迷策略(02440) - 2024 - 中期财报

Corporate Information This section provides core corporate information including the company's basic registration details, board and committee members, principal places of business, legal advisors, auditors, and principal bankers - The Chairman of the Board is Dr. Chen Ping, with executive directors including Ms. Wang Zishi, Mr. Feng Yijing, and Mr. Wang Jun[3] - The company's auditor is Ernst & Young[5] - The company's principal places of business are located in Nanjing, China, and Hong Kong[4] Management Discussion and Analysis Business Overview & Highlights The company, a Chinese IoT data transmission and communication equipment provider, experienced a significant performance decline in H1 2024, with revenue plummeting 82.4% to RMB 31.1 million and a net loss of RMB 30.7 million, primarily due to project delays and lack of communication equipment sales | Metric | H1 2024 (Unaudited) | H1 2023 (Unaudited) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | RMB 31.1 million | RMB 176.7 million | -82.4% | | Gross Profit | RMB 1.3 million | RMB 27.2 million | -95.1% | | (Net Loss)/Profit | (RMB 30.7 million) | RMB 10.3 million | Turn from Profit to Loss | | Adjusted (Net Loss)/Profit | (RMB 25.9 million) | RMB 12.2 million | Turn from Profit to Loss | - Key reasons for revenue decline include: (i) IoT industry clients delaying projects due to cash flow concerns and macroeconomic uncertainty; and (ii) no communication equipment sales during the reporting period due to insufficient client demand[8] - In terms of business structure, non-5G business revenue decreased by 70.1% year-on-year to RMB 31.1 million, while 5G business revenue dropped from RMB 72.8 million in the same period last year to zero[10][12] Outlook Facing a complex macroeconomic environment and intense industry competition, the Group plans to implement multiple measures in 2024 to ensure sustainable development, focusing on client diversification, technology upgrades, and risk management - The company plans to address challenges through: Client Diversification: Expanding 5G private network business to advanced manufacturing, transportation, environmental protection, and energy sectors to broaden the client base; Technology Upgrades: Leveraging AI and big data to enhance its Universal IoT Platform, extending its application in industrial IoT; Risk Management: Strengthening trade receivables collection, monitoring credit risk, and implementing prudent cost control measures to ensure sufficient operating cash flow[15] Business Performance This section details the IoT industry outlook, the company's competitive advantages, and reviews the performance of its data transmission and processing services and communication equipment sales, noting that all revenue came from data transmission services with zero equipment sales, and analyzes client concentration, new contracts, and R&D investment Industry and Strengths China's IoT market, particularly 5G applications, is projected to grow, and despite intense competition, the company is confident in seizing opportunities through its focus on network connectivity and platform layers, one-stop solutions, and R&D capabilities - According to Frost & Sullivan, China's 5G private network market is expected to grow at a CAGR of approximately 62.2% between 2021 and 2026, with the market size projected to reach approximately RMB 491.9 billion by 2026[15] - The company is positioned as an IoT solution provider focused on the network connectivity and platform layers, operating in a competitive market with over 30,000 participants[16][17] Data Transmission and Processing Services As the sole revenue source during the reporting period, data transmission and processing services revenue decreased by 73.4% to RMB 31.1 million, with non-5G network services revenue down 67.5% and 5G private network services revenue plummeting to zero, indicating clients opted for more basic network solutions amid economic uncertainty | Service Type | H1 2024 (RMB '000) | H1 2023 (RMB '000) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Non-5G Network Services | 31,050 | 95,552 | -67.5% | | 5G Private Network Services | 0 | 21,061 | -100.0% | | Total | 31,050 | 116,613 | -73.4% | Sales of Telecommunication Equipment Due to insufficient client demand, the telecommunication equipment sales business generated no revenue in H1 2024, compared to RMB 58.5 million in the prior year period - Revenue from telecommunication equipment sales decreased from RMB 58.5 million in H1 2023 to zero in H1 2024, primarily due to insufficient client demand[23][24] Customers, Contracts, and R&D The company exhibits high client concentration, with its top five clients accounting for 97.2% of total revenue; in H1 2024, it secured 12 new contracts averaging RMB 2.5 million each, and continues to invest in R&D, holding 38 utility model patents, 21 invention patents, and 90 copyrights in China - Revenue from the top five clients increased from 85.2% in the same period of 2023 to 97.2% in H1 2024, indicating further increased client concentration[25] - As of June 30, 2024, the Group held 38 utility model patents, 21 invention patents, and 90 copyrights in China[26] Financial Review This section provides an in-depth analysis of the company's H1 2024 financial performance, covering revenue, costs, profitability, financial position, and cash flow, highlighting significant declines in revenue and gross margin, increased administrative expenses due to R&D, and net cash outflow from operating activities Revenue Analysis Total revenue for H1 2024 was RMB 31.1 million, a year-on-year decrease of 82.4%, with all revenue derived from non-5G business in the Chinese market, as data transmission services revenue fell by 73.4% and equipment sales revenue dropped to zero | Revenue Source | H1 2024 (RMB '000) | H1 2023 (RMB '000) | | :--- | :--- | :--- | | By Business Segment | | | | Data Transmission and Processing Services | 31,050 | 116,613 | | Sales of Equipment | 0 | 58,524 | | By Technology | | | | 5G Business | 0 | 72,830 | | Non-5G Business | 31,050 | 103,914 | | Total | 31,050 | 176,744 | Costs and Expenses Cost of sales decreased by 80.1% in line with revenue, but administrative expenses surged 86.9% to RMB 26.0 million due to increased R&D spending (from RMB 4.5 million to RMB 12.5 million) and higher staff costs from equity-settled share options and severance, while impairment losses on financial assets expanded from RMB 1.7 million to RMB 6.5 million - Administrative expenses increased by 86.9% year-on-year, primarily due to: (i) R&D expenses increasing to RMB 12.5 million (H1 2023: RMB 4.5 million); and (ii) higher staff costs from equity-settled share option expenses and severance payments[34][35] - Impairment losses on financial assets increased from RMB 1.7 million in the same period last year to RMB 6.5 million, mainly due to an increase in trade receivables overdue for more than one year[37] Profitability Analysis Due to declining revenue and gross margin, the company's gross profit plummeted 95.1% to RMB 1.3 million, with gross margin narrowing from 15.4% to 4.3%, resulting in a pre-tax and net loss of RMB 30.7 million, and an adjusted net loss of RMB 25.9 million, a reversal from profitability in the prior year | Metric | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Gross Profit | RMB 1.3 million | RMB 27.2 million | | Gross Margin | 4.3% | 15.4% | | (Net Loss)/Profit | (RMB 30.7 million) | RMB 10.3 million | - The decline in gross margin was primarily attributable to: (i) intensified market competition; (ii) absence of high-margin US IoT antenna export business; and (iii) lower cooperation prices adopted to develop new clients[38] | Item (RMB '000) | H1 2024 | H1 2023 | | :--- | :--- | :--- | | (Loss)/Profit for the period | (30,742) | 10,291 | | Add: Equity-settled share option expenses | 4,809 | 1,887 | | Adjusted (Net Loss)/Profit for the period | (25,933) | 12,178 | Financial Position and Liquidity As of June 30, 2024, cash and cash equivalents decreased to RMB 14.1 million, mainly due to a net cash outflow of RMB 18.1 million from operating activities; total trade receivables slightly declined, but impairment provisions grew 15.2% to RMB 49.3 million, while the gearing ratio remained stable at 2.6% and capital expenditure dropped to zero - Cash and cash equivalents decreased from RMB 33.2 million at the end of 2023 to RMB 14.1 million at the end of the reporting period, primarily due to a net cash outflow of approximately RMB 18.1 million from operating activities[40][47] | Trade and Bills Receivables (RMB '000) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Gross Trade Receivables | 312,636 | 321,254 | | Impairment | (49,279) | (42,785) | | Net | 263,357 | 279,831 | - The gearing ratio (total debt/total equity) remained stable at 2.6%, consistent with the end of 2023[44] Corporate Governance and Other Information Corporate Governance Practices The company is committed to maintaining good corporate governance but deviated from the Corporate Governance Code's requirement for separation of Chairman and CEO roles, with Dr. Chen Ping currently holding both positions, which the Board believes ensures leadership unity and decision-making efficiency - The company deviated from Corporate Governance Code provision C.2.1, as the roles of Chairman and Chief Executive Officer are not separated, both held by Dr. Chen Ping[49] Use of Proceeds from the Global Offering The company disclosed the use of HKD 47.1 million net proceeds from its December 2022 global offering, with HKD 31.6 million utilized and HKD 15.5 million remaining unutilized as of June 30, 2024, primarily for R&D, business development, and working capital, with no significant changes or delays | Use | Net Proceeds Allocated (HKD million) | Utilized During Reporting Period (HKD million) | Unutilized as of Period End (HKD million) | | :--- | :--- | :--- | :--- | | Further R&D | 17.5 | 4.8 | 10.9 | | R&D of Industrial-grade Wireless LAN | 5.5 | 2.4 | - | | Development of Digital Foundation | 7.4 | 5.7 | - | | Upgrading R&D Infrastructure | 4.1 | - | 3.0 | | Enhancing Business Development Capabilities | 3.5 | 0.2 | 1.6 | | Additional Working Capital | 4.7 | 4.4 | - | | Total | 47.1 | 17.5 | 15.5 | Directors' and Shareholders' Interests This section discloses the interests of the company's directors, chief executives, and substantial shareholders in the company's shares as of June 30, 2024, as required by the Securities and Futures Ordinance, highlighting Executive Director Dr. Chen Ping (through his spouse Ms. Wang Zishi) and Ms. Wang Zishi as key shareholding directors - Executive Director Dr. Chen Ping is deemed to be interested in 130,026,676 shares, representing 57.79% of the company's issued share capital, derived from his spouse Ms. Wang Zishi's holdings[54][59] - Substantial shareholder Howkingtech Holding Limited holds 121,124,579 shares, representing 53.83% of the company's issued share capital[61] Share Option and Award Schemes The company operates a Share Option Scheme and a Share Award Scheme; as of the reporting period, 22,500,000 share options remained unexercised under the Share Option Scheme at an exercise price of HKD 1.56, while no award shares were granted under the Share Award Scheme, though the company held 10,656,973 treasury shares for the plan - As of June 30, 2024, 22,500,000 share options remained unexercised under the Share Option Scheme, with an exercise price of HKD 1.56 per share, and no options were exercised, cancelled, or lapsed[69][124] - During the reporting period, no award shares were granted, vested, cancelled, or lapsed under the Share Award Scheme; as of the period end, the number of treasury shares held for the scheme was 10,656,973 shares[71][132] Other Information The Board resolved not to declare an interim dividend for 2024, the Audit Committee reviewed the unaudited interim results, and no significant events occurred after the reporting period - The Board resolved not to declare any interim dividend for the six months ended June 30, 2024[71] Interim Financial Statements Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The financial statements show the company recorded revenue of RMB 31.1 million and a net loss of RMB 30.7 million for the six months ended June 30, 2024, compared to RMB 176.7 million revenue and RMB 10.3 million net profit in the prior year period, resulting in a basic loss per share of RMB 14.34 cents | Item (RMB '000) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Revenue | 31,050 | 176,744 | | Gross Profit | 1,325 | 27,203 | | (Loss)/Profit before tax | (30,742) | 12,049 | | (Loss)/Profit for the period | (30,742) | 10,291 | | Total comprehensive (loss)/income | (31,356) | 9,797 | | Basic (loss)/earnings per share | (RMB 14.34 cents) | RMB 4.58 cents | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2024, the company's total assets were RMB 312.6 million, total liabilities RMB 70.7 million, and net assets RMB 241.8 million, with net current assets at RMB 217.4 million, and trade and bills receivables (net) of RMB 263.4 million being the primary asset | Item (RMB '000) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total Non-current Assets | 24,860 | 28,147 | | Total Current Assets | 287,710 | 322,622 | | Total Assets | 312,570 | 350,769 | | Total Current Liabilities | 70,274 | 81,465 | | Total Non-current Liabilities | 466 | 927 | | Total Liabilities | 70,740 | 82,392 | | Net Assets | 241,830 | 268,377 | | Total Equity | 241,830 | 268,377 | Interim Condensed Consolidated Statement of Changes in Equity As of June 30, 2024, total shareholders' equity decreased from RMB 268.4 million at the beginning of the year to RMB 241.8 million, primarily due to a net loss of RMB 30.7 million for the period, partially offset by RMB 4.8 million in equity-settled share option expenses - Total shareholders' equity decreased from RMB 268,377 thousand at the end of 2023 to RMB 241,830 thousand as of June 30, 2024, with a net change of -RMB 26,547 thousand[77] - The primary item leading to the decrease in equity was a loss for the period of RMB 30,742 thousand, while equity-settled share option expenses increased equity by RMB 4,809 thousand[77] Interim Condensed Consolidated Statement of Cash Flows In H1 2024, the company experienced a net cash outflow of RMB 18.1 million from operating activities, a net cash inflow of RMB 5.9 million from investing activities, and a net cash outflow of RMB 0.7 million from financing activities, resulting in a net decrease in cash and cash equivalents of RMB 12.9 million, with an ending balance of RMB 14.1 million | Item (RMB '000) | H1 2024 (Unaudited) | H1 2023 (Unaudited) | | :--- | :--- | :--- | | Net cash flows from operating activities | (18,134) | (32,551) | | Net cash flows from investing activities | 5,923 | 59,729 | | Net cash flows from financing activities | (665) | (26,896) | | Net (decrease)/increase in cash and cash equivalents | (12,876) | 282 | | Cash and cash equivalents at beginning of period | 27,540 | 47,301 | | Cash and cash equivalents at end of period | 14,098 | 48,684 | Notes to the Interim Condensed Consolidated Financial Statements This section provides supplementary information to the financial statements, including accounting policies, segment information, detailed revenue and client breakdowns, aging analysis of key assets and liabilities, and related party transactions, highlighting that all revenue originated from mainland China, trade receivables aging deteriorated, and significant equity-settled share option expenses were included in key management personnel compensation - All revenue was derived from clients in mainland China and recognized at a point in time as "IoT application data transmission and processing services"[89][96][97] | Aging Analysis of Trade and Bills Receivables (Net) | June 30, 2024 (RMB '000) | December 31, 2023 (RMB '000) | | :--- | :--- | :--- | | Within 1 year | 147,569 | 191,340 | | 1 to 2 years | 82,215 | 71,072 | | 2 to 3 years | 27,577 | 11,205 | | Over 3 years | 5,996 | 6,214 | | Total | 263,357 | 279,831 | - Total remuneration paid to key management personnel was RMB 6.709 million, including RMB 4.697 million in equity-settled share option expenses[134] Definitions Definitions This section provides clear definitions for specific terms and abbreviations used throughout the report to ensure accurate reader comprehension, covering technical terms like "5G" and "IoT," company-specific terms such as "Universal IoT Platform," and regulatory and financial terms like "Corporate Governance Code" and "Share Option Scheme" - Universal IoT Platform is defined as the Group's self-developed centralized data platform for IoT solutions, providing infrastructure functions for upper-layer applications[146] - Share Option Scheme refers to the share option scheme adopted by the company on November 11, 2022[146] - Share Award Scheme refers to the Howkingtech Share Award Scheme adopted by the company on May 16, 2023[146]