中国铸晨81(00810) - 2024 - 中期财报

CHAIRMAN'S STATEMENT This section provides an overview of the company's financial performance, operational review, and strategic outlook amidst a challenging economic environment Performance Overview As of June 30, 2024, the company's Net Asset Value (NAV) significantly declined due to fair value losses on financial assets, with no interim dividend recommended Key Performance Indicators | Metric | June 30, 2024 (HK$ Million) | December 31, 2023 (HK$ Million) | Change | | :--- | :--- | :--- | :--- | | Net Asset Value (NAV) | Approx. 34.9 | Approx. 49.3 | ↓ 29.2% | | NAV per Share (HK$) | 0.25 | 0.35 | ↓ 28.6% | | Listed Equity Investment Portfolio Value | Approx. 26.1 | Approx. 31.3 | ↓ 16.6% | - The Board does not recommend an interim dividend for the period ended June 30, 2024, consistent with the same period last year[1] - The primary reason for the decrease in Net Asset Value is a fair value loss of approximately HK$8.3 million on financial assets at fair value through profit or loss, compared to a fair value gain of approximately HK$19.5 million in the same period last year[1] REVIEW OF OPERATIONS Despite a Hong Kong market rebound, the company's non-index concentrated portfolio incurred fair value losses, leading to a swing from operational profit to loss, though administrative expenses decreased Key Financial Metrics | Financial Metric (Six Months Ended June 30) | H1 2024 (HK$ Million) | H1 2023 (HK$ Million) | Change | | :--- | :--- | :--- | :--- | | Total Proceeds from Investment Disposals and Investment Income | Approx. 15.9 | Approx. 55.8 | ↓ 71.5% | | Revenue (Primarily Dividend Income) | Approx. 0.165 | Approx. 0.197 | ↓ 16.2% | | Operating (Loss)/Profit | Approx. (14.4) | Approx. 7.6 | Swing from Profit to Loss | | Net (Loss)/Gain on Financial Assets at Fair Value Through Profit or Loss | Approx. (8.3) | Approx. 19.5 | Swing from Gain to Loss | | Administrative Expenses | Approx. 6.0 | Approx. 11.5 | ↓ 47.8% | - Despite a 3.9% rise in the Hang Seng Index, the company's listed equity investment portfolio recorded fair value losses as the market rebound concentrated on major index constituent stocks rather than the non-constituent stocks held by the company[3] - Administrative expenses decreased primarily due to several staff retirements in Q4 2023, leading to a reduction in employee benefit expenses from HK$7.2 million to HK$4.3 million[11] PROSPECTS The company anticipates future macroeconomic risks and will adopt a cautious yet proactive investment strategy, emphasizing diversification and considering investments in China's policy-supported technology innovation sectors - The company will continue to invest in a cautious yet proactive manner, emphasizing diversified investments for risk management in the second half of the year[13][14] - The company will consider investing in mainland China's policy-driven technology innovation sectors, including microchips, artificial intelligence, quantum computing, biotechnology, and clean energy projects[11] - Future macroeconomic risks primarily include major central bank monetary policies, the financial health of European and American banking sectors, the pace of China's economic recovery, the intensity of policy stimulus, and China-US relations[12] MANAGEMENT DISCUSSION AND ANALYSIS This section provides an in-depth analysis of the company's financial position, capital structure, risk management, and human resources during the reporting period Financial Position and Capital Structure As of June 30, 2024, the company's financial resources and liquidity declined due to cash outflow, while its capital structure remained stable with a low gearing ratio Financial Position and Capital Structure Metrics | Metric | June 30, 2024 (HK$ Million) | December 31, 2023 (HK$ Million) | | :--- | :--- | :--- | | Bank and Cash Balances | Approx. 2.4 | Approx. 12.2 | | Net Current Assets | Approx. 16.5 | Approx. 31.6 | | Gearing Ratio | Approx. 0.9% | Approx. 1.2% | - The company's total number of issued shares remained at 141,423,187, with no change in capital structure[15] - No share options lapsed, were granted, exercised, or cancelled during the period, and there were no outstanding share options at period-end[15] Risk Management and Human Resources Post-reporting period, the company's financial asset portfolio continued to incur losses, while foreign exchange risk remains insignificant, and employee numbers slightly increased - From June 30, 2024, to the date of approval of the financial statements, the net loss on financial assets at fair value through profit or loss was approximately HK$2.2 million[16][19] - The Group's investment portfolio primarily consists of Hong Kong-listed equities denominated in HKD, thus foreign exchange risk exposure is insignificant[17][20] - The Group has bank loans of HK$0.3 million, secured by leased land and buildings with a carrying value of approximately HK$8.0 million[18] - As of June 30, 2024, the company had 15 employees, an increase from 13 at the end of 2023[18] PARTICULARS OF MAJOR INVESTMENTS HELD BY THE GROUP This section provides detailed information on the Group's major investments, including their business nature, percentage of total assets, and fair value performance Top 10 Investments Analysis As of June 30, 2024, the Group's top ten investments, primarily Hong Kong-listed equities, aimed for capital appreciation or dividend income, with most experiencing share price declines, notably Allegro Culture's 70.9% drop and trading suspension Top 10 Major Investments as of June 30, 2024 | Investment Name | Business Nature | % of Total Assets | Carrying Value (HK$ Thousand) | Fair Value (Loss)/Gain (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | China Oriented | Driving Training Services | 27.99% | 10,416 | (2,284) | | Allegro Culture | Advertising, Healthcare | 4.80% | 1,786 | (2,709) | | JTF | Fuel Oil Sales | 4.14% | 1,540 | (595) | | Sky Blue 11 | Integrated Circuits, Yachts | 3.28% | 1,222 | (1,258) | | Alibaba | E-commerce | 3.12% | 1,162 | (336) | | XiangXing | Port and Logistics Services | 3.12% | 1,159 | 112 | | JD.com | E-commerce | 2.91% | 1,082 | (416) | | Okura Holdings | Japanese Pachinko Parlors | 2.86% | 1,063 | (1,742) | | HKEX | Stock Exchange | 2.69% | 1,001 | (388) | | Xiaomi | Smartphones, IoT | 2.66% | 989 | (206) | - The Group's investment strategy combines buy-and-hold and short-term trading approaches to enhance investment returns from listed securities[25][26] - Allegro Culture's shares have been suspended from trading since April 2, 2024, due to delayed publication of its 2023 results, with its share price falling 70.9% during the reporting period[30] Condensed Consolidated Financial Statements This section presents the condensed consolidated statements of profit or loss, financial position, and cash flows for the reporting period CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS For the six months ended June 30, 2024, the Group reported a HK$14.37 million loss, a swing from profit, primarily due to HK$8.265 million net fair value loss on financial assets, resulting in a HK$0.1016 basic loss per share Condensed Consolidated Statement of Profit or Loss | Item (HK$ Thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Total Operating Proceeds | 16,054 | 55,951 | | Net (Loss)/Gain on Financial Assets at Fair Value Through Profit or Loss | (8,265) | 19,537 | | Operating (Loss)/Profit | (14,361) | 7,596 | | Total (Loss)/Profit for the Period | (14,370) | 7,580 | | Basic (Loss)/Earnings Per Share (HK Cents) | (10.16) | 5.36 | CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As of June 30, 2024, the Group's total assets significantly decreased to HK$37.214 million, with total equity falling to HK$34.934 million, resulting in a HK$0.25 NAV per share, primarily due to financial asset value and cash balance reductions Condensed Consolidated Statement of Financial Position | Item (HK$ Thousand) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total Assets | 37,214 | 52,558 | | Non-current Assets | 18,438 | 17,660 | | Current Assets | 18,776 | 34,898 | | Total Equity | 34,934 | 49,304 | | Total Liabilities | 2,280 | 3,254 | | Net Current Assets | 16,496 | 31,644 | | NAV per Share (HK$) | 0.25 | 0.35 | CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS In H1 2024, the Group experienced a HK$9.572 million net cash outflow from operating activities, a reversal from prior year's inflow, leading to a significant decrease in period-end cash and cash equivalents to HK$2.364 million Condensed Consolidated Statement of Cash Flows | Item (HK$ Thousand) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Net Cash (Used in)/Generated from Operating Activities | (9,572) | 12,098 | | Net Cash Generated from/(Used in) Investing Activities | 40 | (24) | | Net Cash Used in Financing Activities | (281) | (280) | | Net (Decrease)/Increase in Cash and Cash Equivalents | (9,813) | 11,794 | | Cash and Cash Equivalents at End of Period | 2,364 | 13,622 | NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS This section provides detailed notes to the condensed consolidated financial statements, covering fair value measurements and significant related party transactions 3. FAIR VALUE MEASUREMENTS The company measures financial assets using a three-level fair value hierarchy, with most listed equity securities as Level 1, but one suspended security was reclassified to Level 3 and valued at HK$1.786 million using unobservable inputs - Due to a held listed equity security being suspended from trading since April 2, 2024, its fair value measurement has been transferred from Level 1 (relying on active market quotes) to Level 3 (relying on unobservable inputs)[58][59] Fair Value Hierarchy of Financial Assets | Fair Value Hierarchy Level | June 30, 2024 (HK$ Thousand) | Description | | :--- | :--- | :--- | | Level 1 | 24,298 | Quoted prices in active markets for identical assets | | Level 2 | 0 | Observable inputs (other than quoted prices) | | Level 3 | 1,786 | Unobservable inputs | 18. SIGNIFICANT RELATED PARTY TRANSACTIONS AND CONNECTED TRANSACTIONS During the reporting period, the Group engaged in significant related party transactions, including HK$0.195 million in investment management fees paid to a related investment manager and HK$0.964 million in employee benefits to the Chairman's spouse - The company paid HK$0.195 million in investment management fees to its investment manager, Success Advance Investments Limited, whose person in charge is Mr. Li Kwok Leung, an Executive Director of the company, constituting a connected transaction[92][93][97] - Ms. Ding Lai Ling, wife of Dr. Lam Man Chan, the company's Chairman and Non-executive Director, served as Project and Administration General Manager and received HK$0.964 million in employee benefits[92][94][97] OTHER INFORMATION This section provides additional information on directors, shareholders' interests, share options, and the company's corporate governance practices Directors', Shareholders' Interests and Share Options As of June 30, 2024, the Chairman held 24.96% of shares through Goodchamp Holdings Limited, and no share options were granted, exercised, or cancelled during the period - Dr. Lam Man Chan, the company's Chairman and Non-executive Director, beneficially owned 35,305,770 company shares through Goodchamp Holdings Limited, representing 24.96% of the issued share capital[106][110][111] - For the six months ended June 30, 2024, no share options were granted, exercised, or cancelled, and there were no outstanding share options at period-end[115] CORPORATE GOVERNANCE PRACTICES The company generally adheres to high corporate governance standards but noted two deviations: inconsistent timely dispatch of board meeting documents and non-separation of Chairman and CEO roles since November 2023 - The company deviated from Corporate Governance Code Provision C.2, which requires the separation of Chairman and Chief Executive Officer roles; since the CEO's retirement in November 2023, these responsibilities have been jointly undertaken by the Board and senior management team[120][123] - The company did not fully comply with Code Provision C.5.8, as complete meeting documents were not sent to all directors at least 3 days in advance for some Board meetings[119][122] INDEPENDENT REVIEW REPORT This section presents the independent review report on the condensed consolidated interim financial information Auditor's Conclusion RSM Hong Kong, the independent auditor, reviewed the interim financial information and found no material non-compliance with Hong Kong Accounting Standard 34, noting the review's scope is less than an audit - The independent auditor, RSM Hong Kong, concluded that based on their review, they found no matters indicating that the interim financial information was not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[103] - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, and its scope is substantially less than an audit, thus no audit opinion is expressed[100][102] CORPORATE INFORMATION This section provides essential details regarding the company's key personnel, committees, and professional advisors Key Corporate Personnel and Advisors This section outlines the company's key personnel, including Dr. Lam Man Chan as Chairman, committee chairs, RSM Hong Kong as auditor, and Success Advance Investments Limited as investment manager - Chairman and Non-executive Director: Dr. Lam Man Chan[133] - Auditor: RSM Hong Kong[133] - Investment Manager: Success Advance Investments Limited[133] - Hong Kong Share Registrar: Tricor Tengis Limited[134]