Company Overview - Lianhua Supermarket operates a total of 3,152 stores across 26 provinces and municipalities in China, maintaining its leading position in the fast-moving consumer goods retail sector[1]. - The total number of stores includes various formats, with significant contributions from regions like Shanghai (1,097 stores) and Zhejiang (491 stores)[2][3]. - The company was the first Chinese retail chain to be listed on the Hong Kong Stock Exchange on June 27, 2003[1]. - As of December 31, 2024, the group operates a total of 3,152 stores, a decrease of 204 stores compared to the end of 2023, with approximately 84.0% located in the Greater East China region[105]. Brand Development and Recognition - The company has expanded its retail formats to include large comprehensive supermarkets, hypermarkets, and convenience stores under various brands, including "Century Lianhua," "Lianhua Supermarket," and "Hualian Supermarket"[1]. - Lianhua Supermarket has been recognized as one of the "Outstanding Franchise Brands" by the China Chain Store & Franchise Association in recent years[1]. - The company has received accolades such as being named a "Demonstration Enterprise for Common Prosperity" by the Zhejiang Provincial Federation of Industry and Commerce[9]. - Lianhua Supermarket's self-developed beef brand "Baili Beef" won the 2024 German iF Design Award, showcasing its commitment to innovation and product development[13]. - Lianhua Supermarket's self-owned brands "800 Li Beef" and "Youxiang" were recognized as "Outstanding Private Brands" for 2024[25]. Financial Performance - The company's revenue for the fiscal year 2024 was approximately RMB 19.71 billion, a decrease of about RMB 2.13 billion or 9.7% compared to the previous year[63]. - Gross profit for the same period was approximately RMB 2.37 billion, down RMB 409 million or 14.7% year-on-year, with a gross margin of 12.03%, a decline of 0.71 percentage points from 12.74% in the previous year[64]. - The net loss attributable to shareholders was RMB 358.77 million, with a net loss margin of 1.82%[55]. - The group reported a cash flow deficit of RMB 825.91 million for the year[55]. - The group's other income and gains amounted to approximately RMB 636 million, an increase of about RMB 128 million, representing a growth of approximately 25.3% year-on-year[67]. Strategic Initiatives - The company is enhancing its supply chain and product strategy by developing key products, optimizing category structures, and improving fresh product capabilities to strengthen market competitiveness[39]. - The company is accelerating its digital transformation strategy, focusing on operational efficiency through digitalization, supply chain optimization, and integrated logistics systems[42]. - The company aims to enhance its core business by transforming large supermarkets into smaller, community-focused formats and upgrading product structures[100]. - The company is focusing on a dual strategy of restructuring and transformation to improve revenue while actively pursuing cost reduction and efficiency enhancement[36]. - The company plans to implement a "3+3" strategy in 2025, emphasizing strategic transformation, supply chain enhancement, and increased digital investment[44]. Store Operations and Changes - The company closed long-term loss-making outlets as part of a strategic adjustment, impacting overall sales scale[63]. - The company sold all equity of three subsidiaries, including Lianhua Supermarket (Jiangsu), for a total consideration of approximately RMB 146 million, with proceeds used to improve working capital[37]. - A total of 257 new stores were opened during the review period, with 168 located in the Yangtze River Delta, accounting for 65.4% of new openings[101]. - The company closed 461 stores, including 121 direct-operated stores and 340 franchise stores, to optimize store structure and improve cost efficiency[101]. - The group opened 231 new supermarket stores during the review period, including 80 direct-operated and 151 franchised stores, while closing 296 stores, resulting in a net decrease of 65 stores[104]. Digital Transformation and Innovation - The company is focusing on digital transformation, aiming to transition from "information-based" to "intelligent" supply chain systems[132]. - The group implemented a digital management platform to enhance operational efficiency and market competitiveness, transitioning from "channel addition" to "digital reconstruction"[110]. - The company has appointed a new Chief Information Officer to lead its digital initiatives and improve data management[192]. - The company is actively pursuing new product development and technological advancements to enhance operational efficiency[191]. Market Challenges and Outlook - The retail environment remains challenging, with intensified competition and changing consumer shopping habits affecting performance[63]. - The company anticipates ongoing challenges in the Chinese economy but remains optimistic about long-term growth trends and consumer behavior shifts towards more rational purchasing decisions[42]. - Emerging consumption trends such as health and wellness are expected to drive future growth opportunities in the retail sector[60]. - The retail industry is expected to experience a recovery opportunity driven by policy changes by 2025, with a focus on performance improvement and transformation of large supermarkets and hypermarkets[138]. Leadership and Governance - Mr. Zhu Dingping appointed as Executive Director and Deputy General Manager of the company starting January 7, 2025[166]. - Mr. Pu Shaohua serves as the President and Deputy Secretary of the Party Committee of Bailian Group, with extensive experience in the seafood and dairy industries[167]. - Ms. Hu Xiao has held various leadership roles at Alibaba Group, contributing to strategic investments and management[169]. - The management team is committed to maintaining a strong governance structure to support strategic decision-making and compliance[193]. Share Issuance and Capital Management - In 2024, the company issued 360 million new domestic shares to Bailian Group, raising approximately RMB 360 million to support business ecosystem transformation and enhance operational capital[36]. - The company plans to issue up to 360,000,000 new domestic shares at a subscription price of RMB 1.00 per share, representing a premium of approximately 249.37% over the H-share closing price of about HKD 0.315 on May 10, 2025[151]. - Approximately 85% of the net proceeds from the share issuance will be used for business ecosystem transformation, with about 39.2% and 35% allocated for supermarket and hypermarket store transformations respectively[153].
联华超市(00980) - 2024 - 年度财报