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东建国际(00329) - 2024 - 中期财报
OCI INTLOCI INTL(HK:00329)2024-09-19 08:31

Corporate Information This section provides core corporate details, including board members, key personnel, and principal bankers, noting recent non-executive director changes Core Corporate Information This section provides core corporate details, including board members, key personnel, and principal bankers, noting recent non-executive director changes - The company's Chairman of the Board is Mr. Jiao Shuge, and the Chief Executive Officer is Mr. Tang Nanjun8 - Board composition changes include the appointment of Mr. Zhao Li as a non-executive director and the resignation of Mr. Feng Hai on April 29, 20248 - Principal bankers include HSBC, China Minsheng Banking Corp. Hong Kong Branch, CMB Wing Lung Bank in Hong Kong, and China Merchants Bank Shanghai Branch in China9 Financial Highlights This section provides a concise overview of the company's key financial performance and position for the reporting period Summary of Financial Performance Total revenue declined due to reduced asset management income and securities investment losses, yet adjusted net profit turned positive, while total and net assets decreased Key Financial Indicators for H1 2024 | Metric | For the Six Months Ended June 30, 2024 (HK$ Thousand) | For the Six Months Ended June 30, 2023 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | 30,784 | 39,022 | ↓ 21.1% | | - From Asset Management | 12,083 | 27,639 | ↓ 56.3% | | - Sales of Goods | 35,123 | 7,120 | ↑ 393.3% | | - From Securities Trading and Investment | (16,685) | 4,091 | Turned from Profit to Loss | | Adjusted Net Profit (Loss) (Note 1) | 675 | (4,486) | Turned from Loss to Profit | | Adjusted EBITDA (Note 2) | 4,699 | 4,431 | ↑ 6.0% | Summary of Asset Position | Metric | As of June 30, 2024 (HK$ Thousand) | As of December 31, 2023 (HK$ Thousand) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 294,778 | 323,578 | ↓ 8.9% | | Net Assets | 263,648 | 279,983 | ↓ 5.8% | - Adjusted net profit (loss) excludes fair value changes of financial assets at fair value through profit or loss, while Adjusted EBITDA further excludes finance costs, income tax, and depreciation on this basis101113 Condensed Consolidated Financial Statements This section presents the company's condensed consolidated financial statements, including the statement of profit or loss, financial position, changes in equity, and cash flows Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The company reported a net loss of HK$16.01 million, significantly widened from the prior year, driven by decreased total revenue and a sharp increase in cost of sales Core Income Statement Data (Unit: HK$ Thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Revenue | 30,784 | 39,022 | | Cost of Sales and Services Provided | (33,210) | (6,614) | | General and Administrative Expenses | (17,453) | (32,855) | | Securities Trading and Investment (Loss) Income | (16,685) | 4,091 | | (Loss) Profit Before Tax | (16,010) | 1,392 | | Loss for the Period | (16,010) | (581) | | Loss Per Share (HK Cents) | (1.084) | (0.005) | - Loss attributable to company shareholders was HK$16.251 million, significantly higher than HK$0.068 million in the prior year period15 Condensed Consolidated Statement of Financial Position Total assets decreased to HK$295 million as of June 30, 2024, primarily due to reduced financial assets at fair value through profit or loss and debt investments Core Balance Sheet Data (Unit: HK$ Thousand) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Non-current Assets | 19,192 | 22,590 | | Current Assets | 275,586 | 300,988 | | Total Assets | 294,778 | 323,578 | | Current Liabilities | 26,818 | 37,634 | | Non-current Liabilities | 4,312 | 5,961 | | Total Liabilities | 31,130 | 43,595 | | Net Assets | 263,648 | 279,983 | - Cash and cash equivalents slightly increased from HK$89.95 million to HK$92.55 million16 Condensed Consolidated Statement of Changes in Equity Total equity decreased by HK$16.34 million to HK$264 million, primarily due to the period's net loss and other comprehensive expenses, mainly exchange differences Changes in Equity (Unit: HK$ Thousand) | Item | Balance as at January 1, 2024 | Loss for the Period | Other Comprehensive Expenses | Balance as at June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Equity | 279,983 | (16,010) | (325) | 263,648 | Condensed Consolidated Statement of Cash Flows Operating activities generated a HK$20.68 million net cash inflow, a significant improvement, while investing and financing outflows decreased, leading to a slight increase in period-end cash and equivalents Core Cash Flow Statement Data (Unit: HK$ Thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | 20,679 | (13,244) | | Net Cash Used in Investing Activities | (16,097) | (73) | | Net Cash Used in Financing Activities | (1,777) | (39,609) | | Net Increase (Decrease) in Cash and Cash Equivalents | 2,805 | (52,926) | | Cash and Cash Equivalents at Beginning of Period | 89,948 | 230,568 | | Cash and Cash Equivalents at End of Period | 92,553 | 178,038 | Notes to the Condensed Consolidated Financial Statements This section provides detailed notes to the condensed consolidated financial statements, offering further insights into specific accounts and transactions Note 4: Revenue and Segment Reporting This note details revenue and segment performance by business line and region, highlighting a significant decline in asset management income, substantial growth in wine and beverage trading, and a loss in securities trading Revenue Breakdown Total revenue for H1 2024 was HK$30.78 million, down 21.1%, with asset management revenue declining, wine and beverage trading surging, and securities trading turning to a HK$16.69 million loss Revenue by Business Line (Unit: HK$ Thousand) | Business Line | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Asset Management | 12,083 | 27,639 | | Investment and Financial Advisory Services | 263 | 172 | | Trading of Wines and Beverages | 35,123 | 7,120 | | Securities Trading and Investment (Loss) Income | (16,685) | 4,091 | | Total | 30,784 | 39,022 | Segment Performance The securities trading and investment segment was the largest loss source at HK$16.55 million, while wine and beverage trading remained at a HK$1.48 million loss, and asset management profit declined to HK$4.43 million Segment Profit (Loss) (Unit: HK$ Thousand) | Segment | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Asset Management | 4,427 | 6,811 | | Investment and Financial Advisory Services | 263 | 172 | | Securities Trading and Investment | (16,550) | 2,862 | | Trading of Wines and Beverages | (1,476) | (2,506) | | Total Reportable Segment Profit (Loss) | (13,336) | 7,339 | Geographical Information All external customer revenue originated from Hong Kong, while most non-current assets are in Hong Kong, with a smaller portion in mainland China - During the reporting period, 100% of external customer revenue (HK$30.78 million) originated from Hong Kong52 - As of June 30, 2024, specific non-current assets included HK$10.97 million in Hong Kong and HK$7.13 million in China52 Note 12: Debt Investments at Amortised Cost This note details significant impairment losses on the Group's HK$210 million debt investments, including SP, RD, and CFLD notes, which have defaulted or been restructured, leaving a net value of HK$0.626 million Debt Investment Impairment (June 30, 2024, Unit: HK$ Thousand) | Item | Gross Book Value | Loss Allowance | Net Book Value | | :--- | :--- | :--- | :--- | | Corporate Debt Securities | 210,226 | (209,600) | 626 | - SP Notes: A full impairment provision was made for remaining exposure, resulting in a zero net book value, as collateral (C.banner shares) was sold in January 202475139 - RD Notes: A full impairment provision was made, resulting in a zero net book value, due to the delisting of collateral (China Rundong shares)80138 - CFLD Notes: Following default and restructuring, an impairment loss of approximately HK$20.37 million was recognized, leaving a remaining net book value of approximately HK$0.626 million81140 Note 14: Financial Assets at Fair Value Through Profit or Loss Financial assets at fair value through profit or loss decreased to HK$98.35 million, primarily comprising the unlisted OCI Equities Fund SP and some listed securities and warrants Composition of Financial Assets at Fair Value Through Profit or Loss (Unit: HK$ Thousand) | Asset Class | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Unlisted Investment Fund (OCI Equities Fund SP) | 86,918 | 102,403 | | Investments in Listed Securities | 11,376 | 12,563 | | Investments in Listed Warrants | 53 | 66 | | Total | 98,347 | 115,032 | Management Discussion and Analysis This section provides management's perspective on the company's financial performance, business operations, and future outlook Business and Financial Review The Group's total revenue decreased to HK$30.78 million, resulting in a HK$16.01 million consolidated net loss, primarily due to reduced asset management income and securities investment losses, despite strong wine and beverage sales - The Group holds Type 1, Type 4, and Type 9 licenses from the Hong Kong SFC for securities dealing, advising, and asset management, respectively117 Asset Under Management (AUM) Overview | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets Under Management (AUM) | US$134 Million | US$149 Million | | Investor Subscription Amount | US$390 Million | US$406 Million | | Number of Funds | 8 | 10 | - The decrease in AUM and subscription amounts was primarily due to one fund's maturity and another fund terminating its investment management agreement with Dongjian Asset Management117 Segmental Business Review This section reviews segment performance, noting declining asset management revenue, significant growth in wine and beverage trading, fair value decrease in OCI Equities Fund SP, and substantial losses in securities trading due to debt defaults Asset Management Services Asset management AUM decreased to US$134 million, causing revenue to drop to HK$12.08 million, while the Group is fundraising for a US$1.5-1.9 billion healthcare investment fund - Asset management revenue significantly decreased to HK$12.08 million from HK$27.64 million in the prior year period124 - The Group is fundraising for a healthcare investment fund with a target capital commitment of US$1.5 billion to US$1.9 billion, focusing on healthcare industry investments124150 Trading of Wines and Beverages Revenue from wine and beverage trading surged to HK$35.12 million, narrowing segment loss to HK$1.48 million, driven by economic recovery and an expanded product portfolio including whisky and Maotai - Wine and beverage trading revenue increased nearly fourfold year-on-year, reaching HK$35.12 million127130 - Sales channels include direct sales, online sales, and wholesale127 Fund Investment & Securities Trading This segment recorded a HK$16.55 million loss, driven by fair value declines in OCI Equities Fund SP due to extended duration, full impairment of defaulted debt instruments, and HK$1.2 million fair value loss on SPAC investments - The fair value of OCI Equities Fund SP decreased from HK$102 million to HK$86.92 million, primarily due to the discounting effect of extended fund duration132135 - The securities trading and investment segment turned from a HK$2.86 million profit in the prior year to a HK$16.55 million loss133 - The Group made full impairment provisions for the defaulted RD Notes and SP Notes, resulting in zero net book value for both138139 Liquidity, Financial Analysis and Capital Structure The Group maintains a robust financial position with ample liquidity, evidenced by HK$124 million in cash, a 10.3x current ratio, and a very low 2.9% gearing ratio Key Financial Ratios | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Gearing Ratio | 2.9% | 3.3% | | Current Ratio | 10.3 Times | 8.0 Times | | Bank Balances and Cash (HK$ Million) | 123.50 | 104.79 | Prospects for the Year 2024 and Development Plan The Group anticipates improved market conditions in H2 2024, focusing on asset management growth, portfolio optimization, and exploring new opportunities like crypto asset management and QDLP in China for diversified, sustainable growth - The Group expects declining interest rates and government support policies to improve Hong Kong's economic and investment sentiment in H2 2024145 - Strategic focus remains on developing the asset management business to achieve wealth appreciation goals for high-net-worth clients150 - New business exploration includes potential opportunities in crypto asset management and establishing Qualified Domestic Limited Partnerships (QDLP) in China151152 Other Disclosure Information This section provides additional disclosures, including information on directors' and substantial shareholders' interests, share option schemes, and corporate governance practices Directors' and Substantial Shareholders' Interests This section details director and substantial shareholder interests, with JZ Investment Fund L.P. holding 29.34% and Golden Power Group Limited holding 20.94% as of June 30, 2024 - Non-executive director Mr. Wu Guangze beneficially owned 31,000,000 company shares, representing 2.07% of the issued shares162 Substantial Shareholders' Shareholding (As of June 30, 2024) | Shareholder Name | Number of Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | | JZ Investment Fund L.P. | 440,000,000 | 29.34% | | Golden Power Group Limited | 314,000,000 | 20.94% | | Cheer Hope Holdings Limited | 194,960,000 | 12.99% | Share Option Schemes The company has two share option schemes; the 2012 scheme has 22 million unexercised options, while 11 million options granted to Mr. Wu Guangze lapsed, and no options have been granted under the new 2023 scheme - The 2012 Share Option Scheme expired in December 2022, with 22,000,000 share options remaining unexercised at period-end171175 - Due to unfulfilled vesting conditions, 11,000,000 share options granted to non-executive director Mr. Wu Guangze automatically lapsed during the period174 - The company adopted the New Share Option Scheme on June 23, 2023, valid for ten years, with no options granted under it since adoption178179180 Corporate Governance The company fully complied with the Corporate Governance Code, and its unaudited interim results were reviewed by the Audit Committee, comprising four independent non-executive directors - The company fully complied with the code provisions of the Corporate Governance Code during the reporting period184 - The interim results were reviewed by the Audit Committee, composed of four independent non-executive directors and chaired by Mr. Zhuang Jiayi185