珠江钢管(01938) - 2024 - 中期财报

Corporate Information Corporate Profile This section provides basic information on Pearl River Petroleum & Gas Steel Pipe Holdings Limited, including its board members, committees, and key advisors - The company's Chairman is Mr. Chen Chang, and its Independent Non-executive Directors include Mr. Ouyang Guanghua, Mr. Chen Ping, and Mr. Zhan Jianzhou[2] - The company's auditor is Zhongzheng Tianheng Certified Public Accountants Co., Ltd.[3] - The company's Hong Kong stock code is 1938[3] Management Discussion and Analysis Financial Review The Group's revenue grew while profit attributable to owners declined due to lower gross margins and increased financing costs Key Financial Indicators for H1 2024 | Indicator | H1 2024 (Unaudited) | H1 2023 (Unaudited) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | RMB 1.638 billion | RMB 1.195 billion | +37.1% | | Profit Attributable to Owners | RMB 129.5 million | RMB 158.0 million | -18.0% | | Earnings Per Share | RMB 0.13 | RMB 0.16 | -18.8% | | Interim Dividend | Nil | Nil | - | - Revenue growth was primarily driven by steel pipe sales, with the proportion of overseas sales revenue to total steel pipe revenue increasing significantly to 79.1% from 60.0% in the prior period[6][7][8] - The gross profit margin of the steel pipe business decreased to 18.7% from 24.8% year-over-year, mainly due to a major overseas project with a relatively low gross margin[10] - Financing costs increased by 62.2% to RMB 58.1 million, while other expenses surged by 149.0% to RMB 83.4 million, mainly from write-offs and impairment of other receivables[11] Business Review The Group's core business is steel pipe manufacturing, complemented by property development and investment activities - The steel pipe business is the Group's core, and the company is the first and only manufacturer in China capable of developing deep-sea welded pipes for use at 3,500-meter water depths[13] - During the reporting period, the Group received new steel pipe orders of approximately 116,000 tonnes and delivered approximately 217,000 tonnes of welded steel pipes[13] - The Group's property development project is the "Jin Long Cheng Fortune Plaza", but steel pipe manufacturing remains the core business[13][15] Future Plans and Prospects The Group anticipates opportunities from China's focus on energy security and clean energy despite a challenging global economic environment - Favorable National Policies: China's "14th Five-Year Plan" targets expanding the oil and gas pipeline network to 210,000 km by 2025, with natural gas pipelines being a key focus for stable growth over the next 10-20 years[17] - Emerging Market Opportunities: To achieve its "dual carbon" goals, China will prioritize natural gas and explore clean energy sources like hydrogen and wind power, creating demand for related pipelines and offshore platforms[19] - Marine Engineering Potential: China's offshore oil and gas exploration is moving into deep and ultra-deep waters, presenting opportunities for the Group as a manufacturer of deep-sea welded pipes[18] - International Market Expansion: Geopolitical conflicts and supply chain adjustments are prompting importers to seek stable Chinese suppliers, creating opportunities for the Group to expand its overseas market share[19] - Company Strategy: The Group aims to become a leading global steel pipe manufacturer by participating in global oil and gas projects and expanding applications into infrastructure and high-end construction[19] Liquidity and Financial Resources The Group faces liquidity pressure with a current ratio of 0.83, significant short-term debt, and an overdue bond under negotiation Liquidity and Financial Resources (as of June 30, 2024) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and Bank Balances | RMB 75.1 million | RMB 32.2 million | | Current Ratio | 0.83 | 0.81 | | Total Borrowings | RMB 1.911 billion | RMB 1.832 billion | | Gearing Ratio | 29.5% | 28.5% | - The Group faces short-term debt pressure, with approximately 92% of its total borrowings due for repayment within one year[26] - A bond with a principal of HKD 140 million matured in December 2023, and the company is still negotiating a repayment extension with investors[25] - The Group has pledged assets with a total net book value of approximately RMB 2.222 billion as collateral for bank loans[24] Other Information Interests of Directors and Substantial Shareholders Chairman Chen Chang is the controlling shareholder, holding approximately 69.85% of the company's total shares - Chairman Mr. Chen Chang is deemed to hold 706,261,000 shares, representing 69.85% of the total share capital, making him the controlling shareholder[30][33] Share Option Scheme The company adopted a share option scheme in 2020, but no options have been granted as of June 30, 2024 - As of June 30, 2024, no share options have been granted under the company's scheme; the total number of options available for grant is 101,114,200, representing about 10% of the issued share capital[34] Corporate Governance The company complied with most Corporate Governance Code provisions but deviated by not separating the Chairman and CEO roles - The company deviated from the Corporate Governance Code's provision requiring the separation of Chairman and CEO roles, with Mr. Chen Chang holding both positions to facilitate efficient decision-making[36] - The Audit Committee, comprising three independent non-executive directors, has reviewed the Group's unaudited condensed consolidated interim results for the six months ended June 30, 2024[39] Interim Financial Statements Interim Condensed Consolidated Statement of Profit or Loss The company recorded revenue of RMB 1.638 billion and profit attributable to owners of RMB 129.5 million for the period H1 2024 Statement of Profit or Loss Summary | Item | Amount (RMB '000) | | :--- | :--- | | Revenue | 1,638,141 | | Gross Profit | 307,276 | | Profit before tax | 86,665 | | Profit for the period attributable to owners of the Company | 129,516 | Interim Condensed Consolidated Statement of Comprehensive Income Total comprehensive income attributable to owners was RMB 116.8 million after accounting for other comprehensive losses - Profit for the period was RMB 129.5 million, and after accounting for other comprehensive losses of RMB 12.74 million (mainly exchange differences), the total comprehensive income attributable to owners was RMB 116.8 million[42] Interim Condensed Consolidated Statement of Financial Position The Group had total assets of RMB 6.47 billion, total liabilities of RMB 5.28 billion, and net current liabilities of RMB 749 million Statement of Financial Position Summary (as of June 30, 2024) | Item | Amount (RMB '000) | | :--- | :--- | | Total non-current assets | 2,868,329 | | Total current assets | 3,601,387 | | Total current liabilities | 4,350,025 | | Total non-current liabilities | 926,837 | | Net Assets | 1,192,854 | - The Group recorded net current liabilities of approximately RMB 749 million at the period end, indicating its current assets do not cover current liabilities[43] Interim Condensed Consolidated Statement of Changes in Equity Total equity attributable to owners increased from RMB 1.076 billion to RMB 1.193 billion, driven by comprehensive income - Equity attributable to owners of the Company increased from RMB 1.076 billion on January 1, 2024, to RMB 1.193 billion on June 30, primarily due to the comprehensive income for the period[45] Interim Condensed Consolidated Statement of Cash Flows The Group generated positive operating cash flow, leading to an increase in cash and cash equivalents to RMB 75.14 million H1 2024 Statement of Cash Flows Summary | Item | Amount (RMB '000) | | :--- | :--- | | Net cash flows from operating activities | 116,281 | | Net cash flows used in investing activities | (31,884) | | Net cash flows used in financing activities | (29,545) | | Net increase in cash and cash equivalents | 54,852 | | Cash and cash equivalents at June 30 | 75,136 | Notes to the Interim Condensed Consolidated Financial Statements Note 2: Basis of Preparation The financial statements are prepared on a going concern basis despite net current liabilities of RMB 749 million - As of June 30, 2024, the Group had net current liabilities of approximately RMB 749 million, indicating a material uncertainty related to going concern[54] - Management has implemented several measures to improve liquidity, including negotiating for sufficient bank facilities, renewing maturing loans, and implementing cost controls to boost operating cash flow[55][56] Note 4: Operating Segment Information The steel pipe segment is the primary contributor to revenue and profit, with Africa being the largest geographical market Segment Results for H1 2024 | Segment | Revenue (RMB '000) | Segment Results (RMB '000) | | :--- | :--- | :--- | | Steel pipes | 1,637,661 | 129,885 | | Property development and investment | 480 | (35,491) | | Total | 1,638,141 | 94,394 | Revenue by Geographical Location for H1 2024 | Region | Revenue (RMB '000) | Percentage | | :--- | :--- | :--- | | Mainland China | 342,145 | 20.9% | | Africa | 947,460 | 57.8% | | Other Asian countries | 221,845 | 13.5% | | Middle East | 73,037 | 4.5% | | Others | 53,654 | 3.3% | | Total | 1,638,141 | 100% | Note 14 & 15: Trade Receivables and Payables Trade receivables increased significantly to RMB 491 million, while trade and bills payables decreased to RMB 858 million - Net trade receivables increased from RMB 288 million to RMB 491 million, with receivables aged over 60 days accounting for approximately RMB 204 million (42%)[82][83] - Total trade and bills payables decreased from RMB 943 million to RMB 858 million, with payables aged over 90 days totaling approximately RMB 228 million[84] Note 16 & 17: Bonds and Borrowings Total interest-bearing borrowings stood at RMB 1.853 billion, with an overdue HKD 140 million note under negotiation - The 12% notes with a principal of HKD 140 million (the 2020 Notes) matured on December 22, 2023, with HKD 61 million outstanding and under negotiation for extension[86] - Total interest-bearing bank and other borrowings amounted to approximately RMB 1.853 billion, of which RMB 1.706 billion are current liabilities due within one year[87][88] - The Group has undrawn bank facilities totaling RMB 865 million, providing a buffer for future operations and debt service[89]