天德化工(00609) - 2024 - 中期业绩

Performance Highlights Performance Highlights For H1 2024, turnover decreased 14.3% to RMB 988 million, with gross profit and profit attributable to owners of the company both falling over 50% due to price declines, and gross margin narrowing to 14.6%, leading to a reduced interim dividend of HKD 0.02 per share Performance Summary | Metric | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Turnover (RMB) | Approx. 987.8 million | Approx. 1,152.9 million | -14.3% | | Gross Profit (RMB) | Approx. 144.1 million | Approx. 306.4 million | -53.0% | | Gross Margin | 14.6% | 26.6% | -12.0pp | | Profit Attributable to Owners (RMB) | Approx. 42.4 million | Approx. 166.1 million | -74.5% | | Basic Earnings Per Share (RMB) | Approx. 0.049 | Approx. 0.191 | -74.3% | | Interim Dividend (HKD per share) | 0.02 | 0.03 | -33.3% | Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss Turnover decreased 14.3% to RMB 988 million due to lower sales, leading to a 53.0% decline in gross profit to RMB 144 million as cost reductions lagged, while increased operating expenses resulted in profit before tax plummeting to RMB 42 million Condensed Consolidated Statement of Profit or Loss | Item (RMB thousands) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Turnover | 987,765 | 1,152,914 | | Cost of Sales | (843,681) | (846,528) | | Gross Profit | 144,084 | 306,386 | | Selling Expenses | (36,327) | (29,189) | | Administrative and Other Operating Expenses | (83,289) | (51,788) | | Profit Before Income Tax | 41,996 | 245,663 | | Profit for the Period | 33,850 | 183,857 | | Profit Attributable to Owners of the Company | 42,357 | 166,098 | Condensed Consolidated Statement of Comprehensive Income Profit for the period was RMB 33.85 million, with total comprehensive income reaching RMB 34.59 million after including RMB 0.737 million from currency translation differences, a substantial decrease from the prior period Condensed Consolidated Statement of Comprehensive Income | Item (RMB thousands) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Profit for the Period | 33,850 | 183,857 | | Other Comprehensive Income | 737 | 7,072 | | Total Comprehensive Income for the Period | 34,587 | 190,929 | Condensed Consolidated Statement of Financial Position As of June 30, 2024, total assets stood at RMB 2.99 billion, with net assets at RMB 2.512 billion and net current assets at RMB 906 million, while new bank borrowings of RMB 66 million were incurred Condensed Consolidated Statement of Financial Position | Item (RMB thousands) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Non-current Assets | 1,651,586 | 1,679,822 | | Current Assets | 1,338,707 | 1,241,996 | | Total Assets | 2,990,293 | 2,921,818 | | Current Liabilities | 432,568 | 317,815 | | Non-current Liabilities | 46,214 | 46,427 | | Total Liabilities | 478,782 | 364,242 | | Net Assets | 2,511,511 | 2,557,576 | | Bank Borrowings (Current) | 66,000 | - | Notes to the Financial Statements Turnover and Segment Information The Group operates as a single segment in fine chemical products, with Mainland China as the primary market contributing 71.7% of revenue despite a 10.3% decline, while India's revenue fell 31.3%, and no single customer exceeded 10% of total turnover - The Group's business operates as a single operating segment, encompassing the research, development, manufacturing, and sales of fine chemical products[10] Revenue by Region | Region | H1 2024 Revenue (RMB thousands) | H1 2023 Revenue (RMB thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Mainland China | 708,475 | 790,140 | -10.3% | | India | 124,289 | 180,883 | -31.3% | | Switzerland | 25,344 | 48,562 | -47.8% | | Total | 987,765 | 1,152,914 | -14.3% | - In H1 2024, no single customer contributed over 10% of the Group's total turnover, whereas in H1 2023, Customer A contributed RMB 129.5 million[11] Dividends The Board declared an interim dividend of HKD 0.02 per share for H1 2024, a reduction from the prior period, following the approval of a HKD 0.10 per share final dividend for 2023 in June - The Board declared an interim dividend of HKD 0.02 per share for the six months ended June 30, 2024[17] - The 2023 final dividend of HKD 0.10 per share was approved at the Annual General Meeting on June 7, 2024[17] Management Discussion and Analysis Business Review Amidst global high interest rates, geopolitical tensions, and domestic economic slowdown, the Group faced significant product price reductions, partially offset by sales strategy adjustments and cost optimization, though insufficient to prevent substantial declines in gross and net profit, alongside increased R&D investment - Adverse external environment: global high interest rates, geopolitical tensions, diversification of European and American supply chains, and domestic economic slowdown have led to intense manufacturing competition and significant product price reductions[22] - Response strategies: adjusting sales strategies and actively expanding downstream industrial applications and customer base to increase sales volume[22] - Cost control: enhancing raw material self-sufficiency, optimizing procurement and production processes to reduce costs, though cost reductions were far less than price declines, resulting in a substantial decrease in gross profit[22] - Profit decline: despite strict control over other expenses, pressure on product prices and increased R&D investment ultimately led to a significant decrease in profit attributable to owners of the company[22] Outlook Management foresees continued domestic economic slowdown and tariff challenges for manufacturing in the short term, prompting prudent operations, cost control, and strong cash flow, while maintaining long-term confidence in the fine chemical industry's role in economic transformation and stable growth - Short-term outlook: domestic economic slowdown is expected to continue, with the manufacturing sector facing challenges from increased tariffs and intense competition, making significant business breakthroughs difficult[23] - Response strategies: adopting prudent and stable operating principles, improving internal operations, strictly managing costs, maintaining strong cash flow, and continuing to invest in energy-saving and emission reduction technologies[23] - Long-term outlook: confident in the long-term prospects of the fine chemical industry, believing the company can achieve long-term stable growth with its extensive experience and solid industry position[23] Financial Review Due to a sluggish Chinese economy, turnover declined 14.3% to RMB 988 million from significant price drops, leading to a 53.0% fall in gross profit to RMB 144 million and a 14.6% gross margin, while administrative expenses rose 60.8%, resulting in profit attributable to owners decreasing to RMB 42.4 million Financial Performance Summary | Item | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Turnover (RMB) | Approx. 987.8 million | Approx. 1,152.9 million | -14.3% | | Gross Profit (RMB) | Approx. 144.1 million | Approx. 306.4 million | -53.0% | | Gross Margin | 14.6% | 26.6% | -12.0pp | - Administrative and other operating expenses increased by 60.8% year-on-year to approximately RMB 83.3 million, primarily due to increased research and development expenses, entertainment expenses, and depreciation expenses[25] - Profit attributable to owners of the company was approximately RMB 42.4 million, significantly lower than RMB 166.1 million in the prior period[26] Liquidity and Financial Resources As of June 30, 2024, the Group maintained a sound financial position with RMB 701 million in cash and deposits, a net cash balance of RMB 630 million, and RMB 152 million net cash inflow from operations, with new short-term bank borrowings of RMB 66 million Liquidity and Financial Resources Summary | Item (RMB) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Bank and Cash Balances, Time Deposits, and Pledged Bank Deposits | Approx. 701.3 million | Approx. 616.4 million | | Total Outstanding Borrowings | Approx. 71.7 million | Nil | | Net Cash Balance | Approx. 629.6 million | Approx. 616.4 million | | Net Current Assets | Approx. 906.1 million | Approx. 924.2 million | - Primary funding sources include net cash inflow from operating activities of approximately RMB 151.8 million and new bank borrowings of RMB 26 million[29] - Short-term bank borrowings increased to approximately RMB 66 million at period-end[28] Other Information Human Resources As of June 30, 2024, the Group's full-time employees decreased to 1,398, with discretionary bonuses and training provided based on performance, and no share options granted during the period - As of June 30, 2024, the Group had 1,398 full-time employees, a decrease from 1,536 as of December 31, 2023[35] - The Group has adopted a share option scheme but did not grant any share options during the review period[36] Corporate Governance The company complied with the Listing Rules' Corporate Governance Code during the period, with directors confirming adherence to securities trading standards, and the Audit Committee reviewed interim financial information without objection - The company complied with the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules for the six months ended June 30, 2024[38] - The Audit Committee reviewed the unaudited condensed financial information and had no disagreement with the accounting treatments adopted by the company[42]