德信服务集团(02215) - 2024 - 中期财报

Corporate Information This section provides essential corporate details for Dexin Services Group Co., Ltd., covering governance, key personnel, and listing information Corporate Information This section provides essential corporate details for Dexin Services Group Co., Ltd., covering governance, key personnel, and listing information - The company's Board of Directors comprises Executive Directors Mr. Hu Yiping (Chairman), Mr. Tang Junjie, Ms. Zheng Peng, and Independent Non-executive Directors Mr. Rui Meng, Mr. Yang Xi, and Dr. Wang Yongquan[2] - The company was listed on the Hong Kong Stock Exchange on July 15, 2021, under stock code 2215[7] Financial Highlights For the six months ended June 30, 2024, the company reported a modest 3.3% revenue growth, but significant declines in gross profit and net profit by 21.4% and 32.8% respectively, with corresponding margin contractions, while total assets and equity slightly increased and GFA continued to grow Financial Highlights For the six months ended June 30, 2024, the company reported a modest 3.3% revenue growth, but significant declines in gross profit and net profit by 21.4% and 32.8% respectively, with corresponding margin contractions, while total assets and equity slightly increased and GFA continued to grow 2024 H1 Key Financial Data | Indicator | 2024 H1 (RMB Thousand) | 2023 H1 (RMB Thousand) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 473,228 | 458,022 | 3.3% | | Gross Profit | 101,531 | 129,175 | -21.4% | | Profit for the Period | 42,484 | 63,255 | -32.8% | | Profit Attributable to Owners of the Company | 42,169 | 63,015 | -33.1% | Key Financial Ratios and Operating Data | Indicator | 2024 H1 | 2023 H1 | | :--- | :--- | :--- | | Gross Profit Margin | 21.5% | 28.2% | | Net Profit Margin | 9.0% | 13.8% | | Basic and Diluted Earnings Per Share (RMB) | 0.045 | 0.065 | | Total GFA Under Management (Thousand Sq.m.) | 39,563 | 36,230 | | Total Contracted GFA (Thousand Sq.m.) | 44,851 | 44,191 | Chairman's Statement The Chairman's Statement highlights the Group's independent and stable operations amidst real estate market fluctuations, focusing on enhancing core competitiveness through customer-centricity, lean operations, and quality services, achieving a top-20 ranking in China's property management sector, with future plans for continued independent growth, organizational transformation, and service diversification Chairman's Statement The Chairman's Statement highlights the Group's independent and stable operations amidst real estate market fluctuations, focusing on enhancing core competitiveness through customer-centricity, lean operations, and quality services, achieving a top-20 ranking in China's property management sector, with future plans for continued independent growth, organizational transformation, and service diversification - The company maintains independent development, advancing its market strategy of "deepening presence in the Yangtze River Delta and strategically expanding to key national cities," with its first entry into the Tianjin market during the reporting period[14][16] - The company excelled in third-party market expansion, particularly in the non-residential sector, and explored collaborations with local state-owned enterprises and leading companies, such as its high-end commercial service brand "Shi Pu Lian Hang" partnering with Qujiang Jiaotou[14][16] - The company adheres to the principle of "cash before profit, profit before scale," proactively adjusting low-quality projects and enhancing operational efficiency and gross margin stability through measures like management flattening and integrated finance-business operations[17][19] - The company actively innovates services, upgrading its high-end commercial office service brand "Shi Pu Lian Hang," and proactively investing in new energy sectors like photovoltaic energy storage and smart charging, while launching new products such as positioning consulting and leasing operations[22][23] Management Discussion and Analysis This section provides a comprehensive review of the Group's financial performance, liquidity, capital resources, significant investments, and human resources, offering insights into operational drivers and future strategic directions Financial Review In H1 2024, total revenue grew 3.3% to RMB 473.2 million, driven by a 20.9% increase in property management services, despite significant declines in value-added services to non-property owners and community value-added services, leading to a 6.7 percentage point drop in overall gross margin and a 32.8% decrease in net profit Revenue Analysis During the reporting period, total Group revenue increased by 3.3% to RMB 473.2 million, primarily driven by a significant rise in property management service revenue, which now accounts for 87.4% of total revenue, while non-owner and community value-added services experienced notable declines Revenue Breakdown by Business Line (RMB Thousand) | Business Line | 2024 H1 | Proportion (%) | 2023 H1 | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Property Management Services | 413,438 | 87.4% | 341,844 | 74.6% | | Value-added Services to Non-property Owners | 19,835 | 4.2% | 59,801 | 13.1% | | Community Value-added Services | 39,955 | 8.4% | 56,377 | 12.3% | | Total | 473,228 | 100.0% | 458,022 | 100.0% | Property Management Services Property management service revenue grew 20.9% to RMB 413.4 million, primarily due to a 9.2% increase in GFA under management to 39.6 million sq.m. by June 30, 2024, with Zhejiang Province remaining the core region contributing 73.7% of revenue, and residential properties forming the majority at 68.7% - As of June 30, 2024, total GFA under management was approximately 39.6 million sq.m., representing a 9.2% increase from 36.2 million sq.m. in the same period last year[29][30] - GFA under management from independent third-party developers reached 21.1 million sq.m., accounting for 53.3% of total GFA under management and contributing 49.0% of property management revenue[31] - The business's geographical distribution is concentrated in the Yangtze River Delta region, with Zhejiang Province contributing the vast majority of revenue (RMB 305 million, accounting for 73.7%)[33] Value-added Services to Non-property Owners Due to the ongoing downturn in the real estate sector, demand for services from developers significantly decreased, leading to a 66.8% year-on-year decline in value-added services to non-property owners, from RMB 59.8 million to RMB 19.8 million, with site services and preliminary consulting services being the primary contributors to this reduction Value-added Services to Non-property Owners Revenue Breakdown (RMB Thousand) | Service Type | 2024 H1 | 2023 H1 | | :--- | :--- | :--- | | Site Services | 13,147 | 37,746 | | Preliminary Consulting Services | 4,735 | 17,200 | | Property Inspection and Repair Services | 1,623 | 4,855 | | Commercial Consulting Services | 330 | — | | Total | 19,835 | 59,801 | Community Value-added Services Community value-added services revenue decreased by 29.1% to RMB 40 million, primarily due to significant declines in property sales and co-sales services and home furnishing services, while smart community solutions revenue more than doubled - Revenue from property sales and co-sales services significantly decreased from RMB 9.4 million to RMB 0.5 million due to the impact of the real estate industry[42] - Home furnishing services revenue decreased from RMB 9.9 million to RMB 1.5 million, a decline of RMB 8.4 million[43][45] - Smart community solutions revenue grew against the trend, increasing from RMB 4.6 million to RMB 9.4 million, a 104% year-on-year increase[40][41] Profitability Analysis Due to shifts in business mix, a decline in high-margin value-added services, and increased costs, the Group's overall gross margin decreased from 28.2% to 21.5%, with non-owner value-added services experiencing the most significant margin drop, while administrative expenses decreased due to organizational optimization, but trade receivables impairment losses increased, resulting in a 32.8% year-on-year decline in net profit to RMB 42.5 million Gross Profit Margin by Business Segment | Business Segment | 2024 H1 | 2023 H1 | Change | | :--- | :--- | :--- | :--- | | Property Management Services | 19.4% | 25.1% | -5.7% | | Value-added Services to Non-property Owners | 19.2% | 35.1% | -15.9% | | Community Value-added Services | 44.0% | 39.5% | 4.5% | | Total | 21.5% | 28.2% | -6.7% | - Administrative expenses decreased by RMB 10.4 million year-on-year to RMB 39.7 million, primarily due to organizational structure adjustments and optimized staffing[56][60] - Out of prudence, impairment losses on trade and other receivables increased from RMB 10.2 million to RMB 11.0 million[57][61] - Net profit for the period was RMB 42.5 million, a 32.8% year-on-year decrease; net profit margin was 9.0%, down 4.8 percentage points from 13.8% in the same period last year[63] Liquidity, Capital Resources, and Risk The Group maintains a prudent treasury management policy, with cash and cash equivalents at RMB 202.1 million as of June 30, 2024, a stable current ratio of 2.0x, and a low gearing ratio of 0.04, while primarily operating in RMB with minimal foreign exchange exposure and no significant capital commitments, contingent liabilities, or asset pledges at period-end Liquidity and Capital Structure Indicators | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and Cash Equivalents (RMB Million) | 202.1 | 229.7 | | Current Ratio | 2.0x | 2.1x | | Total Borrowings (RMB Million) | 27.0 | 27.0 | | Gearing Ratio | 0.04 | 0.04 | - The Group's vast majority of income and expenditures are denominated in RMB, resulting in low foreign exchange risk, and no hedging transactions have been entered into[66][70] - As of the end of the reporting period, the Group had no contracted but unprovided capital commitments, nor any pledged assets or significant contingent liabilities[67][68][71][72][73][76] Significant Investments and Future Plans During the reporting period, the company advanced a significant connected transaction announced in August 2023 to acquire target parking spaces and 100% equity in Deqing Moganshan Ruijing Property Co., Ltd., which, despite shareholder approval on March 13, 2024, faces uncertainty due to the cancellation of the related party Dexin China's EGM, while the Group plans to use part of its IPO proceeds for future acquisitions to expand its property management business - On August 24, 2023, the company entered into agreements to acquire target parking spaces and 100% equity in Deqing Moganshan Ruijing Property Co., Ltd., for a total consideration of approximately RMB 211 million and RMB 90 million respectively[74][75][77] - The completion of this significant connected transaction is contingent on shareholder approval from Dexin China, but Dexin China has cancelled its extraordinary general meeting originally scheduled for June 12, 2024, introducing uncertainty to the transaction[78][79] - The Group plans to utilize a portion of its IPO proceeds to acquire or invest in other property management companies to expand its business scale and market share[80][83] Human Resources and Remuneration As of June 30, 2024, the Group had 2,703 employees, a decrease of 239 from year-end, with total staff costs of RMB 145.3 million for the first half, maintaining market-aligned remuneration, comprehensive social insurance, and systematic training, while no share options were granted, exercised, or cancelled under the 2021 share option scheme during the period - As of June 30, 2024, the Group's employee count was 2,703, a decrease from 2,942 at the end of 2023, with total staff costs for the first half amounting to RMB 145.3 million[82][85] - The company adopted a share option scheme on June 21, 2021, aimed at rewarding and incentivizing eligible participants who contribute to the Group[88][90] - During the reporting period and up to the date of this report, no share options were granted, exercised, cancelled, or lapsed under the share option scheme[95][97] Dividend Policy The Board resolved not to declare any interim dividend for the six months ended June 30, 2024, consistent with the prior year's policy - The Board resolved not to declare an interim dividend for the six months ended June 30, 2024[96][98] Corporate Governance and Other Information This section details the company's adherence to corporate governance standards, adjustments to IPO proceeds utilization, share repurchase activities, and compliance with relevant listing rules Use of Proceeds The company adjusted the use of its 2021 IPO net proceeds, reallocating RMB 315 million of unutilized funds, originally for business expansion, as a loan to a business partner to optimize idle capital, and extended the utilization timeline for all unutilized net proceeds to on or before December 2024 - The company provided a portion of its unutilized net IPO proceeds, originally designated for business expansion, as a loan (principal up to RMB 315 million) to a business partner, secured by parking space assets valued at approximately RMB 630 million[99][100] Net Proceeds Allocation and Utilization (HKD Million) | Purpose | Planned Use | Unutilized Amount as of June 30, 2024 | | :--- | :--- | :--- | | Expand Business Scale and Market Share | 496.0 | 82.4 | | Diversify and Expand Service Offerings | 76.4 | 0.0 | | Invest in Information Technology | 76.4 | 57.4 | | Improve Human Resource Management | 38.3 | 3.6 | | Working Capital and Other | 76.4 | 0.0 | | Loan to Borrower | Not Applicable | 0.0 | Share Repurchase For the six months ended June 30, 2024, the company repurchased 19,427,000 shares on the Stock Exchange for approximately HKD 38.51 million, with all repurchased shares subsequently cancelled 2024 H1 Share Repurchase Details | Transaction Month | Total Shares Repurchased | Total Consideration Paid (HKD) | | :--- | :--- | :--- | | March | 3,781,000 | 7,562,000 | | April | 5,940,000 | 11,878,970 | | May | 9,706,000 | 19,069,110 | | Total | 19,427,000 | 38,510,080 | Corporate Governance Compliance During the reporting period, the company maintained high corporate governance standards, complying with all applicable code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules, adopting the Model Code in Appendix C3 for directors' securities transactions, with all directors confirming compliance, and the Audit Committee reviewed the interim results - For the six months ended June 30, 2024, the company complied with all applicable code provisions of the Corporate Governance Code[119][120] - All directors confirmed compliance with the Model Code for Securities Transactions by Directors during the reporting period[121][123] Condensed Consolidated Financial Statements This section presents the Group's condensed consolidated financial statements, including the statement of profit or loss, financial position, cash flows, and accompanying notes, providing a summary of the financial performance and position for the period 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 473.2 million, a 3.3% increase, but gross profit declined to RMB 101.5 million and operating profit to RMB 46.8 million due to increased cost of sales and reduced other income, resulting in a net profit of RMB 42.5 million, a 32.8% decrease, with basic earnings per share at RMB 0.045 Condensed Consolidated Statement of Profit or Loss (RMB Thousand) | Item | 2024 H1 (Unaudited) | 2023 H1 (Unaudited) | | :--- | :--- | :--- | | Revenue | 473,228 | 458,022 | | Cost of Sales | (371,697) | (328,847) | | Gross Profit | 101,531 | 129,175 | | Operating Profit | 46,783 | 69,212 | | Profit Before Tax | 55,839 | 80,156 | | Profit and Total Comprehensive Income for the Period | 42,484 | 63,255 | | Attributable to Owners of the Company | 42,169 | 63,015 | | Basic and Diluted Earnings Per Share (RMB) | 0.045 | 0.065 | Condensed Consolidated Statement of Financial Position As of June 30, 2024, total company assets increased to RMB 1.512 billion from RMB 1.425 billion at year-end, primarily driven by higher trade and other receivables, while total liabilities rose to RMB 746.5 million, total equity slightly increased to RMB 765.4 million, and cash and cash equivalents decreased to RMB 202.1 million Condensed Consolidated Statement of Financial Position (RMB Thousand) | Item | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Non-current Assets | 30,942 | 29,299 | | Current Assets | 1,481,015 | 1,395,350 | | Total Assets | 1,511,957 | 1,424,649 | | Current Liabilities | 736,510 | 655,599 | | Non-current Liabilities | 10,023 | 10,017 | | Total Liabilities | 746,533 | 665,616 | | Net Assets | 765,424 | 759,033 | | Total Equity | 765,424 | 759,033 | Condensed Consolidated Statement of Cash Flows In H1 2024, cash flow from operating activities shifted to a net outflow of RMB 12.8 million, while investing activities generated a net inflow of RMB 23.8 million, mainly from third-party repayments, and financing activities resulted in a net outflow of RMB 38.6 million, primarily for share repurchases, leading to a net decrease in cash and cash equivalents of RMB 27.6 million to RMB 202.1 million at period-end Condensed Consolidated Statement of Cash Flows (RMB Thousand) | Item | 2024 H1 (Unaudited) | 2023 H1 (Unaudited) | | :--- | :--- | :--- | | Net Cash from Operating Activities | (12,788) | 58,337 | | Net Cash from Investing Activities | 23,804 | 11,759 | | Net Cash Used in Financing Activities | (38,646) | (83,131) | | Net Decrease in Cash and Cash Equivalents | (27,630) | (13,035) | | Cash and Cash Equivalents at Beginning of Period | 229,728 | 209,855 | | Cash and Cash Equivalents at End of Period | 202,098 | 196,820 | Notes to the Condensed Consolidated Financial Statements The notes to the financial statements provide detailed explanations of key accounting items, highlighting a significant increase and extended aging of trade receivables, a RMB 315 million secured loan to a third party, the repurchase and cancellation of 19.43 million shares during the period, and ongoing service and financial transactions with related parties, primarily Dexin China Group controlled by the ultimate controlling shareholder Mr. Hu Yiping Trade Receivables Aging Analysis (RMB Thousand) | Aging | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | 0 to 180 days | 219,371 | 199,338 | | 181 to 365 days | 127,463 | 44,145 | | Over 1 year | 161,377 | 173,729 | | Total | 508,211 | 417,110 | - As of June 30, 2024, the company had a loan to a third party with a principal amount of approximately RMB 315 million, secured by parking spaces valued at no less than RMB 600 million, bearing an annual interest rate of 5%, and due for repayment in December 2024[154][155] - For the period ended June 30, 2024, the Group repurchased and cancelled 19,427,000 ordinary shares, with a total payment of approximately RMB 35.28 million[163][164] - The Group has significant transactions with related parties, primarily Dexin China Group and its joint ventures/associates, with revenue from services provided to them amounting to RMB 17.18 million in H1 2024, and trade receivables from Dexin China Group totaling RMB 89.24 million at period-end[172][176]