GHW INTL(09933) - 2025 - 中期业绩

Financial Summary Overview of Financial Summary GHW International announced its unaudited condensed consolidated results for the six months ended June 30, 2025, with revenue increasing by 3.7% year-over-year to RMB 1,856.7 million, net profit surging by 77.1% to RMB 7.9 million, and basic earnings per share growing by 40.0% to RMB 0.007 Key Financial Indicators for H1 2025 | Indicator | H1 2025 (RMB million) | H1 2024 (RMB million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,856.7 | 1,790.2 | +3.7% | | Gross Profit | 170.5 | 194.5 | -12.4% | | Net Profit | 7.9 | 4.4 | +77.1% | | Basic EPS (RMB) | 0.007 | 0.005 | +40.0% | - The Board resolved not to recommend any interim dividend for the six months ended June 30, 2025[5] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, the Group's revenue was RMB 1,856,712 thousand, a 3.7% increase year-over-year; gross profit decreased by 12.4% to RMB 170,463 thousand, but profit for the period significantly increased by 77.1% to RMB 7,877 thousand due to higher other income and exchange gains Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | H1 2025 (RMB thousand) | H1 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 1,856,712 | 1,790,194 | | Cost of sales | (1,686,249) | (1,595,694) | | Gross Profit | 170,463 | 194,500 | | Other income | 12,315 | 2,691 | | Other gains and losses | 8,905 | (167) | | Profit before tax | 10,613 | 6,932 | | Profit for the period | 7,877 | 4,447 | | Total comprehensive income for the period | 9,996 | 596 | | Basic EPS (RMB) | 0.007 | 0.005 | - Profit for the period significantly increased by 77.1%, primarily due to a substantial increase in other income (such as VAT additional deduction benefits) and net exchange gains, offsetting the decrease in gross profit caused by intensified market competition[6][23][70] Condensed Consolidated Statement of Financial Position As of June 30, 2025, the Group's total assets increased to RMB 2,090,527 thousand from December 31, 2024; net current liabilities improved from RMB (127,755) thousand to RMB (87,500) thousand, and total equity grew to RMB 632,338 thousand Summary of Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current assets | 930,938 | 925,170 | | Current assets | 1,159,589 | 1,121,377 | | Total assets | 2,090,527 | 2,046,547 | | Current liabilities | 1,247,089 | 1,249,132 | | Non-current liabilities | 211,100 | 175,839 | | Total liabilities | 1,458,189 | 1,424,971 | | Net current liabilities | (87,500) | (127,755) | | Net assets | 632,338 | 621,576 | | Total equity | 632,338 | 621,576 | - Cash and cash equivalents increased from approximately RMB 101,461 thousand as of December 31, 2024, to approximately RMB 155,278 thousand as of June 30, 2025, indicating improved liquidity[9] Notes to the Condensed Consolidated Financial Statements General Information GHW International was incorporated in the Cayman Islands and listed on the Hong Kong Stock Exchange, primarily engaged in the manufacturing and sale of chemical and pharmaceutical products, with Mr. Yin Yanbin and Ms. Wu Hailing as its controlling shareholders - The Company was incorporated in the Cayman Islands on April 25, 2018, and listed on the Main Board of the Hong Kong Stock Exchange on January 21, 2020[11] - The Company is an investment holding company, and its subsidiaries are principally engaged in the manufacturing and sale of chemical and pharmaceutical products[12] Basis of Preparation of Condensed Consolidated Financial Statements The condensed consolidated financial statements are prepared in accordance with IAS 34 'Interim Financial Reporting' and the HKEX Listing Rules, presented in RMB - The financial statements are prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' and the applicable disclosure requirements of Appendix 16 to the HKEX Listing Rules[13] - The condensed consolidated financial statements are presented in RMB, which is the same as the Company's functional currency[14] Significant Accounting Policies The condensed consolidated financial statements are primarily prepared on a historical cost basis, applying consistent accounting policies with the prior year's consolidated financial statements, with no material impact from newly applied IFRS amendments - The financial statements are prepared on a historical cost basis, except for certain financial instruments measured at fair value[15] - The revised IFRS accounting standards, mandatory for annual periods beginning on or after January 1, 2025, were first applied in this interim period but had no material impact on the Group's financial position and performance[16] Revenue and Segment Information The Group's revenue primarily derives from the manufacturing and sale of chemical and pharmaceutical products, totaling RMB 1,856,712 thousand for the six months ended June 30, 2025; revenue from iodine derivative series and green products significantly increased, while methylamine industrial series and advanced material intermediates series declined, with Mainland China remaining the primary revenue source at 76.4% of total revenue - Revenue refers to income generated from the manufacturing and sale of chemical and pharmaceutical products during the two periods[17] Revenue by Product Type (RMB thousand) | Product Type | H1 2025 | H1 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Methylamine Industrial Series | 600,981 | 617,525 | -2.7% | | Iodine Derivative Series and Related Products | 588,339 | 440,302 | +33.6% | | Jinhaiwei New Materials | 399,090 | 399,570 | -0.1% | | Advanced Material Intermediates Series | 132,537 | 218,071 | -39.2% | | Green Products | 111,485 | 94,706 | +17.7% | | Health Products | 15,001 | 13,321 | +12.6% | | Gegexiang Select | 978 | — | N/A | | Others | 8,301 | 6,699 | +23.9% | | Total | 1,856,712 | 1,790,194 | +3.7% | Revenue by Customer Location (RMB thousand) | Region | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Mainland China | 1,418,926 | 1,411,161 | | Europe | 183,474 | 148,735 | | Vietnam | 85,828 | 77,264 | | Other Asian Countries | 95,906 | 101,916 | | Others | 72,578 | 51,118 | | Total | 1,856,712 | 1,790,194 | Other Income and Other Gains and Losses Other income significantly increased to RMB 12,315 thousand this period, primarily due to RMB 7,452 thousand in VAT additional deduction benefits; other gains and losses turned from a loss to a gain of RMB 8,905 thousand, mainly driven by increased net exchange gains Other Income (RMB thousand) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Government grants | 2,560 | 1,409 | | VAT additional deduction benefits | 7,452 | — | | Bank interest income | 600 | 637 | | Interest income from loans receivable | 297 | 299 | | Others | 1,406 | 346 | | Total | 12,315 | 2,691 | Other Gains and Losses (RMB thousand) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net exchange gains/(losses) | 9,427 | (114) | | Loss on disposal of property, plant and equipment | (1,090) | (654) | | Fair value changes of financial assets at fair value through profit or loss | (8) | (144) | | Fair value changes of derivative financial instruments | (79) | (7) | | Others | 655 | 752 | | Total | 8,905 | (167) | - The Group benefited from China's VAT credit refund policy for advanced manufacturing, receiving approximately RMB 7,452 thousand in additional deduction benefits this period[26] Profit Before Tax For the six months ended June 30, 2025, profit before tax increased to RMB 10,613 thousand from RMB 6,932 thousand in the prior period, reflecting the combined impact of inventory costs, depreciation, and inventory write-downs Composition of Profit Before Tax (RMB thousand) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Cost of inventories recognized as an expense | 1,686,256 | 1,594,853 | | Total depreciation | 10,651 | 7,368 | | (Reversal of)/write-down of inventories, net of reversal | (7) | 841 | Taxation Tax expense increased to RMB 2,736 thousand this period, with the effective tax rate decreasing to 25.8%, primarily due to the impact of under-provision for prior year income tax expenses Tax Expense (RMB thousand) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Current tax | 4,311 | 3,495 | | Under-provision in prior years | 9 | 1,324 | | Deferred tax | (1,584) | (2,334) | | Total | 2,736 | 2,485 | - The effective tax rate was approximately 25.8% in H1 2025, a decrease from 35.8% in the same period of 2024[76] Dividends The Company neither paid nor declared any dividends for the six months ended June 30, 2025 and 2024 - The Company neither paid nor declared any dividends for the six months ended June 30, 2025 and 2024[28] Earnings Per Share For the six months ended June 30, 2025, both basic and diluted earnings per share attributable to owners of the Company were RMB 0.007, an increase from RMB 0.005 in the prior period EPS Calculation Data | Indicator | H1 2025 (thousand shares) | H1 2024 (thousand shares) | | :--- | :--- | :--- | | Weighted average number of ordinary shares for basic EPS | 944,320 | 949,100 | | Weighted average number of ordinary shares for diluted EPS | 944,544 | 949,100 | - Basic earnings per share attributable to owners of the Company was RMB 0.007, representing a 40% year-over-year increase[8] Trade Receivables As of June 30, 2025, net trade receivables decreased to RMB 270,195 thousand from December 31, 2024; the provision for credit losses decreased, and impairment losses of RMB 2,356 thousand were reversed this period Trade Receivables (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade receivables | 273,203 | 291,869 | | Less: Provision for credit losses | (3,008) | (5,417) | | Net | 270,195 | 286,452 | Aging Analysis of Trade Receivables (RMB thousand) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 0 to 30 days | 169,508 | 186,358 | | 31 to 60 days | 63,038 | 52,546 | | 61 to 90 days | 25,675 | 34,866 | | Over 90 days | 11,974 | 12,682 | | Total | 270,195 | 286,452 | - For the six months ended June 30, 2025, the Group reversed impairment losses of RMB 2,356 thousand on trade receivables (2024: recognized impairment losses of RMB 1,656 thousand)[35] Bills Receivable at Fair Value Through Other Comprehensive Income As of June 30, 2025, bills receivable at fair value through other comprehensive income decreased to RMB 117,027 thousand from December 31, 2024, with RMB 81,092 thousand pledged as collateral for borrowings Bills Receivable at Fair Value Through Other Comprehensive Income (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Bills receivable at fair value through other comprehensive income | 117,027 | 127,229 | - As of June 30, 2025, the Group pledged bills receivable with a total net carrying amount of RMB 81,092 thousand as collateral for bank financing and supplier payments[37] Trade Payables and Bills Payable As of June 30, 2025, total trade payables and bills payable decreased to RMB 379,703 thousand from December 31, 2024, driven by a significant reduction in bills payable and a slight increase in trade payables Trade Payables and Bills Payable (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade payables | 367,213 | 363,403 | | Bills payable | 12,490 | 40,621 | | Total | 379,703 | 404,024 | Aging Analysis of Trade Payables (RMB thousand) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 0 to 30 days | 157,804 | 207,405 | | 31 to 60 days | 102,347 | 39,702 | | 61 to 90 days | 60,959 | 67,922 | | Over 90 days | 46,103 | 48,374 | | Total | 367,213 | 363,403 | Share Capital As of June 30, 2025, the Company's issued and fully paid share capital remained at RMB 8,930 thousand, consistent with January 1, 2025, with a total of 1,009,500,000 shares Share Capital Structure | Item | Number of Shares | Amount (HKD) | | :--- | :--- | :--- | | Authorized share capital (HKD 0.01 per share) | 10,000,000,000 | 100,000,000 | | Issued and fully paid share capital (June 30, 2025) | 1,009,500,000 | 10,095,000 | - As of June 30, 2025, the issued and fully paid share capital was presented as RMB 8,930 thousand[40] Management Discussion and Analysis Business Overview The Group, an applied chemical intermediate supplier in the integrated chemical services market, primarily manufactures and sells chemical and pharmaceutical products through a global network, optimizing its product portfolio and strategic layout to address industry challenges and pursue global expansion - The Group is an applied chemical intermediate supplier in the integrated chemical services market, primarily engaged in the production and sale of chemicals and the sale of chemicals manufactured by third-party manufacturers[41] - The Group operates seven main business segments: Methylamine Industrial Series, Jinhaiwei New Materials, Advanced Material Intermediates Series, Green Products, Health Products, Iodine Derivative Series and Related Products, and Gegexiang Select[41] - Facing challenges in China's chemical industry such as sluggish demand, supply-demand imbalance, and declining profit margins, the Group achieved resilient growth through technological innovation, supply chain management, and market segmentation, while actively exploring global expansion[45][46] Financial Review For the six months ended June 30, 2025, the Group's revenue increased by 3.7% year-over-year to RMB 1,856.7 million, and profit for the period surged by 77.1% to RMB 7.9 million; revenue growth was driven by green products and iodine derivative series, while profit growth was influenced by exchange gains and VAT refunds, partially offset by a decline in gross profit - Revenue for the period was approximately RMB 1,856.7 million, an increase of 3.7% year-over-year; profit for the period significantly increased by 77.1% to approximately RMB 7.9 million[47] - The increase in profit for the period was primarily due to higher net exchange gains (resulting from the appreciation of Russian Ruble and Mexican Peso against RMB) and an increase in other income of approximately RMB 7.5 million due to additional VAT credit refund policies[47] Revenue The Group's total revenue grew by 3.7%, contributed by both self-manufactured and third-party produced chemicals; revenue from iodine derivative series and related products and green products significantly increased, while methylamine industrial series and advanced material intermediates series declined Total Revenue by Business Segment (RMB thousand) | Business Segment | H1 2025 | % of Total Revenue | H1 2024 | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Methylamine Industrial Series | 600,981 | 32.4% | 617,525 | 34.5% | | Iodine Derivative Series and Related Products | 588,339 | 31.7% | 440,302 | 24.6% | | Jinhaiwei New Materials | 399,090 | 21.5% | 399,570 | 22.3% | | Advanced Material Intermediates Series | 132,537 | 7.1% | 218,071 | 12.2% | | Green Products | 111,485 | 6.0% | 94,706 | 5.3% | | Health Products | 15,001 | 0.8% | 13,321 | 0.7% | | Gegexiang Select | 978 | 0.1% | — | 0.0% | | Others | 8,301 | 0.4% | 6,699 | 0.4% | | Total | 1,856,712 | 100.0% | 1,790,194 | 100.0% | Total Revenue by Product Source (RMB thousand) | Product Source | H1 2025 | % of Total Revenue | H1 2024 | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Self-manufactured chemicals | 1,409,518 | 75.9% | 1,406,830 | 78.6% | | Third-party manufactured chemicals | 438,893 | 23.7% | 376,665 | 21.0% | | Others | 8,301 | 0.4% | 6,699 | 0.4% | | Total | 1,856,712 | 100.0% | 1,790,194 | 100.0% | Methylamine Industrial Series Revenue from the methylamine industrial series decreased by 2.7% to RMB 601.0 million, primarily due to intense market competition leading to lower sales volume, market prices, and profit margins; increased sales of choline chloride and betaine were partially offset by lower average selling prices due to falling trimethylamine prices - Revenue from the methylamine industrial series decreased by 2.7% to approximately RMB 601.0 million, mainly due to intense market competition leading to lower sales volume, market prices, and profit margins for methylamine[52] - Sales volume of choline chloride and betaine increased by approximately 10% and 57% respectively, but their average selling prices decreased by approximately 3% to 7%[52][53] Iodine Derivative Series and Related Products Revenue from the iodine derivative series and related products significantly increased by 33.6% to RMB 588.3 million, primarily due to expanded market share and increased market penetration leading to higher sales volume; iodine sales volume notably grew by 104%, with an improved average selling price - Revenue from the iodine derivative series and related products increased by 33.6% to approximately RMB 588.3 million, primarily due to expanded market share and increased market penetration[54] - Sales volume of traded iodine derivatives increased by approximately 14%, with average selling price increasing by approximately 9%; iodine sales volume significantly increased by approximately 104%, and its average selling price increased by approximately 6%[54] Jinhaiwei New Materials Revenue from the Jinhaiwei New Materials segment slightly decreased by 0.1% to RMB 399.1 million; TDI sales volume increased by approximately 15%, but its average selling price fell by approximately 28% due to US tariffs and market oversupply, while resin sales volume decreased by 17%, but its average selling price increased by 40% due to the introduction of higher-priced alternatives - Revenue from Jinhaiwei New Materials slightly decreased by 0.1% to approximately RMB 399.1 million, mainly affected by fluctuations in TDI and polymeric MDI market prices and slow recovery in downstream industries[55] - TDI sales volume increased by approximately 15%, but its average selling price decreased by approximately 28%; resin sales volume decreased by approximately 17%, but its average selling price increased by approximately 40%[55] Advanced Material Intermediates Series Revenue from the advanced material intermediates series significantly decreased to RMB 132.5 million, primarily due to declining domestic demand and production halts caused by reactor facility malfunctions, impacting sales volumes of isooctanoic acid and diethyl sulfate; the average selling price of isooctanoic acid decreased by 28% due to new market entrants - Revenue from the advanced material intermediates series decreased from approximately RMB 218.1 million to approximately RMB 132.5 million, mainly due to declining domestic demand and production halts caused by reactor facility malfunctions[56] - Sales volumes of isooctanoic acid and diethyl sulfate decreased by approximately 19% and 18% respectively; the average selling price of isooctanoic acid decreased by approximately 28%[57] Green Products Revenue from green products (cardanol) significantly increased by 17.7% to RMB 111.5 million, primarily benefiting from European market recovery, increased exports, higher production capacity, and rising raw material prices driving up finished product selling prices - Revenue from cardanol significantly increased by 17.7% to approximately RMB 111.5 million, primarily due to increased exports and production capacity driven by the recovery of the European market[58] - Sales volume delivered to Europe increased by over 30%, cardanol sales volume increased by approximately 11.0%, and its average selling price also increased by approximately 6.0%[58] Health Products Revenue from the health products segment increased by 12.6% to RMB 15.0 million, mainly due to increased sales of products like Cefpodoxime Proxetil Dispersible Tablets, benefiting from new customer acquisition through trade exhibitions and online promotions - Revenue from health products increased by 12.6% to approximately RMB 15.0 million, primarily due to increased sales volume (especially Cefpodoxime Proxetil Dispersible Tablets)[59] - The Company is developing a moxifloxacin hydrochloride side chain production line, expected to be operational by the end of 2025[43] Gegexiang Select Gegexiang Select, a new business segment, contributed RMB 1.0 million in revenue this period, primarily from increased supplement sales; the Company plans to establish a consumer product sales platform and develop its own brands through event platforms, influencers, and KOL live streaming - The Gegexiang Select segment contributed RMB 1.0 million in revenue, primarily due to increased sales of supplements[60] - The Group plans to sign influencers and Key Opinion Leaders (KOLs) for live streaming sales, establish a consumer product sales platform, and develop its own brand products[60] Total Revenue by Geographical Location Mainland China remains the Group's largest revenue source, accounting for 76.4% of total revenue; revenue from Europe and Vietnam increased, while revenue from other Asian countries (excluding Mainland China and Vietnam) slightly decreased Total Revenue by Geographical Location (RMB thousand) | Region | H1 2025 | % of Total Revenue | H1 2024 | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Mainland China | 1,418,926 | 76.4% | 1,411,161 | 78.8% | | Europe | 183,474 | 9.9% | 148,735 | 8.3% | | Vietnam | 85,828 | 4.6% | 77,264 | 4.3% | | Other Asian Countries (excluding Mainland China and Vietnam) | 95,906 | 5.2% | 101,916 | 5.7% | | Others | 72,578 | 3.9% | 51,118 | 2.9% | | Total | 1,856,712 | 100.0% | 1,790,194 | 100.0% | - Revenue from Mainland China accounted for the majority of total revenue, at 76.4% in H1 2025 (H1 2024: 78.8%)[63] Cost of Sales Cost of sales increased from RMB 1,595.7 million to RMB 1,686.2 million, primarily due to higher production costs for iodine and iodine derivatives, partially offset by reduced raw material costs from lower sales volumes of methylamine, isooctanoic acid, and diethyl sulfate - Cost of sales increased from approximately RMB 1,595.7 million to approximately RMB 1,686.2 million[64] - The increase in cost of sales was primarily due to higher production costs for iodine and iodine derivatives, partially offset by reduced raw material costs from lower sales volumes of methylamine, isooctanoic acid, and diethyl sulfate[64] Gross Profit Gross profit decreased from RMB 194.5 million to RMB 170.5 million, with the overall gross profit margin falling from 10.9% to 9.2%, mainly due to lower gross profit in the advanced material intermediates series segment and rapidly rising raw material costs for green products and iodine derivative series exceeding market price increases Total Gross Profit and Gross Profit Margin by Business Segment (RMB thousand) | Business Segment | H1 2025 Gross Profit | H1 2025 Gross Profit Margin % | H1 2024 Gross Profit | H1 2024 Gross Profit Margin % | | :--- | :--- | :--- | :--- | :--- | | Methylamine Industrial Series | 93,800 | 15.6% | 83,328 | 13.5% | | Iodine Derivative Series and Related Products | 27,020 | 4.6% | 36,873 | 8.4% | | Jinhaiwei New Materials | 26,639 | 6.7% | 31,519 | 7.9% | | Advanced Material Intermediates Series | 4,294 | 3.2% | 21,318 | 9.8% | | Green Products | 12,803 | 11.5% | 17,568 | 18.6% | | Health Products | 4,299 | 28.7% | 3,219 | 24.2% | | Gegexiang Select | 480 | 49.1% | 6 | 730.6% | | Others | 1,128 | 13.6% | 669 | 10.0% | | Total | 170,463 | 9.2% | 194,500 | 10.9% | - The overall gross profit margin decreased from 10.9% in H1 2024 to 9.2% in H1 2025[66] - The decrease in gross profit and gross profit margin was mainly due to lower gross profit in the advanced material intermediates series segment, and rapidly rising raw material costs for green products and iodine derivative series and related products exceeding their market price increases[67] Other Income Other income significantly increased from RMB 2.7 million to RMB 12.3 million, primarily due to approximately RMB 7.5 million from additional VAT credit policies and higher government grants - Other income increased from approximately RMB 2.7 million to approximately RMB 12.3 million[68] - The increase was mainly due to income of approximately RMB 7.5 million from additional VAT credit policies, and other government grants increasing from approximately RMB 1.4 million to RMB 2.6 million[68] Other Gains and Losses The Group recorded net other gains of approximately RMB 8.9 million this period, a turnaround from net other losses of approximately RMB 0.2 million in the prior period, primarily due to an increase of approximately RMB 9.5 million in net exchange gains from the appreciation of various currencies (such as Russian Ruble and Mexican Peso) against RMB - The Group recorded net other gains of approximately RMB 8.9 million, compared to net other losses of approximately RMB 0.2 million in the prior period[70] - The increase in gains was primarily due to an increase in net exchange gains of approximately RMB 9.5 million resulting from the appreciation of various currencies (such as Russian Ruble and Mexican Peso) against RMB during the period[70] Selling and Distribution Expenses Selling and distribution expenses slightly decreased to RMB 72.3 million, mainly due to a slight reduction in logistics costs (including transportation, port fees, and shipping costs) resulting from lower sales volumes of certain products like methylamine and ethylene glycol - Selling and distribution expenses slightly decreased from approximately RMB 75.8 million to approximately RMB 72.3 million[71] - The decrease was primarily due to a slight reduction in logistics costs resulting from lower sales volumes of certain products[71] Administrative Expenses Administrative expenses slightly decreased to RMB 65.5 million, mainly due to reduced consulting fees related to a mixed martial arts competition held in Macau last year, partially offset by increased staff costs and share-based payment expenses in Singapore - Administrative expenses slightly decreased from approximately RMB 65.8 million to approximately RMB 65.5 million[73] - The decrease was primarily due to a reduction in consulting fees of approximately RMB 2.6 million resulting from lower expenses related to a mixed martial arts competition held in Macau last year[73] Research and Development Expenses Research and development expenses decreased to RMB 26.0 million, primarily due to the completion of certain production technology improvement projects last year, leading to reduced raw material costs - Research and development expenses decreased from approximately RMB 26.9 million to approximately RMB 26.0 million[74] - The decrease was primarily due to the completion of certain production technology improvement projects last year, leading to reduced raw material costs[74] Finance Costs Finance costs remained relatively stable, slightly changing from RMB 19.9 million to RMB 19.6 million, with no significant fluctuations during the period - Finance costs changed from approximately RMB 19.9 million to approximately RMB 19.6 million, with no significant fluctuations during the period[75] Income Tax Expense Income tax expense increased to RMB 2.7 million, consistent with the rise in profit before tax; the effective tax rate decreased to 25.8%, mainly influenced by under-provision for prior period income tax expenses - Income tax expense increased from approximately RMB 2.5 million to approximately RMB 2.7 million[76] - The effective tax rate was approximately 25.8% in H1 2025 (2024: 35.8%), with the decrease attributed to the impact of under-provision for prior year income tax expenses recognized in the previous period[76] Profit for the Period For the six months ended June 30, 2025, the Group recorded a profit for the period of approximately RMB 7.9 million, a significant increase from approximately RMB 4.4 million in the prior period, reflecting the combined impact of the aforementioned financial fluctuations - For the six months ended June 30, 2025, the Group recorded a profit for the period of approximately RMB 7.9 million, compared to approximately RMB 4.4 million in the prior period[77] Outlook Looking ahead to H2 2025, cost pressures in the chemical industry are expected to ease, supply-demand balance will improve, and the transition towards green and environmentally friendly practices will continue; the Group will persist in expanding production capacity, diversifying regional markets, and strengthening supply chain resilience to achieve long-term sustainable value growth - Looking ahead to H2 2025, falling prices of key raw materials such as crude oil and coal are expected to ease cost pressures, and the supply-demand balance in the chemical industry will improve[78] - The Group will adhere to its strategic commitments, steadily advance with intelligent manufacturing equipment, continuously expand production capacity, and diversify regional markets through tiered customer cooperation and customized services[78] Capital Structure, Liquidity and Financial Resources The Group funds its working capital through internal resources and borrowings; as of June 30, 2025, total assets increased to RMB 2,090.5 million, and bank balances and cash rose to RMB 155.3 million; total borrowings increased to RMB 926.8 million, leading to a higher gearing ratio of 146.6% - As of June 30, 2025, the Group's total assets reached approximately RMB 2,090.5 million (December 31, 2024: RMB 2,046.5 million)[80] - Bank balances and cash amounted to approximately RMB 155.3 million (December 31, 2024: RMB 101.5 million)[80] - Borrowings (including loans from related companies) were approximately RMB 926.8 million (December 31, 2024: RMB 852.2 million)[80] - The Group's gearing ratio was 146.6% (December 31, 2024: 137.1%), with the increase primarily due to higher borrowings[81] Principal Risks and Uncertainties and Risk Management The Group faces market risks (currency and interest rate risks), credit risk, and liquidity risk; management monitors and assesses these risks, but currently has no foreign currency or interest rate hedging policies - The Group's financial position, operating results, business, and outlook will be affected by various risks and uncertainties, including market risk, credit risk, and liquidity risk[82] Market Risk The Group's activities primarily expose it to currency risk and interest rate risk, with no changes in how these risks are managed and measured - The Group's activities primarily expose it to currency risk and interest rate risk, and there have been no changes in these risks or the way they are managed and measured[83] Currency Risk The Group is exposed to foreign currency risk, mainly from financial instruments denominated in USD, Russian Ruble, Mexican Peso, and Ukrainian Hryvnia; there is currently no foreign currency hedging policy, but management monitors and considers hedging when necessary - The Group currently has no foreign currency hedging policy, but management monitors foreign exchange risk and will consider hedging significant foreign currency risks when necessary[84] - The Group's foreign currency transactions are primarily denominated in RMB and USD, and are subject to foreign exchange risk arising from future commercial transactions and recognized assets and liabilities denominated in RMB[92] Interest Rate Risk The Group faces fair value interest rate risk on fixed-rate financial instruments and cash flow interest rate risk on variable-rate financial liabilities; there is currently no interest rate hedging policy, but management monitors and assesses the potential impact of interest rate changes - The Group is exposed to fair value interest rate risk on certain fixed-rate financial assets, financial liabilities, and lease liabilities[85] - The Group currently has no interest rate hedging policy; management monitors interest rate exposure and will consider hedging significant interest rate risks when necessary[86] Credit Risk The Group's maximum credit risk arises from trade receivables, through credit limit determination, approval, and monitoring procedures; credit risk for bills receivable is limited as they are issued by highly-rated banks, and credit risk for bank balances and restricted bank deposits is also limited - The Group's maximum credit risk arises from the carrying amounts of the relevant recognized financial assets stated in the condensed consolidated statement of financial position at the end of the reporting period, primarily attributable to its trade receivables[87] - The credit risk for bills receivable at fair value through other comprehensive income is limited because these bills are issued by banks with high credit ratings from international credit rating agencies and no history of default[88] - The credit risk for bank balances and restricted bank deposits is limited because the counterparties are banks with high credit ratings from international credit rating agencies[89] Liquidity Risk The Group manages liquidity risk by monitoring and maintaining adequate levels of cash and cash equivalents, adopting prudent treasury policies, and continuously assessing customers' financial standing - The Group monitors and maintains levels of cash and cash equivalents deemed adequate by management to fund its operations and mitigate the impact of cash flow fluctuations[90] - The Group adopts prudent treasury policies, thereby maintaining a sound liquidity position throughout the period[91] Capital Expenditure During the period, the Group's capital expenditure amounted to approximately RMB 70.1 million, primarily for additions to property, plant and equipment and construction in progress, representing an increase from the prior period - During the period, the Group's capital expenditure, including additions to property, plant and equipment and construction in progress in the course of operations, amounted to approximately RMB 70.1 million (2024: RMB 55.4 million)[93] Capital Commitments As of June 30, 2025, the Group's capital commitments were approximately RMB 10.9 million, primarily for the purchase of machinery and equipment in Mainland China, planned to be funded by internal resources and borrowings - As of June 30, 2025, the Group's capital commitments amounted to approximately RMB 10.9 million (December 31, 2024: RMB 17.9 million)[94] - Capital commitments primarily involve the purchase of machinery and equipment for current use in Mainland China, intended to be funded by cash generated from operations and bank and other borrowings[94] Pledge of Assets As of June 30, 2025, the Group pledged various assets as collateral for borrowings, including restricted bank deposits, right-of-use assets, property, plant and equipment, bills receivable, cash and cash equivalents, inventories, and trade and other receivables and prepayments - Assets pledged by the Group include restricted bank deposits of approximately RMB 30.4 million, right-of-use assets of approximately RMB 62.9 million, property, plant and equipment of approximately RMB 317.8 million, bills receivable of approximately RMB 81.1 million, cash and cash equivalents of approximately RMB 1.9 million, inventories of approximately RMB 17.1 million, and trade and other receivables and prepayments of approximately RMB 1.3 million[95] Contingent Liabilities As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities (December 31, 2024: Nil)[96] Dividends The Board has resolved not to recommend any interim dividend for the six months ended June 30, 2025 - The Board has resolved not to recommend any interim dividend for the six months ended June 30, 2025 (2024: Nil)[97] Employees and Remuneration Policy As of June 30, 2025, the Group had 1,093 employees, with total staff costs of approximately RMB 71.8 million; remuneration policies are based on market norms and individual performance, with share option and share award schemes to incentivize and retain talent - As of June 30, 2025, the Group had a total of 1,093 employees (2024: 1,086 employees)[98] - Total staff costs (including directors' emoluments) for the six months ended June 30, 2025, were approximately RMB 71.8 million (2024: RMB 67.9 million)[98] - The Group has a share option scheme and a share award scheme, designed to recognize and reward contributions from eligible participants and provide incentives to retain talent[100][101] Material Investments For the six months ended June 30, 2025, the Group held no material investments or capital assets - For the six months ended June 30, 2025, the Group held no material investments or capital assets (2024: Nil)[105] Future Plans for Material Investments and Capital Expenditure Beyond what was disclosed in the prospectus, the Group has no other plans for material investments or capital expenditure in the coming year; future acquisitions will be funded by internal resources and other fundraising activities - Other than those disclosed in the prospectus, the Group has no other plans for material investments or capital expenditure in the coming year[106] - The Group will fund future acquisitions through internal resources and other fundraising activities, including but not limited to issuing new debt or equity instruments[106] Material Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures For the six months ended June 30, 2025, the Group neither acquired nor disposed of any of its material subsidiaries, associates, or joint ventures - The Group neither acquired nor disposed of any of its material subsidiaries, associates, or joint ventures for the six months ended June 30, 2025[107] Events After Reporting Period There were no significant events after the reporting period up to the date of this announcement for the six months ended June 30, 2025 - There were no significant events after the six months ended June 30, 2025, up to the date of this announcement[108] Other Information Audit Committee and Review of Condensed Consolidated Financial Statements The Audit Committee reviewed the Group's accounting principles, internal control and risk management systems, and financial reporting matters, including the unaudited condensed consolidated financial statements for the six months ended June 30, 2025, confirming adequate disclosure and no disagreements - The Audit Committee, comprising three independent non-executive directors, has reviewed the Group's accounting principles and practices, internal control and risk management, and financial reporting matters[109] - The Audit Committee has reviewed the unaudited condensed consolidated financial statements for the six months ended June 30, 2025, and confirmed that adequate disclosures have been made with no disagreements with the Audit Committee[109] Purchase, Sale or Redemption of the Company's Listed Securities Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period ended June 30, 2025, and up to the date of this announcement - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period ended June 30, 2025, and up to the date of this announcement[110] Directors' Interests in Competing Businesses No director holds any interest in a business that competes or is likely to compete with the Group's business - No director holds any interest in a business that competes or is likely to compete with the Group's business[111] Directors' Securities Transactions The Company adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance with the required standards during the period ended June 30, 2025, and up to the date of this announcement - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, as set out in Appendix C3 to the Listing Rules, as its own code of conduct[112] - Following specific enquiries made to all directors, each director has confirmed compliance with the required standards set out in the Model Code for the period ended June 30, 2025, and up to the date of this announcement[112] Corporate Governance Practices The Company complied with all code provisions of the Corporate Governance Code, except for code provision C.2.1 (separation of roles of Chairman and Chief Executive), as the Board believes the combined role provides strong and consistent leadership and will be reviewed periodically - The Company has complied with all code provisions of the Corporate Governance Code, except for code provision C.2.1 (the roles of Chairman and Chief Executive should be separate)[113] - Mr. Yin Yanbin serves as both the Chairman of the Board and Chief Executive Officer, and the Board believes this arrangement provides strong and consistent leadership for the Company[114][115] - For the six months ended June 30, 2025, the Chairman held one meeting with independent non-executive directors without the presence of other executive directors[115] Publication of Results Announcement on HKEX and Company Website and By Order of the Board This interim results announcement has been published on the HKEX and the Company's website, and the interim report containing all required information will be dispatched to shareholders and published on the websites in due course - This interim results announcement will be published on the HKEX website www.hkexnews.hk and the Company's website www.goldenhighway.com[116](index=116&type=chunk) - The Company's interim report for the six months ended June 30, 2025, containing all information required by the Listing Rules, will be dispatched to shareholders and published on the respective websites of the HKEX and the Company in due course[116]