宏华数科(688789) - 2025 Q2 - 季度财报

Important Notice Management guarantees report accuracy, proposes a 53.84 million Yuan cash dividend, and advises caution on forward-looking statements - The company's board of directors and senior management guarantee the truthfulness, accuracy, and completeness of the semi-annual report content, assuming individual and joint legal liabilities[3] - The company plans to distribute a cash dividend of 3.00 Yuan per 10 shares (tax inclusive) to all shareholders based on the total share capital registered on the equity distribution record date, totaling 53,835,399.60 Yuan (tax inclusive)[4] - The company advises that forward-looking statements in this report, such as future plans and development strategies, do not constitute substantial commitments to investors, who should be aware of investment risks[5] Section I Definitions This section defines common terms, including company names, shareholders, subsidiaries, and industry terminology, to ensure clear report understanding - This section defines common terms used in the report, including company names, major shareholders, subsidiaries, associates, industry terms, and related entities, to ensure clear understanding of the report's content[11][12] - Defines "the Company," "Company," and "Honghua Digital" as Hangzhou Honghua Digital Technology Co., Ltd[11] - Explains core industry technical terms such as digital printing, transfer printing, flat screen printing, and rotary screen printing[11][12] Section II Company Profile and Key Financial Indicators This section provides company basic information, contact details, stock summary, and key financial performance metrics for the reporting period I. Company Basic Information Honghua Digital is a STAR Market-listed company, with Jin Xiaotuan as legal representative, registered and operating in Hangzhou, Zhejiang - Company's Chinese name: Hangzhou Honghua Digital Technology Co., Ltd., abbreviation: Honghua Digital[14] - The company's shares are listed on the STAR Market of the Shanghai Stock Exchange, stock code: 688789[17] II. Contact Persons and Information This section discloses contact information for the Board Secretary and Securities Affairs Representative, including address, phone, and email - Board Secretary (Domestic Representative for Information Disclosure): Yu Jianli[15] - Contact number: 0571-86732193, email: honghua01@atexco.cn[15] III. Overview of Information Disclosure and Document Custody Location Changes The company uses major financial newspapers and www.sse.com.cn for information disclosure, with reports available at its board office - Company's information disclosure newspapers: China Securities Journal, Shanghai Securities News, Securities Daily, Securities Times[16] - Semi-annual report publication website: www.sse.com.cn[16](index=16&type=chunk) IV. Brief Introduction to Company Shares/Depositary Receipts The company's A-shares are listed on the STAR Market of the Shanghai Stock Exchange, with stock abbreviation Honghua Digital and code 688789 - Share type: A-shares, listing exchange and board: STAR Market of Shanghai Stock Exchange[17] - Stock abbreviation: Honghua Digital, stock code: 688789[17] V. Company's Key Accounting Data and Financial Indicators The company achieved significant growth in operating revenue and net profit, with substantial net cash flow increase from operations, driven by sales Key Accounting Data for H1 2025 | Key Accounting Data | Current Period (Jan-Jun) (Yuan) | Prior Period (Yuan) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,037,608,282.78 | 815,962,695.42 | 27.16 | | Total Profit | 304,654,969.34 | 239,881,294.39 | 27.00 | | Net Profit Attributable to Shareholders of Listed Company | 250,519,507.48 | 200,171,789.32 | 25.15 | | Net Cash Flow from Operating Activities | 81,793,810.33 | 45,566,018.47 | 79.51 | Key Financial Indicators for H1 2025 | Key Financial Indicators | Current Period (Jan-Jun) | Prior Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (Yuan/share) | 1.40 | 1.12 | 25.00 | | Diluted Earnings Per Share (Yuan/share) | 1.40 | 1.12 | 25.00 | | Weighted Average Return on Net Assets (%) | 7.75 | 6.87 | Increased by 0.88 percentage points | | R&D Investment as % of Operating Revenue (%) | 5.94 | 6.05 | Decreased by 0.11 percentage points | - Net cash flow from operating activities increased by 79.51% year-on-year, primarily due to a greater increase in cash received from sales of goods and services than cash paid for purchases in the current period[20] VI. Differences in Accounting Data under Domestic and International Accounting Standards The company has no differences in accounting data under domestic and international accounting standards - The company has no differences in net profit and net assets attributable to shareholders of the listed company in financial reports disclosed simultaneously under International Accounting Standards and Chinese Accounting Standards[21] VII. Non-Recurring Gains and Losses Items and Amounts The company's total non-recurring gains and losses were 22.83 million Yuan, mainly from asset disposal, government grants, and entrusted investments Non-Recurring Gains and Losses Items and Amounts for H1 2025 | Non-Recurring Gains and Losses Item | Amount (Yuan) | | :--- | :--- | | Gains/losses from disposal of non-current assets | 8,102,565.63 | | Government grants recognized in current profit or loss (excluding those closely related to business) | 15,254,106.39 | | Gains/losses from changes in fair value and disposal of financial assets and liabilities | 308,045.72 | | Gains/losses from entrusted investments or asset management | 2,361,251.95 | | Other non-operating income and expenses apart from the above | 636,594.91 | | Less: Income tax impact | 2,518,433.55 | | Impact on minority interests (after tax) | 1,318,775.49 | | Total | 22,825,355.56 | - Software VAT immediate refund, VAT additional deduction, individual income tax handling fee refunds, and amortization of deferred income are deemed directly related to normal operating activities, not special or incidental, and are thus classified as recurring gains and losses[24] VIII. Companies with Equity Incentive or Employee Stock Ownership Plans May Choose to Disclose Net Profit After Deducting Share-Based Payment Impact The company's net profit after deducting share-based payment impact was 281.97 million Yuan, a 34.52% year-on-year increase Net Profit After Deducting Share-Based Payment Impact for H1 2025 | Key Accounting Data | Current Period (Jan-Jun) (Yuan) | Prior Period (Yuan) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Net Profit After Deducting Share-Based Payment Impact | 281,973,876.72 | 209,619,143.20 | 34.52 | Section III Management Discussion and Analysis This section analyzes the company's industry, operations, core competencies, risk factors, and key financial performance during the reporting period I. Description of the Company's Industry and Main Business During the Reporting Period The company operates in special equipment manufacturing, providing comprehensive digital inkjet printing solutions for textiles, including printers and consumables - The company's industry is "2.1 Intelligent Manufacturing Equipment Industry" under "C35 Special Equipment Manufacturing Industry"[28] - The digital inkjet printing industry is transitioning from "technology substitution" to "ecosystem reconstruction," with green and low-carbon production becoming a rigid demand, benefiting from "dual carbon" goals and "trade-in" policies[29] - The company's main business is providing comprehensive textile digital printing solutions, with products including digital direct-to-fabric printers, transfer printers, ultra-high-speed industrial inkjet printers, automated sewing equipment, and related consumables (inks)[33] - The company's business model is "equipment first, consumables follow," developing the market through cost-effective equipment and comprehensive services, while also providing配套耗材[33][34] II. Discussion and Analysis of Operations The company achieved steady operating growth with double-digit revenue and net profit increases, driven by digital printing focus, new applications, and R&D investment Operating Performance for H1 2025 | Indicator | Amount (Million Yuan) | YoY Growth (%) | | :--- | :--- | :--- | | Operating Revenue | 1,037.61 | 27.16 | | Net Profit Attributable to Shareholders of Listed Company | 250.52 | 25.15 | - The company's operating revenue from digital inkjet printing equipment reached 670.41 million Yuan, a year-on-year increase of 42.75%, with a significant increase in the sales proportion of single-pass models[36] - The fundraising project "Intelligent Factory for Annual Production of 2,000 Sets of Industrial Digital Inkjet Printing Equipment and Consumables" has commenced production, generating approximately 90.08 million Yuan in benefits during the first half of the year[37] - The infrastructure construction for Tianjin Honghua Digital New Materials Co., Ltd.'s "Inkjet Printing Industry Integrated Base Project" is largely complete, which will further enhance full industry chain synergy and achieve independent control over key consumables[37] - R&D investment in H1 2025 was 61.61 million Yuan, accounting for 5.94% of operating revenue, a year-on-year increase of 24.73%[39] - The company newly applied for 8 domestic invention and utility model patents, accumulating 284 authorized patents (55 invention patents) and 110 authorized software copyrights[40] III. Analysis of Core Competitiveness During the Reporting Period The company's core competitiveness is built on 30 years of tech, strong R&D, global market presence, scaled production, and brand influence, with ongoing patent acquisitions - The company has cultivated the digital inkjet printing field for nearly 30 years, developing core technologies such as machine learning-based density curve optimization, color management engines, precision electromechanical control systems, and nano-ink formulations[41][45] - The company is the supporting entity for the "National Digital Inkjet Printing Engineering Technology Research Center," possesses an academician expert workstation and a postdoctoral research workstation, and has accumulated 284 authorized patents (55 invention patents)[42][47] - The company has international service centers in 37 countries or regions globally, serving approximately 3,000 customers, with textiles produced by its digital inkjet printing equipment ranking among the world's top in total digital printing products[42] - Upon completion and operation of the company's fundraising projects, it will establish the world's largest digital inkjet printing equipment production base (with a capacity of approximately 5,520 units), and ink production capacity is expected to expand to 40,000-50,000 tons[43] - The company was awarded the title of National Manufacturing Single Champion Demonstration Enterprise by the Ministry of Industry and Information Technology[43][46] - The company's ongoing R&D projects include the development of core components and equipment for digital micro-spraying, integrated single-pass digital printing key technologies and equipment, and automatic zipper and strap sewing equipment for duvet covers, aiming to promote green, digital transformation and cost reduction with efficiency improvement[54] IV. Risk Factors The company faces risks in core competitiveness, operations (overseas markets, printhead reliance, receivables, FX), industry adoption, and management expansion - Core competitiveness risk: infringement or leakage of intellectual property, core technologies, and trade secrets[58] - Overseas market risk: export sales account for 46.46% of revenue, facing international competition and adverse impacts from geopolitics, trade policies, and foreign exchange management[58] - Core raw material printheads for digital inkjet printing equipment primarily rely on overseas procurement, accounting for over 30% of industrial digital inkjet printing business costs, posing risks of high supplier concentration and supply disruption[59] - Risk of uncollectible accounts receivable: accounts receivable balance at the end of the reporting period was 805.91 million Yuan[59] - Exchange rate fluctuation risk: overseas sales revenue accounts for 46.46%, and foreign currency settlement may lead to increased exchange losses[59] - Industry risk: if digital inkjet printing technology does not achieve further breakthroughs in stability, consumable costs, and comprehensive maintenance costs, the pace of large-scale adoption may slow down[60] - Management risk: rapid expansion of production and operation scale extends the management chain, posing challenges to the management control system and human resource coordination capabilities[61][62] V. Key Operating Performance During the Reporting Period The company saw increased revenue, net profit, and assets, with significant balance sheet changes driven by business growth, expenses, exchange gains, and dividends Key Operating Data for H1 2025 | Indicator | Amount (Million Yuan) | YoY Change (%) | | :--- | :--- | :--- | | Operating Revenue | 1,037.61 | 27.16 | | Net Profit Attributable to Shareholders of Listed Company | 250.52 | 25.15 | | Total Assets (Period-end) | 4,541.28 | 5.39 | | Net Assets Attributable to Shareholders of Listed Company (Period-end) | 3,317.85 | 5.43 | Analysis of Financial Statement Items Changes for H1 2025 | Item | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | Change (%) | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 1,037,608,282.78 | 815,962,695.42 | 27.16 | Continuous expansion of business scale, year-on-year growth in product sales | | Operating Cost | 583,196,353.32 | 441,940,551.51 | 31.96 | Increased with operating revenue growth | | Selling Expenses | 70,822,741.76 | 54,398,262.16 | 30.19 | Increase in sales personnel salaries, travel expenses, technical service fees, and share-based payment expenses | | Administrative Expenses | 53,461,999.24 | 44,338,180.67 | 20.58 | Increase in labor expenses, travel expenses, depreciation and amortization, and share-based payment expenses | | Financial Expenses | -26,115,754.72 | -12,754,526.41 | Not applicable | Year-on-year increase in exchange gains | | R&D Expenses | 61,607,693.41 | 49,394,438.07 | 24.73 | Increase in R&D personnel salaries and share-based payment expenses | | Net Cash Flow from Operating Activities | 81,793,810.33 | 45,566,018.47 | 79.51 | Cash received from sales of goods and services increased more than cash paid for purchases | | Net Cash Flow from Investing Activities | 20,606,795.40 | -252,019,633.04 | Not applicable | More cash received from recovery of wealth management investments | | Net Cash Flow from Financing Activities | -78,505,309.17 | 76,833,151.75 | -202.18 | Increase in cash dividend payments | - Fixed assets at period-end increased by 102.21% compared to the end of the previous year, primarily due to construction in progress reaching its intended usable state and being transferred to fixed assets[66] - Construction in progress at period-end decreased by 54.44% compared to the end of the previous year, primarily due to reaching its intended usable state and being transferred to fixed assets[66] VI. Analysis of Investment Status The company's equity investment decreased by 13.11% to 125.54 million Yuan, mainly from capital injections into subsidiaries and associates, while transactional financial assets significantly decreased - Investment amount during the reporting period was 125.54 million Yuan, a 13.11% decrease compared to the prior period[73] - Major external equity investments include a 77 million Yuan capital increase in Hangzhou Honghua Software Co., Ltd., a 14.4 million Yuan investment payment to Tianjin Honghua Digital New Materials Co., Ltd., and a 17.5 million Yuan capital increase in Zhejiang Honghua Baijin Qianyin Home Textile Technology Co., Ltd[73] - Transactional financial assets at period-end amounted to 30,332,863.96 Yuan, a 83.89% decrease from the beginning of the period, primarily due to the recovery of non-fixed income wealth management products[66][75] - The company participated in investing in Hangzhou Jintou Honghua Venture Capital Fund Partnership (Limited Partnership), with an investment of 95 million Yuan at period-end, holding a 38% stake[77] VII. Analysis of Major Holding and Participating Companies This section lists major holding and participating subsidiaries, detailing the acquisition of Shandong Beiao Chemical and the deregistration of Zhuji Honghua Software - The company's major subsidiaries include Hangzhou Honghua Software Co., Ltd., Tianjin Jingli Digital Technology Co., Ltd., Hangzhou Saiyang Digital Technology Co., Ltd., Tianjin Honghua Digital New Materials Co., Ltd., and Shandong Yingkejie Digital Technology Co., Ltd[80][81] - During the reporting period, the company acquired a 51% equity stake in Shandong Beiao Chemical Co., Ltd., and included it in the scope of consolidation on June 30, 2025[82] - Zhuji Honghua Software Technology Co., Ltd. has been deregistered[83] Section IV Corporate Governance, Environment, and Society This section covers changes in directors and senior management, profit distribution plans, and the status and impact of equity incentive and employee stock ownership plans I. Changes in Company Directors, Senior Management, and Core Technical Personnel Vice General Manager WANG XI resigned due to personal reasons but remains a core technical personnel of the company - Company Vice General Manager WANG XI resigned due to personal reasons but remains a core technical personnel of the company[85] II. Profit Distribution or Capital Reserve Conversion Plan The company plans a 53.84 million Yuan cash dividend (3.00 Yuan per 10 shares, tax inclusive), with no capital reserve conversion or bonus shares - The company plans to distribute a cash dividend of 3.00 Yuan per 10 shares (tax inclusive), totaling 53,835,399.60 Yuan (tax inclusive)[85] - No capital reserve conversion to share capital or bonus share issuance will be conducted[85] III. Status and Impact of Company's Equity Incentive Plan, Employee Stock Ownership Plan, or Other Employee Incentive Measures The 2024 employee stock ownership plan completed share transfer, and the 2024 restricted stock incentive plan granted shares at an adjusted 65.80 Yuan/share - The 2024 employee stock ownership plan completed the transfer of 865,000 shares to the employee stock ownership plan securities account on June 12, 2024, at a transfer price of 51.00 Yuan/share[87] - The 2024 restricted stock incentive plan granted 1.502 million shares for the initial grant on August 12, 2024, and 0.198 million shares for the reserved grant on October 30, 2024, with the grant price adjusted to 65.80 Yuan/share[87] Section V Important Matters This section details commitment fulfillment, absence of related-party fund occupation or illegal guarantees, unaudited report status, regulatory penalties, significant related-party transactions, and raised fund usage I. Fulfillment of Commitments The company's actual controller, shareholders, directors, and senior management strictly fulfilled commitments on shareholding, lock-up, anti-fraud, competition, related transactions, fund occupation, and profit distribution - The company's actual controller, Jin Xiaotuan, committed that the reduction price within 2 years after the lock-up period expires will not be lower than the issue price[94] - Corporate shareholders controlled by the company's actual controller committed that the reduction price within 2 years after the lock-up period expires will not be lower than the issue price[95] - The company, its actual controller, directors, supervisors, and senior management committed to avoiding horizontal competition, regulating related-party transactions, and preventing related-party fund occupation[100][103][106] - The company, its actual controller, directors, supervisors, and senior management committed to compensating for diluted immediate returns, including strengthening management of raised funds, improving operational efficiency, and perfecting the profit distribution system[108][109][110][113][114] - All holders of the 2024 employee stock ownership plan committed not to distribute the equity of target shares that have met unlocking conditions for each batch within 3 months from the expiration date of the respective lock-up period[116] II. Non-Operating Fund Occupation by Controlling Shareholders and Other Related Parties During the Reporting Period During the reporting period, the company had no non-operating fund occupation by controlling shareholders or other related parties - The company had no non-operating fund occupation by controlling shareholders or other related parties[119] III. Irregular Guarantees During the reporting period, the company had no irregular guarantees - The company did not provide external guarantees in violation of prescribed decision-making procedures[6][120] IV. Semi-Annual Report Audit Status This semi-annual report is unaudited - This semi-annual report is unaudited[4][121] VIII. Listed Company, Its Directors, Senior Management, Controlling Shareholders, and Actual Controllers Suspected of Violations, Penalties, and Rectification The company received a warning letter from Zhejiang Securities Regulatory Bureau and strengthened internal supervision of raised funds and information disclosure - The company received a warning letter from the Zhejiang Regulatory Bureau of the China Securities Regulatory Commission on March 25, 2025[121] - The company has strengthened internal supervision mechanisms for the use of raised funds, established a special approval mechanism for raised fund usage, and improved the quality of information disclosure[122] X. Significant Related-Party Transactions The company engaged in related-party sales with associates Jiangsu Honghua Flexible Supply Chain and Zhejiang Honghua Baijin Qianyin, also providing a 140 million Yuan guarantee for the latter Related-Party Transactions for Sales of Goods/Services in H1 2025 | Related Party | Related Transaction Content | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | | :--- | :--- | :--- | :--- | | Jiangsu Honghua Flexible Supply Chain Co., Ltd. | Equipment and ink sales | 1,599,461.09 | 776,230.11 | | Zhejiang Honghua Baijin Qianyin Home Textile Technology Co., Ltd. | Equipment and ink sales | 338,601.77 | 14,814,699.05 | - The company provided a guarantee limit of no more than 140 million Yuan for its associate Zhejiang Honghua Baijin Qianyin Home Textile Technology Co., Ltd., with the company's guarantee ratio being its investment shareholding ratio of 35%[128][510] - As of June 30, 2025, Honghua Baijin's actual borrowings under this guarantee amounted to 292.12 million Yuan, with the company actually bearing 102.24 million Yuan[128][511] XI. Significant Contracts and Their Fulfillment The company disclosed guarantee progress for its associate Honghua Baijin Qianyin and external guarantees passively formed from an equity acquisition - The company provided a guarantee limit of 140 million Yuan for its associate Honghua Baijin Qianyin Home Textile Technology Co., Ltd., with the company actually bearing 102.24 million Yuan as of period-end[128][511] - Due to the acquisition of a 51% equity stake in Shandong Beiao Chemical, the company passively formed an external guarantee of 25 million Yuan, with Changyi Zaohu Salt Chemical's actual borrowings under this guarantee amounting to 24 million Yuan as of period-end[128] - The company's total guarantee amount accounted for 3.66% of its net assets[128] XII. Explanation of Progress in Use of Raised Funds The company's 1.58 billion Yuan raised funds saw one project commence production and generate benefits, while other projects experienced delays Overall Use of Raised Funds | Source of Raised Funds | Total Amount (Million Yuan) | Net Amount (Million Yuan) | Total Committed Investment (Million Yuan) | Total Cumulative Investment as of Period-End (Million Yuan) | Investment Progress as of Period-End (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Initial Public Offering | 575.32 | 503.40 | 503.40 | 473.32 | 94.03 | | Private Placement of Shares | 999.99 | 987.93 | 987.93 | 726.12 | 73.50 | | Total | 1,575.32 | 1,491.33 | 1,491.33 | 1,199.44 | 80.43 | - The fundraising project "Intelligent Factory for Annual Production of 2,000 Sets of Industrial Digital Inkjet Printing Equipment and Consumables" was completed and commenced production in July 2023, generating 90.08 million Yuan in benefits this year[133] - The fundraising project "Intelligent Production Line for Annual Production of 3,520 Sets of Industrial Digital Inkjet Printing Equipment" has had its expected usable date extended to September 2025[134] - The company managed idle raised funds through cash management, with a period-end balance of 291.19 million Yuan[137] Section VI Share Changes and Shareholder Information This section outlines the company's share capital changes, shareholder structure, and top ten shareholder holdings, including pledge situations I. Share Capital Changes During the reporting period, there were no changes in the company's total ordinary shares or share capital structure - During the reporting period, there were no changes in the company's total ordinary shares or share capital structure[140] II. Shareholder Information The company had 4,280 ordinary shareholders, with Ningbo Weixin holding the highest stake among the top ten, and Zhejiang Xinhua Zhinnao having pledged shares - Total number of ordinary shareholders as of period-end: 4,280[142] Top Ten Shareholders' Holdings as of Period-End | Shareholder Name | Number of Shares Held at Period-End (Shares) | Proportion (%) | Pledged, Marked, or Frozen Status (Number of Shares) | | :--- | :--- | :--- | :--- | | Ningbo Weixin Enterprise Management Partnership (Limited Partnership) | 25,703,258 | 14.32 | None 0 | | Han Jia Development Co., Ltd. | 17,198,172 | 9.58 | None 0 | | Zhejiang Xinhua Zhinnao Investment Management Partnership (Limited Partnership) | 15,702,226 | 8.75 | Pledged 15,697,280 | | Ningbo Chibo Investment Co., Ltd. | 11,404,415 | 6.36 | None 0 | | Hangzhou Baoxin Digital Technology Co., Ltd. | 10,380,590 | 5.78 | None 0 | | HKSCC Nominees Limited | 9,339,644 | 5.20 | None 0 | | Zhejiang Provincial State-owned Capital Operation Co., Ltd. | 9,098,730 | 5.07 | None 0 | | Huitianfu Fund Management Co., Ltd. - Social Security Fund 17022 Portfolio | 2,843,465 | 1.58 | None 0 | | Chen Jie | 2,606,688 | 1.45 | None 0 | | Zheshang Securities Asset Management - Everbright Bank - Zheshang Jinhui STAR Market Honghua Digital No. 1 Strategic Placement Collective Asset Management Plan | 1,816,341 | 1.01 | None 0 | - Ningbo Weixin, Hangzhou Baoxin Digital, and Ningbo Chibo are all controlled by the company's actual controller, Mr. Jin Xiaotuan[146] III. Information on Directors, Senior Management, and Core Technical Personnel Core technical personnel Xu Liming, Shan Qingchuan, and Gu Rongqing indirectly reduced company shareholdings due to Ningbo Chibo's agreed transfer - Core technical personnel Xu Liming, Shan Qingchuan, and Gu Rongqing indirectly reduced their holdings in Honghua Digital shares due to Ningbo Chibo's agreed transfer of Honghua Digital shares[147] Section VII Bond-Related Information This section confirms the absence of company bonds, corporate bonds, non-financial enterprise debt financing instruments, and convertible corporate bonds I. Company Bonds (Including Corporate Bonds) and Non-Financial Enterprise Debt Financing Instruments During the reporting period, the company had no company bonds or non-financial enterprise debt financing instruments - The company has no company bonds (including corporate bonds) or non-financial enterprise debt financing instruments[150] II. Convertible Corporate Bonds During the reporting period, the company had no convertible corporate bonds - The company has no convertible corporate bonds[150] Section VIII Financial Report This section presents the company's unaudited consolidated and parent financial statements, with detailed notes on accounting policies, taxes, and related-party transactions I. Audit Report This semi-annual report is unaudited - This semi-annual report is unaudited[4][152] II. Financial Statements This section includes unaudited consolidated and parent financial statements, with detailed notes on asset, liability, profit, cash flow, and equity changes, and accounting policies Key Consolidated Balance Sheet Data (June 30, 2025) | Item | June 30, 2025 (Yuan) | December 31, 2024 (Yuan) | | :--- | :--- | :--- | | Total Current Assets | 2,840,527,028.63 | 2,794,776,216.04 | | Total Non-Current Assets | 1,700,748,744.16 | 1,514,339,445.72 | | Total Assets | 4,541,275,772.79 | 4,309,115,661.76 | | Total Current Liabilities | 892,994,863.34 | 970,872,251.29 | | Total Non-Current Liabilities | 194,480,335.02 | 103,050,212.93 | | Total Liabilities | 1,087,475,198.36 | 1,073,922,464.22 | | Total Equity Attributable to Parent Company Owners | 3,317,852,646.32 | 3,146,979,859.56 | | Total Equity | 3,453,800,574.43 | 3,235,193,197.54 | Key Consolidated Income Statement Data (Jan-Jun 2025) | Item | H1 2025 (Yuan) | H1 2024 (Yuan) | | :--- | :--- | :--- | | Total Operating Revenue | 1,037,608,282.78 | 815,962,695.42 | | Total Operating Cost | 754,612,688.90 | 583,551,201.99 | | Total Profit | 304,654,969.34 | 239,881,294.39 | | Net Profit | 264,263,239.30 | 207,606,774.16 | | Net Profit Attributable to Parent Company Shareholders | 250,519,507.48 | 200,171,789.32 | | Basic Earnings Per Share (Yuan/share) | 1.40 | 1.12 | Key Consolidated Cash Flow Statement Data (Jan-Jun 2025) | Item | H1 2025 (Yuan) | H1 2024 (Yuan) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 81,793,810.33 | 45,566,018.47 | | Net Cash Flow from Investing Activities | 20,606,795.40 | -252,019,633.04 | | Net Cash Flow from Financing Activities | -78,505,309.17 | 76,833,151.75 | | Net Increase in Cash and Cash Equivalents | 40,144,299.04 | -131,265,487.67 | III. Company Basic Information Honghua Digital, established in 1992 and listed in 2021, primarily engages in R&D, production, and sales of digital inkjet printing equipment and consumables - The company's predecessor, Honghua Computer Company, was established on October 10, 1992, restructured into a joint-stock company in 2001, and listed on the Shanghai Stock Exchange on July 8, 2021[185] - The company's main business is the R&D, production, and sales of digital inkjet printing equipment and consumables, automated sewing equipment, and digital printing equipment[186] IV. Basis of Financial Statement Preparation The company's financial statements are prepared on a going concern basis, with no significant doubts about its ability to continue for the next 12 months - The company's financial statements are prepared on a going concern basis[187] - There are no matters or circumstances that cause significant doubt about the company's ability to continue as a going concern for the next 12 months from the end of the reporting period[188] V. Significant Accounting Policies and Accounting Estimates This section details the company's accounting policies and estimates for financial instruments, inventories, fixed assets, construction in progress, intangible assets, and revenue recognition - The company adheres to the requirements of enterprise accounting standards to truthfully and completely reflect its financial position[190] - The company has formulated specific accounting policies and estimates for financial instrument impairment, inventories, fixed asset depreciation, construction in progress, intangible assets, and revenue recognition[189] - The company classifies, recognizes, measures, and derecognizes financial assets and liabilities, and provides for impairment based on expected credit losses[202][205][208] - The company's revenue recognition principles are based on identifying distinct performance obligations, determining whether they are satisfied over time or at a point in time, and measuring revenue at the transaction price allocated to each distinct performance obligation[267][268][269] VI. Taxation This section lists the company's main tax categories and rates, detailing VAT and corporate income tax preferential policies for the company and its subsidiaries Main Tax Categories and Rates | Tax Category | Tax Rate | | :--- | :--- | | Value-Added Tax (VAT) | 5%、6%、7%、9%、13%、19% | | Urban Maintenance and Construction Tax | 7% | | Corporate Income Tax | 15%、16.5%、20%、25%、28%等 | | Property Tax | 1.2%、12% | | Education Surcharge | 3% | | Local Education Surcharge | 2% | - The company and its subsidiaries Hangzhou Saiyang Digital, Hangzhou Honghua Software, Shandong Yingkejie Digital, and Tianjin Jingli Digital all enjoy a 15% preferential corporate income tax rate as high-tech enterprises[285][289][290] - The company and its subsidiary Shandong Yingkejie Digital Technology Co., Ltd. enjoy the VAT immediate refund policy for software products[286][287] - The company and its subsidiaries Hangzhou Honghua Software, Tianjin Jingli Digital, Shandong Yingkejie Digital, and Hangzhou Saiyang Digital comply with the VAT additional deduction policy for advanced manufacturing enterprises[288] VII. Notes to Consolidated Financial Statement Items This section provides detailed notes on consolidated financial statement items, including asset, liability, equity, revenue, cost, and expense balances, changes, and explanations - Cash and bank balances at period-end amounted to 1,192,528,180.26 Yuan, of which 30,578,152.29 Yuan was deposited overseas[292] - Transactional financial assets at period-end amounted to 30,332,863.96 Yuan, a 83.89% decrease from the beginning of the period, primarily due to the recovery of non-fixed income wealth management products[294][66] - Accounts receivable at period-end amounted to 736,252,251.66 Yuan, with 80.49% being within 1 year of age[301][303] - Inventory book value at period-end was 622,242,559.04 Yuan, an increase of 10.99% from the beginning of the period, primarily including raw materials, work-in-progress, and finished goods[336] - Fixed assets book value at period-end was 833,256,251.25 Yuan, an increase of 102.21% from the beginning of the period, primarily due to transfers from construction in progress[353][66] - Construction in progress book value at period-end was 237,741,438.29 Yuan, a decrease of 54.44% from the beginning of the period, primarily due to transfers to fixed assets upon reaching intended usable state[361][66] - Goodwill original book value at period-end was 216,014,339.66 Yuan, with an increase of 5,804,566.23 Yuan in the current period due to business combinations[372] - Total assets with restricted ownership or use rights amounted to 512,243,038.83 Yuan, primarily including pledged or frozen cash and bank balances, fixed assets, intangible assets, and construction in progress[388] - Operating revenue for the current period was 1,037,608,282.78 Yuan, a year-on-year increase of 27.16%; operating cost was 583,196,353.32 Yuan, a year-on-year increase of 31.96%[428] - Selling expenses for the current period were 70,822,741.76 Yuan, a year-on-year increase of 30.19%, primarily due to increased sales personnel salaries, travel expenses, technical service fees, and share-based payment expenses[432][64] - R&D expenses for the current period were 61,607,693.41 Yuan, a year-on-year increase of 24.73%, primarily due to increased R&D personnel salaries and share-based payment expenses[434][64] - Financial expenses for the current period were -26,115,754.72 Yuan, with an increase in exchange gains compared to the prior period[435][64] - Net cash flow from operating activities was 81,793,810.33 Yuan, a year-on-year increase of 79.51%[455] VIII. R&D Expenses This section itemizes the company's R&D expenses by cost nature, with 61.61 million Yuan expensed, primarily for salaries, materials, and share-based payments R&D Expenses by Nature of Cost for H1 2025 | Item | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | | :--- | :--- | :--- | | Salaries and Welfare Expenses | 30,393,416.76 | 23,612,426.33 | | R&D Material Expenses | 12,547,750.38 | 14,979,135.04 | | Share-Based Payment | 9,295,491.31 | 0 | | Depreciation and Amortization | 4,896,246.09 | 3,757,703.14 | | Mold Development and Outsourced R&D | 1,895,945.57 | 3,223,621.69 | | Others | 2,578,843.30 | 3,821,551.87 | | Total | 61,607,693.41 | 49,394,438.07 | | Of which: Expensed R&D | 61,607,693.41 | 49,394,438.07 | IX. Changes in Consolidation Scope The company acquired 51% of Shandong Beiao Chemical, bringing it into consolidation, while wholly-owned subsidiary Zhuji Honghua Software was liquidated and deregistered - The company, through its controlled subsidiary Tianjin Honghua Digital New Materials Co., Ltd., acquired a 51% equity stake in Shandong Beiao Chemical Co., Ltd. for 40.8 million Yuan, and included it in the scope of consolidation on June 19, 2025[469][470][474] - This acquisition resulted in goodwill of 5,804,566.23 Yuan[474] - Wholly-owned subsidiary Zhuji Honghua Software Technology Co., Ltd. was liquidated and deregistered in March 2025, and is no longer included in the scope of consolidation[477] X. Interests in Other Entities This section details the company's enterprise group composition, including major subsidiaries, significant non-wholly-owned subsidiaries, and interests in important associates - The company owns Hangzhou Honghua Software, Tianjin Jingli Digital, GLOMIC Sàrl, TEXPA GmbH等 wholly-owned or controlled subsidiaries[478] - Significant non-wholly-owned subsidiaries include Saiyang Digital, Shandong Yingkejie, and Tianjin Honghua, with minority shareholder stakes of 45.00%, 49.00%, and 15.00%, respectively[480][481] - Important associates include Zhejiang Honghua Baijin Qianyin Home Textile Technology Co., Ltd., Jiangsu Honghua Flexible Supply Chain Co., Ltd., and Hangzhou Jintou Honghua Venture Capital Fund Partnership (Limited Partnership), with shareholding ratios of 35% or 38% respectively[482] XI. Government Grants The company recognized 20.95 million Yuan in government grants, primarily from asset-related deferred income amortization and income-related grants Government Grants Recognized in Current Profit or Loss for H1 2025 | Type | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | | :--- | :--- | :--- | | Asset-related | 673,979.90 | 465,303.51 | | Income-related | 20,276,532.74 | 16,225,563.46 | | Total | 20,950,512.64 | 16,690,866.97 | - The period-end balance of asset-related government grants in deferred income was 1,457,625.00 Yuan[487] XII. Risks Related to Financial Instruments The company faces credit, liquidity, and market risks (interest rate, FX), managed through credit assessment, bank lines, financing optimization, and foreign currency trading - The company faces credit risk, liquidity risk, and market risk (interest rate risk and foreign exchange risk)[489][495] - Credit risk management is conducted by assessing financial instrument credit risk, defining default and credit-impaired assets, and measuring expected credit losses[490][491] - Liquidity risk is controlled by comprehensively utilizing various financing methods such as bill settlement and bank borrowings, and by appropriately combining long-term and short-term financing approaches[493] - As of June 30, 2025, the company had no bank borrowings with floating interest rates, resulting in a relatively small impact from interest rate risk[496] - Foreign exchange risk is managed by buying and selling foreign currencies at market exchange rates when necessary to ensure net risk exposure is maintained at an acceptable level[497] XIII. Disclosure of Fair Value This section discloses period-end fair values of assets and liabilities, primarily transactional financial assets, other equity investments, and accounts receivable financing Fair Value Measurement Items at Period-End | Item | Level 3 Fair Value Measurement (Yuan) | Total (Yuan) | | :--- | :--- | :--- | | Transactional Financial Assets | 30,332,863.96 | 30,332,863.96 | | Other Equity Instrument Investments | 12,292,000.00 | 12,292,000.00 | | Accounts Receivable Financing | 25,866,124.94 | 25,866,124.94 | | Total Assets Measured at Fair Value on a Recurring Basis | 68,490,988.90 | 68,490,988.90 | - For other non-current financial assets (equity instrument investments), measurement is based on their book value or the target company's net assets as a reasonable estimate of fair value[504] XIV. Related Parties and Related-Party Transactions This section discloses related-party relationships with subsidiaries and associates, and related-party transactions including sales, services, and guarantees - The company has related-party transactions for equipment and ink sales with its associates Jiangsu Honghua Flexible Supply Chain Co., Ltd. and Zhejiang Honghua Baijin Qianyin Home Textile Technology Co., Ltd[508] - The company provided a guarantee limit of 140 million Yuan for its associate Zhejiang Honghua Baijin Qianyin Home Textile Technology Co., Ltd., with the company actually bearing 102.24 million Yuan as of period-end[510][511] - Key management personnel compensation for the current period amounted to 3.56 million Yuan[514] - Accounts receivable from associates Jiangsu Honghua Flexible Supply Chain Co., Ltd. and Zhejiang Honghua Baijin Qianyin Home Textile Technology Co., Ltd. at period-end were 9,610,333.60 Yuan and 1,106,120.00 Yuan, respectively[516] XV. Share-Based Payment This section details the 2024 employee stock ownership and restricted stock incentive plans, including grantees, prices, vesting, and current period expenses - The 2024 employee stock ownership plan granted 0.865 million restricted shares at 51 Yuan/share to 82 incentive recipients, with two vesting periods and performance targets of not less than 30% net profit growth in 2024 and not less than 200% cumulative net profit growth for 2024-2025[518] - The 2024 restricted stock incentive plan granted initial and reserved restricted shares at an adjusted price of 65.80 Yuan/share, with two vesting periods and performance targets similar to the employee stock ownership plan[518][519] - Total equity-settled share-based payment expenses for the current period amounted to 20,257,151.20 Yuan, primarily allocated to management, R&D, sales, and production personnel[525] XVI. Commitments and Contingencies During the reporting period, the company had no significant commitments or contingencies requiring disclosure - During the reporting period, the company had no significant commitments or contingencies requiring disclosure[525] XVII. Post-Balance Sheet Events After the reporting period, the company plans to distribute profits or dividends totaling 53.84 million Yuan - After the reporting period, the company plans to distribute profits or dividends totaling 53,835,399.60 Yuan[526] XVIII. Other Important Matters The company's main business, including digital inkjet printers and consumables, is managed as a single segment, thus segment information disclosure is not required - The company's main business is the production and sales of digital inkjet printers and consumables, automated sewing equipment, and digital printing machines and consumables, managed as a single entity, thus segment information disclosure is not required[528] XIX. Notes to Parent Company Financial Statement Items This section provides detailed notes on parent company financial statement items, including receivables, long-term equity investments, revenue, costs, and investment income - Parent company's accounts receivable at period-end amounted to 665,328,898.93 Yuan, with 81.52% being within 1 year of age[530][532] - Parent company's other receivables at period-end amounted to 47,855,952.70 Yuan, of which 47,273,283.59 Yuan was due from related parties within the consolidation scope, accounting for 98.71%[545][550] - Parent company's long-term equity investments at period-end had a book value of 1,491,700,868.17 Yuan, primarily including investments in subsidiaries and associates[553] - Parent company's operating revenue for the current period was 1,086,758,505.08 Yuan, and operating cost was 757,204,051.79 Yuan[556] - Parent company's investment income for the current period was 9,744,599.92 Yuan, primarily including investment income from disposal of long-term equity investments and wealth management product income[560][561] XX. Supplementary Information This section provides supplementary information, including non-recurring gains and losses, net asset return, and earnings per share, refining financial performance Total Non-Recurring Gains and Losses for H1 2025 | Item | Amount (Yuan) | | :--- | :--- | | Gains/losses from disposal of non-current assets | 8,102,565.63 | | Government grants recognized in current profit or loss (excluding those closely related to business) | 15,254,106.39 | | Gains/losses from changes in fair value and disposal of financial assets and liabilities | 308,045.72 | | Gains/losses from entrusted investments or asset management | 2,361,251.95 | | Other non-operating income and expenses apart from the above | 636,594.91 | | Less: Income tax impact | 2,518,433.55 | | Impact on minority interests (after tax) | 1,318,775.49 | | Total | 22,825,355.56 | Net Asset Return and Earnings Per Share for H1 2025 | Profit for the Reporting Period | Weighted Average Return on Net Assets (%) | Earnings Per Share (Yuan) | | :--- | :--- | :--- | | Net Profit Attributable to Ordinary Shareholders of the Company | 7.75 | 1.40 | | Net Profit Attributable to Ordinary Shareholders of the Company After Deducting Non-Recurring Gains and Losses | 7.04 | 1.27 |