迈科管业(01553) - 2025 - 中期业绩

Company Information and Announcement Statement This section provides essential company details and official announcements regarding the interim results Announcement Statement The Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited disclaim responsibility for the content of this announcement and any losses arising from reliance on it - The Hong Kong Stock Exchange is not responsible for the content of this announcement, does not guarantee its accuracy or completeness, and assumes no liability for any losses incurred[1] Company Basic Information Maike Tube Industry Holdings Limited (Stock Code: 1553) announces its unaudited interim results for the six months ended June 30, 2025 - Company Name: MAIKE TUBE INDUSTRY HOLDINGS LIMITED[2] - Stock Code: 1553[2] - Announcement Period: Interim results for the six months ended June 30, 2025[2][3] Condensed Consolidated Financial Statements This section presents the condensed consolidated financial statements, including income, financial position, equity changes, and cash flows Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, revenue increased by 10.2% to RMB 1,280,978 thousand, profit for the period grew by 6.2% to RMB 86,497 thousand, and basic earnings per share were RMB 0.199 Key Data from Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | For the six months ended June 30, 2025 (RMB '000) | For the six months ended June 30, 2024 (RMB '000) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,280,978 | 1,162,024 | 10.2% | | Cost of sales | (1,061,335) | (995,186) | 6.6% | | Gross profit | 219,643 | 166,838 | 31.7% | | Other income | 7,930 | 10,583 | -25.1% | | Other gains and losses | 11,135 | 11,366 | -2.0% | | Distribution and selling expenses | (59,122) | (35,015) | 68.8% | | Administrative expenses | (32,058) | (28,313) | 13.2% | | Research and development costs | (39,338) | (28,894) | 36.1% | | Profit before tax | 104,915 | 94,586 | 10.9% | | Income tax expense | (18,418) | (13,134) | 40.2% | | Profit for the period | 86,497 | 81,452 | 6.2% | | Basic earnings per share (RMB) | 0.199 | 0.188 | 5.9% | Condensed Consolidated Statement of Financial Position As of June 30, 2025, total assets slightly increased, net current assets grew significantly, and net assets reached RMB 1,179,620 thousand, a 3.35% increase from the end of 2024 Key Data from Condensed Consolidated Statement of Financial Position | Indicator | As of June 30, 2025 (RMB '000) | As of December 31, 2024 (RMB '000) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current assets | 468,383 | 471,721 | -0.7% | | Current assets | 1,685,231 | 1,662,442 | 1.4% | | Current liabilities | 950,411 | 964,851 | -1.5% | | Net current assets | 734,820 | 697,591 | 5.3% | | Total assets less current liabilities | 1,203,203 | 1,169,312 | 2.9% | | Non-current liabilities | 23,583 | 27,969 | -15.6% | | Net assets | 1,179,620 | 1,141,343 | 3.4% | | Share capital | 304 | 304 | 0.0% | | Reserves | 1,175,033 | 1,137,118 | 3.3% | | Total equity | 1,179,620 | 1,141,343 | 3.4% | Condensed Consolidated Statement of Changes in Equity For the six months ended June 30, 2025, equity attributable to owners increased from RMB 1,137,422 thousand at the beginning of the period to RMB 1,175,337 thousand, primarily due to profit for the period of RMB 86,431 thousand, despite dividends distributed of RMB 47,694 thousand Key Data from Condensed Consolidated Statement of Changes in Equity | Indicator | As of June 30, 2025 (RMB '000) | As of January 1, 2024 (RMB '000) | | :--- | :--- | :--- | | Equity attributable to owners at beginning of period | 1,137,422 | 1,046,530 | | Profit for the period | 86,431 | 81,547 | | Other comprehensive (expense) income for the period | (822) | (6,846) | | Dividends distributed | (47,694) | (47,314) | | Equity attributable to owners at end of period | 1,175,337 | 1,073,917 | Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities increased to RMB 101,259 thousand, net cash used in investing activities significantly decreased to RMB 5,402 thousand, net cash generated from financing activities increased to RMB 132,992 thousand, and cash and cash equivalents at period-end were RMB 104,068 thousand Key Data from Condensed Consolidated Statement of Cash Flows | Indicator | For the six months ended June 30, 2025 (RMB '000) | For the six months ended June 30, 2024 (RMB '000) | Change (RMB '000) | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (101,259) | (70,098) | (31,161) | | Net cash used in investing activities | (5,402) | (48,135) | 42,733 | | Net cash generated from financing activities | 132,992 | 115,468 | 17,524 | | Net increase (decrease) in cash and cash equivalents | 26,331 | (2,765) | 29,096 | | Cash and cash equivalents at end of period | 104,068 | 69,522 | 34,546 | Notes to the Condensed Consolidated Financial Statements This section provides detailed notes explaining the accounting policies, revenue breakdown, and specific financial statement items General Information and Basis of Preparation Maike Tube Industry Holdings Limited is an investment holding company registered in the Cayman Islands, with subsidiaries primarily engaged in manufacturing and selling steel pipe products and pre-fabricated pipe fittings, with financial statements presented in RMB and prepared in accordance with HKAS 34 - The Company is an investment holding company, with subsidiaries primarily engaged in the manufacturing and sale of steel pipe products and pre-fabricated pipe fittings products[10] - The financial statements are presented in RMB and prepared in accordance with HKAS 34 and Appendix 16 of the Listing Rules[11] Accounting Policies The condensed consolidated financial statements are prepared on a historical cost basis, with accounting policies consistent with the prior year, except for certain financial instruments measured at fair value, and new HKFRS amendments had no significant impact - The financial statements are prepared on a historical cost basis, with the exception of certain financial instruments[12] - Amendments to HKFRS accounting standards were first applied this period, but had no significant impact on financial position or performance[13] Revenue and Segment Information The Group's total revenue for the six months ended June 30, 2025, was RMB 1,280,978 thousand, primarily from pipe product sales and steel coil trading, with operations in China, Vietnam, and Thailand, and China being the largest market contributor Revenue For the six months ended June 30, 2025, the Group's revenue was RMB 1,280,978 thousand, mainly from sales of pipe products (customized steel pipes, standard pre-fabricated pipe fittings, spiral submerged arc welded steel pipes, electric resistance welded steel pipes, assembled piping system design and supply) and steel coil trading Revenue Analysis (RMB '000) | Product Category | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Customized steel pipes | 206,671 | 218,058 | | Standard pre-fabricated pipe fittings | 204,331 | 184,517 | | Spiral submerged arc welded steel pipes | 317,296 | 177,646 | | Electric resistance welded steel pipes | 240,456 | 101,863 | | Assembled piping system design and supply | 32,016 | 18,738 | | Steel coil trading | 280,208 | 461,202 | | Total Revenue | 1,280,978 | 1,162,024 | Segment Information The Group's business originates from the production and sale of pipe products in China, Vietnam, and Thailand, and as the chief operating decision maker reviews overall group performance, no operating segments are presented - The Group's business primarily involves the production and sale of pipe products in China, Vietnam, and Thailand[15] - The chief operating decision maker reviews the Group's performance as a whole, thus no operating segments are presented[15] Geographical Information For the six months ended June 30, 2025, the Chinese market contributed RMB 779,437 thousand in revenue, accounting for 60.8%, while other Asian countries saw significant revenue growth to RMB 204,613 thousand Revenue by Geographical Region (RMB '000) | Region | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | China | 779,437 | 764,850 | | United States | 154,304 | 149,898 | | Other Asian countries (excluding China) | 204,613 | 130,467 | | Other American countries (excluding United States) | 100,688 | 95,827 | | Europe | 10,894 | 11,154 | | Others | 31,042 | 9,828 | | Total Revenue | 1,280,978 | 1,162,024 | Other Income / Other Gains and Losses For the six months ended June 30, 2025, other income decreased by 25.1% YoY to RMB 7,930 thousand, mainly due to reduced government grants; other gains and losses slightly decreased by 2% YoY to RMB 11,135 thousand, primarily affected by lower scrap sales and net exchange gains, but offset by a RMB 3,405 thousand gain from subsidiary disposal Other Income (RMB '000) | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Government grants | 5,047 | 8,394 | | Bank interest income | 2,883 | 2,189 | | Total | 7,930 | 10,583 | Other Gains and Losses (RMB '000) | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Gain from sales of scrap materials | 4,379 | 4,876 | | Fair value gain on structured bank deposits | 307 | 45 | | Fair value gain (loss) on foreign exchange forward contracts | (186) | 1,049 | | Fair value gain (loss) on derivative financial instruments | 155 | (24) | | Loss on disposal of property, plant and equipment | (1,480) | (278) | | Gain on disposal of a subsidiary | 3,405 | – | | Net exchange gain | 3,239 | 5,118 | | Others | 1,316 | 580 | | Total | 11,135 | 11,366 | - A gain of RMB 3,405 thousand was recognized from the disposal of 100% equity interest in Shandong Maike Intelligent Technology Co., Ltd. and Yongqing County Keqi Trading Co., Ltd.[18] Impairment Losses under Expected Credit Loss Model (Net of Reversal) For the six months ended June 30, 2025, impairment losses under the expected credit loss model (net of reversal) were RMB 2,129 thousand, a slight decrease from RMB 2,208 thousand in the prior year Impairment Losses (RMB '000) | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Trade receivables | (3,681) | (2,377) | | Contract assets | 1,552 | 169 | | Total | (2,129) | (2,208) | Finance Costs For the six months ended June 30, 2025, finance costs increased by 29.1% YoY to RMB 5,404 thousand, primarily due to higher interest on discounted bills Finance Costs (RMB '000) | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Interest on bank borrowings | 740 | 1,235 | | Interest on lease liabilities | 62 | 90 | | Interest on discounted bills | 4,602 | 2,862 | | Total | 5,404 | 4,187 | Profit Before Tax For the six months ended June 30, 2025, profit before tax was RMB 104,915 thousand, primarily after deducting depreciation of property, plant and equipment of RMB 2,988 thousand and reversal of inventories of RMB 272 thousand Components of Profit Before Tax (RMB '000) | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Total depreciation of property, plant and equipment | 2,988 | 4,458 | | Reversal of inventories | (272) | (2,107) | Income Tax Expense For the six months ended June 30, 2025, income tax expense increased by 40.2% YoY to RMB 18,418 thousand, mainly due to higher PRC corporate income tax and increased deferred tax expense for the period Income Tax Expense (RMB '000) | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | PRC corporate income tax (current period) | 19,019 | 11,659 | | Under-provision in prior periods (over-provision) | (1,459) | 1,258 | | Deferred tax expense | 858 | 217 | | Total | 18,418 | 13,134 | Dividends The Board decided not to declare any dividends for the six months ended June 30, 2025, but a final dividend of HK 12 cents per share, totaling approximately RMB 47,694 thousand, was declared for the year ended December 31, 2024 - The Board does not recommend the payment of any dividend for the six months ended June 30, 2025[22] - A final dividend of HK 12 cents per share, totaling RMB 47,694 thousand, was declared for the year ended December 31, 2024[22] Earnings Per Share For the six months ended June 30, 2025, basic earnings per share increased to RMB 0.199 from RMB 0.188 in the prior year, with the weighted average number of ordinary shares remaining unchanged Earnings Per Share Data | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Profit for the period attributable to owners of the Company (RMB '000) | 86,431 | 81,547 | | Weighted average number of ordinary shares ('000 shares) | 433,800 | 433,800 | | Basic earnings per share (RMB) | 0.199 | 0.188 | Property, Plant and Equipment For the six months ended June 30, 2025, the Group disposed of property, plant and equipment totaling RMB 1,529 thousand and acquired new property, plant and equipment totaling RMB 21,880 thousand - Disposal of property, plant and equipment totaled RMB 1,529 thousand (2024: RMB 3,402 thousand)[27] - Acquisition of property, plant and equipment totaled RMB 21,880 thousand (2024: RMB 40,520 thousand)[27] Trade Receivables As of June 30, 2025, total trade receivables were RMB 608,808 thousand, a 16.7% decrease from the end of 2024, primarily due to collection efforts and subsidiary disposals Aging Analysis of Trade Receivables (RMB '000) | Aging | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | 0 to 60 days | 204,657 | 338,922 | | 61 to 180 days | 167,077 | 167,848 | | 181 days to 1 year | 69,574 | 58,403 | | Over 1 year | 167,500 | 166,027 | | Total | 608,808 | 731,200 | Pledged Trade Receivables As of June 30, 2025, pledged trade receivables were RMB 51,252 thousand, a 32.1% decrease from the end of 2024, mainly due to early discounting of bank bills received Aging Analysis of Pledged Trade Receivables (RMB '000) | Aging | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | 0 to 180 days | 50,852 | 69,431 | | 181 days to 1 year | 400 | 6,019 | | Total | 51,252 | 75,450 | Contract Assets As of June 30, 2025, contract assets decreased to RMB 26,893 thousand, primarily due to a reduction in retention receivables from pipe product sales Contract Assets (RMB '000) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Retention receivables from sales of pipe products | 28,939 | 32,552 | | Less: Provision for impairment losses | (2,046) | (2,445) | | Total | 26,893 | 30,107 | Amounts Due From/To Related Parties As of June 30, 2025, amounts due from related parties increased to RMB 17,563 thousand, and amounts due to related parties increased to RMB 13,938 thousand, both primarily due to increased unsettled trade balances at period-end Amounts Due From Related Parties As of June 30, 2025, amounts due from related parties increased to RMB 17,563 thousand, mainly due to increased unsettled trade balances at period-end, with Maide being the largest receivable party Amounts Due From Related Parties (RMB '000) | Related Party | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Maide | 6,729 | 4,752 | | Shandong Maike Intelligent Technology Co., Ltd. | 2,518 | – | | Jinan Kede Intelligent Technology Co., Ltd. | 2,478 | 1,164 | | Maide Group Linyi Co., Ltd. | 2,148 | 4,193 | | Total | 17,563 | 15,383 | - Of the balances due from related parties, RMB 4,638 thousand was overdue and unsecured[34] Amounts Due To Related Parties As of June 30, 2025, amounts due to related parties increased to RMB 13,938 thousand, mainly due to increased unsettled payables at period-end, with Taigang Pipe Fittings being the largest payable party Amounts Due To Related Parties (RMB '000) | Related Party | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Taigang Pipe Fittings | 9,141 | 1,087 | | Maide New Energy | 2,723 | 981 | | Kede Intelligent | 609 | 856 | | Maide | 535 | 2,697 | | Total | 13,938 | 6,075 | Trade Payables and Bills Payable As of June 30, 2025, total trade payables and bills payable increased to RMB 683,124 thousand, primarily due to an increase in bills payable Trade Payables and Bills Payable (RMB '000) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Trade payables | 100,265 | 156,343 | | Bills payable | 582,859 | 469,367 | | Total | 683,124 | 625,710 | Contract Liabilities As of June 30, 2025, contract liabilities decreased to RMB 67,218 thousand, related to the timing of product delivery to customers Contract Liabilities (RMB '000) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Contract liabilities | 67,218 | 157,031 | Refund Liabilities As of June 30, 2025, refund liabilities decreased to RMB 4,528 thousand Refund Liabilities (RMB '000) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Refund liabilities | 4,528 | 5,562 | Other Payables and Accrued Expenses As of June 30, 2025, other payables and accrued expenses decreased to RMB 64,520 thousand, primarily due to a reduction in accrued expenses Other Payables and Accrued Expenses (RMB '000) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Accrued expenses | 15,954 | 31,716 | | Staff costs payable | 14,589 | 17,696 | | Guarantees received from employees for trade receivables | 6,983 | 4,584 | | Other taxes payable | 9,365 | 12,659 | | Agent fees payable | 11,448 | 14,128 | | Transportation costs payable | 5,319 | 4,856 | | Deposits received from suppliers | 862 | 4,491 | | Total | 64,520 | 90,130 | Provisions As of June 30, 2025, provisions decreased to RMB 1,286 thousand, primarily representing warranties provided for products sold Provisions (RMB '000) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Provisions | 1,286 | 2,541 | Borrowings As of June 30, 2025, borrowings decreased to RMB 56,440 thousand, mainly due to a reduction in bank loans, with RMB 46,900 thousand repayable within one year Borrowings (RMB '000) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Borrowings | 56,440 | 69,127 | - New bank loans of RMB 46,900 thousand were obtained during the period, with interest rates ranging from 2.50% to 3.45%, used for purchasing raw materials[40] Lease Liabilities As of June 30, 2025, the Group's lease liabilities were approximately RMB 2,024 thousand, primarily arising from property leases for factories in Vietnam and Thailand Lease Liabilities (RMB '000) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Current lease liabilities | 2,024 | 1,143 | | Non-current lease liabilities | 610 | 2,023 | Share Capital As of June 30, 2025, the company's authorized share capital was 500,000,000 shares, with 433,800,000 issued and fully paid shares at a par value of USD 0.0001, equivalent to RMB 304 thousand, remaining unchanged from the prior year-end Share Capital Information | Indicator | Number of Shares | Amount (USD '000) | Equivalent Amount (RMB '000) | | :--- | :--- | :--- | :--- | | Authorized share capital | 500,000,000 | 50 | 335 | | Issued and fully paid share capital | 433,800,000 | 43 | 304 | Non-controlling Interests As of June 30, 2025, non-controlling interests increased to RMB 4,283 thousand, primarily due to their share of profit and other comprehensive income for the period Non-controlling Interests (RMB '000) | Indicator | As of June 30, 2025 | As of January 1, 2025 | | :--- | :--- | :--- | | Non-controlling interests | 4,283 | 3,921 | | Share of profit for the period | 66 | – | | Share of other comprehensive income for the period | 296 | – | - The Group, JJ Fitting, and Essence Electrical respectively hold 85%, 10%, and 5% equity interests in Thailand Delta Power, with registered capital fully paid[42] Capital Commitments As of June 30, 2025, contracted but unprovided capital expenditure for the acquisition of property, plant and equipment was RMB 11,474 thousand, an increase from the end of 2024 Capital Commitments (RMB '000) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Acquisition of property, plant and equipment | 11,474 | 7,445 | Pledge of Assets As of June 30, 2025, the Group had pledged assets with a net book value of approximately RMB 405,745 thousand as collateral for bank financing, an increase from the end of 2024 Pledge of Assets (RMB '000) | Pledged Asset Category | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Property, plant and equipment | 44,949 | 46,482 | | Pledged bank deposits | 278,891 | 246,867 | | Right-of-use assets | 81,905 | 38,857 | | Total | 405,745 | 332,206 | Related Party Transactions For the six months ended June 30, 2025, the Group engaged in various related party transactions, including sales of steel pipe products, sales of scrap materials, purchases of inventories, and purchases of fixed assets, with disclosure of key management personnel compensation Transactions For the six months ended June 30, 2025, the Group conducted various related party transactions, including sales of steel pipe products to Maide for RMB 14,235 thousand and purchases of inventories from Taigang Pipe Fittings for RMB 1,102 thousand Major Related Party Transactions (RMB '000) | Related Company Name | Nature of Transaction | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | | Maide | Sales of steel pipe products | 14,235 | 12,493 | | | Sales of scrap materials | 4,418 | 6,051 | | | Purchases of inventories | 97 | 1,391 | | Taigang Pipe Fittings | Purchases of inventories | 1,102 | 249 | | | Sales of scrap materials | 1,041 | 495 | | Shandong Maike Intelligent Technology Co., Ltd. | Sales of steel pipe products | 3,149 | – | | | Purchases of inventories | 942 | – | Key Management Personnel Compensation For the six months ended June 30, 2025, total compensation for directors and other key management personnel was RMB 1,270 thousand, a decrease from RMB 2,375 thousand in the prior year Key Management Personnel Compensation (RMB '000) | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Salaries and other benefits | 1,182 | 1,565 | | Discretionary bonuses | – | 650 | | Contributions to retirement benefit schemes | 88 | 160 | | Total | 1,270 | 2,375 | Disposal of a Subsidiary/Business On March 28, 2025, the Group completed the disposal of 100% equity interest in Shandong Maike Intelligent Technology Co., Ltd. and Yongqing County Keqi Trading Co., Ltd., receiving cash consideration of RMB 45,000 thousand and generating a disposal gain of RMB 3,405 thousand Details of Subsidiary Disposal (RMB '000) | Indicator | As of March 28, 2025 | | :--- | :--- | | Net assets disposed of | 41,595 | | Cash consideration received | 45,000 | | Gain on disposal | 3,405 | | Net cash inflow from disposal | 42,227 | Management Discussion and Analysis This section provides an overview of the Group's business performance, financial results, capital structure, and future outlook Business Review The Group primarily manufactures and sells standard pre-fabricated pipe fittings and steel pipe products, designs and supplies assembled piping systems, and trades steel coils. Despite market challenges, revenue increased by 10.2% and net profit by 6.2% for the period - The Group's main businesses include the manufacturing and sale of standard pre-fabricated pipe fittings products, steel pipe products, and the design and supply of assembled piping systems, as well as steel coil sales[48] - For the six months ended June 30, 2025, the Group's revenue was approximately RMB 1,281.0 million, a 10.2% year-on-year increase; net profit was approximately RMB 86.5 million, a 6.2% year-on-year increase[49] Standard Pre-fabricated Pipe Fittings Products Revenue from standard pre-fabricated pipe fittings products increased by 10.7% YoY to RMB 204.3 million, accounting for 16.0% of total revenue, driven by higher sales volume and new orders, with 98.6% from overseas customers Standard Pre-fabricated Pipe Fittings Products Revenue (RMB million) | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 204.3 | 184.5 | 10.7% | | Share of total revenue | 16.0% | 15.9% | - | - New orders amounted to approximately 12,500 tons, with approximately 98.6% from overseas customers[50] Steel Pipe Products Steel pipe products accounted for approximately 59.7% of total revenue, with electric resistance welded steel pipe and spiral submerged arc welded steel pipe revenue increasing by 136.1% and 78.6% YoY respectively due to higher sales volume, while customized steel pipe revenue decreased by 5.2% YoY due to lower selling prices, and new orders totaled approximately 185,000 tons, with 67.6% from domestic customers Steel Pipe Products Revenue (RMB million) | Product Category | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Electric resistance welded steel pipes | 240.5 | 101.9 | 136.1% | | Spiral submerged arc welded steel pipes | 317.3 | 177.6 | 78.6% | | Customized steel pipes | 206.7 | 218.1 | -5.2% | - New orders for steel pipe products amounted to approximately 185,000 tons, with approximately 67.6% from domestic customers[50] Assembled Piping System Design and Supply Revenue from assembled piping system design and supply increased by 70.9% YoY to RMB 32.0 million, accounting for approximately 2.5% of total revenue, primarily due to an increase in delivered orders Assembled Piping System Design and Supply Revenue (RMB million) | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 32.0 | 18.7 | 70.9% | | Share of total revenue | 2.5% | 1.6% | - | Steel Coil Trading Revenue from steel coil trading decreased by 39.2% YoY to RMB 280.2 million, primarily because more purchased steel coils were used for production rather than sales due to increased steel pipe product orders Steel Coil Trading Revenue (RMB million) | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 280.2 | 461.2 | -39.2% | Financial Review The Group's total revenue for the first half of 2025 increased by 10.2% YoY, with improved gross profit and gross profit margin, but other income and gains slightly decreased. Distribution and selling expenses, administrative expenses, and R&D costs all increased, with profit for the period driven by gross profit growth - The Group's total revenue was approximately RMB 1,281.0 million, a 10.2% increase from the prior year, primarily due to increased sales volume of steel pipe products[55] Revenue, Sales Volume, and Average Selling Price by Product Category In the first half of 2025, revenue and sales volume for standard pre-fabricated pipe fittings, electric resistance welded steel pipes, spiral submerged arc welded steel pipes, and assembled piping system design and supply all increased, while customized steel pipe revenue decreased due to lower selling prices, and steel coil trading revenue declined due to increased internal production demand Revenue, Sales Volume, and Average Selling Price by Product Category for H1 2025 | Product Category | Revenue (RMB '000) | Share (%) | Sales Volume ('000 tons) | Average Selling Price (RMB/ton) | | :--- | :--- | :--- | :--- | :--- | | Standard pre-fabricated pipe fittings | 204,331 | 16.0% | 11.6 | 17,615 | | Electric resistance welded steel pipes | 240,456 | 18.8% | 50.8 | 4,733 | | Spiral submerged arc welded steel pipes | 317,296 | 24.8% | 72.6 | 4,370 | | Customized steel pipes | 206,671 | 16.1% | 43.0 | 4,806 | | Assembled piping system design and supply | 32,016 | 2.5% | Not applicable | Not applicable | | Steel coil trading | 280,208 | 21.8% | 84.0 | 3,336 | | Total | 1,280,978 | 100.0% | 262.0 | | Revenue, Sales Volume, and Average Selling Price by Product Category for H1 2024 | Product Category | Revenue (RMB '000) | Share (%) | Sales Volume ('000 tons) | Average Selling Price (RMB/ton) | | :--- | :--- | :--- | :--- | :--- | | Standard pre-fabricated pipe fittings | 184,517 | 15.9% | 10.4 | 17,742 | | Electric resistance welded steel pipes | 101,863 | 8.8% | 22.3 | 4,568 | | Spiral submerged arc welded steel pipes | 177,646 | 15.3% | 36.7 | 4,840 | | Customized steel pipes | 218,058 | 18.8% | 39.7 | 5,493 | | Assembled piping system design and supply | 18,738 | 1.6% | Not applicable | Not applicable | | Steel coil trading | 461,202 | 39.6% | 136.8 | 3,371 | | Total | 1,162,024 | 100.0% | 245.9 | | Sales by Geographical Location In the first half of 2025, domestic market sales share decreased from 65.8% to 60.8%, while overseas market sales share, particularly in other Asian countries, significantly increased, reflecting successful overseas market expansion Sales by Geographical Location (RMB '000) | Region | Revenue for the six months ended June 30, 2025 | Share of Revenue (%) | Revenue for the six months ended June 30, 2024 | Share of Revenue (%) | | :--- | :--- | :--- | :--- | :--- | | China | 779,437 | 60.8% | 764,850 | 65.8% | | United States | 154,304 | 12.0% | 149,898 | 12.9% | | Other American countries | 100,688 | 7.9% | 95,827 | 8.3% | | Other Asian countries | 204,613 | 16.0% | 130,467 | 11.2% | | Europe | 10,894 | 0.9% | 11,154 | 1.0% | | Others | 31,042 | 2.4% | 9,828 | 0.8% | | Total | 1,280,978 | 100.0% | 1,162,024 | 100.0% | Gross Profit and Gross Profit Margin For the six months ended June 30, 2025, gross profit increased by 31.7% YoY to RMB 219.6 million, and gross profit margin increased by 2.8% from the prior year, primarily due to increased sales volume of standard pre-fabricated pipes, electric resistance welded steel pipes, and spiral submerged arc welded steel pipes - Gross profit increased by 31.7% to RMB 219.6 million[61] - Gross profit margin increased by 2.8% compared to the prior year[61] - The increase was primarily due to higher sales volume of standard pre-fabricated pipes, electric resistance welded steel pipes, and spiral submerged arc welded steel pipes[61] Other Income For the six months ended June 30, 2025, other income decreased by 25.1% YoY to RMB 7.9 million, mainly due to a RMB 3.3 million reduction in government grants - Other income decreased by 25.1% to RMB 7.9 million[62] - The main reason was a RMB 3.3 million reduction in government grants[62] Other Gains and Losses For the six months ended June 30, 2025, other gains and losses slightly decreased by 2% YoY to RMB 11.1 million, primarily affected by lower scrap sales and net exchange gains - Other gains and losses were approximately RMB 11.1 million, a decrease of approximately 2% from the prior year[63] - Gain from sales of scrap materials was approximately RMB 4.4 million (prior year: RMB 4.9 million)[63] - Net exchange gain was approximately RMB 3.2 million (prior year: RMB 5.1 million)[63] Distribution and Selling Expenses For the six months ended June 30, 2025, distribution and selling expenses increased by 68.8% YoY to RMB 59.1 million, primarily due to higher sea freight and business expenses - Distribution and selling expenses increased by 68.8% to RMB 59.1 million[64] - Primarily due to increased sea freight expenses and business expenses[64] Administrative Expenses For the six months ended June 30, 2025, administrative expenses increased by 13.2% YoY to RMB 32.0 million, primarily due to higher consulting fees - Administrative expenses increased by 13.2% to RMB 32.0 million[65] - Primarily due to increased consulting fees[65] Research and Development Costs For the six months ended June 30, 2025, research and development costs increased by 36.1% YoY to RMB 39.3 million, representing approximately 3.1% of total revenue - Research and development costs increased by 36.1% to RMB 39.3 million[66] - R&D costs accounted for approximately 3.1% of total revenue (prior year: approximately 2.5%)[66] Impairment Losses under Expected Credit Loss Model (Net of Reversal) For the six months ended June 30, 2025, impairment losses under the expected credit loss model (net of reversal) were approximately RMB 2.1 million, largely consistent with the prior year - Impairment losses under the expected credit loss model (net of reversal) were approximately RMB 2.1 million (prior year: approximately RMB 2.2 million)[67] Finance Costs For the six months ended June 30, 2025, finance costs increased by 29.1% YoY to RMB 5.4 million, primarily due to an increase in discounted bills - Finance costs increased by 29.1% to RMB 5.4 million[68] - The increase was primarily due to an increase in discounted bills[68] Income Tax Expense For the six months ended June 30, 2025, income tax expense increased to RMB 18.4 million - Income tax expense increased to RMB 18.4 million (prior year: RMB 13.1 million)[69] Profit for the Period For the six months ended June 30, 2025, profit for the period increased by 2.2% YoY to RMB 83.2 million, primarily due to higher gross profit - Profit for the period increased by 2.2% to RMB 83.2 million[70] - Primarily due to an increase in gross profit[70] Capital Structure, Liquidity, and Financial Resources For the six months ended June 30, 2025, net cash used in operating activities increased, net cash used in investing activities significantly decreased, net cash generated from financing activities increased, cash and cash equivalents at period-end were RMB 104,068 thousand, and the gearing ratio significantly decreased Cash Flow Overview (RMB '000) | Indicator | For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | | :--- | :--- | :--- | | Net cash (used in) / generated from operating activities | (101,259) | (70,098) | | Net cash (used in) / generated from investing activities | (5,402) | (48,135) | | Net cash generated from / (used in) financing activities | 132,992 | 115,468 | | Net increase / (decrease) in cash and cash equivalents | 26,331 | (2,765) | | Cash and cash equivalents at end of period | 104,068 | 69,522 | Gearing Ratio As of June 30, 2025, the gearing ratio decreased to approximately 4.8% from 9.9% at the end of 2024, primarily due to a reduction in bank loans - Gearing ratio decreased to approximately 4.8% (December 31, 2024: approximately 9.9%)[72] - The decrease was primarily due to a reduction in bank loans[72] - Total interest-bearing debt was RMB 56.4 million[72] Net Cash Used in Operating Activities For the six months ended June 30, 2025, net cash used in operating activities increased to RMB 101.3 million, primarily due to increased inventories and decreased payables - Net cash used in operating activities increased to RMB 101.3 million (prior year: RMB 70.1 million)[73] - The change was primarily due to an increase in inventories and a decrease in payables[73] Net Cash Used in Investing Activities For the six months ended June 30, 2025, net cash used in investing activities significantly decreased to RMB 5.4 million, primarily due to increased proceeds from subsidiary disposal - Net cash used in investing activities decreased to RMB 5.4 million (prior year: RMB 48.1 million)[74] - The change in net cash was primarily due to increased proceeds from the disposal of a subsidiary[74] Net Cash Generated from Financing Activities For the six months ended June 30, 2025, net cash generated from financing activities increased to RMB 133.0 million, primarily due to an increase in bills payable - Net cash generated from financing activities increased to RMB 133.0 million (prior year: RMB 115.5 million)[75] - The change was primarily due to an increase in bills payable[75] Net Current Assets and Liabilities As of June 30, 2025, net current assets were RMB 734,820 thousand, a 5.3% increase from the end of 2024, with inventories, deposits, and amounts due from related parties increasing, while trade receivables, pledged trade receivables, contract assets, contract liabilities, refund liabilities, other payables, and provisions all decreased, and borrowings and lease liabilities also changed Net Current Assets (RMB '000) | Indicator | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Net current assets | 734,820 | 697,591 | Inventories As of June 30, 2025, inventory balance increased by 30.3% to RMB 358.0 million, primarily due to increased product orders and delayed shipments after production - Inventory balance increased by 30.3% to RMB 358.0 million[76] - Primarily due to increased product orders and products not yet shipped after production[76] Trade Receivables and Pledged Trade Receivables As of June 30, 2025, trade receivables decreased by 16.7% to RMB 608.8 million, and pledged trade receivables decreased by 32.1% to RMB 51.3 million, primarily due to collection efforts, subsidiary disposals, and early discounting of bills - Trade receivables decreased by 16.7% to RMB 608.8 million[77] - Pledged trade receivables decreased by 32.1% to RMB 51.3 million[77] - The decrease was primarily due to collection efforts, subsidiary disposals, and early discounting of bank bills[77] Contract Assets As of June 30, 2025, contract assets decreased to RMB 26.9 million, primarily due to a reduction in retention receivables from pipe product sales - Contract assets decreased to RMB 26.9 million[78] - Primarily due to a reduction in retention receivables from pipe product sales[78] Deposits, Prepayments and Other Receivables As of June 30, 2025, deposits, prepayments, and other receivables increased to RMB 224.4 million, primarily due to higher prepayments for raw materials - Deposits, prepayments, and other receivables increased to RMB 224.4 million[79] - Primarily due to an increase in prepayments for raw materials[79] Amounts Due From/To Related Parties As of June 30, 2025, amounts due from related parties increased to RMB 17.6 million, and amounts due to related parties increased to RMB 13.9 million, both primarily due to increased unsettled trade balances at period-end - Amounts due from related parties increased to RMB 17.6 million[80] - Amounts due to related parties increased to RMB 13.9 million[80] - Both increases were primarily due to higher unsettled trade balances at the end of the interim period[80] Trade Payables and Bills Payable As of June 30, 2025, trade payables and bills payable increased to RMB 683.1 million, primarily due to an increase in bills payable - Trade payables and bills payable increased to RMB 683.1 million[81] - Primarily due to an increase in bills payable[81] Contract Liabilities As of June 30, 2025, contract liabilities decreased to RMB 67.2 million, related to the timing of product delivery to customers - Contract liabilities decreased to RMB 67.2 million[82] - Related to the timing of product delivery to customers[82] Refund Liabilities As of June 30, 2025, refund liabilities decreased to RMB 4.5 million - Refund liabilities decreased to RMB 4.5 million[83] Other Payables and Accrued Expenses As of June 30, 2025, other payables and accrued expenses decreased to RMB 64.5 million, primarily due to a reduction in accrued expenses - Other payables and accrued expenses decreased to RMB 64.5 million[84] - Primarily due to a reduction in accrued expenses[84] Provisions As of June 30, 2025, provisions decreased to RMB 1.3 million, primarily representing warranties provided for products sold - Provisions decreased to RMB 1.3 million[85] - Provisions refer to warranties provided for products sold[85] Borrowings As of June 30, 2025, borrowings decreased to RMB 56.4 million, mainly due to a reduction in bank loans, with RMB 46.9 million repayable within one year - Borrowings decreased to RMB 56.4 million[86] - Primarily due to a reduction in bank loans[86] - RMB 46.9 million is repayable within one year[86] Lease Liabilities As of June 30, 2025, the Group's lease liabilities were approximately RMB 2.0 million, primarily arising from property leases for factories in Vietnam and Thailand - Lease liabilities were approximately RMB 2.0 million[87] - Primarily from two leased properties in Vietnam and Thailand used for factory operations[87] Foreign Exchange Risk While most of the Group's assets and liabilities are RMB-denominated, some bank balances and overseas sales receivables are denominated in USD, HKD, VND, and THB, exposing the Group to foreign exchange fluctuations, which are primarily managed through foreign currency forward contracts - Most assets and liabilities are RMB-denominated[88] - Some bank balances and overseas sales receivables are denominated in USD, HKD, VND, and THB[88] - Potential foreign exchange fluctuations are managed through foreign currency forward contracts, though no hedging transactions were entered into[89] Dividends The Board does not recommend the payment of any dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of any dividend for the six months ended June 30, 2025[90] Pledge of Assets As of June 30, 2025, the Group had pledged property, plant, equipment, right-of-use assets, pledged trade receivables, and pledged bank deposits with a net book value of approximately RMB 405.7 million as collateral for bank financing - Assets with a net book value of approximately RMB 405.7 million were pledged as collateral for bank financing[91] - Pledged assets include property, plant, equipment, right-of-use assets, pledged trade receivables, and pledged bank deposits[91] 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[92] Material Investments Held, Major Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures by the Group On March 28, 2025, the Group completed the disposal of 100% equity interest in Shandong Maike Intelligent Technology Co., Ltd. and Yongqing County Keqi Trading Co., Ltd., receiving cash consideration of RMB 45,000 thousand; other than this, there were no other material investments or acquisitions/disposals during the period - Completed the disposal of 100% equity interest in Shandong Maike Intelligent Technology Co., Ltd. and Yongqing County Keqi Trading Co., Ltd. on March 28, 2025, receiving cash consideration of RMB 45,000 thousand[93] - Other than the above, there were no other material investments or acquisitions/disposals during the period[93] Future Plans for Material Investments or Capital Assets As of the date of this announcement, the Group has no other future plans regarding material investments or capital assets - As of the date of this announcement, the Group has no other future plans regarding material investments or capital assets[94] Other Information This section covers employee information, post-reporting period events, industry outlook, risk management, environmental protection, and corporate governance compliance Employees and Remuneration Policy As of June 30, 2025, the Group had 1,207 employees with staff costs of approximately RMB 57.4 million, offering fixed salaries, commissions, performance bonuses, paid leave, and various allowances, while emphasizing employee training and development - As of June 30, 2025, the Group had 1,207 employees (December 31, 2024: 1,229 employees)[95] - Staff costs were approximately RMB 57.4 million (prior year: RMB 57.7 million)[95] Employee Distribution by Function (As of June 30, 2025) | Function | China (incl. Hong Kong) | Vietnam | Thailand | | :--- | :--- | :--- | :--- | | Management, Administration, Accounting | 56 | 2 | 3 | | Production | 618 | 173 | 69 | | Quality Control | 30 | 1 | 1 | | Procurement and Inventory | 32 | 1 | 1 | | Research and Development | 113 | – | – | | Sales and Marketing | 107 | – | – | | Total Employees | 956 | 177 | 74 | Events After the Reporting Period As of the date of this interim results announcement, there have been no significant events after June 30, 2025, that would materially affect the Group's operations and financial performance - There were no significant events after the reporting period that would materially affect the Group's operations and financial performance[96] No Other Material Changes There have been no other material changes in the Group's financial position or business since the announcement of the annual results for the year ended December 31, 2024 - There have been no other material changes in the Group's financial position or business since the announcement of the annual results for the year ended December 31, 2024[97] Industry Trends and Future Strategies The steel pipe industry faced multiple challenges in the first half of 2025 but anticipates new opportunities in the second half, with the Group pursuing sustainable growth through marketing breakthroughs, lean production, digital empowerment, and team upgrades Industry Trends In the first half of 2025, the steel pipe industry faced challenges including domestic overcapacity, rising environmental costs, slowing demand from real estate and infrastructure, and increasing international trade protectionism, but new demand is expected in the second half from '14th Five-Year Plan' major projects and 'Belt and Road' initiatives - The first half faced challenges such as domestic overcapacity, rising environmental costs, and slowing demand from real estate and infrastructure[98] - The international market faced challenges including rising trade protectionism, the China-US trade war, and EU carbon tariffs[98] - The second half is expected to see new demand generated by '14th Five-Year Plan' major projects and 'Belt and Road' initiatives in countries along the route[98] Future Strategic Initiatives The Group will drive sustainable growth through strategic initiatives including 'deep cultivation + expansion' in overseas markets, accelerating domestic client onboarding, lean production for quality and cost efficiency, digital empowerment for management decisions, and optimizing team structure and talent systems - Marketing Breakthroughs: Implement a 'deep cultivation + expansion' strategy in overseas markets and accelerate client onboarding in the domestic market[99] - Lean Production: Enhance quality and cost efficiency through capacity expansion, process optimization, and supply chain collaboration[99] - Digital Empowerment: Integrate full-chain data, streamline operational processes, and improve management efficiency and decision-making accuracy[99] - Team Upgrades: Optimize organizational structure and talent system, strengthening execution and innovation capabilities[99] Risk Management Management formulates and implements risk management policies covering strategic, operational, financial, and legal risks, with the Board responsible for overseeing the overall risk management system and quarterly evaluating and updating policies - Management formulates and implements risk management policies to address strategic, operational, financial, and legal risks[100] - The Board is responsible for overseeing the overall risk management system, evaluating and updating policies quarterly[100] Environmental Protection The Group complies with environmental laws and regulations in China, Vietnam, and Thailand, optimizing pollution control systems to reduce energy consumption by 5% for dust removal facilities and enhancing environmental management through interlocking hardware and electronic transfer manifest systems during the reporting period - Complies with environmental laws and regulations in China, Vietnam, and Thailand[101] - Optimized environmental pollution control systems, achieving a 5% reduction in energy consumption for dust removal and pollution control facilities[101] - Increased environmental interlocking hardware facilities and implemented an electronic transfer manifest system to enhance environmental management standards[101] Purchase, Sale or Redemption of the Company's Listed Securities For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any 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[102] Compliance with Corporate Governance Code The Company has fully complied with the code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules of the Stock Exchange - The Company has fully complied with the code provisions of the Corporate Governance Code set out in Appendix C1 to the Listing Rules of the Stock Exchange[103] Compliance with Model Code for Securities Transactions The Company has adopted the Model Code for Securities Transactions set out in Appendix C3 to the Listing Rules as the code of conduct for directors' securities transactions, and all directors have confirmed compliance upon inquiry - The Company has adopted the Model Code for Securities Transactions set out in Appendix C3 to the Listing Rules as the code of conduct for directors' securities transactions[104] - All directors have confirmed compliance with the Model Code, with no instances of non-compliance found[104] Audit Committee The Audit Committee, comprising three independent non-executive directors, has reviewed the Group's unaudited condensed consolidated interim results for the six months ended June 30, 2025, and discussed and reviewed accounting principles, internal controls, and risk management systems - The Audit Committee comprises three independent non-executive directors[105] - Reviewed the Group's unaudited condensed consolidated interim results for the six months ended June 30, 2025[105] - Discussed and reviewed the adequacy and effectiveness of accounting principles, internal control systems, risk management functions, and financial reporting systems[105] Publication of Interim Results and Interim Report on HKEX and Company Website The interim results announcement has been published on the HKEX and Company websites, and the interim report will be dispatched to shareholders and posted on the website in due course - The interim results announcement has been published on the HKEX website (www.hkexnews.hk) and the **Company's website (www.mechpipingtech.com)**[106](index=106&type=chunk) - The interim report will be dispatched to shareholders and posted on the website in due course[106]