嘉耀控股(01626) - 2024 - 中期财报

Financial Highlights Summary of Financial and Operating Performance The company experienced significant revenue and gross profit growth for the six months ended June 30, 2024, despite a decline in gross margin and profit attributable to owners, alongside mixed changes in working capital turnover days and no interim dividend recommendation Key Financial Indicators for H1 2024 | Indicator | H1 2024 | H1 2023 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | Approx. 742.8 million RMB | 526.6 million RMB | +41.1% | | Gross Profit | Approx. 153.6 million RMB | 119.1 million RMB | +28.9% | | Gross Margin | Approx. 20.7% | Approx. 22.6% | -1.9 percentage points | | Profit Attributable to Owners of the Company | Approx. 14.8 million RMB | 21.1 million RMB | -29.8% | Changes in Working Capital Turnover Days | Indicator | June 30, 2024 | December 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Average Trade Receivables and Bills Turnover Days | Approx. 84 Days | Approx. 68 Days | Increase of 16 Days | | Average Trade Payables and Bills Turnover Days | Approx. 180 Days | Approx. 202 Days | Decrease of 22 Days | | Average Inventory Turnover Days | Approx. 65 Days | Approx. 74 Days | Decrease of 9 Days | - The Board does not recommend an interim dividend for the six months ended June 30, 2024[3] Corporate Information Company Basic Information This section details the company's fundamental information, including its board and committee members, registered office, principal business locations, key personnel, and financial partners - The report lists the company's core management, legal, and financial partners, with Mr. Yang Wing On as Chairman and PricewaterhouseCoopers as the auditor[3] Chairman's Report Chairman's Statement Chairman Mr. Yang Wing On highlights a 41.1% year-on-year revenue growth driven by the e-cigarette industry, successful global market expansion, enhanced R&D capabilities, and a future focus on consolidating market leadership in e-cigarette business - Benefiting from the strong growth in the global e-cigarette market, the Group focused on developing its own brand e-cigarette products, leading to significant overall revenue growth[4] H1 2024 Performance Highlights | Indicator | Value | | :--- | :--- | | Overall Revenue Growth | 41.1% | | Revenue Amount | Approx. 742.8 million RMB | | Cash and Cash Equivalents | 254.9 million RMB | - During the reporting period, the Group successfully expanded its market into the Middle East and South America, continuously strengthening its R&D capabilities through initiatives like establishing a technology innovation research institute and joint laboratories[4] Management Discussion and Analysis Market and Business Review Amidst China's 5% GDP growth and global e-cigarette market expansion, the Group, primarily in e-cigarette and paper packaging, is strategically focusing on its e-cigarette segment for future growth, including own-brand and OEM/ODM services, particularly in overseas markets due to domestic competition and regulation - The global e-cigarette market is expanding, with China, as a major producer, poised for rapid export growth; the Group's business is divided into e-cigarette and paper cigarette packaging segments, with the e-cigarette segment considered a key driver for future revenue and profit growth[5][6] - The e-cigarette segment's customers are located across Europe, America, and Southeast Asia, with successful expansion into Middle Eastern countries during the reporting period[7] Operating Strategies The Group significantly boosted R&D investment to approximately 50.1 million RMB to foster innovation and production efficiency, while implementing various cost control measures and achieving strong sales growth for its own-brand e-cigarettes through quality and customer recognition Product R&D Investment | Period | Investment Amount (RMB) | | :--- | :--- | | For the six months ended June 30, 2024 | Approx. 50.1 million | | For the six months ended June 30, 2023 | Approx. 9.6 million | - The Group implemented various cost control measures, including process optimization, productivity enhancement, introducing new suppliers, rolling inventory preparation, and consolidating production orders[12] Financial Review The Group's H1 2024 turnover grew 41.1%, primarily from the e-cigarette segment's 50% growth, yet overall gross margin declined to 20.7% due to the paper packaging segment, and increased operating expenses led to a 29.8% decrease in profit attributable to owners, while net current assets decreased and interest-bearing borrowings rose Turnover For the six months ended June 30, 2024, the Group's turnover reached approximately 742.8 million RMB, marking a 41.1% year-on-year increase, predominantly driven by the e-cigarette segment's 50.0% growth and 55.6% contribution to total revenue Segment Sales Details (For the six months ended June 30) | Segment | 2024 (RMB thousand) | 2023 (RMB thousand) | Change Rate | | :--- | :--- | :--- | :--- | | E-cigarette Segment | 412,623 | 275,054 | +50.0% | | Paper Cigarette Packaging and Social Product Paper Packaging Segment | 330,142 | 251,517 | +31.3% | | Total | 742,765 | 526,571 | +41.1% | Gross Profit and Gross Margin The Group's gross profit rose 28.9% to 153.6 million RMB, yet the overall gross margin declined from 22.6% to 20.7%, primarily due to a significant drop in the paper cigarette packaging segment's gross margin, negatively affecting overall profitability - Gross profit increased by approximately 28.9% from 119.1 million RMB in the same period last year to 153.6 million RMB[13] - Gross margin decreased by 1.9 percentage points from 22.6% in the same period last year to 20.7%, primarily dragged down by a significant decline in the gross margin of the paper cigarette packaging segment[13] Operating Expenses and Profit Distribution costs surged 93.1% and administrative expenses rose 28.7% due to increased staff and R&D costs, leading to a 29.8% year-on-year decrease in profit attributable to owners, settling at 14.8 million RMB - Distribution costs increased by 93.1% year-on-year to 48.0 million RMB, primarily due to increased staff costs and e-cigarette product promotion expenses[14] - Administrative expenses increased by 28.7% year-on-year to 76.3 million RMB, mainly due to increased staff costs and innovation development costs for own-brand e-cigarette products[16] - Profit attributable to owners of the company decreased by 29.8% from 21.1 million RMB in the same period last year to 14.8 million RMB[21] Liquidity and Financial Resources As of June 30, 2024, the Group's net current assets decreased to approximately 255.8 million RMB, with cash and cash equivalents at approximately 254.9 million RMB, while interest-bearing borrowings increased to 114.8 million RMB, and capital expenditure totaled approximately 50.1 million RMB mainly for plant and machinery Liquidity and Debt Position (RMB) | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Net Current Assets | Approx. 255.8 million | Approx. 314.4 million | | Cash and Cash Equivalents | Approx. 254.9 million | Approx. 311.2 million | | Interest-bearing Borrowings | 114.8 million | 61.5 million | - For the six months ended June 30, 2024, total capital expenditure amounted to approximately 50.1 million RMB, significantly higher than 9.6 million RMB in the same period last year, primarily for the purchase of plant and machinery[25] Future Outlook The Group foresees continued global e-cigarette market expansion, focusing on overseas markets, and plans to enhance R&D, expand distribution, and develop new products to become a one-stop own-brand e-cigarette company, maximizing shareholder returns - The Group's core future strategy is to expand its e-cigarette market share, especially in overseas markets, aiming to become a one-stop company with its own brands[36] - To achieve its goals, the Group will focus on: - Closely following emerging tobacco trends - Strengthening R&D capabilities to foster innovation - Expanding global distribution channels - Actively developing new products and collaborating with renowned enterprises[36] Corporate Governance and Other Information Directors' and Shareholders' Interests This section details the shareholdings of directors, chief executives, and substantial shareholders, highlighting Chairman Mr. Yang Wing On's 69.79% controlling interest through Spearhead Leader Limited Major Directors' and Shareholders' Interests (As at June 30, 2024) | Name/Designation | Capacity/Nature of Interest | Number of Ordinary Shares Held | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Yang Wing On | Interest in controlled corporation | 418,724,000 | 69.79% | | Spearhead Leader | Beneficial owner | 418,724,000 | 69.79% | | Ms. Choi Yiu Fai | Spouse's interest | 418,724,000 | 69.79% | Share Option Scheme The company's 2014 Share Option Scheme saw 30,000,000 options granted on December 7, 2022, at an exercise price of HK$1.00 per share, with 26,300,000 options remaining unexercised as of the reporting period, and no new grants - On December 7, 2022, the company granted a total of 30,000,000 share options under the Share Option Scheme, with an exercise price of HK$1.00[44] Movements in Share Options (For the six months ended June 30, 2024) | Grantee | Number at Beginning of Period | Movements During Period | Number Unexercised at End of Period | | :--- | :--- | :--- | :--- | | Mr. Li Siu On | 3,600,000 | 0 | 3,600,000 | | Mr. Ng Hung Wai | 100,000 | 0 | 100,000 | | Other Employees | 26,300,000 | 0 | 26,300,000 | Compliance and Review The company adhered to the Corporate Governance Code and Model Code for Securities Transactions by Directors, and while interim financial results were not externally audited, they were reviewed and approved by the Audit Committee for compliance and adequate disclosure - The company has complied with the Corporate Governance Code, and all directors confirmed compliance with the Model Code for Securities Transactions[50][51] - Although the interim financial results were not reviewed by external auditors, they were reviewed and approved by the Audit Committee[52] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Comprehensive Income For the six months ended June 30, 2024, the company reported 742.8 million RMB in revenue and 153.6 million RMB in gross profit, with 14.8 million RMB profit attributable to owners and basic earnings per share of 0.025 RMB H1 2024 Income Statement Summary (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Revenue | 742,765 | 526,571 | | Gross Profit | 153,608 | 119,137 | | Operating Profit | 37,435 | 35,281 | | Profit for the Period | 27,247 | 31,499 | | Profit Attributable to Owners of the Company | 14,808 | 21,094 | | Basic Earnings Per Share (RMB) | 0.025 | 0.035 | Condensed Consolidated Statement of Financial Position As of June 30, 2024, the Group reported total assets of 1,428.8 million RMB, total liabilities of 900.3 million RMB, and total equity of 528.5 million RMB, with 419.4 million RMB attributable to owners of the company Statement of Financial Position Summary (RMB thousand) | Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Non-current assets | 319,074 | 247,513 | | Current assets | 1,109,710 | 1,217,727 | | Total assets | 1,428,784 | 1,465,240 | | Equity and Liabilities | | | | Total equity | 528,511 | 540,023 | | Non-current liabilities | 46,409 | 21,862 | | Current liabilities | 853,864 | 903,355 | | Total liabilities | 900,273 | 925,217 | Condensed Consolidated Statement of Cash Flows The reporting period saw a net cash outflow of 53.5 million RMB from operating activities and 33.7 million RMB from investing activities, offset by a 28.7 million RMB net cash inflow from financing activities, resulting in a 58.5 million RMB net decrease in cash and cash equivalents, with an ending balance of 254.9 million RMB H1 2024 Cash Flow Statement Summary (RMB thousand) | Item | Amount | | :--- | :--- | | Net Cash Used in Operating Activities | (53,460) | | Net Cash Used in Investing Activities | (33,698) | | Net Cash From Financing Activities | 28,691 | | Net Decrease in Cash and Cash Equivalents | (58,467) | | Cash and Cash Equivalents at Beginning of Period | 311,156 | | Cash and Cash Equivalents at End of Period | 254,927 | Notes to the Condensed Consolidated Interim Financial Information Segment Information The Group's business is segmented into e-cigarette and paper packaging, with the e-cigarette segment being the main revenue and profit driver, contributing 412.6 million RMB in revenue, 118.7 million RMB in gross profit, and 87.0 million RMB in segment results during the reporting period H1 2024 Segment Results (Unaudited, RMB thousand) | Item | E-cigarette | Paper Cigarette Packaging and Other | Total | | :--- | :--- | :--- | :--- | | Revenue | 412,623 | 330,142 | 742,765 | | Gross Profit | 118,679 | 34,929 | 153,608 | | Segment Results | 87,011 | 18,589 | 105,600 | Events After the Reporting Period On September 6, 2024, the company agreed to conditionally sell a 70% equity interest in its subsidiary, Giant Harmony Limited, for 115 million RMB, after which the target company's financial results will no longer be consolidated into the Group's statements - On September 6, 2024, the company agreed to sell a 70% equity interest in its subsidiary, Giant Harmony Limited, for a consideration of 115 million RMB[128]