中铝国际(601068) - 2024 Q2 - 季度财报

Definitions This section provides definitions of key terms used throughout the report Company Profile and Key Financial Indicators This section introduces the company and presents its key financial performance and position for the reporting period Company Profile Aluminum Corporation of China International Engineering Co., Ltd. (CHALIECO) is a company listed on both the Shanghai Stock Exchange (A-share: 601068) and the Hong Kong Stock Exchange (H-share: 2068), with Li Yihua as its legal representative and its main office in Beijing - Chinese Name: Aluminum Corporation of China International Engineering Co., Ltd[9] - Stock Abbreviation: CHALIECO[9] - A-share Code: 601068 (Shanghai Stock Exchange)[13] - H-share Code: 2068 (Hong Kong Stock Exchange)[13] - Legal Representative: Li Yihua[13] Key Accounting Data and Financial Indicators In the first half of 2024, the company achieved operating revenue of 10.71 billion yuan, an 11.31% year-on-year increase, and turned a profit with net income attributable to shareholders of 156 million yuan, compared to a loss of 831 million yuan in the prior year, despite a widened net cash outflow from operating activities of 2.035 billion yuan, while total assets grew by 1.89% to 41.719 billion yuan Major Accounting Data (Unit: RMB Thousand) | Indicator | Current Period (Jan-Jun) | Prior Period (Adjusted) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 10,710,476 | 9,622,056 | 11.31% | | Net Profit Attributable to Shareholders | 155,989 | -831,259 | Not Applicable | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) | 66,325 | -1,021,136 | Not Applicable | | Net Cash Flow from Operating Activities | -2,034,849 | -862,869 | Not Applicable | | Indicator | End of Current Period | End of Prior Year (Adjusted) | Change from Prior Year-End (%) | | Net Assets Attributable to Shareholders | 6,144,309 | 7,016,541 | -12.43% | | Total Assets | 41,719,313 | 40,943,803 | 1.89% | Key Financial Indicators | Indicator | Current Period (Jan-Jun) | Prior Period (Adjusted) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | 0.02 | -0.30 | Not Applicable | | Weighted Average Return on Net Assets (%) | 2.98 | -18.91 | Not Applicable | - Company performance improvement primarily resulted from revenue growth in engineering design and equipment manufacturing businesses, along with improved structure in engineering construction and a significant increase in overseas industrial project revenue[16] Non-recurring Gains and Losses (Unit: RMB Thousand) | Non-recurring Gains and Losses Item | Amount | | :--- | :--- | | Reversal of impairment provisions for individually tested receivables | 65,197 | | Fund occupation fees received from non-financial enterprises recognized in current profit/loss | 24,001 | | Debt restructuring gains and losses | 21,877 | | Other non-operating income and expenses apart from the above | 18,346 | | Government grants recognized in current profit/loss | 13,798 | | Total | 89,664 | Chairman's Statement Chairman Li Yihua stated that in the first half of 2024, the company firmly pursued its "Technology + International" strategy, achieving positive progress and a turnaround to profitability, with a focus on strengthening operations, promoting transformation, and deepening reforms in the second half to build a high-quality "New CHALIECO" Key Operating Data for H1 2024 | Indicator | Amount/Ratio | YoY Change | | :--- | :--- | :--- | | New Industrial Contracts | 11.107 billion yuan | Accounted for 85.49% of total new contracts | | New CHINALCO Group Internal Contracts | 4.028 billion yuan | Increased by 43.24% | | New Overseas Contracts | 975 million yuan | Increased by 6.79% | | Operating Revenue | 10.71 billion yuan | Increased by 11.31% | | Overseas Business Revenue | 1.886 billion yuan | Increased by 88.32% | | Net Profit Attributable to Parent | 156 million yuan | Turned loss into profit | - Second half strategic priorities: - Strengthen Operations: Deepen cultivation of CHINALCO Group internal market, consolidate domestic market, expand international market, and comprehensively develop EPC, maintenance, and mining services[18] - Promote Transformation: Fully return to advantageous industrial sectors, serve CHINALCO Group's main business, strengthen technological innovation, and support green, low-carbon, and intelligent upgrades of traditional industries[18] - Deepen Reforms: Drive business, management, and organizational system reforms, deepen market-oriented incentive mechanisms, and accelerate the construction of ERP and digital design platforms[18] Management Discussion and Analysis This section provides an in-depth analysis of the company's operations, financial condition, and future outlook, including industry trends and risk factors Principal Business and Industry Overview The company is a modern industrial service enterprise providing comprehensive technical, engineering design, and construction services across the non-ferrous metals industry chain, with its principal businesses including engineering survey, design, and consulting, engineering construction and contracting, and equipment manufacturing, while the non-ferrous metals industry experienced robust growth, accelerated investment, and improved profitability in H1 2024, driven by global green and intelligent trends - Company's three principal businesses: - Engineering Survey, Design & Consulting: The company's traditional core business, with leading domestic technology and higher profit margins[19] - Engineering Construction & Contracting: Covers multiple fields, vigorously promotes EPC general contracting, and transitions to full lifecycle services[19] - Equipment Manufacturing: A high-tech industry the company focuses on developing, specializing in R&D of new processes, technologies, materials, and equipment for non-ferrous metals[20] - Industry trends: The non-ferrous metals industry benefited from economic recovery and industrial upgrades, showing strong growth in production, accelerated investment, and improved profitability[20] - Digital transformation and the development of new quality productive forces are key drivers for high-quality industry development, with high demand for new energy metal materials and an optimistic industry outlook[21] Analysis of Core Competencies The company's core competencies stem from its five major advantages: technology and talent, full industry chain services, qualifications, domestic market presence, and overseas market reach, boasting strong R&D capabilities, a large professional technical team, and leading core technologies in mining, metallurgy, and non-ferrous metal processing, along with comprehensive "three-full" service capabilities and 398 various qualifications across dozens of countries - The company possesses strong technology and talent reserves, including 51 national and industry survey and design masters, as well as multiple national-level technology centers and postdoctoral workstations[22] - In several metallurgical sub-sectors, the company's designed capacity accounts for a very high proportion of the total domestic capacity, demonstrating its technological leadership: - Electrolytic Aluminum: Over 80%[24] - Non-ferrous Metal Processing Engineering Design: Over 90%[25] - Pre-baked Anodes: Approximately 73%[28] - Sponge Titanium: Approximately 70%[28] - Graphite Electrodes: Approximately 61%[28] - Anode Materials: Approximately 59%[28] - The company possesses "three-full" advantages, covering all metal categories, the entire industry chain, and the full project lifecycle, enabling it to provide one-stop integrated solutions to clients[31] - The company holds 398 various qualifications, including comprehensive Grade A engineering design and special-grade general contracting for construction, indicating significant qualification advantages[31] Discussion and Analysis of Operations In the first half of 2024, the company achieved a net profit attributable to shareholders of 156 million yuan, successfully turning a loss into profit, driven by a focus on the non-ferrous industrial sector, optimized business structure with industrial contracts accounting for 85.49%, breakthroughs in innovative businesses like EPC and new energy, active overseas market expansion, and enhanced project execution and cost control, with plans to further strengthen market development, adjust business structure, and improve project profitability in the second half New Contract Signings for Jan-Jun 2024 | Contract Type | Number (Units) | Amount (Billion RMB) | | :--- | :--- | :--- | | Industrial Projects | 399 | 8.82 | | Engineering Survey, Design & Consulting | 1709 | 1.367 | | Equipment Manufacturing | 433 | 1.067 | | Civil Architecture | 46 | 1.378 | | Highway & Municipal | 19 | 0.269 | | Total | 2,668 | 12.992 | - First half operating highlights: - Strong Operations: New contracts totaled 12.992 billion yuan, with industrial contracts accounting for 85.49%; contract value within CHINALCO Group increased by 43.24% year-on-year[33] - Promote Transformation: Achieved new breakthroughs in synergy with CHINALCO Group enterprises, made new progress in key technologies, and received 1 National Science and Technology Progress Second Prize[34] - Deepen Reforms: Completed headquarters organizational optimization, advanced reforms in large-scale marketing and project management systems, and implemented a restricted stock incentive plan[34] - Second half business outlook: - Market Development: Vigorously expand internal and external markets of CHINALCO Group and overseas markets, focusing on non-ferrous and advantageous industrial sectors[35] - Performance Improvement: Establish a "customer-centric service" philosophy, accelerate ERP system construction, and promote project management model transformation[35] - Profitability Enhancement: Implement project operating responsibility system, optimize centralized procurement, and enhance cost control capabilities[36] Analysis of Key Operating Conditions In the first half of 2024, the company's operating revenue increased by 11.3%, driven by engineering design, equipment manufacturing, and overseas industrial projects, with a significant reversal of asset impairment losses contributing 1.243 billion yuan to the profit turnaround, while engineering construction and contracting was the largest and fastest-growing segment, equipment manufacturing saw improved gross margins, and overseas business revenue surged by 88.32%, demonstrating the success of its "going global" strategy Principal Business by Industry (Unit: RMB Thousand) | Industry Segment | Operating Revenue | Gross Margin (%) | YoY Change in Operating Revenue (%) | Change in Gross Margin from Prior Year (%) | | :--- | :--- | :--- | :--- | :--- | | Engineering Design & Consulting | 964,353 | 32.19% | -13.93% | Increased by 4.80 percentage points | | Engineering Construction & Contracting | 8,550,054 | 6.40% | 15.72% | Decreased by 1.81 percentage points | | Equipment Manufacturing | 1,196,069 | 14.10% | 7.45% | Increased by 2.29 percentage points | Principal Business by Region (Unit: RMB Thousand) | Region | Operating Revenue | Gross Margin (%) | YoY Change in Operating Revenue (%) | | :--- | :--- | :--- | :--- | | Mainland China | 8,824,190 | 8.74% | 2.36% | | Other Countries and Regions | 1,886,286 | 13.5% | 88.32% | - Key changes in income statement: - Financial Expenses: Increased by 220.37% year-on-year, primarily due to a 56 million yuan decrease in exchange gains as the impact of USD appreciation weakened[39][40] - Asset Impairment Losses: A reversal resulted in a 25 million yuan increase in profit, compared to a loss of 1.218 billion yuan in the prior year, mainly because the impact of accounting estimate changes in H1 2023 was fully recognized in the prior year's profit and loss[44] - As of June 30, 2024, the company's overseas assets amounted to 4.293 billion yuan, accounting for 10.29% of total assets[47] Risk Analysis and Countermeasures The company faces key risks in safety and environmental protection, reform and business transformation, market competition, cash flow, and operating efficiency, for which it has implemented countermeasures such as safety campaigns, organizational optimization, market expansion focusing on non-ferrous metals, enhanced cash flow management, and improved project execution to boost profitability - Major risk points: - Safety and Environmental Risks: Inherent risks in construction and engineering fields[54] - Reform and Business Transformation Risks: Insufficient core competitiveness, reform momentum, and production factor efficiency persist[54] - Market Changes and Market Competition Risks: The proportion of contract value in the non-ferrous industry needs improvement[54] - Cash Flow Risks: Unfavorable collection situation for engineering projects and difficulty in recovering long-aged receivables[54] - Operating Efficiency Risks: In a critical period of reform and transformation, new market development requires time for accumulation[54] - Countermeasures: - Safety and Environmental Protection: Strengthen safety standardization system and focus on intrinsic safety of projects[54] - Reform and Transformation: Optimize headquarters organization, advance "four-determination" work and labor efficiency improvement reforms[55] - Market Development: Focus on non-ferrous main business, strengthen internal and external collaboration, and develop overseas markets[55] - Cash Flow: Strengthen monthly cash budgeting, optimize assessment system, and strictly implement "revenue-controlled production"[55] - Operating Efficiency: Optimize business structure, focus on synergistic marketing, and deeply carry out "performance quality improvement actions"[55] Corporate Governance During the reporting period, the company held its 2023 Annual General Meeting and class shareholder meetings in compliance with procedures, experienced multiple changes in its board and senior management, including resignations and appointments of directors and the company secretary, and proceeded with its 2023 Restricted Stock Incentive Plan, which received SASAC approval and shareholder approval, with the initial grant registration completed post-period, demonstrating a sound corporate governance structure adhering to the Corporate Governance Code - During the reporting period, multiple changes occurred in the company's directors, supervisors, and senior management, including Liu Ruiping, Zhou Xinzhe, and Gui Weihua resigning from director positions, and Liu Dongjun, Yang Xu, and Zhang Ting'an being elected as new directors; Zhao Hongmei resigned as Board Secretary, with Tao Fulun taking over[62][63] - The company advanced its 2023 Restricted Stock Incentive Plan, proposing to grant a total of no more than 29.5061 million shares[65] - The plan received approval from SASAC and was passed by the general meeting of shareholders, with the initial grant registration announced on July 30, 2024, actually granting 26.7696 million shares to 237 incentive recipients[66] Environmental and Social Responsibility The company highly values environmental protection and social responsibility, promoting green development and strictly adhering to regulations without major environmental incidents during the reporting period, and actively participating in rural revitalization by investing 1.403 million yuan in industrial assistance, living environment improvement, and employment support since 2024 - The company strengthens environmental protection measures in survey, design, and construction, prioritizing the use of energy-saving and environmentally friendly new processes, technologies, equipment, and materials to minimize environmental impact[70] - Since 2024, the company has invested 1.403 million yuan in rural revitalization, including 1.358 million yuan for purchasing agricultural products and 45 thousand yuan in financial support, covering various assistance areas such as industry, drinking water, and employment[71] Significant Matters During the reporting period, the company and related parties strictly fulfilled their commitments, with several significant lawsuits and arbitrations ongoing, and related party transactions primarily involving daily operations with controlling shareholder CHINALCO and its subsidiaries for engineering construction, design, and equipment manufacturing services, all within approved annual limits, in addition to providing substantial guarantees for multiple highway PPP projects Significant Litigation and Arbitration Matters During the reporting period, the company was involved in multiple significant litigation and arbitration cases, primarily construction engineering contract disputes, including major cases with Panxian Panzhou Ancient City Development Management Co., Ltd. (382 million yuan) and Zhumadian Economic Development Zone Jiafucheng Real Estate Co., Ltd. (176 million yuan, plaintiff withdrew), with some cases still ongoing - Major lawsuits where the company is a defendant include: - Construction engineering contract dispute with China Nuclear Industry East China Construction Engineering Group Co., Ltd., involving approximately 154 million yuan, currently in first instance[76] - Construction engineering contract dispute with Guizhou Huarun New Material Co., Ltd., involving approximately 145 million yuan, currently in arbitration[77][435] Significant Related Party Transactions The company's significant related party transactions primarily involve daily operating activities with its controlling shareholder CHINALCO Group and its subsidiaries, with the largest amount being approximately 1.947 billion yuan for engineering construction services, followed by 376 million yuan for engineering consulting and design services, all within the approved annual limits Key Daily Related Party Transactions (Unit: RMB Thousand) | Related Party | Transaction Type | Transaction Content | Amount | | :--- | :--- | :--- | :--- | | CHINALCO Group and its subsidiaries | Provision of Services | Engineering Construction Services | 1,947,164 | | CHINALCO Group and its subsidiaries | Provision of Services | Engineering Consulting & Design | 375,897 | | Company's Associates | Provision of Services | Engineering Construction Services | 242,437 | | CHINALCO Group and its subsidiaries | Sale of Goods | Equipment Manufacturing | 107,624 | - The company has financial business dealings with its related party, CHINALCO Finance Co., Ltd[82] - As of the end of the period, the company's deposit balance with this finance company was 2.011 billion yuan, and its loan balance was 5.246 billion yuan[83] Significant Contracts and Guarantees During the reporting period, the company provided significant guarantees for several joint PPP highway projects, with the total guarantee amount reaching 8.532 billion yuan as of the end of the period, representing a high 132.85% of the company's net assets, including 447 million yuan in debt guarantees for entities with a debt-to-asset ratio exceeding 70% Summary of Significant Guarantees (Unit: RMB Thousand) | Indicator | Amount | | :--- | :--- | | Total Guarantee Balance at Period-End (A+B) | 8,531,839 | | Total Guarantees as % of Company's Net Assets | 132.85% | | Debt Guarantees for Entities with Debt-to-Asset Ratio > 70% (D) | 447,124 | | Amount of Total Guarantees Exceeding 50% of Net Assets (E) | 5,320,717 | Share Changes and Shareholder Information As of June 30, 2024, the company's total share capital was 2.959 billion shares, with no changes in share structure during the reporting period, though it increased to 2.986 billion shares post-period due to equity incentives, and controlling shareholder CHINALCO Group held 73.56% of shares, with a total of 42,702 common shareholders at period-end - Post-reporting period, due to the completion of the initial grant registration for the 2023 Restricted Stock Incentive Plan, the company's total share capital changed from 2,959,066,667 shares to 2,985,836,267 shares[92] Top Three Shareholders (as of June 30, 2024) | Shareholder Name | Number of Shares Held (Shares) | Percentage of Total Share Capital (%) | | :--- | :--- | :--- | | Aluminum Corporation of China | 2,176,758,534 | 73.56% | | HKSCC Nominees Limited | 399,476,000 | 13.50% | | Luoyang Nonferrous Metals Processing & Design Research Institute Co., Ltd. | 86,925,466 | 2.94% | Preferred Shares Information The company had no preferred shares during the reporting period Bond Information As of the end of the reporting period, the company had two outstanding perpetual medium-term notes with a total balance of 2.8 billion yuan, and its asset-liability ratio increased to 84.59% from the prior year-end, while the interest coverage ratio improved from negative to 2.71, indicating better debt servicing capacity, though the cash interest coverage ratio significantly decreased to -12.95 Outstanding Non-financial Enterprise Debt Financing Instruments | Bond Abbreviation | Code | Bond Balance (Thousand RMB) | Interest Rate (%) | Maturity Date | | :--- | :--- | :--- | :--- | :--- | | 23 CHALIECO MTN001 | 102382877 | 1,500,000 | 4.17 | 2025/10/27 | | 23 CHALIECO MTN002 | 102383165 | 1,300,000 | 3.77 | 2025/11/24 | Key Solvency Indicators | Key Indicator | End of Current Period/Current Period | End of Prior Year/Prior Period | | :--- | :--- | :--- | | Asset-Liability Ratio (%) | 84.59 | 82.28 | | Interest Coverage Ratio | 2.71 | -6.37 | | Cash Interest Coverage Ratio | -12.95 | 1.81 | Financial Report This section presents the company's unaudited 2024 semi-annual consolidated and parent company financial statements, including the balance sheet, income statement, cash flow statement, statement of changes in shareholders' equity, and detailed notes to the financial statements, covering the company's basic information, key accounting policies and estimates, taxation, notes to consolidated financial statement items, related parties and transactions, and contingent matters Consolidated Financial Statements This section provides the consolidated balance sheet as of June 30, 2024, and the consolidated income statement, cash flow statement, and statement of changes in shareholders' equity for January-June 2024 Parent Company Financial Statements This section provides the parent company balance sheet as of June 30, 2024, and the parent company income statement, cash flow statement, and statement of changes in shareholders' equity for January-June 2024 Notes to Financial Statements This section details the company's basic information, basis of financial statement preparation, statement of compliance with accounting standards, and significant accounting policies and estimates such as revenue recognition, financial instruments, long-term equity investments, fixed assets, and government grants, also disclosing taxation, detailed composition of consolidated financial statement items, related party relationships and transactions, commitments and contingencies, and post-balance sheet events