宏华集团(00196) - 2025 - 中期业绩

Interim Results Announcement Financial Highlights Honghua Group Limited announced its unaudited interim results for the six months ended June 30, 2025, with revenue decreasing by 6.3% year-on-year, while gross profit and net profit attributable to owners of the parent company significantly increased, and gross margin improved by 2.1 percentage points. The company's board of directors recommended no interim dividend | Indicator | Six months ended June 30, 2025 (RMB thousands) | Six months ended June 30, 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 2,601,073 | 2,776,000 | -6.3% | | Gross profit | 338,585 | 301,514 | 12.3% | | Operating profit | 81,311 | 80,970 | 0.4% | | Profit attributable to owners of the Company | 37,095 | 2,419 | 1433.5% | | Earnings Per Share - Basic (RMB cents) | 0.41 | 0.03 | EPS increased by 0.38 cents per share | | Earnings Per Share - Diluted (RMB cents) | 0.41 | 0.03 | EPS increased by 0.38 cents per share | - Gross margin increased by 2.1 percentage points from 10.9% in the same period of 2024 to 13.0% in the same period of 2025[3] - The Board recommended no interim dividend for the six months ended June 30, 2025[3] Introduction to Interim Results This announcement presents Honghua Group's unaudited condensed consolidated interim financial results for the six months ended June 30, 2025, which have been reviewed by the company's audit committee but not by the auditors - The Group's unaudited condensed consolidated interim financial results for the six months ended June 30, 2025, have been announced[4] - The interim results have not been reviewed or audited by the Company's auditors but have been reviewed by the Audit Committee[4] Unaudited Condensed Consolidated Interim Financial Statements Unaudited Condensed Consolidated Statement of Profit or Loss This statement details revenue, cost of sales, gross profit, various expenses, net finance costs, share of profit/loss from associates and joint ventures, profit before tax, income tax expense, and profit for the period for the six months ended June 30, 2025, reflecting a significant improvement in the company's profitability | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 2,601,073 | 2,776,000 | | Cost of sales | (2,262,488) | (2,474,486) | | Gross profit | 338,585 | 301,514 | | Operating profit | 81,311 | 80,970 | | Net finance costs | (40,977) | (68,848) | | Profit before tax | 37,544 | 12,498 | | Income tax expense | (997) | (15,114) | | Profit/(Loss) for the period | 36,547 | (2,616) | | Profit/(Loss) attributable to owners of the Company | 37,095 | 2,419 | - Profit for the period turned from a loss of RMB 2,616 thousands in the same period of 2024 to a profit of RMB 36,547 thousands in the same period of 2025[5] - Net finance costs significantly decreased year-on-year from RMB 68,848 thousands to RMB 40,977 thousands[5] Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the total of profit for the period and other comprehensive income, where foreign currency translation differences significantly impacted comprehensive income, resulting in a total comprehensive expense of RMB 9,149 thousands for the first half of 2025, compared to an income of RMB 40,943 thousands in the prior year | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit/(Loss) for the period | 36,547 | (2,616) | | Other comprehensive (expense)/income – net of tax | (45,696) | 43,559 | | Total comprehensive (expense)/income for the period | (9,149) | 40,943 | | Total comprehensive (expense)/income for the period attributable to owners of the Company | (8,601) | 45,978 | - In the first half of 2025, foreign currency translation differences (items not to be reclassified to profit or loss) resulted in an expense of RMB 64,679 thousands, significantly impacting other comprehensive income[7] Unaudited Condensed Consolidated Statement of Financial Position As of June 30, 2025, the Group's total assets increased to RMB 12,710,723 thousands, with a higher proportion of current assets. Changes in asset structure were mainly due to increases in contract assets and cash and cash equivalents, and a decrease in non-current assets. Total liabilities also increased, with current liabilities accounting for over 80% | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Total assets | 12,710,723 | 11,928,201 | | Non-current assets | 3,993,739 | 4,294,609 | | Current assets | 8,716,984 | 7,633,592 | | Total equity | 3,655,440 | 3,664,589 | | Total liabilities | 9,055,283 | 8,263,612 | | Current liabilities | 7,538,262 | 6,143,432 | | Non-current liabilities | 1,517,021 | 2,120,180 | - Contract assets within current assets significantly increased from RMB 1,472,915 thousands at the end of 2024 to RMB 2,102,226 thousands as of June 30, 2025[8] - Cash and cash equivalents increased from RMB 790,586 thousands at the end of 2024 to RMB 1,356,489 thousands as of June 30, 2025[8] Notes to the Financial Statements General Information Honghua Group primarily engages in drilling rigs, oil and gas extraction equipment, drilling engineering services, fracturing business, and marine equipment. The company is registered in the Cayman Islands, with its parent company being Dongfang Electric Group International Investment Co., Ltd., and ultimate parent company being China Dongfang Electric Group Co., Ltd. These interim financial statements are unaudited and presented in RMB - The Group's principal activities include manufacturing drilling rigs, oil and gas extraction equipment, providing drilling engineering services, fracturing business, and marine equipment business[10] - The Company was incorporated in the Cayman Islands on June 15, 2007, and listed on The Stock Exchange of Hong Kong Limited on March 7, 2008[10][11] - These condensed consolidated interim financial statements are presented in RMB and are unaudited[12][13] Basis of Preparation These condensed consolidated interim financial statements are prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and should be read in conjunction with the annual financial statements. New and revised International Financial Reporting Standards were first applied in this period, but had no significant impact on financial position and performance - The condensed consolidated interim financial statements are prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'[14] - New and revised International Financial Reporting Standards were first applied in this period, but had no significant impact on the financial position and performance[14] Segment Information The Group is divided into five reportable operating segments based on business lines: Land Drilling Rigs, Parts and Others, Drilling Engineering Services, Fracturing Business, and Marine Sector. Segment performance is primarily assessed based on segment profit or loss, excluding share of profit/loss from associates and joint ventures, net other gains or losses, other income, and unallocated head office expenses. During the reporting period, each segment showed varied revenue and profit performance, with significant revenue growth in the Middle East market, while revenue from Parts and Others decreased due to business structure adjustments - The Group has identified five reportable segments: Land Drilling Rigs, Parts and Others, Drilling Engineering Services, Fracturing Business, and Marine Sector[15][17] - Segment performance assessment excludes share of profit/(loss) from associates and joint ventures, net other gains or losses, other income, and unallocated head office and corporate expenses[16] Segment Overview Management determines operating segments based on information reviewed for resource allocation and performance evaluation, identifying five reportable segments: Land Drilling Rigs, Parts and Others, Drilling Engineering Services, Fracturing Business, and Marine Sector - Management determines operating segments based on information reviewed by senior executive management for allocating resources and assessing performance[15] - The Group has identified five reportable segments: Land Drilling Rigs, Parts and Others, Drilling Engineering Services, Fracturing Business, and Marine Sector[17] Segment Performance and Revenue This section details the revenue and profit/loss for each of the five operating segments, showing varied performance with significant profit growth in Land Drilling Rigs and Marine Sector, and reduced losses in Fracturing Business | Segment | 2025 Revenue (RMB thousands) | 2024 Revenue (RMB thousands) | 2025 Profit/(Loss) (RMB thousands) | 2024 Profit/(Loss) (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Land Drilling Rigs | 801,453 | 869,464 | 88,266 | 25,672 | | Parts and Others | 574,751 | 968,571 | 94,773 | 108,266 | | Drilling Engineering Services | 174,505 | 173,795 | 11,451 | 33,689 | | Fracturing Business | 433,421 | 307,091 | (34,157) | (93,627) | | Marine Sector | 616,943 | 457,079 | 32,482 | 10,853 | | Total | 2,601,073 | 2,776,000 | 192,815 | 84,853 | - Fracturing Business's loss significantly narrowed from RMB 93,627 thousands in the same period of 2024 to a loss of RMB 34,157 thousands in the same period of 2025[18] - Marine Sector profit increased from RMB 10,853 thousands in the same period of 2024 to RMB 32,482 thousands in the same period of 2025[18] Revenue and Non-Current Assets by Geography This section presents revenue and non-current assets broken down by geographical region, highlighting significant revenue growth in the Middle East and stable non-current assets in China | Region | 2025 Revenue (RMB thousands) | 2024 Revenue (RMB thousands) | | :--- | :--- | :--- | | China | 1,295,528 | 1,296,267 | | Middle East | 1,029,806 | 779,714 | | Europe | 191,541 | 132,282 | | Americas | 42,140 | 58,842 | | South and Southeast Asia | 25,277 | 144,062 | | Africa | 16,781 | 364,833 | | Total | 2,601,073 | 2,776,000 | - Revenue from the Middle East region increased by 32.1% year-on-year, reaching RMB 1,029,806 thousands[19] | Region | June 30, 2025 Non-current assets (RMB thousands) | December 31, 2024 Non-current assets (RMB thousands) | | :--- | :--- | :--- | | China | 2,916,149 | 3,037,834 | | Middle East | 419,119 | 377,919 | | Africa | 41,349 | 41,863 | | Europe | 2,181 | 1,036 | | Americas | 74 | 74 | | Total | 3,378,872 | 3,458,726 | Major Customers The Group's revenue for the six months ended June 30, 2025, included a significant portion from one external customer, with no other customer contributing more than 10% of total revenue - For the six months ended June 30, 2025, approximately RMB 569,620,000 of the Group's revenue was derived from one external customer, primarily from sales of 'Land Drilling Rigs' and 'Parts and Others'[20] - The Group had no other customers contributing more than 10% of total revenue[20] Operating Profit In the calculation of operating profit for the period, key deductions included inventory write-downs and impairment provisions for property, plant, and equipment, while reversals of impairment provisions for financial assets and gains on disposal of property, plant, and equipment and other intangible assets were recognized | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Write-down of inventories | 27,508 | 28,804 | | Reversal of impairment loss on financial assets | (8,351) | (12,628) | | Impairment (reversal)/provision for contract assets | (485) | 549 | | Impairment provision for property, plant and equipment | – | 3,996 | | Gain on disposal of property, plant and equipment and other intangible assets | (6,669) | (478) | Income Tax Expense Income tax expense significantly decreased during the period, primarily due to the reversal of deferred income tax. Chinese subsidiaries enjoy a 15% corporate income tax rate under high-tech enterprise or western preferential policies. The Board decided that Chinese subsidiaries would not distribute dividends to offshore holding companies in the foreseeable future to support business development | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current income tax – China | 1,265 | 1,788 | | Current income tax – Other regions | 7,500 | 12,935 | | Deferred income tax | (7,768) | 391 | | Total | 997 | 15,114 | - High-tech enterprises such as Sichuan Honghua, Gansu Hongteng, and Jiangsu Ocean are subject to a corporate income tax rate of 15%[24] - Honghua Electric, Sichuan Oil Service, and Hanzheng Testing are approved to enjoy a preferential tax rate of 15% as qualified enterprises in Western China[24] - The Board decided that subsidiaries of the Group located in the People's Republic of China would not distribute dividends to offshore holding companies in the foreseeable future to fund business and future development[26] Earnings Per Share Both basic and diluted earnings per share attributable to owners of the Company were RMB 0.41 cents, a significant increase from the prior year, with basic and diluted EPS being consistent due to the absence of dilutive potential shares | Indicator | 2025 (RMB thousands/thousand shares/RMB cents per share) | 2024 (RMB thousands/thousand shares/RMB cents per share) | | :--- | :--- | :--- | | Profit attributable to owners of the Company | 37,095 | 2,419 | | Adjusted weighted average number of ordinary shares in issue | 8,979,400 | 8,979,400 | | Basic and diluted earnings per share | 0.41 | 0.03 | - Diluted loss per share was consistent with basic earnings per share due to the absence of dilutive potential shares during the periods presented[28] Dividends The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025, consistent with the prior year - The Board of Directors does not recommend the payment of an interim dividend for the six months ended June 30, 2025[30] Property, Plant and Equipment As of June 30, 2025, the Group's net book value of property, plant, and equipment was RMB 2,437,359 thousands, a decrease from the end of 2024, primarily due to depreciation expense and disposals | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Net book value at end of period | 2,437,359 | 2,541,627 | | Additions | 46,153 | - | | Disposals | (16,850) | - | | Depreciation expense | (132,919) | - | - For the six months ended June 30, 2025, depreciation expense was RMB 132,919 thousands[31] Trade and Other Receivables As of June 30, 2025, the Group's total trade and other receivables were RMB 3,685,908 thousands, a decrease from the end of 2024. Trade receivables and bills receivable within one year accounted for the largest proportion, and the company maintains different credit policies, with trade receivables generally payable within 90 days | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade receivables | 2,340,830 | 2,683,320 | | Bills receivable | 51,907 | 215,246 | | Amounts due from related parties | 392,812 | 475,394 | | Prepayments to non-related parties | 660,367 | 455,121 | | Total | 3,685,908 | 4,110,463 | | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within one year | 1,795,326 | 2,374,741 | | Over one year | 377,942 | 365,514 | | Total | 2,173,268 | 2,740,255 | - Trade receivables are generally payable within 90 days after the Group submits invoices to customers[33] Borrowings As of June 30, 2025, the Group's total borrowings were RMB 4,771,805 thousands, an increase from the end of 2024, with a significant rise in the current portion. Borrowings primarily include bank loans, unsecured related party loans, and other borrowings, with detailed disclosures of terms and repayment status for several related party syndicated and entrusted loans | Borrowing type | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Bank loans | 3,174,664 | 2,895,356 | | Unsecured related party loans | 1,463,760 | 1,108,860 | | Other borrowings | 86,381 | 98,538 | | Total borrowings | 4,771,805 | 4,149,754 | | Current portion | 3,333,771 | 2,110,702 | | Non-current portion | 1,438,034 | 2,039,052 | - The Group's subsidiary, Honghua (China) Investment Co., Ltd., obtained syndicated loans from Dongfang Electric Group Finance Co., Ltd., Sichuan Bank, and Industrial Bank, with a total credit facility of RMB 1,470,000,000[35] - As of June 30, 2025, the Group had unutilized fixed-rate borrowing facilities of RMB 6,563,512 thousands[39] Trade and Other Payables As of June 30, 2025, the Group's total trade and other payables were RMB 3,270,999 thousands, a slight decrease from the end of 2024. Trade payables accounted for the largest proportion, with the vast majority being current liabilities due within one year | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade payables | 2,450,057 | 2,182,072 | | Amounts due to related parties | 407,925 | 434,695 | | Bills payable | 190,648 | 520,065 | | Other payables | 222,369 | 270,669 | | Total | 3,270,999 | 3,407,501 | | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Within one year | 2,657,571 | 2,771,633 | | Over one year | 386,680 | 360,901 | | Total | 3,044,251 | 3,132,534 | Events After Reporting Period As of the approval date of these condensed consolidated financial statements, there were no significant events after June 30, 2025, requiring disclosure by the Group - The Group had no significant events requiring disclosure from June 30, 2025, up to the approval date of these condensed consolidated financial statements[42] Business Review Company Overview Honghua Group is a global leader in oil and gas exploration and development equipment manufacturing and drilling engineering services, operating across major oil and gas producing regions worldwide, offering a full range of land drilling rigs, electric fracturing equipment, core components for drilling and completion equipment, drilling engineering services, digital drilling and completion products, offshore wind power, marine oil and gas and offshore equipment manufacturing, and new energy equipment and integrated services for oil and gas fields - Honghua Group is a global leading company in oil and gas exploration and development equipment manufacturing and drilling engineering services[43] - The product portfolio is extensive, covering land drilling rigs, electric fracturing, drilling engineering services, marine equipment, and new energy equipment[43] Market Environment and Strategy In the first half of 2025, international oil prices fluctuated due to geopolitical conflicts and global economic downturn pressures, increasing the oil and gas industry's focus on equipment and service efficiency, stability, and safety. Honghua Group aligns with the energy transition trend, focusing on enhancing core competitiveness, seizing opportunities in intelligent, unmanned, and green development, and serving national deep-earth and deep-sea strategies - International oil prices experienced significant short-term fluctuations due to multiple factors including the Russia-Ukraine war, Iran-Israel conflict, US tariff policies, OPEC+ production increases, and global economic downturn pressures[44] - The oil and gas industry increased the application of intelligent equipment and green extraction technologies, with unconventional oil and gas development and deep-sea energy development becoming new growth cores[44] - The Group's strategy focuses on enhancing core competitiveness, seizing opportunities in intelligent, unmanned, and green development, and serving national deep-earth and deep-sea strategies[44] Quality and Efficiency Improvements The Group's revenue decreased by 6.3% in the first half of 2025, primarily due to proactive business structure adjustments and streamlining low-margin businesses. By reducing financing costs, controlling expenses, and optimizing cost management, gross profit increased by 12.3% year-on-year, and net profit attributable to owners of the parent company surged by 1433.5%. Working capital turnover efficiency significantly improved, with net cash flow from operating activities increasing by 132.4% year-on-year - Revenue decreased by 6.3% to RMB 2,601.07 million, primarily due to the company's proactive adjustment of its business structure and contraction of low-margin business segments[45] - Financing costs decreased by 0.89 percentage points to 2.5%, interest expenses decreased by 27.5% year-on-year, and the finance cost ratio decreased by 0.90 percentage points to 1.6%[46] | Indicator | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Gross profit | RMB 338.59 million | RMB 301.51 million | Increased by 12.3% | | Net profit attributable to owners of the parent company | RMB 37.10 million | RMB 2.42 million | Significantly increased by 1433.5% | | Gross profit margin | 13.0% | 10.9% | Increased by 2.1 percentage points | | Average turnover days for trade and bills receivables | 201 days | 268 days | Decreased by 67 days | | Average turnover days for inventories | 126 days | 144 days | Decreased by 18 days | | Net cash flow from operating activities | RMB 93.67 million | RMB 40.30 million | Increased by 132.4% | Market Expansion The Group achieved multi-faceted breakthroughs in market expansion, with stable revenue in the Chinese market and a decrease in overseas market revenue, though the Middle East market performed strongly with a 32.1% year-on-year growth. Total new effective orders increased by 14.2% year-on-year, with overseas orders surging by 107%, securing several major contracts in the Middle East and Indonesia, and entering CNPC's framework bidding and high-end scientific research vessel construction for the first time - Revenue from the Chinese market was RMB 1,295.53 million, a slight decrease of 0.06% year-on-year, accounting for 49.8% of total revenue[47] - Overseas market revenue was RMB 1,305.55 million, a year-on-year decrease of 11.8%, but Middle East market revenue increased by 32.1% year-on-year to RMB 1,029.81 million[47] - New effective orders reached RMB 4,578 million, a year-on-year increase of 14.2%, with overseas new effective orders reaching RMB 2,556 million, a year-on-year increase of 107%[49] - Successfully signed contracts for RMB 1.5 billion intelligent cluster well drilling rigs for artificial islands, several desert fast-moving drilling rigs exceeding USD 100 million (Middle East), and 6 Offshore Construction Vessel (OCV) orders from Middle Eastern clients[49] - Domestically, the Group was selected for CNPC's framework bidding for the first time, secured an order for Sinopec's oil production platform new energy photovoltaic power generation project, and signed a shipbuilding engineering sub-procurement contract exceeding RMB 240 million, entering the high-end scientific research vessel construction niche market[49] Revenue by Market This section provides a breakdown of revenue by geographical region, showing stable performance in China, a decrease in overall overseas revenue, but strong growth in the Middle East market | Regional Distribution | 2025 Revenue (RMB millions) | 2025 Proportion (%) | 2024 Revenue (RMB millions) | 2024 Proportion (%) | Revenue Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | China | 1,295.52 | 49.81 | 1,296.27 | 46.70 | -0.06 | | Overseas | 1,305.55 | 50.19 | 1,479.73 | 53.30 | -11.77 | | Middle East | 1,029.81 | 39.59 | 779.71 | 28.09 | 32.07 | | Other Overseas | 275.74 | 10.60 | 700.02 | 25.21 | -60.61 | | Total | 2,601.07 | 100.00 | 2,776.00 | 100.00 | -6.30 | New Effective Orders The Group recorded significant growth in new effective orders, particularly from overseas markets, securing major contracts for intelligent drilling rigs, desert fast-moving rigs, and offshore engineering vessels - During the reporting period, the Group recorded new effective orders totaling RMB 4,578 million, a year-on-year increase of 14.2%[49] - Overseas new effective orders reached RMB 2,556 million, a year-on-year increase of 107%[49] - Successfully signed contracts in the international market for RMB 1.5 billion intelligent cluster well drilling rigs for artificial islands, several desert fast-moving drilling rigs exceeding USD 100 million, and 6 Offshore Construction Vessel (OCV) orders from Middle Eastern clients[49] Technology Innovation and Green Development The Group made significant progress in technological innovation, applying for 55 patents in the first half of the year, with a cumulative total of 859 valid patents. Breakthroughs were achieved in equipment intelligence, drilling digitalization, completion digitalization, and new energy-related industries, notably the intelligent fracturing demonstration project and the implementation of 'photovoltaic + oil and gas' new energy business - During the reporting period, 55 patents were applied for (30 invention patents), with a cumulative total of 859 valid patents (397 invention patents)[50] - Awarded the First Prize for Petroleum and Petrochemical Equipment Technology Innovation Achievements in 2025, the Second Prize for National Drilling Standardization Committee Standard Innovation, and the First Prize for Chongqing Science and Technology Progress Award in 2024[50] - Key efforts were made to advance the R&D of Intelligent Drilling Rig 2.0 and national deep-earth drilling rig research projects, and to build AI edge computing capabilities in drilling digitalization[50] - The intelligent fracturing demonstration project achieved breakthrough progress, realizing dynamic real-time optimization of fracturing parameters and remote collaboration in operations[50] - Achieved the first 'photovoltaic + oil and gas' new energy business implementation, completing a new breakthrough in photovoltaic power generation and 'zero-carbon' power supply in the oil and gas field[50] Business Model and Segment Performance The Group's business model covers Land Drilling Rigs, Parts and Others, Drilling Engineering Services, Marine Sector, and Fracturing Business. During the reporting period, revenue from the Marine Sector and Fracturing Business significantly increased, while revenue from Parts and Others substantially decreased due to proactive business structure adjustments. Each business segment achieved new progress and breakthroughs in both domestic and international markets | Business Category | 2025 Revenue (RMB millions) | 2025 Proportion (%) | 2024 Revenue (RMB millions) | 2024 Proportion (%) | Revenue Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Land Drilling Rigs | 801.45 | 30.81 | 869.46 | 31.32 | -7.82 | | Parts and Others | 574.75 | 22.10 | 968.57 | 34.89 | -40.66 | | Drilling Engineering Services | 174.51 | 6.71 | 173.80 | 6.26 | 0.41 | | Marine Sector | 616.94 | 23.72 | 457.08 | 16.47 | 34.98 | | Fracturing Business | 433.42 | 16.66 | 307.09 | 11.06 | 41.14 | | Total | 2,601.07 | 100.00 | 2,776.00 | 100.00 | -6.30 | Land Drilling Rigs Land Drilling Rigs business revenue decreased by 7.8% year-on-year, primarily driven by overseas markets, especially the Middle East, where significant orders were secured, while domestic market competitiveness was also enhanced - Land Drilling Rigs business revenue was RMB 801.45 million, a year-on-year decrease of 7.8%, accounting for 30.8% of total revenue[51][54] - 92.3% of Land Drilling Rigs business revenue came from overseas, with the Middle East accounting for 85.2%, and multiple significant orders secured in the Middle East[54] - Domestically, the Group won a drilling rig project for a certain coalfield geological oil and gas drilling and extraction company, enhancing market competitiveness[54] Parts and Others Revenue from Parts and Others business decreased by 40.7% due to proactive business structure adjustments, focusing on streamlining low-margin operations, while achieving a 3.3 percentage point increase in gross margin and securing new orders for high-pressure mud pumps and photovoltaic power generation projects - Revenue from Parts and Others business was RMB 574.75 million, a year-on-year decrease of 40.7%, accounting for 22.1% of total revenue, primarily due to the company's proactive adjustment of its business structure and streamlining of low-margin businesses[51][56] - During the reporting period, the gross margin of Parts and Others business increased by 3.3 percentage points compared to the same period last year[56] - High-pressure mud pumps received 49 bulk orders from domestic and international markets, and successfully secured an order for Sinopec's oil production platform new energy photovoltaic power generation project[56] Drilling Engineering Services Drilling Engineering Services revenue saw a slight increase of 0.4% year-on-year, with six self-owned drilling rigs deployed in the Middle East operating at full capacity, and domestic projects demonstrating stable performance and advanced technology - Drilling Engineering Services revenue was RMB 174.51 million, a year-on-year increase of 0.4%, accounting for 6.7% of total revenue[51][57] - The Group deployed 6 self-owned drilling rigs in the Middle East, with overall production tasks at full capacity and project execution progressing steadily[57] - Domestic projects utilized intelligent drilling rigs on a Sinopec Chongqing shale gas platform in Nanchuan, demonstrating stable equipment performance and advanced technology[57] Marine Sector The Marine Sector experienced significant revenue growth of 35.0% year-on-year, driven by a substantial increase in new effective orders, particularly in offshore oil and gas and marine engineering equipment manufacturing - Marine Sector revenue was RMB 616.94 million, a year-on-year increase of 35.0%, accounting for 23.7% of total revenue, with new effective orders significantly up by 63% compared to the same period last year[51][59] - The Offshore Oil & Gas and Marine Engineering Equipment Manufacturing business unit recorded revenue of RMB 263.19 million, a significant increase of 1,171.4% compared to the same period last year[59] Offshore Wind Power Offshore Wind Power business revenue decreased by 18.9% but the company maintains a leading position in the large jacket foundation market, securing new orders and expanding its client base - Offshore Wind Power business revenue was RMB 353.75 million, a year-on-year decrease of 18.9%, accounting for 57.3% of Marine Sector business revenue[60][61] - The company has secured a leading position in China's offshore wind power large jacket foundation sub-market[61] - New effective orders amounted to approximately RMB 800 million, including 38 sets of large offshore wind jacket foundation orders, and new clients such as Mingyang BASF and Guangdong Institute were developed[61] Offshore Oil & Gas and Marine Engineering Equipment Manufacturing Revenue from Offshore Oil & Gas and Marine Engineering Equipment Manufacturing significantly increased by 1,171.4%, driven by new orders for offshore workover rigs, OCV vessels for Middle Eastern clients, and entry into the high-end scientific research vessel construction market - Revenue from Offshore Oil & Gas Equipment and Special Vessels business was RMB 263.19 million, a significant increase of 1,171.4% compared to the same period in 2024[60][63] - Successfully signed an offshore workover rig order with a domestic client and secured 6 OCV vessel orders from Middle Eastern clients, achieving a breakthrough in special vessel exports[63] - Signed a shipbuilding engineering sub-procurement contract exceeding RMB 240 million with a domestic vessel operation and management company, successfully entering the high-end scientific research vessel construction market[63] Fracturing Business Fracturing Business revenue significantly increased by 41.1%, entirely from the domestic market, driven by substantial growth in fracturing equipment sales and services, successful application of electric fracturing, and expansion to new clients - Fracturing Business revenue was RMB 433.42 million, a significant year-on-year increase of 41.1%, accounting for 16.7% of total revenue, entirely from the domestic market[51][64] - Revenue from fracturing equipment sales and fracturing services recorded RMB 328.30 million, a significant year-on-year increase of 64.7%, with gross profit significantly increasing by RMB 57.62 million[64][65] - Completed approximately 1,800 fracturing stages, achieved the first application of electric fracturing in Xinjiang Tarim, and expanded to 8 new clients[64] Talent Development As of June 30, 2025, the Group had a total of 2,830 employees. The company comprehensively promotes high-quality talent team building through targeted recruitment of high-end technical talents for emerging industries, strengthening job rotation and exchanges, conducting numerous training sessions, and implementing incentive measures such as performance-linked remuneration and project profit sharing - As of June 30, 2025, the Group had a total of 2,830 employees[66] - Focusing on supporting the development of strategic emerging industries, the Group specifically introduced high-end technical talents for emerging industries, forming technical talent teams in areas such as equipment intelligence, management digitalization, and marine engineering equipment[66] - During the period, a total of 392 training sessions were conducted, covering technology, skill enhancement, legal risk compliance, quality and safety, financial literacy, and employee management[66] - Implemented incentive measures such as project profit sharing, linking employee income to performance, ensuring that total compensation growth is synchronized with economic benefits[66] Future Outlook Industry Trends and Company Strategy Facing uncertainties and new opportunities in the global oil and gas development industry in the second half of 2025, Honghua Group will continuously improve its global operational system and form a 'equipment + services' dual-driven competitive advantage by accelerating business structure optimization and upgrading, focusing on core technological breakthroughs, and striving to enhance operational efficiency - In the second half of 2025, the global oil and gas development industry faces multiple factors including supply-demand structural adjustments, oil price fluctuations, and a complex and changing policy environment[67] - The Group will focus on accelerating business structure optimization and upgrading, concentrating on core technological breakthroughs, and striving to enhance operational efficiency[67] - The goal is to gradually form a 'equipment + services' dual-driven competitive advantage[67] Accelerate Business Structure Optimization and Upgrading To mitigate industry fluctuations, the Group will stabilize its three core businesses—Land Drilling Rigs, Parts and Others, and Drilling Engineering Services—reshape the Fracturing Business segment while expanding overseas markets, and build the Marine Sector as its 'second growth curve'. The company will continue to strengthen its presence in the Middle East market, cultivate emerging markets, and comprehensively enhance its comprehensive solution service competitiveness, including spare parts services, global service center operations, and API Q2 certification advantages - Gradually form an industry development pattern driven by 'equipment + services' with mutual empowerment[68] - Stabilize the three major businesses of Land Drilling Rigs, Parts and Others, and Drilling Engineering Services, reshape the Fracturing Business segment and accelerate breakthroughs in overseas markets, and build the Marine Sector business as the 'second growth curve'[68][69] - Continue to strengthen and expand the Middle East market, cultivate emerging markets, and continuously enhance offshore wind power market expansion[69] - Comprehensively enhance the competitiveness of comprehensive solution services, including improving spare parts service sales capabilities, operating global service centers, and leveraging API Q2 certification advantages to expand overseas markets[70] Focus on Core Technology Breakthroughs The Group will maintain an R&D investment intensity of approximately 5%, actively respond to national deep-earth and deep-sea strategies, and focus on technological segments such as drilling and completion equipment, marine engineering equipment, digital products, and new energy. Key efforts include advancing Intelligent Drilling Rig 2.0 and iterative upgrades of electric fracturing systems, achieving new breakthroughs in the oil and gas field new energy market, and strengthening digital governance and innovation talent assurance systems - Actively embrace national deep-earth and deep-sea strategies, focusing on technological segments such as drilling and completion equipment, marine engineering equipment, digital products, and new energy[71] - Key efforts include advancing the R&D of Intelligent Drilling Rig 2.0 and national deep-earth drilling rig research projects, and promoting pump efficiency improvement and system performance iterative upgrades in the electric fracturing field[71] - In the new energy sector, closely follow Dongfang Electric Group's new energy product lines, striving for new breakthroughs in the oil and gas field new energy market[71] - Will continue to maintain an R&D investment intensity of approximately 5%, strengthen the supporting role of technological innovation, and promote industrial development towards high-end, intelligent, and green directions[72] - Strengthen the innovation talent assurance system, focusing on introducing industry technical experts in marine engineering, digitalization, and other fields, and strengthening the development of a diversified and international talent team[72] Financial Review Overall Financial Performance In the first half of 2025, Honghua Group achieved significant growth in gross profit and profit attributable to owners of the Company, with improvements in both gross margin and net margin, steadily enhancing profitability through optimized cost management and improved operational efficiency amidst a complex external environment | Indicator | First half of 2025 | First half of 2024 | | :--- | :--- | :--- | | Gross profit | Approximately RMB 339 million | Approximately RMB 302 million | | Profit attributable to owners of the Company | Approximately RMB 37 million | Approximately RMB 2 million | | Gross margin | 13.0% | 10.9% | | Net margin | 1.4% | 0.1% | - Profitability steadily improved, primarily benefiting from optimized cost management and reduced financing costs[73] Revenue Revenue for the period was approximately RMB 2.601 billion, a year-on-year decrease of 6.3%, primarily due to the company's proactive adjustment of its business structure, focusing on core business segments to enhance overall profitability | Indicator | First half of 2025 | First half of 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | Approximately RMB 2.601 billion | Approximately RMB 2.776 billion | -6.3% | - The main reason for the revenue decrease was the company's proactive adjustment of its business structure, focusing on core business segments[74] Cost of Sales Cost of sales for the period was approximately RMB 2.262 billion, a year-on-year decrease of 8.6%, primarily influenced by reduced sales revenue, while optimized product structure, improved production efficiency, and cost reduction measures also enhanced profitability | Indicator | First half of 2025 | First half of 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Cost of sales | Approximately RMB 2.262 billion | Approximately RMB 2.474 billion | -8.6% | - The decrease in cost of sales was mainly influenced by reduced sales revenue, coupled with effective implementation of product structure optimization, improved production efficiency, and cost reduction measures[75] Gross Profit and Gross Margin Gross profit for the period was approximately RMB 339 million, a year-on-year increase of 12.3%, with gross margin improving by 2.1 percentage points to 13.0%. This was primarily due to the expanded scale and improved efficiency of fracturing services, rapid growth in the marine sector, and optimized product structure | Indicator | First half of 2025 | First half of 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Gross profit | Approximately RMB 339 million | Approximately RMB 302 million | 12.3% | | Gross margin | 13.0% | 10.9% | Increased by 2.1 percentage points | - The increase in gross margin was primarily due to the significant expansion and improved efficiency of fracturing services, rapid growth in the marine sector, and optimized product structure[76] Period Expenses Distribution expenses decreased year-on-year, administrative expenses increased due to higher staff salaries and property fees, R&D expenses significantly grew to meet the demand for equipment automation, digitalization, and intelligence, and net finance costs substantially decreased due to improved financing structure | Expense Category | First half of 2025 (RMB billions) | First half of 2024 (RMB billions) | Change (%) | | :--- | :--- | :--- | :--- | | Distribution expenses | 0.75 | 0.80 | -6.8% | | Administrative expenses | 1.43 | 1.30 | 9.9% | | R&D expenses | 0.77 | 0.58 | 31.8% | | Net finance costs | 0.41 | 0.69 | -40.5% | - Total R&D investment was RMB 146 million, a year-on-year increase of 10.6%, to meet the development needs for automation, digitalization, and intelligence of drilling and extraction equipment[77] - Net finance costs significantly decreased, primarily benefiting from continuous improvement in financing structure and optimized financing costs[77] Profit Before Income Tax Profit before income tax for the period was approximately RMB 38 million, an increase of RMB 26 million compared to the RMB 12 million profit in the same period last year, indicating a significant improvement in profitability | Indicator | First half of 2025 | First half of 2024 | Change (RMB billions) | | :--- | :--- | :--- | :--- | | Profit before income tax | Approximately RMB 38 million | Approximately RMB 12 million | Increased by 0.026 billion | Income Tax Expense Income tax expense for the period was approximately RMB 1 million, a significant decrease of RMB 14 million compared to RMB 15 million in the same period last year | Indicator | First half of 2025 | First half of 2024 | Change (RMB billions) | | :--- | :--- | :--- | :--- | | Income tax expense | Approximately RMB 1 million | Approximately RMB 15 million | Decreased by 0.014 billion | Profit/(Loss) for the Period The Group achieved a profit of approximately RMB 37 million for the period, compared to a loss of approximately RMB 3 million in the same period last year, with net margin improving from 0.1% to 1.4%, indicating a significant improvement in operating performance | Indicator | First half of 2025 | First half of 2024 | | :--- | :--- | :--- | | Profit/(Loss) for the period | Approximately RMB 37 million | Approximately RMB (3) million | | Net margin | 1.4% | 0.1% | - Profit attributable to owners of the Company was approximately RMB 37 million, while loss attributable to non-controlling interests was approximately RMB 1 million[80] Non-HKFRS Financial Measures EBITDA for the period was approximately RMB 260 million, a year-on-year increase, with EBITDA margin improving to 10.0%, reflecting the Group's continuous enhancement of profitability and significant improvement in operating efficiency. EBITDA, as a non-HKFRS financial measure, helps compare operating performance across periods | Indicator | First half of 2025 | First half of 2024 | | :--- | :--- | :--- | | EBITDA | Approximately RMB 260 million | Approximately RMB 232 million | | EBITDA margin | 10.0% | 8.4% | - EBITDA growth was primarily due to the Group's continuous enhancement of profitability and significant improvement in operating efficiency[81] Dividends For the six months ended June 30, 2025, the Board of Directors recommended no interim dividend, consistent with the prior year - The Board of Directors recommended no interim dividend for the six months ended June 30, 2025[82] Liquidity and Capital Resources Funding Sources The Group's primary funding sources include cash generated from operations and bank loans - The Group's primary funding sources include cash generated from operations and bank loans[83] Borrowings Status As of June 30, 2025, the Group's total borrowings were approximately RMB 4.772 billion, an increase of RMB 622 million from the end of 2024. Current borrowings repayable within one year significantly increased by 57.9% to approximately RMB 3.334 billion | Indicator | June 30, 2025 (RMB billions) | December 31, 2024 (RMB billions) | Change (RMB billions) | | :--- | :--- | :--- | :--- | | Total borrowings | 4.772 | 4.150 | Increased by 0.622 billion | | Borrowings repayable within one year | 3.334 | 2.111 | Increased by 1.223 billion (57.9% increase) | Deposits and Cash Flows As of June 30, 2025, the Group's cash and cash equivalents were approximately RMB 1.356 billion, an increase of RMB 565 million from the end of 2024. During the period, net cash inflow from operating activities was RMB 94 million, net cash inflow from financing activities was RMB 539 million, and net cash outflow from investing activities was RMB 70 million | Indicator | June 30, 2025 (RMB billions) | December 31, 2024 (RMB billions) | | :--- | :--- | :--- | | Cash and cash equivalents | 1.356 | 0.791 | | Net cash inflow from operating activities | 0.094 | - | | Net cash outflow from investing activities | 0.070 | - | | Net cash inflow from financing activities | 0.539 | - | Asset and Liability Structure Asset Structure and Changes As of June 30, 2025, the Group's total assets were approximately RMB 12.711 billion. Current assets accounted for 68.6% of total assets, increasing by RMB 1.083 billion, primarily due to increases in contract assets and cash and cash equivalents; non-current assets decreased by RMB 301 million, mainly due to reductions in property, plant, and equipment and trade and other receivables | Indicator | June 30, 2025 (RMB billions) | December 31, 2024 (RMB billions) | | :--- | :--- | :--- | | Total assets | 12.711 | 11.928 | | Current assets | 8.717 | 7.634 | | Non-current assets | 3.994 | 4.295 | - Current assets increased by RMB 1.083 billion, primarily due to increases in contract assets and cash and cash equivalents[86] - Non-current assets decreased by RMB 301 million, mainly due to reductions in property, plant, and equipment and trade and other receivables[86] Liabilities Structure and Changes As of June 30, 2025, the Group's total liabilities were approximately RMB 9.055 billion, with current liabilities accounting for 83.2% and increasing by RMB 1.395 billion. The asset-liability ratio increased by 1.9 percentage points to 71.2% | Indicator | June 30, 2025 (RMB billions) | December 31, 2024 (RMB billions) | | :--- | :--- | :--- | | Total liabilities | 9.055 | 8.264 | | Total current liabilities | 7.538 | 6.143 | | Total non-current liabilities | 1.517 | 2.120 | | Asset-liability ratio | 71.2% | 69.3% | - Total current liabilities increased by RMB 1.395 billion, while total non-current liabilities decreased by RMB 603 million[87] Equity Structure and Changes As of June 30, 2025, the Group's total equity was approximately RMB 3.655 billion, a slight decrease from the end of 2024. Both equity attributable to owners of the Company and non-controlling interests saw minor declines. Basic and diluted earnings per share were both RMB 0.41 cents | Indicator | June 30, 2025 (RMB billions) | December 31, 2024 (RMB billions) | | :--- | :--- | :--- | | Total equity | 3.655 | 3.665 | | Total equity attributable to owners of the Company | 3.461 | 3.470 | | Total non-controlling interests | 0.194 | 0.195 | | Basic earnings per share (RMB cents) | 0.41 | 0.03 | | Diluted earnings per share (RMB cents) | 0.41 | 0.03 | - Total equity decreased by RMB 10 million, and total equity attributable to owners of the Company decreased by RMB 9 million[88] Other Information Major Acquisitions or Disposals of Subsidiaries, Associates, and Joint Ventures During the period, the Group had no major acquisitions or disposals of subsidiaries, associates, or joint ventures - The Group had no major acquisitions or disposals of subsidiaries, associates, or joint ventures during the period[89] Capital Expenditure and Major Investments and Commitments Total capital expenditure for the period was approximately RMB 52 million, primarily for infrastructure and technological upgrades. Capital expenditure for the second half of 2025 is estimated at approximately RMB 196 million, with capital commitments of RMB 29 million for business and capacity optimization adjustments | Indicator | First half of 2025 (RMB billions) | First half of 2024 (RMB billions) | Change (RMB billions) | | :--- | :--- | :--- | :--- | | Total capital expenditure | 0.052 | 0.070 | Decreased by 0.018 billion | - For the second half of 2025, the Group anticipates capital expenditure of approximately RMB 196 million, primarily for infrastructure and technological upgrades[90] - As of June 30, 2025, the Group had capital commitments of approximately RMB 29 million for optimizing and adjusting the Group's business and production capacity[90] Foreign Exchange Risk The Group faces foreign exchange risks arising from multiple currencies (primarily USD, HKD, AED, and RMB), and management has established policies to monitor and consider hedging significant foreign exchange risks when necessary - The Group is exposed to foreign exchange risks arising from various currencies, primarily involving USD, HKD, AED, and RMB[92] - Management has established policies requiring Group companies to manage foreign exchange risks related to their functional currencies and to consider hedging significant foreign exchange risks when necessary[92] Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities - The Group had no significant contingent liabilities as of June 30, 2025[93] Pledges and Guarantees Details of the Group's pledges and guarantees are provided in Note 10 (Borrowings) to the financial statements - Details of the Group's pledges and guarantees are provided in Note 10 to the financial statements[94] Purchase, Sale or Repurchase of Listed Securities As of June 30, 2025, the Company held no treasury shares, and neither the Company nor its subsidiaries purchased, sold, or repurchased any of the Company's shares - As of June 30, 2025, the Company held no treasury shares[95] - During the period, neither the Company nor its subsidiaries purchased, sold, or repurchased any of the Company's shares[96] Events After Reporting Period From the end of the reporting period on June 30, 2025, to the date of this announcement, no significant events occurred that had any material impact on the Group - From the end of the reporting period on June 30, 2025, to the date of this announcement, no significant events occurred that had any material impact on the Group[97] Corporate Governance and Other Disclosures Audit Committee The Company's Audit Committee was established in accordance with the Listing Rules, responsible for reviewing and overseeing financial reporting, internal control, and risk management, and has reviewed the unaudited interim financial report for the period - The Audit Committee was established in accordance with Rules 3.21 and 3.22 of the Listing Rules[98] - Its primary responsibilities include reviewing and overseeing the adequacy and effectiveness of the Company's financial reporting system, internal control, and risk management systems and related procedures[98] - The Audit Committee has reviewed the unaudited interim financial report of the Company and the Group for the six months ended June 30, 2025[98] Compliance with Corporate Governance Code The Company has adopted and complied with all code provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules, and will continue to review to maintain a high standard of corporate governance - The Company has adopted and complied with the principles and code provisions of the Corporate Governance Code set out in Appendix C1 Part 2 of the Listing Rules[99] - For the six-month period from January 1, 2025, to June 30, 2025, the Company has complied with all code provisions of the Corporate Governance Code[99] Standard Code for Directors' Securities Transactions The Company has adopted a code for directors' securities transactions no less stringent than the Standard Code set out in Appendix C3 of the Listing Rules, with all directors confirming compliance. Additionally, the company has established written guidelines for employees with inside information, and no non-compliance incidents were noted during the reporting period - The Company has adopted a code for directors' dealings in the Company's securities, the terms of which are no less exacting than those set out in the Standard Code in Appendix C3 of the Listing Rules[101] - All Directors have confirmed that they have complied with the Securities Dealing Code and the Standard Code throughout the six-month reporting period ended June 30, 2025[102] - The Company has also established written guidelines for employees' dealings in securities, and no incidents of non-compliance by employees were noted during the reporting period[102][103] Publication of Interim Results Announcement and Interim Report This results announcement has been published on the Company's website and the Stock Exchange's website, and the interim report will be dispatched to shareholders and published on the aforementioned websites in due course - This results announcement is published on the Company's website (www.hh-gltd.com) and the Stock Exchange's website (www.hkexnews.hk)[104](index=104&type=chunk) - The Company's interim report for the six months ended June 30, 2025, will be dispatched to the Company's shareholders and published on the aforementioned websites in due course[104] Definitions This report provides definitions for key terms, including 'Audit Committee', 'Board', 'Corporate Governance Code', 'Securities Dealing Code', 'Company', 'Directors', 'Group', 'HKD', 'Hong Kong', 'Listing Rules', 'Standard Code', 'Period', 'PRC', 'RMB', 'Last Corresponding Period', 'Shares', 'Stock Exchange', and 'USD' - This report provides definitions for key terms to ensure consistent understanding of the report's content[105][106]