中国宏桥(01378) - 2024 - 中期财报

Company Information This section provides fundamental information about the company Financial Highlights The company achieved significant growth in revenue, gross profit, and net profit, alongside improved profitability ratios Financial Performance (For the six months ended June 30) | Metric (For the six months ended June 30) | 2024 (RMB thousands) | 2023 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 73,592,249 | 65,733,870 | 12.0% | | Gross Profit | 17,801,761 | 5,892,364 | 202.1% | | Net Profit Attributable to Company Owners | 9,154,911 | 2,456,623 | 272.7% | | Basic Earnings Per Share (RMB Yuan) | 0.966 | 0.259 | 273.0% | | Gross Margin (%) | 24.2 | 9.0 | +15.2 percentage points | | Net Margin (%) | 13.6 | 4.5 | +9.1 percentage points | Financial Position (As of June 30) | Metric (As of June 30) | 2024 (RMB thousands) | 2023 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 37,501,630 | 29,776,735 | 25.9% | | Debt/EBITDA (times) | 1.7 | 3.6 | -1.9 times | | Debt/Total Capital (%) | 39.0 | 39.5 | -0.5 percentage points | Chairman's Report The Chairman's report highlights the company's strong financial performance driven by favorable market conditions and strategic initiatives in green development, technological innovation, and international cooperation - The Chairman's report indicates that despite a complex global economic situation, China's economy has maintained stable growth. The company benefited from rising aluminum and alumina prices, while maintaining cost advantages through its integrated upstream and downstream industrial chain and overseas resource integration, achieving significant profit growth[14][15] Financial Metrics (For the six months ended June 30, 2024) | Financial Metric (For the six months ended June 30, 2024) | Amount | Year-on-Year Change | | :--- | :--- | :--- | | Revenue | approx. RMB 73.592 billion | +12.0% | | Gross Profit | approx. RMB 17.802 billion | +202.1% | | Net Profit Attributable to Shareholders | approx. RMB 9.155 billion | +272.7% | | Basic Earnings Per Share | approx. RMB 0.966 Yuan | +273.0% | | Interim Dividend | HK 59.0 cents per share | +73.5% (vs HK 34.0 cents) | - The company's strategy focuses on technological innovation, digitalization, and green and low-carbon transformation, with key initiatives including green development through clean energy utilization, technological innovation via research platforms like Weiqiao (Suzhou) Lightweight Research Institute, lightweight expansion through strategic collaborations with automotive manufacturers, and international cooperation by integrating into global supply chains[15][16] - The company received high recognition in the capital market, successfully issuing various domestic bonds totaling RMB 9.5 billion at a historical low for medium-to-long-term bond rates, and successfully issuing USD 300 million senior unsecured bonds with over 7 times oversubscription[17] Management Discussion and Analysis This section provides a comprehensive review of the company's operational and financial performance, along with industry trends and future strategies Industry Review In the first half of 2024, demand from photovoltaic and new energy vehicle sectors drove an increase in non-ferrous metal prices, with aluminum prices rising significantly year-on-year, and both global and Chinese primary aluminum production and consumption growing Market Indicators (H1 2024) | Market Indicators (H1 2024) | Average Price | Year-on-Year Change | | :--- | :--- | :--- | | LME Three-Month Aluminum | approx. USD 2,401/ton | +1.6% | | SHFE Three-Month Aluminum | approx. RMB 19,846/ton | +8.2% | Production and Sales Data (H1 2024) | Production and Sales Data (H1 2024) | Global | China | | :--- | :--- | :--- | | Primary Aluminum Production | approx. 35.8 million tons (+4.0% YoY) | approx. 21.3 million tons (+5.7% YoY) | | Primary Aluminum Consumption | approx. 35.94 million tons (+5.3% YoY) | approx. 22.1 million tons (+8.2% YoY) | Business Review The company saw increased product output, notably a 30.6% rise in aluminum alloy processed products, driving a 12.0% revenue growth from higher volumes and prices, and a 272.7% surge in net profit due to improved gross margins and a lower prior-year base Product Output (H1 2024) | Product Output (H1 2024) | Output | Year-on-Year Change | | :--- | :--- | :--- | | Aluminum Alloy Products | approx. 3.221 million tons | +5.3% | | Aluminum Alloy Processed Products | approx. 0.493 million tons | +30.6% | - The company's total revenue increased by 12.0% to RMB 73.59 billion, primarily driven by increases in both sales price and volume of aluminum alloy products and alumina products[23] - Net profit attributable to shareholders significantly increased by 272.7% to RMB 9.15 billion, mainly due to (i) increased gross profit from higher volumes and prices of aluminum alloy and alumina products, coupled with lower procurement prices for key raw materials like coal and anode carbon blocks, and (ii) a lower net profit base in the first half of 2023[25] Financial Review This section analyzes revenue, gross profit, and expense changes across product lines, highlighting a significant increase in overall gross margin to 24.2% and proportional shifts in operating and finance costs Performance by Product Line (H1 2024) | Performance by Product Line (H1 2024) | Revenue (RMB billions) | Revenue YoY Change | Gross Margin | Gross Margin YoY Change | | :--- | :--- | :--- | :--- | :--- | | Aluminum Alloy Products | 49.312 | +7.2% | 24.6% | +15.9 percentage points | | Alumina | 16.200 | +19.7% | 25.4% | +16.5 percentage points | | Aluminum Alloy Processed Products | 7.582 | +34.3% | 21.0% | +7.4 percentage points | | Total | 73.592 | +12.0% | 24.2% | +15.2 percentage points | - Sales and distribution expenses increased by 20.5% year-on-year to RMB 366 million, primarily due to higher transportation costs from increased sales volume of alumina and aluminum alloy processed products[28] - Administrative expenses decreased by 12.6% year-on-year to RMB 2.454 billion, mainly due to a reduction in research and development expenses recognized within administrative expenses[29] - Finance costs increased by 5.9% year-on-year to RMB 1.561 billion, primarily due to higher interest expenses resulting from an increase in total interest-bearing debt[31] - Income tax expense increased by 343.2% year-on-year to RMB 3.863 billion, mainly due to a significant increase in profit before tax[34] Liquidity and Financial Resources As of June 30, 2024, the Group's cash and cash equivalents increased to RMB 37.5 billion, supported by strong operating cash flow, while investing and financing activities resulted in net outflows for project development and debt servicing Cash Flow Statement Summary (H1 2024) | Cash Flow Statement Summary (H1 2024) | Amount (RMB thousands) | | :--- | :--- | | Net Cash Inflow from Operating Activities | 14,263,699 | | Net Cash Outflow from Investing Activities | (6,461,570) | | Net Cash Outflow from Financing Activities | (2,062,821) | - Capital expenditure during the period was approximately RMB 5.56 billion, primarily for construction expenses of projects such as the Yunnan Green Aluminum Innovation Industrial Park, lightweight materials base, and new energy projects[32] - As of June 30, 2024, the Group had cash and cash equivalents of RMB 37.502 billion, an 18.2% increase from RMB 31.721 billion at the end of 2023[32] Capital Structure The Group maintains a stable capital structure with a 48.5% asset-liability ratio and RMB 103.6 billion in total liabilities, demonstrating strong risk management through a predominantly fixed-rate and RMB-denominated debt portfolio, optimized by recent bond issuances Capital Structure Metrics (As of June 30, 2024) | Capital Structure Metrics (As of June 30, 2024) | Value | Comparison (As of December 31, 2023) | | :--- | :--- | :--- | | Total Liabilities | approx. RMB 103.63 billion | approx. RMB 94.06 billion | | Asset-Liability Ratio | approx. 48.5% | approx. 47.0% | | Total Bank Borrowings | approx. RMB 44.04 billion | - | | Net Current Assets | approx. RMB 20.51 billion | - | - Debt composition includes approximately 87.3% of bank borrowings at fixed interest rates and 12.7% at floating rates, with approximately 87.0% of total debt denominated in RMB and 13.0% in foreign currencies[38][40] Future Outlook Despite global uncertainties, the Group remains confident in China's economic outlook, focusing on high-quality development and new productive forces through green and technological innovation to lead industry transformation - The company's future strategic core is to promote high-quality development and foster new productive forces[45] - Two major strategic focuses include green and low-carbon for continuous green transformation and technological innovation to deeply integrate industrial, innovation, and talent chains[45] Supplementary Information This section provides additional disclosures on major shareholders' interests, convertible bonds and senior notes, and corporate governance practices Major Shareholders' Interests This section discloses the interests of major shareholders in the company's shares as of June 30, 2024, with Chiping Xingwang Private Trust Company (via China Hongqiao Holdings) being the largest shareholder holding approximately 64.27% of shares, and CITIC Group Corporation and its associates collectively holding approximately 8.98% long positions Major Shareholders' Interests (As of June 30, 2024) | Shareholder Name | Capacity/Nature of Interest | Total Number of Shares Held (Long Position) | Approximate Percentage (%) | | :--- | :--- | :--- | :--- | | Chiping Xingwang Private Trust Company | Trustee | 6,090,031,073 | 64.27 | | China Hongqiao Holdings Limited | Beneficial Owner | 6,090,031,073 | 64.27 | | Ms. Zhang Hongxia | Interest of Person Acting in Concert | 6,098,901,073 | 64.36 | | Ms. Zhang Yanhong | Interest of Person Acting in Concert | 6,098,901,073 | 64.36 | | CITIC Limited | Interest in Controlled Corporation | 850,625,461 | 8.98 | | CITIC Group Corporation | Interest in Controlled Corporation | 850,625,461 | 8.98 | Convertible Bonds and Senior Notes This section details the company's convertible bonds and senior notes, including multiple adjustments to the conversion price of the 5.25% convertible bonds due 2026 to HKD 6.54 per share due to dividend distribution, the full redemption of the maturing USD 500 million senior notes, and the new issuance of USD 300 million senior unsecured notes - Due to the company's declaration of the 2023 final dividend, the conversion price of the USD 300 million convertible bonds due 2026 was adjusted from HKD 6.82 per share to HKD 6.54 per share, effective May 31, 2024[57] - The company fully redeemed the principal amount of USD 500 million of 6.25% senior unsecured notes due 2024 upon their maturity on June 8, 2024[58] - The company newly issued USD 300 million in principal amount of 7.75% senior unsecured notes due 2025 on March 25, 2024[58] Corporate Governance During the reporting period, the company largely complied with the Corporate Governance Code, with one deviation where Mr. Zhang Bo serves as both Chief Executive Officer and Chairman of the Board, a dual role the Board believes benefits the company's stable business development - The company has one deviation from the Corporate Governance Code: Mr. Zhang Bo serves as both Chief Executive Officer and Chairman of the Board, whereas Code Provision C.2.1 stipulates that the roles of chairman and chief executive should be separate[61] - The Board explains that considering Mr. Zhang Bo's extensive management experience and industry knowledge, this arrangement is beneficial for the Group's continuous and stable business development, and the current Board composition ensures a balance of power and authority[61] Interim Condensed Consolidated Financial Information This section presents the interim condensed consolidated financial statements, including the review report, statement of profit or loss, statement of financial position, statement of cash flows, and explanatory notes Review Report The auditor, Shinewing (HK) CPA Limited, has reviewed the Group's interim condensed consolidated financial information in accordance with Hong Kong Standard on Review Engagements, concluding that there is no evidence suggesting the financial information is not prepared in all material respects in accordance with International Accounting Standard 34, "Interim Financial Reporting" - The auditor concluded that based on their review work, nothing has come to their attention that causes them to believe the interim condensed consolidated financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34[65] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2024, the company reported revenue of RMB 73.59 billion, a 12.0% year-on-year increase; gross profit of RMB 17.80 billion, up 202.1%; profit for the period (net profit) reached RMB 10.01 billion, a 236.7% increase; and net profit attributable to company owners was RMB 9.15 billion, up 272.7% Profit or Loss Statement Item (For the six months ended June 30) | Profit or Loss Statement Item (For the six months ended June 30) | 2024 (RMB thousands) | 2023 (RMB thousands) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 73,592,249 | 65,733,870 | +12.0% | | Gross Profit | 17,801,761 | 5,892,364 | +202.1% | | Profit Before Tax | 13,870,989 | 3,843,698 | +260.9% | | Profit for the Period | 10,007,876 | 2,972,024 | +236.7% | | Profit Attributable to Company Owners | 9,154,911 | 2,456,623 | +272.7% | Condensed Consolidated Statement of Financial Position As of June 30, 2024, the Group's total assets reached RMB 213.71 billion, total liabilities were RMB 103.63 billion, resulting in an asset-liability ratio of 48.5%, and total equity was RMB 110.08 billion, a 3.6% increase from the end of 2023, with both non-current and current assets growing, including cash and cash equivalents increasing to RMB 37.50 billion Balance Sheet Item | Balance Sheet Item | As of June 30, 2024 (RMB thousands) | As of December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Total Assets | 213,707,665 | 200,320,085 | | Non-current Assets | 116,725,397 | 112,925,122 | | Current Assets | 96,982,268 | 87,394,963 | | Total Liabilities | 103,632,190 | 94,063,640 | | Current Liabilities | 76,469,447 | 74,029,126 | | Non-current Liabilities | 27,162,743 | 20,034,514 | | Total Equity | 110,075,475 | 106,256,445 | Condensed Consolidated Statement of Cash Flows In the first half of 2024, the Group generated a strong net cash inflow of RMB 14.26 billion from operating activities, a net cash outflow of RMB 6.46 billion from investing activities primarily for property, plant, and equipment purchases, and a net cash outflow of RMB 2.06 billion from financing activities mainly for dividend and interest payments and debt repayment, resulting in a net increase in cash and cash equivalents of RMB 5.74 billion at period-end Cash Flow Statement Item (For the six months ended June 30) | Cash Flow Statement Item (For the six months ended June 30) | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 14,263,699 | 7,087,021 | | Net Cash Used in Investing Activities | (6,461,570) | (6,060,284) | | Net Cash (Used in) Generated from Financing Activities | (2,062,821) | 1,215,205 | | Net Increase in Cash and Cash Equivalents | 5,739,308 | 2,241,942 | | Cash and Cash Equivalents at End of Period | 37,501,630 | 29,776,735 | Notes to the Interim Condensed Consolidated Financial Information The notes to the financial statements provide detailed explanations of financial statement items, including revenue breakdown by product and region, reasons for the significant increase in income tax expense, dividend distribution details, bank borrowing structure, changes in convertible bond terms, and significant related party transactions - Revenue composition (Note 4): Of the total revenue of RMB 73.59 billion, liquid aluminum alloy contributed RMB 45.22 billion, and alumina products contributed RMB 16.20 billion; by region, revenue from the Chinese market was RMB 69.53 billion, accounting for 94.5% of total revenue[94] - Dividends (Note 9): The 2023 final dividend, totaling approximately RMB 2.50 billion, was recognized and paid during the reporting period; the Board resolved to declare an interim dividend of HK 59.0 cents per share for 2024[102] - Bank borrowings (Note 24): As of June 30, 2024, total bank borrowings amounted to RMB 44.04 billion, of which RMB 34.43 billion were current borrowings due within one year; total secured borrowings were RMB 12.21 billion[128] - Related party transactions (Note 37): Several significant related party transactions occurred during the period, including the purchase of bauxite from GTS for RMB 8.85 billion, electricity from Bineng Energy for RMB 6.66 billion, and anode carbon blocks from Chuangxin Carbon Materials for RMB 690 million[177][179]