德信服务集团(02215) - 2024 - 中期业绩

Financial Summary and Performance Overview Financial Summary Dexin Services saw modest revenue growth in H1 2024, but profitability significantly declined with double-digit drops in key metrics and no interim dividend declared Key Performance Indicators for H1 2024 | Indicator | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue (RMB million) | Approx. 473.2 | Approx. 458.0 | +3.3% | | Gross Profit (RMB million) | Approx. 101.5 | Approx. 129.2 | -21.4% | | Profit for the Period (RMB million) | Approx. 42.5 | Approx. 63.3 | -32.8% | | Gross Margin (%) | 21.5% | 28.2% | -6.7 ppt | | Basic Earnings Per Share (RMB yuan) | 0.045 | 0.065 | -30.8% | | GFA Under Management (million sq.m.) | 39.6 | 36.2 | +9.2% | | Contracted GFA (million sq.m.) | 44.9 | 44.2 | +1.5% | | Interim Dividend | Not Recommended | N/A | - | Condensed Consolidated Financial Statements Financial statements show revenue growth but declining profitability due to cost pressures, while asset and liability structures remain stable Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Revenue grew 3.3% to RMB 473 million, but increased cost of sales and impairment losses led to a 21.4% drop in gross profit and a 33.1% decline in net profit attributable to owners Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Item (RMB thousand) | 2024 (Unaudited) | 2023 (Unaudited) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 473,228 | 458,022 | +3.3% | | Cost of Sales | (371,697) | (328,847) | +13.0% | | Gross Profit | 101,531 | 129,175 | -21.4% | | Administrative Expenses | (39,748) | (50,125) | -20.7% | | Impairment Loss on Trade and Other Receivables | (10,964) | (10,156) | +8.0% | | Operating Profit | 46,783 | 69,212 | -32.4% | | Profit for the Period | 42,484 | 63,255 | -32.8% | | Profit Attributable to Owners of the Company | 42,169 | 63,015 | -33.1% | | Basic Earnings Per Share (RMB yuan) | 0.045 | 0.065 | -30.8% | Condensed Consolidated Statement of Financial Position As of June 30, 2024, total assets increased to RMB 1.512 billion, driven by receivables, with total liabilities rising to RMB 747 million, maintaining a healthy 2.0x current ratio Summary of Condensed Consolidated Statement of Financial Position | Item (RMB thousand) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 1,511,957 | 1,424,649 | +6.1% | | Current Assets | 1,481,015 | 1,395,350 | +6.1% | | Total Liabilities | 746,533 | 665,616 | +12.2% | | Current Liabilities | 736,510 | 655,599 | +12.3% | | Net Assets | 765,424 | 759,033 | +0.8% | | Equity Attributable to Owners of the Company | 749,659 | 742,766 | +0.9% | Chairman's Statement and Management Discussion and Analysis Chairman's Statement The Chairman highlighted the Group's strategic shift towards high-quality development, focusing on product and service capabilities, independent expansion in the Yangtze River Delta, operational efficiency, customer-centricity, and innovation - Company strategy shifts towards high-quality development, emphasizing product and service capabilities over mere scale expansion[27] - Maintaining independent development, deepening presence in the Yangtze River Delta, and focusing on non-residential sectors, exploring cooperation with local SOEs and leading enterprises[28] - Implementing lean operations, adhering to the principle of "cash before profit, profit before scale," and enhancing per capita efficiency through organizational restructuring[29] - Continuously innovating services, upgrading high-end commercial service brand "World Union Property," venturing into new energy, and expanding diversified community services[31] Management Discussion and Analysis Management reviewed H1 performance, highlighting property management growth offset by declines in non-owner and community value-added services due to market downturns, impacting profitability despite controlled administrative expenses and stable financials Financial and Business Review H1 total revenue grew 3.3% but with significant segment divergence, leading to a gross margin drop from 28.2% to 21.5% and a 32.8% decline in net profit despite controlled administrative expenses Revenue Breakdown by Business Segment (For the six months ended June 30) | Business Segment | 2024 Revenue (RMB thousand) | Revenue Share (%) | 2023 Revenue (RMB thousand) | Revenue Share (%) | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Property Management Services | 413,438 | 87.4% | 341,844 | 74.6% | +20.9% | | Non-Owner Value-Added Services | 19,835 | 4.2% | 59,801 | 13.1% | -66.8% | | Community Value-Added Services | 39,955 | 8.4% | 56,377 | 12.3% | -29.1% | | Total | 473,228 | 100.0% | 458,022 | 100.0% | +3.3% | Gross Margin by Business Segment (For the six months ended June 30) | Business Segment | 2024 Gross Margin (%) | 2023 Gross Margin (%) | Change (ppt) | | :--- | :--- | :--- | :--- | | Property Management Services | 19.4% | 25.1% | -5.7 | | Non-Owner Value-Added Services | 19.2% | 35.1% | -15.9 | | Community Value-Added Services | 44.0% | 39.5% | +4.5 | | Overall Gross Margin | 21.5% | 28.2% | -6.7 | - Non-owner value-added services revenue and gross margin significantly declined, primarily due to the ongoing downturn in the real estate industry, leading to a sharp drop in demand from developer partners and increased service costs for the company[42][49] - Administrative expenses decreased by RMB 10.4 million year-on-year, mainly due to organizational restructuring and optimized staffing[53] - Impairment loss provisions for trade and other receivables increased to RMB 11.0 million due to prudence and credit risk in the real estate sector[54] Liquidity and Capital Resources The Group maintains a robust financial position with ample liquidity, evidenced by RMB 202 million in cash and equivalents, a 2.0x current ratio, and a low 0.04 capital gearing ratio Key Liquidity and Capital Indicators | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and Cash Equivalents (RMB million) | 202.1 | 229.7 | | Current Ratio (x) | 2.0 | 2.1 | | Total Borrowings (RMB million) | 27.0 | 27.0 | | Capital Gearing Ratio (x) | 0.04 | 0.04 | Significant Investments and Future Plans No new significant investments were made, and a major connected transaction announced in August 2023 remains uncompleted due to a cancelled shareholder meeting, while the company plans to use IPO proceeds for future property management acquisitions - A significant connected transaction announced in August 2023 to acquire target parking spaces and hotel equity remains uncompleted due to Dexin China's cancellation of the relevant shareholder meeting, introducing uncertainty[65][66] - The Group plans to use a portion of the net IPO proceeds for acquiring or investing in other property management companies to expand business scale and market share[67] Employees and Remuneration Policy As of June 30, 2024, the Group's employee count decreased to 2,703, reflecting cost optimization, with total staff costs of RMB 145.3 million for H1, supported by performance-linked remuneration and training - As of June 30, 2024, the Group's employee count was 2,703, a decrease of 239 from end-2023[69] - Total staff costs for H1 2024 were RMB 145.3 million[69] Other Information Use of Proceeds from Global Offering The company updated IPO proceeds usage, reallocating funds for a secured loan to enhance efficiency, with HKD 143.4 million remaining unutilized as of June 30, 2024, expected to be fully deployed by December 2024 - In 2022, the company reallocated part of its IPO proceeds, using HKD 342.9 million (approx. RMB 315 million) to provide a secured loan to an independent third party to enhance returns on idle funds[72] Use of Proceeds and Application (As of June 30, 2024) | Purpose | Revised Allocation (HKD million) | Utilized During Reporting Period (HKD million) | Unutilized Balance (HKD million) | | :--- | :--- | :--- | :--- | | 1. Business Expansion | 83.7 | 1.3 | 82.4 | | 2. Expansion of Service Offerings | 7.1 | 0.0 | 0.0 | | 3. Investment in Information Technology | 70.2 | 3.1 | 57.4 | | 4. Human Resources | 12.7 | 4.2 | 3.6 | | 5. Working Capital | 7.5 | 0.0 | 0.0 | | 6. Loan to Borrower | 342.9 | 0.0 | 0.0 | | Total | 524.1 | 8.6 | 143.4 | Share Repurchases The company actively repurchased and cancelled 19,427,000 shares for approximately HKD 38.51 million during the period, enhancing earnings per share and shareholder value H1 2024 Share Repurchase Details | Month of Transaction | Total Shares Repurchased | Highest Price Per Share (HKD) | Lowest Price Per Share (HKD) | Total Consideration Paid (HKD) | | :--- | :--- | :--- | :--- | :--- | | March | 3,781,000 | 2.00 | 2.00 | 7,562,000 | | April | 5,940,000 | 2.00 | 1.99 | 11,878,970 | | May | 9,706,000 | 2.00 | 1.81 | 19,069,110 | | Total | 19,427,000 | - | - | 38,510,080 | Corporate Governance and Compliance The company confirmed compliance with all applicable Corporate Governance Code provisions, with directors' securities transactions adhering to standards, and the Audit Committee reviewing the unaudited financial statements - The company complied with all applicable code provisions of the Corporate Governance Code for the six months ended June 30, 2024[77] - The company's Audit Committee reviewed the Group's unaudited condensed consolidated interim results[79]