丽年国际(09918) - 2020 - 中期财报

Company Information This report provides an overview of Luen Thai International Holdings Limited (Stock Code: 9918), detailing its board members, committee structures, principal bankers, and legal advisors, following its listing on the Main Board of the Hong Kong Stock Exchange on January 10, 2020 - This report provides an overview of Luen Thai International Holdings Limited (Stock Code: 9918), detailing its board members, committee structures, principal bankers, and legal advisors, following its listing on the Main Board of the Hong Kong Stock Exchange on January 10, 2020[3][6][29] Financial Statements Condensed Consolidated Statement of Comprehensive Loss/Income For the six months ended June 30, 2020, the company turned from profit to loss, with revenue significantly decreasing by 46.3% to HK$283 million and gross profit falling by 63.9% to HK$44.24 million, resulting in a loss attributable to equity holders of HK$22.43 million compared to a profit of HK$18.45 million in the prior period 2020 Half-Year Performance Summary (HK$ Thousand) | Indicator | 2020 H1 (Unaudited) | 2019 H1 (Audited) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 283,136 | 527,594 | -46.3% | | Gross Profit | 44,243 | 122,688 | -63.9% | | Operating (Loss)/Profit | (19,102) | 33,197 | Turned from profit to loss | | (Loss)/Profit for the Period | (22,425) | 18,449 | Turned from profit to loss | | Basic (Loss)/Earnings Per Share (HK cents) | (1.1) | 1.2 | Turned from profit to loss | Condensed Consolidated Statement of Financial Position As of June 30, 2020, the company's total assets increased by 7.0% to HK$654 million from the end of 2019, while total equity significantly grew by 110.5% to HK$110 million primarily due to IPO proceeds, and total liabilities slightly decreased from HK$560 million to HK$545 million Financial Position Summary (HK$ Thousand) | Indicator | June 30, 2020 (Unaudited) | December 31, 2019 (Audited) | Period Change | | :--- | :--- | :--- | :--- | | Total Assets | 654,492 | 611,692 | +7.0% | | Total Liabilities | 544,696 | 559,537 | -2.6% | | Total Equity | 109,796 | 52,155 | +110.5% | Condensed Consolidated Statement of Changes in Equity As of June 30, 2020, total equity increased to HK$110 million, primarily due to HK$125 million raised from share issuance, partially offset by a loss for the period of HK$22.43 million and dividends paid of HK$20 million - In the first half of 2020, the company raised HK$125 million through a share issuance (IPO) and paid HK$20 million in dividends[19] - The total comprehensive loss for the period was HK$22.7 million, primarily comprising an operating loss of HK$22.43 million[19] Condensed Consolidated Statement of Cash Flows In the first half of 2020, the company's net increase in cash and cash equivalents was HK$71.13 million, with a net cash outflow from operating activities of HK$3.11 million (compared to a net inflow in the prior period), while financing activities generated HK$76.66 million in net cash, mainly from ordinary share issuance, significantly improving the company's cash position Cash Flow Statement Summary (HK$ Thousand) | Activity Type | 2020 H1 (Unaudited) | 2019 H1 (Audited) | | :--- | :--- | :--- | | Net Cash from Operating Activities | (3,107) | 80,838 | | Net Cash from Investing Activities | (2,415) | (17,638) | | Net Cash from Financing Activities | 76,656 | (45,817) | | Net Increase in Cash and Cash Equivalents | 71,134 | 17,383 | - Cash inflow from financing activities primarily stemmed from HK$125 million raised from ordinary share issuance, partially offset by loan repayments, dividend payments, and listing expenses[26] Notes to the Condensed Consolidated Financial Statements Revenue and Segment Information The company operates as a single segment for electronic product manufacturing and sales; in H1 2020, revenue from major customers generally declined, with the US market, despite a 56.9% decrease, remaining the largest, while sales to Ireland significantly increased by 276.3% due to a major customer's distribution strategy change Revenue by Customer Geographical Location (HK$ Thousand) | Region | 2020 H1 | 2019 H1 | YoY Change | | :--- | :--- | :--- | :--- | | United States | 139,015 | 322,629 | -56.9% | | United Kingdom | 48,398 | 106,780 | -54.7% | | Ireland | 42,411 | 11,269 | +276.3% | | Hong Kong | 16,610 | 29,533 | -43.8% | | China | 9,881 | 16,596 | -40.5% | | Total | 283,136 | 527,594 | -46.3% | Dividends The Board does not recommend an interim dividend for the six months ended June 30, 2020; however, a final dividend for the year ended December 31, 2019, totaling HK$20 million, was paid during the period - The directors do not recommend an interim dividend for 2020[85] - A final dividend for 2019 of HK$0.01 per share, totaling HK$20 million, was paid in the first half of 2020[84] Share Capital As of January 10, 2020, the company's total share capital increased to 2 billion shares with a total par value of HK$20 million, following a capitalization issue of 1.499 billion shares and a global offering of 500 million shares at HK$0.25 per share, raising HK$125 million in total proceeds - Upon listing on January 10, 2020, the company issued 500 million ordinary shares at an issue price of HK$0.25 per share, raising total proceeds of HK$125 million[130] - As of June 30, 2020, the total number of issued ordinary shares was 2 billion[126] Management Discussion and Analysis Business and Financial Review Due to the COVID-19 pandemic, the Group's revenue in H1 2020 significantly decreased by 46.3% to HK$283 million, leading to a gross profit margin decline from 23.3% to 15.6% and a net loss of HK$22.4 million, as the pandemic caused product delivery delays, supply chain disruptions, and global demand slowdown, though cost control measures like executive salary reductions partially offset administrative expenses - The COVID-19 pandemic was the primary cause of the significant revenue reduction in the first half of 2020, impacting supply chains, logistics, and product demand[152][154] Key Performance Indicators Change in H1 2020 | Indicator | 2020 H1 | 2019 H1 | Reason for Change | | :--- | :--- | :--- | :--- | | Revenue | HK$283 million | HK$528 million | Demand decline and delivery delays due to pandemic | | Gross Profit Margin | 15.6% | 23.3% | Revenue decline, but fixed costs like factory management expenses did not decrease significantly | | Net (Loss)/Profit | (HK$22.4 million) | HK$18.4 million | Significant decrease in revenue and gross profit | | Administrative Expenses | HK$43.7 million | HK$55.0 million | No listing expenses and implementation of cost control measures | Prospects Despite challenging business prospects for H2 2020, management anticipates a moderate market recovery, with the company focusing on developing new products like healthcare and IoT devices, expected to commence shipments in 2021, while the planned new production facility in Southeast Asia (new Asia plant) has been delayed by the pandemic, now expected to begin operations in H1 2021 - Strategic focus includes developing healthcare products and IoT connected devices for industrial and commercial applications, with shipments anticipated in 2021[178] - Capacity expansion plans for a new production facility in Southeast Asia have been delayed due to the pandemic, with negotiations slowing and expected commencement of operations now in the first half of 2021[176][179] Liquidity and Financial Resources The company's liquidity significantly improved due to IPO proceeds, with cash and cash equivalents increasing to HK$210 million as of June 30, 2020, and net total debt substantially decreasing by 53.4% to HK$59.6 million, leading to a significant reduction in the net gearing ratio from 245.2% to 54.3%, indicating a more robust financial position Financial Position Indicators | Indicator | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash and Cash Equivalents | HK$209.8 million | HK$138.6 million | | Net Total Debt | HK$59.6 million | HK$128.0 million | | Net Gearing Ratio | 54.3% | 245.2% | Use of Proceeds from Listing The company's January 2020 listing generated net proceeds of approximately HK$74 million; as of June 30, 2020, HK$7.1 million had been utilized primarily for general working capital and IT infrastructure enhancement, leaving HK$66.9 million unused, with most funds originally earmarked for capacity expansion and production efficiency improvements yet to be deployed Use of Listing Proceeds (HK$ Million) | Intended Use | Proposed Amount | Utilized | Unutilized | | :--- | :--- | :--- | :--- | | Capacity Increase (Southeast Asia & China) | 26.1 | – | 26.1 | | Enhance Production Efficiency & Capability | 19.4 | – | 19.4 | | Strengthen R&D Capability (IoT) | 4.0 | – | 4.0 | | Strengthen Marketing Capability | 4.3 | – | 4.3 | | Enhance IT Infrastructure | 2.5 | (0.2) | 2.3 | | Repay Bank Loans | 10.8 | – | 10.8 | | General Working Capital | 6.9 | (6.9) | – | | Total | 74.0 | (7.1) | 66.9 | Other Information Directors' and Chief Executives' Interests As of June 30, 2020, Executive Director Mr. Chu Wai Hang was deemed to hold a 63.0% equity interest in the company, with his brother Mr. Chu Wai Cheung also deemed to hold the same proportion, and no share options were granted by the company - Executive Director Mr. Chu Wai Hang, through his controlled corporations Smart Union and Smartview, is deemed to hold 1.26 billion ordinary shares, representing 63.0% of the total issued share capital[221] - No share options have been granted by the company since the adoption of the share option scheme on December 10, 2019, up to the reporting date[232][235] Corporate Governance The company complied with all applicable corporate governance code provisions from its listing date to June 30, 2020; the Audit Committee reviewed the interim financial statements, and as a cost control measure in response to the pandemic, executive directors agreed to waive 30% of their emoluments from April to June 2020 - The company has complied with all applicable provisions of the Corporate Governance Code in Appendix 14 to the Listing Rules[238][242] - The Audit Committee, comprising three independent non-executive directors, has reviewed the unaudited condensed consolidated financial statements for the period[247][248] - In response to the COVID-19 pandemic, executive directors agreed to waive 30% of their emoluments from April to June 2020[240][244]