力丰(集团)(00387) - 2024 - 中期业绩

Performance Highlights Financial Highlights In the first half of 2024, despite a 37.7% year-on-year decrease in revenue to HKD 255.25 million, profit attributable to owners of the company increased by 53.4% to HKD 8.43 million, driven by a shift to commission-based revenue, a significant gross profit margin increase from 16.6% to 26.3%, and an 86.7% rise in operating profit from trading business, with basic earnings per share growing 53.1% to 3.66 HK cents Key Financial Indicators for H1 2024 | Indicator | H1 2024 (HKD Thousands) | H1 2023 (HKD Thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 255,249 | 409,610 | -37.7% | | Gross Profit | 67,246 | 67,887 | -0.9% | | Gross Profit Margin | 26.3% | 16.6% | +9.7pp | | Operating Profit | 19,130 | 10,248 | +86.7% | | Profit Attributable to Owners of the Company | 8,430 | 5,496 | +53.4% | | Basic Earnings Per Share | 3.66 HK cents | 2.39 HK cents | +53.1% | - Revenue decreased but gross profit remained largely stable, primarily due to a shift in some new businesses to a commission-based revenue model, recognizing only net income as revenue, which significantly boosted the gross profit margin[3] Interim Dividend The Board resolved to declare an interim dividend of 3 HK cents per share for the six months ended June 30, 2024, representing a significant 200% increase from 1 HK cent per share in the prior year period - An interim dividend of 3 HK cents per share was declared, a 200% year-on-year increase (H1 2023: 1 HK cent)[2] - The dividend will be distributed on or about September 27, 2024, to shareholders on record as of September 10, 2024[2] Financial Performance Analysis Revenue and Gross Profit Revenue for the first half of 2024 was HKD 255.25 million, a 37.7% year-on-year decrease, yet gross profit remained stable at HKD 67.25 million, with the gross profit margin significantly improving from 16.6% to 26.3% due to a shift towards commission-based revenue Revenue and Gross Profit Performance | Indicator | H1 2024 (HKD Thousands) | H1 2023 (HKD Thousands) | | :--- | :--- | :--- | | Revenue | 255,249 | 409,610 | | Gross Profit | 67,246 | 67,887 | | Gross Profit Margin | 26.3% | 16.6% | Other Income and Gains Total other income and gains significantly increased by 272.1% year-on-year to HKD 8.95 million, primarily due to the recognition of a HKD 6.4 million fair value gain on financial assets, which was absent in the prior year period - Total other income and gains amounted to HKD 8.948 million, representing a 272.1% year-on-year increase[4] - The increase was primarily driven by a HKD 6.4 million fair value gain on a financial asset at fair value through profit or loss[4] Operating Expenses Operating expenses were well-controlled, with selling and distribution costs decreasing by 11.5% year-on-year to HKD 9.38 million, while administrative expenses remained largely stable at HKD 49.57 million Operating Expense Details | Item | H1 2024 (HKD Thousands) | H1 2023 (HKD Thousands) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Selling and Distribution Costs | 9,383 | 10,607 | -11.5% | | Administrative Expenses | 49,570 | 49,437 | +0.3% | Finance Costs - Net Net finance costs decreased by 11.9% year-on-year to HKD 4.79 million, primarily due to a 96.6% increase in finance income and a 4.2% decrease in finance costs, while the Group's net gearing ratio improved from 28.7% to 19.5% - Net finance costs amounted to HKD 4.79 million, a 11.9% year-on-year decrease[6] - The net gearing ratio decreased from 28.7% at the end of 2023 to 19.5% at the end of June 2024[6] Share of Results of Associates Share of results of associates shifted from a profit of HKD 0.95 million in the prior year to a loss of HKD 5.51 million, primarily due to losses recorded by OPS-Ingersoll Funkenerosion GmbH and Prima Power Sheet Metal Machinery (Suzhou) Co., Ltd - A post-tax loss of HKD 5.511 million from share of results of associates was recorded, compared to a profit of HKD 0.953 million in the prior year period[7] Condensed Consolidated Interim Financial Statements Condensed Consolidated Interim Statement of Profit or Loss This section presents the unaudited condensed consolidated interim statement of profit or loss for the six months ended June 30, 2024, detailing revenue, costs, various gains and losses, and final profit Condensed Consolidated Interim Statement of Profit or Loss (Unaudited) | Item (HKD Thousands) | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | | :--- | :--- | :--- | | Revenue | 255,249 | 409,610 | | Gross Profit | 67,246 | 67,887 | | Operating Profit | 19,130 | 10,248 | | Profit Before Income Tax | 8,829 | 5,767 | | Profit for the Period | 8,428 | 5,487 | | Profit Attributable to Owners of the Company | 8,430 | 5,496 | Condensed Consolidated Interim Statement of Comprehensive Income This section presents the unaudited condensed consolidated interim statement of comprehensive income for the six months ended June 30, 2024, reflecting changes in profit for the period and other comprehensive income, such as revaluation gains and currency translation differences Condensed Consolidated Interim Statement of Comprehensive Income (Unaudited) | Item (HKD Thousands) | For the six months ended June 30, 2024 | For the six months ended June 30, 2023 | | :--- | :--- | :--- | | Profit for the Period | 8,428 | 5,487 | | Other Comprehensive Loss After Tax | (4,556) | (4,716) | | Total Comprehensive Income for the Period | 3,872 | 771 | | Total Comprehensive Income Attributable to Owners of the Company | 3,874 | 564 | Condensed Consolidated Interim Statement of Financial Position This section presents the unaudited condensed consolidated interim statement of financial position as of June 30, 2024, showcasing the company's assets, liabilities, and equity at the end of the reporting period Statement of Financial Position Summary | Item (HKD Thousands) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Non-current Assets | 409,807 | 464,369 | | Current Assets | 362,747 | 356,414 | | Total Assets | 772,554 | 820,783 | | Current Liabilities | 268,547 | 312,392 | | Non-current Liabilities | 30,046 | 30,249 | | Total Liabilities | 298,593 | 342,641 | | Total Equity | 473,961 | 478,142 | Management Discussion and Analysis Business Review Despite a weak overall economic outlook in China with manufacturing PMI mostly in contraction, the Group's business continued to benefit from the new energy vehicle manufacturing sector, with year-on-year improvements in both machine tool and electronic equipment businesses, a significant increase in service income, and satisfactory improvement in trading business with increased total orders in the first half - Despite challenges in China's manufacturing sector, the Group's business benefited from the new energy vehicle manufacturing segment, with improvements in both machine tool and electronic equipment businesses[40] - Total orders for the first half of 2024 amounted to HKD 480 million, an increase from HKD 408 million in the prior year period[40] Investment Review Affected by weak European economy and reduced orders from China, associates OPS Ingersoll Funkenerosion GmbH and Prima Power Sheet Metal Machinery (Suzhou) Co., Ltd. both recorded losses in the first half, though the former shows positive order trends and the latter's order situation is expected to improve within the year - Associate OPS Ingersoll Funkenerosion GmbH continued to record significant losses, but its order volume shows a positive trend[41] - Prima Power Sheet Metal Machinery (Suzhou) Co., Ltd. recorded a loss due to decreased sales, but order volume is expected to improve in the coming months[41] Liquidity and Financial Resources The Group's financial position is robust, with the net gearing ratio significantly decreasing from 28.7% at the end of 2023 to 19.5%, primarily due to a reduction in short-term borrowings, while the company manages accounts receivable risk through strict credit control and deems impairment provisions adequate Key Financial Resources Indicators (June 30, 2024) | Indicator | June 30, 2024 (HKD Thousands) | December 31, 2023 (HKD Thousands) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 32,516 | 29,795 | | Inventories | 72,418 | 80,209 | | Accounts and Bills Receivable | 169,870 | 209,795 | | Short-term Borrowings | 130,314 | 172,146 | | Net Gearing Ratio | 19.5% | 28.7% | - The Group primarily funds its operations through internal resources and bank financing, with total bank facilities of approximately HKD 302 million, of which approximately HKD 143 million has been utilized[43] Future Plans and Prospects The Group maintains a cautiously optimistic outlook for the second half, aiming to capitalize on opportunities in 'new quality productive forces' and high-end manufacturing, particularly in electric vehicles, lithium batteries, photovoltaic products ('new three'), smartphones, and electronic equipment, planning to drive growth through new products and expanded service teams, expecting increased orders in H2 - Business strategy will focus on high-end manufacturing, especially electric vehicles, lithium batteries, photovoltaic products ('new three'), and the smartphone industry, which are expected to generate significant business opportunities[44] - Plans include expanding the engineering team, enhancing parts delivery, and strengthening technical support to drive business advancement through value-added services[44] - A cautiously optimistic outlook is maintained for the second half, with expected order volume growth, and if associate businesses continue to improve, overall financial performance in 2024 may surpass that of 2023[44] Other Disclosures Employees As of June 30, 2024, the Group employed 231 staff, a slight increase from the end of 2023, with employees primarily located in mainland China (179) and Hong Kong (40), and the Group offers competitive remuneration packages - As of June 30, 2024, the Group's total number of employees was 231, with 179 in mainland China and 40 in Hong Kong[45] Exchange Rate Risk Management The Group's revenue and purchases are largely denominated in foreign currencies, exposing it to exchange rate risk, which is mitigated by using foreign currency income to pay overseas suppliers and entering into foreign currency forward contracts when necessary - As of June 30, 2024, the Group held outstanding foreign currency forward contracts to purchase JPY 175 million for HKD 9.418 million[48] Corporate Governance The company complied with most provisions of the Corporate Governance Code during the reporting period, with one deviation: the Chairman and Group Chief Executive Officer positions are held by the same individual, Mr. Li Sau Leung, though the Board believes the current structure ensures a balance of power and accountability - The Corporate Governance Code was complied with during the reporting period, except for Code Provision C.2.1[50] - The deviation is that the roles of Chairman and Group Chief Executive Officer are held by the same person, but the Board believes the current operational model ensures a balance of power and accountability[50]