周黑鸭(01458) - 2021 - 中期财报

Corporate Information This section provides essential corporate details, including board composition, key executives, auditors, stock code, and principal place of business BOARD OF DIRECTORS AND COMMITTEES This chapter lists the company's board members and the composition and chairpersons of its specialized committees, including audit, nomination, remuneration, and strategic development - The company's executive directors include Chairman Mr. Zhou Fuyu, Chief Executive Officer Mr. Zhang Yuchen, and Mr. Wen Yong[3] - The company has established Audit, Nomination, Remuneration, and Strategic Development Committees, with clearly defined chairpersons and members for each[3][4] Other Corporate Information This chapter provides details on the company's company secretary, authorized representatives, auditor (Ernst & Young), website, stock code (1458), principal place of business, and major banks - The company's auditor is Ernst & Young[4] - The company's stock code is 1458, with its headquarters located in Wuhan, Hubei Province, China[4][5] Business Review and Outlook This section reviews the company's operational performance, market conditions, and strategic initiatives, along with future business prospects MARKET OVERVIEW In the first half of 2021, China's macro economy experienced a slow K-shaped recovery amid normalized pandemic conditions, impacting offline consumption and accelerating online-offline integration - The macro economy showed a slow K-shaped recovery, with passenger traffic at transportation hubs under pressure, adversely affecting the offline consumer sector, especially during the Spring Festival[7][10] - The pandemic accelerated the integration of online and offline consumption, with online consumption scale and stickiness continuously growing, blurring the lines between traditional and online retail[8][9] - Consumer differentiation and demand stratification continue to create structural growth opportunities, requiring companies to adapt to changing consumer habits and preferences to enhance core competitiveness[9] OVERALL BUSINESS AND FINANCIAL PERFORMANCE The company significantly expanded its store network by 66.1% to 2,270 stores by June 30, 2021, with Central China being the largest contributor to both store count and revenue Store Count by Region | Region | June 30, 2021 Store Count | Proportion | June 30, 2020 Store Count | Proportion | | :--- | :--- | :--- | :--- | :--- | | Central China | 1,062 | 46.8% | 583 | 42.6% | | South China | 417 | 18.4% | 272 | 19.9% | | East China | 327 | 14.4% | 221 | 16.2% | | North China | 266 | 11.7% | 178 | 13.0% | | West China | 198 | 8.7% | 113 | 8.3% | | Total | 2,270 | 100.0% | 1,367 | 100.0% | Revenue by Region (RMB in thousands) | Region | H1 2021 Revenue (RMB in thousands) | Proportion | H1 2020 Revenue (RMB in thousands) | Proportion | | :--- | :--- | :--- | :--- | :--- | | Central China | 664,850 | 58.5% | 315,225 | 50.5% | | South China | 183,648 | 16.2% | 127,479 | 20.4% | | East China | 118,618 | 10.4% | 79,083 | 12.6% | | North China | 99,271 | 8.7% | 73,763 | 11.8% | | West China | 69,758 | 6.2% | 29,629 | 4.7% | | Total | 1,136,145 | 100.0% | 625,179 | 100.0% | Continuous Implementation of Upgraded Six Development Strategies The company steadfastly advanced its six development strategies, achieving strong franchise business growth, synchronized online-offline channel efforts, significant new product launches, and supply chain optimization - Despite the adverse impact of significantly reduced traffic during the Spring Festival, the company achieved quarter-over-quarter operational improvement and enhanced profitability by steadfastly advancing its six development strategies[19][21] Upgrade of Business Model The company focused on developing its franchise business, establishing a retail development platform and refining recruitment and incentive mechanisms, leading to 511 new franchise stores in H1 - The company established a retail business development platform to centrally manage six major regions nationwide, empowering franchise capability building[22][23] - In the first half of 2021, 511 new franchise stores were opened, entering 45 new cities[25] - As of June 30, 2021, over 38,000 franchise applications were received, reflecting strong market recognition for the brand[25] Omni-channel Coverage The company accelerated online and offline omni-channel coverage, with internet O&O business revenue growing by 29.5%, and actively expanded into live-streaming e-commerce and community fresh retail - For the six months ended June 30, 2021, revenue from internet O&O business (online and self-operated delivery) increased by 29.5% year-on-year[26][27] - The company actively expanded into live-streaming platforms like Taobao, Douyin, and Kuaishou, and developed new proximity retail channels, establishing strategic partnerships with platforms such as Pupu Supermarket, Dingdong Maicai, and Hema Fresh[28][29] - Delivery business, as an incremental store business, played a significant role in enhancing brand exposure, acquiring new customers, and driving revenue[30][31] Product Diversification The company accelerated product innovation, launching 16 new products in H1, including "Boneless Duck Feet" and "Tiger Skin Chicken Feet," contributing over RMB 250 million to revenue - In the first half of 2021, 16 key product series were successfully launched, including popular items like 'Boneless Duck Feet' and 'Tiger Skin Chicken Feet,' and new flavors such as 'Five Spice' and 'Treasured Mountain Pepper'[33][34] - New products contributed over RMB 250 million in revenue, accounting for nearly 20% of total revenue in the second quarter of 2021[33][34] Integrated Branding and Marketing The company maintained its youthful brand positioning, launched a new slogan, increased marketing investments in non-transportation hub markets, and enhanced brand value through platform collaborations and movie sponsorships - Adopted the new slogan 'Tasteless? Eat Zhou Hei Ya' to strengthen brand image and extend from physical to psychological scenarios[35][36] - Increased marketing investment across the entire business chain, including non-window markets, key franchise markets, and delivery services, based on the AIPL model, and deepened cooperation with platforms like Xiaohongshu, Douyin, and Bilibili[36][37][38] - In the first half of 2021, the company was once again selected as one of the 'China's 500 Most Valuable Brands' by World Brand Lab[38] Supply Chain Optimization The company advanced its integrated supply chain strategy, optimizing costs and efficiency through a dedicated center, completing five production centers, and achieving 24-hour delivery to 80% of stores - The company has four highly automated production centers in North, East, South, and Central China, with the West China production center expected to be operational in 2022[40] - Adopted lean production management and established a monthly OCM (Production Cost Management) review mechanism to continuously reduce costs and enhance efficiency[41][42] - Logistics and distribution efficiency improved, achieving 80% of stores delivered within 24 hours and 100% within 48 hours, effectively extending product shelf life[42][43] Organizational Capacity Enhancement The company enhanced organizational capabilities by optimizing structure, attracting talent, and implementing diverse incentive plans, including a second restricted share unit scheme for 160 selected individuals - Integrated and established the 'Retail Business Development Center' and 'Integrated Marketing Center,' optimizing R&D and marketing organizational structures[46][48] - In the first half of 2021, the second phase of the equity incentive plan was launched, granting a total of approximately 13,561,382 restricted share units to 160 selected individuals[47][48] INDUSTRY AND BUSINESS OUTLOOK Despite ongoing challenges in the retail sector, the company remains optimistic about industry prospects and plans to deepen its six development strategies in the second half of 2021, including accelerating franchise expansion and digital transformation - Facing the challenges and opportunities of normalized pandemic conditions, the company will continue to densify its store network, expand internet O&O channels, and strategically deploy in community consumption scenarios[50][51] - In the second half of 2021, the company will continue to implement its six development strategies, including: * Accelerating franchise expansion to enhance store coverage * Deepening digital transformation to build a data middle platform * Accelerating product innovation to support diversified channel sales * Increasing marketing investment across the entire business chain to improve brand marketing efficiency * Integrating and upgrading the supply chain management system for cost reduction and efficiency improvement * Continuously strengthening incentives to boost organizational vitality[53][54] Management Discussion and Analysis This section provides a detailed analysis of the company's financial performance, liquidity, capital resources, and operational metrics for the reporting period Financial Performance Review In H1 2021, the company achieved a strong rebound, with total revenue increasing by 60.8% to RMB 1.453 billion, gross margin improving to 59.0%, and a net profit of RMB 230 million, reversing a prior-year loss Financial Performance Summary (RMB in thousands) | Item | H1 2021 (Unaudited) | H1 2020 (Unaudited) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 1,452,972 | 903,470 | +60.8% | | Gross Profit | 857,207 | 492,928 | +73.9% | | Profit/(Loss) Before Tax | 318,638 | (51,531) | Turned profitable | | Profit/(Loss) for the Period | 229,556 | (42,194) | Turned profitable | | Basic Earnings/(Loss) Per Share (RMB) | 0.10 | (0.02) | +600.0% | | Gross Margin | 59.0% | 54.6% | +4.4 p.p. | | Net Profit Margin | 15.8% | -4.7% | +20.5 p.p. | - The increase in total revenue was primarily due to the overall control of the pandemic in China, a gradual recovery in consumer demand, and the company's effective implementation of its six development strategies, leading to increased sales revenue across all channels, particularly a 1,385.0% year-on-year increase in sales volume from franchising[57] - The improvement in gross margin was attributable to revenue growth and a series of optimization measures resulting from the integrated supply chain strategy[57] Liquidity and Capital Resources The company funds operations through cash from business activities, IPO proceeds, and convertible bond issuance, with net assets of approximately RMB 4.178 billion and cash and bank balances of RMB 2.416 billion as of June 30, 2021 - In November 2020, the company completed the issuance of HKD 1.55 billion in principal amount of 1% convertible bonds due 2025, with net proceeds of approximately HKD 1.52 billion[65][68] Capital Structure (RMB in millions) | Capital Structure | June 30, 2021 (RMB in millions) | December 31, 2020 (RMB in millions) | | :--- | :--- | :--- | | Net Assets | 4,178.3 | 4,100.9 | | Cash and Bank Balances | 2,415.8 | 1,583.8 | Use of Proceeds from the IPO This chapter details the use of proceeds from the IPO and 2025 convertible bonds; as of June 30, 2021, RMB 683 million from the IPO and approximately HKD 1.52 billion from the 2025 bonds remained unutilized Use of IPO Proceeds (RMB in millions) | Use of IPO Proceeds | Budget (RMB in millions) | Utilized as of June 30, 2021 (RMB in millions) | Remaining Balance (RMB in millions) | | :--- | :--- | :--- | :--- | | Construction and Improvement of Processing Facilities | 1,258.3 | 1,006.4 | 251.9 | | Store Network Development | 167.8 | 140.0 | 27.8 | | Brand Image Activities | 394.3 | 264.8 | 129.5 | | R&D Improvement | 45.2 | 38.6 | 6.6 | | Total (Partial Listing) | 2,452.2 | 1,769.3 | 682.9 | - As of June 30, 2021, the net proceeds of approximately HKD 1.52 billion from the issuance of 2025 convertible bonds remained unutilized and were placed in short-term deposits and money market instruments[77][79] Indebtedness and Turnover Ratios As of June 30, 2021, the group's total bank borrowings were RMB 110 million, with the debt-to-asset ratio increasing to 38.4% due to convertible bond issuance, while operational efficiency indicators improved - Due to the issuance of convertible bonds in November 2020, the Group's debt-to-asset ratio (total liabilities/total assets) increased from 25.9% as of June 30, 2020, to 38.4% as of June 30, 2021[78] Turnover Ratios | Turnover Ratios | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Average Inventory Turnover Days | 82.6 Days | 163.7 Days | | Average Trade Receivables Turnover Days | 8.5 Days | 7.0 Days | | Average Trade Payables Turnover Days | 27.5 Days | 41.2 Days | Employee and Other Operational Data As of June 30, 2021, the group had 4,111 employees, with total labor costs of RMB 222 million, representing 15.3% of total revenue, and the top five duck suppliers accounted for 20.0% of total procurement costs - As of June 30, 2021, the Group had 4,111 employees, with total labor costs of RMB 222.3 million, accounting for 15.3% of total revenue[93][94][97] - In the first half of the year, procurement from the largest duck supplier accounted for 6.9% of total procurement costs, while the top five duck suppliers collectively accounted for 20.0%[95][98] Other Information This section covers additional disclosures, including interests of directors, chief executives, and major shareholders, the restricted share unit scheme, and corporate governance compliance DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND MAJOR SHAREHOLDERS' HOLDINGS This chapter discloses the shareholdings of directors, chief executives, and major shareholders, with Chairman Mr. Zhou Fuyu holding approximately 56.75% of the company's shares through his spouse and trust - Chairman Mr. Zhou Fuyu is deemed to hold interests in 1,352,417,440 shares, representing approximately 56.75% of the total share capital, primarily through his spouse Ms. Tang Jianfang and family trust[103][104][105] - Major shareholder Ms. Tang Jianfang collectively holds 56.75% interest in the company through personal holdings, controlled corporations, and family trusts[110][111] Restricted Share Unit Scheme and Dividends The company adopted a Restricted Share Unit Scheme in 2018 to incentivize employees, granting 13,561,382 RSUs to 160 selected individuals, and the board resolved not to declare an interim dividend for H1 2021 - As of the reporting date, 160 selected individuals were granted restricted share units representing 13,561,382 shares under the RSU scheme[89][91] - The Board resolved not to declare any interim dividend for the six months ended June 30, 2021[117][122] COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE The company complied with the applicable code provisions of the Corporate Governance Code in H1 2021, and the Audit Committee reviewed and discussed the interim results report - During the reporting period, the company complied with the applicable provisions of the Corporate Governance Code[114][119] - The Audit Committee, comprising three independent non-executive directors, has reviewed this interim report[116][121] Interim Condensed Consolidated Financial Statements This section presents the company's unaudited interim condensed consolidated financial statements, including the statement of profit or loss, financial position, cash flows, and accompanying notes Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the company's revenue, costs, expenses, and profit for H1 2021, showing total revenue of RMB 1.453 billion and a net profit of RMB 230 million, reversing a loss Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (RMB in thousands) | Item (RMB in thousands) | H1 2021 (Unaudited) | H1 2020 (Unaudited) | | :--- | :--- | :--- | | Revenue | 1,452,972 | 903,470 | | Cost of Sales | (595,765) | (410,542) | | Gross Profit | 857,207 | 492,928 | | Other Income and Gains, Net | 92,745 | 21,600 | | Selling and Distribution Expenses | (500,145) | (461,507) | | Administrative Expenses | (120,302) | (81,310) | | Profit/(Loss) Before Tax | 318,638 | (51,531) | | Income Tax Expense | (89,082) | 9,337 | | Profit/(Loss) for the Period | 229,556 | (42,194) | | Basic Earnings Per Share (RMB) | 0.10 | (0.02) | Interim Condensed Consolidated Statement of Financial Position This statement outlines the company's assets, liabilities, and equity as of June 30, 2021, with total assets of RMB 6.786 billion, total liabilities of RMB 2.608 billion, and net assets of RMB 4.178 billion Interim Condensed Consolidated Statement of Financial Position (RMB in thousands) | Item (RMB in thousands) | June 30, 2021 (Unaudited) | December 31, 2020 (Audited) | | :--- | :--- | :--- | | Total Non-current Assets | 2,649,601 | 2,590,676 | | Total Current Assets | 4,136,686 | 4,324,215 | | Total Assets | 6,786,287 | 6,914,891 | | Total Current Liabilities | 1,024,919 | 1,261,483 | | Total Non-current Liabilities | 1,583,104 | 1,552,555 | | Total Liabilities | 2,608,023 | 2,814,038 | | Net Assets | 4,178,264 | 4,100,853 | | Total Equity | 4,178,264 | 4,100,853 | Interim Condensed Consolidated Statement of Cash Flows This statement reflects the company's cash inflows and outflows for H1, with net cash from operating activities of RMB 322 million, net cash from investing activities of RMB 26 million, and net cash used in financing activities of RMB 225 million Interim Condensed Consolidated Statement of Cash Flows (RMB in thousands) | Item (RMB in thousands) | H1 2021 (Unaudited) | H1 2020 (Unaudited) | | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 322,338 | 60,025 | | Net Cash Flows from Investing Activities | 25,765 | 222,735 | | Net Cash Flows Used in Financing Activities | (224,767) | (129,037) | | Net Increase in Cash and Cash Equivalents | 123,336 | 153,723 | | Cash and Cash Equivalents at Beginning of Period | 271,401 | 190,305 | | Cash and Cash Equivalents at End of Period | 380,903 | 358,390 | Notes to the Interim Condensed Consolidated Financial Statements These notes provide detailed explanations and supplementary information for the financial statements, including accounting policies, segment information, revenue breakdown, asset and liability details, and related party transactions - The company primarily engages in the production, marketing, and retail of braised duck leisure products, with all revenue and most non-current assets located in mainland China, resulting in only one reportable segment[141][157][158] Revenue Breakdown (RMB in thousands) | Revenue Breakdown (RMB in thousands) | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Modified Atmosphere Packaging Products | 1,267,331 | 781,802 | | Vacuum Packaging Products | 159,891 | 115,630 | | Retail Store Franchise Fees | 11,365 | 1,941 | | Other Products | 14,385 | 4,097 | | Total | 1,452,972 | 903,470 | - On November 5, 2020, the company issued HKD 1.55 billion in principal amount of 1% convertible bonds due 2025; as of June 30, 2021, the carrying amount of these bonds was RMB 1.32 billion[229][231]