintaining a solid financial position Key Business Highlights | Metric | H1 2024 | Y-o-Y Change | | :--- | :--- | :--- | | Turnover (HKD billion) | 1.56 | -0.6% | | Total Sales Volume (tons) | 136,000 | -5% | | Group Gross Profit Margin | 23.1% | -0.8 percentage points | | Profit Attributable to Shareholders (HKD million) | 34.00 | +109% | - The solvent associate business recorded stable performance growth, contributing HKD 49.4 million in profit to the Group[8] - The Group's gearing ratio remained at a relatively low level of 18.3%, indicating a solid financial position and providing flexibility for future investments in new projects[9] Segment Business Review Segment performance varied, with coatings facing losses due to real estate downturns, while inks turned profitable, lubricants maintained profit, and solvent associates provided significant returns with new capacity plans Segment Performance | Business Segment | Turnover (HKD billion) | Y-o-Y Change | Gross Profit Margin | Y-o-Y Change (percentage points) | Segment Results (HKD million) | | :--- | :--- | :--- | :--- | :--- | :--- | | Coatings | 0.731 | -6% | 25.5% | -2.6 | -10.10 (Loss) | | Inks | 0.645 | +16% | 20.0% | +2.6 | 31.20 (Profit) | | Lubricants | 0.173 | -11% | 23.6% | +2.8 | 6.90 (Profit) | - The coatings business faced significant challenges, primarily due to the depressed real estate market, and despite the Group's continuous brand promotion and channel expansion efforts, its performance was significantly impacted[10] - The ink business successfully gained market share in food packaging and expanded special ink applications in niche areas such as electronic products and flooring, achieving a turnaround to profitability[11] - Qianxin Chemical, the solvent associate company in which the Group holds a 24% stake, saw a 24% increase in sales volume in the first half, contributing HKD 49.4 million in returns to the Group. Its new plant construction in Hubei is progressing well and is expected to commence operations in the second half of 2025[13][14] Outlook The Group plans to focus on new product development and brand enhancement in core businesses, while actively seeking strategic investment opportunities for accelerated long-term growth - Key strategies for the second half include promoting new product development in inks, industrial coatings, resins, and lubricants, enhancing the 'Bauhinia' brand's recognition, and leveraging a healthy financial position to seek strategic investment opportunities[15] Liquidity and Financial Resources The Group maintains a robust financial position with a low gearing ratio and ample bank facilities, prudently managing foreign exchange risks and optimizing financing costs Financial Position | Financial Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Gearing Ratio | 18.3% | 14.0% (Year-end data) | | Total Bank Borrowings (HKD billion) | 1.186 | 1.402 | | Net Bank Borrowings (HKD billion) | 0.693 | 0.548 | | Net Cash Flow from Operating Activities (HKD million) | -91.08 | 51.76 (Prior period) | - The Group prudently managed foreign exchange risks by increasing RMB bank loans to benefit from lower interest costs in mainland China and mitigate RMB exchange rate fluctuation risks[16][19] - As of the period end, the Group secured HKD 2.616 billion in bank facilities from 18 banks, indicating ample liquidity[19] Human Resources The Group employs 2,308 staff, primarily in mainland China, and prioritizes human resource development through comprehensive training, competitive compensation, and talent retention strategies - As of June 30, 2024, the Group had 2,308 employees, with 2,240 from mainland China[20] - The Group implements a comprehensive talent management strategy, including providing training, development programs, and competitive compensation and benefits, to motivate employees and drive business development[20] Other Disclosures This section provides information on securities repurchases, corporate governance practices, and the audit committee's review of the interim financial report Securities Repurchase, Corporate Governance and Audit Committee The company confirmed no securities repurchases, compliance with corporate governance codes, and the Audit Committee's review of the unaudited interim financial report - During the review period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[21] - The Company complied with the code provisions of the HKEX Corporate Governance Code during the reporting period[22] - The Audit Committee reviewed the unaudited interim financial report for this period, which was also reviewed by the Company's auditor, Deloitte Touche Tohmatsu[23] Condensed Consolidated Financial Statements This section presents the Group's condensed consolidated financial statements, including the income statement, balance sheet, and cash flow statement, along with their accompanying notes Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The Group reported a slight 0.6% turnover decrease to HKD 1.557 billion, but a 109% increase in profit attributable to owners to HKD 34.06 million, driven by associate contributions and cost control Statement of Profit or Loss and Other Comprehensive Income | Item (HKD thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Turnover | 1,557,365 | 1,566,874 | | Gross Profit | 359,244 | 375,022 | | Operating Expenses (Selling and Administrative) | (358,527) | (399,237) | | Share of Results of Associates | 49,449 | 32,145 | | Profit Before Tax | 39,337 | 10,072 | | Profit for the Period | 33,551 | 8,895 | | Profit Attributable to Owners of the Company | 34,057 | 16,260 | Condensed Consolidated Statement of Financial Position As of June 30, 2024, total assets decreased to HKD 6.049 billion, with total liabilities at HKD 2.233 billion, while equity attributable to owners remained robust at HKD 3.793 billion Statement of Financial Position | Item (HKD thousand) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Non-current Assets | 3,727,335 | 3,765,519 | | Current Assets | 2,321,384 | 2,653,508 | | Total Assets | 6,048,719 | 6,419,027 | | Current Liabilities | 1,798,331 | 1,967,212 | | Non-current Liabilities | 434,297 | 536,713 | | Total Liabilities | 2,232,628 | 2,503,925 | | Equity Attributable to Owners of the Company | 3,792,695 | 3,926,349 | Condensed Consolidated Statement of Cash Flows Operating activities resulted in a net cash outflow of HKD 91.08 million, while investing activities generated HKD 172.09 million, leading to a period-end cash balance of HKD 431.18 million Statement of Cash Flows | Item (HKD thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (91,075) | 51,761 | | Net Cash Generated from Investing Activities | 172,089 | 969,321 | | Net Cash Used in Financing Activities | (253,242) | (977,723) | | Net Decrease in Cash and Cash Equivalents | (172,228) | 43,359 | | Cash and Cash Equivalents at Beginning of Period | 616,093 | 1,088,116 | | Cash and Cash Equivalents at End of Period | 431,177 | 1,111,688 | Notes to the Financial Statements This section details segment performance, with inks profitable and coatings at a loss, outlines the interim dividend, and describes the period's acquisition and disposal activities Segment Information Segment performance varied, with the ink segment turning profitable at HKD 31.17 million, while the coatings segment incurred a loss of HKD 10.08 million, and lubricants remained profitable Segment Results | Segment Results (HKD thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Coatings | (10,076) | 15,596 | | Inks | 31,171 | (4,012) | | Lubricants | 6,949 | 5,726 | | Property | 101 | (1,391) | Dividends The Board declared an interim dividend of HKD 0.03 per share for H1 2024, totaling approximately HKD 16.99 million, an increase from the prior year - The Board resolved to declare an interim dividend of HKD 0.03 per share (prior period: HKD 0.02 per share), payable on or around October 9, 2024[47] Acquisition and Disposal The Group acquired a 59.91% stake in Hubei Huima via debt-to-equity conversion, generating goodwill, and disposed of a 61% stake in Hebei Damai, incurring a loss - In January 2024, the Group acquired a 59.91% equity stake in Hubei Huima through a debt-to-equity swap, resulting in goodwill of HKD 3.98 million[56][57] - In January 2024, the Group disposed of a 61% equity stake in Hebei Damai, recording a loss on disposal of HKD 1.036 million[59][60] Dividends and Other Announcements This section provides details on the interim dividend declaration and related arrangements, along with other significant announcements Interim Dividend and Arrangements The company announced an interim dividend of HKD 0.03 per share, payable around October 9, 2024, with share transfer registration suspended from September 6-11 for eligibility determination - The Board resolved to declare an interim dividend of HKD 0.03 per share (prior period: HKD 0.02 per share), payable on or around October 9, 2024[62] - To determine eligibility for the interim dividend, the company will suspend registration of the register of members from September 6 to September 11, 2024 (both dates inclusive)[63]