佐力小贷(06866) - 2024 - 中期财报

Definitions Definitions Company Information Company Information Management Discussion and Analysis Industry Overview and Business Overview The company is Zhejiang Province's largest licensed micro-lending company by registered capital, focusing on Deqing County, Huzhou, and Binjiang District, Hangzhou, serving "San Nong", SMEs, and online retailers, with 1,199 clients as of June 30, 2024 - The company is Zhejiang Province's largest licensed micro-lending company by registered capital and Huzhou's first and only green micro-lending company, specializing in financing services for "San Nong", small and medium-sized enterprises, micro-enterprises, and online retailers[9] Deqing County Market Share (As of June 30, 2024) | Indicator | Group's Share | | :--- | :--- | | Total Cumulative Loans Disbursed | 79.2% | | Loan Balance | 88.1% | Core Business Data | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Registered Capital | RMB 1.18 billion | RMB 1.18 billion | | Total Loans and Advances (excluding accrued interest) | RMB 2.635 billion | RMB 2.701 billion | | Leverage Ratio | 2.23 | 2.29 | Loan Portfolio Analysis As of June 30, 2024, the company's total loan balance (excluding accrued interest) was RMB 2.635 billion, slightly down from 2023 year-end, with guaranteed loans at 97.8%; asset quality improved as impaired and overdue loan ratios decreased from 4.6% to 3.9%, and provision coverage rose from 159% to 181% Loans and Advances by Guarantee Type (excluding accrued interest) | Loan Type | June 30, 2024 (RMB in thousands) | Percentage | December 31, 2023 (RMB in thousands) | Percentage | | :--- | :--- | :--- | :--- | :--- | | Credit Loans | 29,157 | 1.1% | 27,919 | 1.0% | | Guaranteed Loans | 2,577,143 | 97.8% | 2,644,055 | 97.9% | | Mortgage Loans | 8,491 | 0.3% | 8,392 | 0.3% | | Pledged Loans | 20,196 | 0.8% | 20,528 | 0.8% | | Subtotal | 2,634,987 | 100.0% | 2,700,894 | 100.0% | Asset Quality Indicators | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Impaired Loan Ratio | 3.9% | 4.6% | | Provision Coverage Ratio | 181% | 159% | | Impairment Loss Provision Ratio | 7.1% | 7.3% | | Overdue Loan Ratio | 3.9% | 4.6% | - Impaired loan balance decreased from RMB 124.5 million at year-end 2023 to RMB 104.6 million; overdue loan balance decreased from RMB 124.8 million to RMB 104.9 million[16][17] Financial Performance Analysis In H1 2024, net interest income decreased by 16.2% to RMB 81.43 million due to lower average loan rates (8.8% to 7.6%) and reduced loan scale; profit and total comprehensive income fell 20.6% to RMB 46.63 million, while administrative expenses decreased 17.8% to RMB 21.80 million, reflecting cost control Net Interest Income Composition (For the six months ended June 30) | Item (RMB in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Total Interest Income | 102,616 | 122,463 | | Total Interest and Commission Expenses | (21,185) | (25,257) | | Net Interest Income | 81,431 | 97,206 | - The average loan interest rate decreased from 8.8% in the same period last year to 7.6%, primarily due to policy responses and industry competition, leading to reduced interest income[20] - Other net income turned from a loss of RMB 13.8 million in the same period last year to an income of RMB 17.4 million, mainly due to an increase of RMB 13.3 million in government subsidies and an increase of RMB 17.9 million in exchange gains[21] Profit for the Period and Administrative Expenses (For the six months ended June 30) | Item (RMB in thousands) | 2024 | 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Profit and Total Comprehensive Income for the Period | 46,626 | 58,753 | -20.6% | | Total Administrative Expenses | 21,802 | 26,524 | -17.8% | Liquidity and Capital Resources The company relies on equity, interest-bearing borrowings, and operating cash flow, with borrowings decreasing to RMB 522 million as of June 30, 2024, and net operating cash flow at RMB 96.7 million, while the asset-liability ratio improved from 29.6% to 25.3%, indicating reduced leverage and a more stable financial structure Condensed Cash Flow Statement (For the six months ended June 30, RMB in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 96,685 | 265,928 | | Net Cash Generated from Investing Activities | 58 | (18) | | Net Cash Used in Financing Activities | (89,466) | (166,513) | Interest-Bearing Borrowings and Asset-Liability Ratio | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Interest-Bearing Borrowings Balance | RMB 522 million | RMB 594 million | | Asset-Liability Ratio | 25.3% | 29.6% | - The decrease in the asset-liability ratio was primarily due to a RMB 71.6 million reduction in interest-bearing borrowings and a RMB 7.3 million increase in cash and cash equivalents[39] Related Party Transactions and Other Matters During the period, Executive Director Mr. Yu Yin and other related parties guaranteed RMB 25 million of the company's interest-bearing borrowings, and the company paid related expenses for leased properties from Zuoli Holdings, with no significant investments, acquisitions, asset pledges, or off-balance sheet arrangements - Executive Director Mr. Yu Yin and other related parties provided guarantees for the company's RMB 25 million interest-bearing borrowings[40] - The company leased properties from related party Zuoli Holdings and paid for utilities and business expenses[41] - There were no significant investments, acquisitions, asset pledges, off-balance sheet arrangements, or contingent liabilities during the reporting period[45][43][46] Outlook The company will leverage policy opportunities in Zhejiang's common prosperity zone and Huzhou's green finance pilot zone to deepen green credit, developing more green loan products through international cooperation to serve "San Nong" and low-carbon SMEs, aiming for market consolidation and sustainable development - The company will leverage the policy advantages of Zhejiang Province's common prosperity demonstration zone and Huzhou City's national green finance reform and innovation pilot zone to explore a sustainable path for green credit[47] - The company has officially become Huzhou City's first green micro-lending company and is cooperating with international institutions like DEG and GCPF to introduce green lending concepts and technologies to develop more green products[47] Independent Auditor's Report Review Conclusion KPMG reviewed the company's interim financial report as of June 30, 2024, concluding no matters suggesting it was not prepared in all material respects according to Hong Kong Accounting Standard 34 Interim Financial Reporting - The scope of the review is significantly smaller than an audit conducted in accordance with Hong Kong Auditing Standards, thus the auditor does not express an audit opinion[49] - The conclusion is that no matters were found that would lead to a belief that the interim financial report was not prepared in all material respects in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting[50] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2024, the company recorded net interest income of RMB 81.43 million, down 16.2% YoY, with profit and total comprehensive income at RMB 46.63 million, down 20.6% YoY, and basic and diluted earnings per share of RMB 0.04 Consolidated Statement of Profit or Loss Summary (For the six months ended June 30) | Item (RMB in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net Interest Income | 81,431 | 97,206 | | Profit Before Tax | 64,509 | 79,640 | | Profit and Total Comprehensive Income for the Period | 46,626 | 58,753 | | Profit Attributable to Equity Holders of the Company | 44,940 | 56,053 | | Basic Earnings Per Share (RMB) | 0.04 | 0.05 | Consolidated Statement of Financial Position As of June 30, 2024, total assets were RMB 2.609 billion, slightly down from RMB 2.657 billion at year-end 2023, with total liabilities at RMB 586 million, net assets at RMB 2.022 billion, and net loans and advances to customers at RMB 2.471 billion Consolidated Statement of Financial Position Summary (RMB in thousands) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Loans and Advances to Customers | 2,470,995 | 2,522,351 | | Total Assets | 2,608,539 | 2,657,317 | | Interest-Bearing Borrowings | 521,961 | 593,519 | | Total Liabilities | 586,199 | 654,603 | | Total Equity | 2,022,340 | 2,002,714 | Consolidated Statement of Changes in Equity As of June 30, 2024, total equity increased to RMB 2.022 billion from RMB 2.003 billion at year-start, driven by RMB 46.63 million profit for the period, partially offset by RMB 27 million in dividends paid Summary of Changes in Equity (For the six months ended June 30, 2024, RMB in thousands) | Item | Amount | | :--- | :--- | | Total Equity at Beginning of Period (January 1, 2024) | 2,002,714 | | Profit and Total Comprehensive Income for the Period | 46,626 | | Dividends Approved for Prior Year | (27,000) | | Total Equity at End of Period (June 30, 2024) | 2,022,340 | Condensed Consolidated Cash Flow Statement In H1 2024, net cash from operating activities was RMB 96.69 million, while financing activities used RMB 89.47 million, primarily for loan repayments, resulting in cash and cash equivalents increasing by RMB 7.28 million to RMB 24.76 million at period-end Consolidated Cash Flow Statement Summary (For the six months ended June 30, RMB in thousands) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 96,685 | 265,928 | | Net Cash from/(used in) Investing Activities | 58 | (18) | | Net Cash Used in Financing Activities | (89,466) | (166,513) | | Net Increase in Cash and Cash Equivalents | 7,277 | 99,397 | | Cash and Cash Equivalents at Beginning of Period | 17,478 | 16,595 | | Cash and Cash Equivalents at End of Period | 24,755 | 116,010 | Notes to the Unaudited Interim Financial Report Note 10 - Loans and Advances to Customers As of June 30, 2024, total loans and advances to customers were RMB 2.661 billion (net RMB 2.471 billion), primarily retail (57%) and corporate (42%) loans, with guaranteed loans at 97.8%, and total overdue loans decreased to RMB 105 million from RMB 125 million at year-start Loans and Advances by Nature and Guarantee Type (RMB in thousands) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Corporate Loans | 1,107,386 | 1,146,973 | | Retail Loans | 1,500,932 | 1,526,958 | | Guaranteed Loans | 2,577,143 | 2,644,055 | | Total Loans and Advances | 2,660,517 | 2,720,846 | | Less: Impairment Loss Provisions | (189,522) | (198,495) | | Net Loans and Advances | 2,470,995 | 2,522,351 | Overdue Loan Analysis (RMB in thousands) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Overdue Loans | 104,939 | 124,812 | Note 14 - Interest-Bearing Borrowings As of June 30, 2024, total interest-bearing borrowings were RMB 522 million, down from RMB 594 million at year-end 2023, mainly from Eurozone borrowings (RMB 497 million) and bank borrowings (RMB 25.03 million) Interest-Bearing Borrowings Composition (RMB in thousands) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Bank Borrowings | 25,028 | 25,015 | | Borrowings from Third Parties | — | 41,248 | | Borrowings from Eurozone | 496,933 | 527,256 | | Total | 521,961 | 593,519 | Note 17 - Capital, Reserves and Dividends During the period, the company approved a final dividend of RMB 0.02 per share for FY2023, totaling RMB 23.6 million, with share capital maintained at 1.18 billion shares, and is required to appropriate statutory surplus and general risk reserves per regulations - Approved a final dividend of RMB 0.02 per share for 2023, totaling RMB 23.6 million[93] - The company's share capital consists of 1,180,000,000 ordinary shares with a par value of RMB 1 each[94] Note 18 - Financial Risk Management The company faces primary financial risks including credit risk, liquidity risk, and interest rate risk, with a comprehensive credit risk management mechanism covering pre-lending, in-lending, and post-lending stages, liquidity risk managed by monitoring cash reserves, limited interest rate risk from fixed-rate loans and borrowings, and currency risk primarily from Euro-denominated borrowings - Credit risk primarily arises from micro-lending business, and the company has established a risk management mechanism covering pre-lending assessment, credit approval, and post-lending monitoring[101] - The loan portfolio bears a certain degree of geographical concentration risk as the business primarily operates in Zhejiang Province[104] - Currency risk primarily arises from Euro-denominated interest-bearing borrowings, with an exposure of RMB 136 million as of June 30, 2024[111][113] Note 20 - Significant Related Party Transactions During the reporting period, the company's significant related party transactions included guarantees provided by the Chairman of the Board and other related parties for the company's total RMB 25 million bank borrowings, and payments to related party Zuoli Holdings Group Co Ltd for leased property related expenses Guarantee Balances with Related Parties (RMB in thousands) | Guarantee Type | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Bank Borrowing Guarantees Obtained | 25,000 | 25,000 | | Third-Party Borrowing Guarantees Obtained | — | 41,110 | Other Information Corporate Governance and Compliance The company maintains high corporate governance standards, fully complying with the Hong Kong Listing Rules' Corporate Governance Code and the Model Code for Securities Transactions by Directors of Listed Issuers during the period, with public float meeting the minimum 25% requirement - The company has fully complied with the Corporate Governance Code for the six months ended June 30, 2024[125] - Directors and supervisors confirmed full compliance with the Model Code for Securities Transactions by Directors of Listed Issuers[127] Shareholders' Equity and Dividends As of June 30, 2024, issued share capital was 1.18 billion shares, with controlling shareholder Puhua Energy and concerted parties controlling approximately 37.58% of shares, and the Board decided not to declare any interim dividend for 2024 - Controlling shareholder Puhua Energy and its concerted parties jointly control approximately 37.58% of the company's total issued shares[129] - The Board decided not to declare any interim dividend for the six months ended June 30, 2024[133] - Controlling shareholder Puhua Energy has pledged 293,130,000 domestic shares (representing 24.84% of total share capital) as collateral for financing[135]