智欣集团控股(02187) - 2025 - 中期业绩

Company Information Board Members and Committees The Board of Directors consists of executive and independent non-executive directors, supported by Review, Nomination, Remuneration, and Strategy Committees - The Board of Directors includes 6 executive directors and 3 independent non-executive directors[6] - Four Board committees are established: Review, Nomination, Remuneration, and Strategy[6] Registration and Business Locations The company is registered in the Cayman Islands, with its headquarters and main China operations in Xiamen, Fujian Province, and its principal Hong Kong office in Causeway Bay - The company is registered in the Cayman Islands[6] - The main operating location in China is Xiamen, Fujian Province[6] Share Registrar and Principal Bankers The Cayman Islands principal share registrar is Conyers Trust Company (Cayman) Limited, and the Hong Kong share registrar is Tricor Investor Services Limited, with principal bankers being China Construction Bank and Industrial Bank - The Hong Kong share registrar is Tricor Investor Services Limited[7] - Principal bankers are China Construction Bank (Xinglin Branch) and Industrial Bank (Xiamen Wenbin Branch)[7] Financial Highlights Overview of Key Financial Indicators For the six months ended June 30, 2025, the company's revenue increased by 6.4% to RMB259.7 million, but gross profit significantly decreased by 82.6% to RMB7.9 million, resulting in a loss of RMB49.1 million for the period Key Financial Data for the Six Months Ended June 30 | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | Change % | | :--- | :--- | :--- | :--- | | Revenue | 259,673 | 244,079 | 6.4% | | Gross Profit | 7,905 | 45,517 | (82.6%) | | Loss/(Profit) for the Period | (49,061) | 1,172 | (4,286.1%) | - Revenue growth was primarily driven by a 14.0% increase in sales of ready-mixed concrete and a 6.8% increase in revenue from iron ore tailings recycling and eco-friendly bricks[9] - Gross profit significantly decreased by 82.6%, mainly due to a gross loss in the ready-mixed concrete business[10] - The company recorded a loss of RMB49.1 million for the current period, compared to a profit of RMB1.2 million in the same period last year[11] Chairman's Report Business Overview and Performance Review The Group primarily manufactures and supplies concrete building materials in Xiamen, Fujian, and engages in comprehensive utilization of iron ore tailings and eco-friendly brick production in Changjiang, Hainan, with revenue growth driven by tailings recycling and ready-mixed concrete, but overall gross profit declined significantly due to gross loss in ready-mixed concrete, leading to a net loss - The Group's business is categorized into ready-mixed concrete, precast concrete components, and iron ore tailings recycling and eco-friendly bricks[12] - Revenue for the period was approximately RMB259.7 million, a 6.4% year-on-year increase, primarily driven by increased revenue from iron ore tailings recycling and ready-mixed concrete[12] - Overall gross profit decreased by 82.6% to RMB7.9 million, mainly due to a gross loss of approximately RMB19.3 million in the ready-mixed concrete business[13] - The Group recorded a net loss of approximately RMB49.1 million for the period, primarily attributable to segment losses in the ready-mixed concrete and precast concrete components businesses[13] Business Outlook Despite anticipated ongoing market pressure in ready-mixed concrete and precast concrete components, the Group remains optimistic about the iron ore tailings recycling and eco-friendly bricks business, expecting it to continue generating strong revenue - Market pressure on ready-mixed concrete and precast concrete components is expected to persist[13] - The outlook for the comprehensive utilization of iron ore tailings business is optimistic, with expectations of continued strong revenue generation[13] Management Discussion and Analysis Business Review The Group's revenue increased by 6.4% to RMB259.7 million, with ready-mixed concrete revenue up 14.0% but incurring losses due to intense competition, while precast concrete components revenue sharply declined by 91.8% with a segment loss, and iron ore tailings recycling and eco-friendly bricks revenue grew by 6.8% due to higher selling prices, but cost of sales increased by 26.8%, leading to an 82.6% decrease in gross profit Revenue Analysis (By Business Segment) Total revenue for the period was approximately RMB259.7 million, a 6.4% year-on-year increase, with ready-mixed concrete revenue growing 14.0% to RMB148.2 million but remaining unprofitable due to intense market competition, precast concrete components revenue significantly decreasing by 91.8% to RMB870 thousand, and iron ore tailings recycling and eco-friendly bricks revenue increasing by 6.8% to RMB110.6 million, mainly due to higher selling prices Comparison of Revenue by Business Segment | Business Segment | 2025 (RMB thousand) | 2024 (RMB thousand) | Change % | | :--- | :--- | :--- | :--- | | Ready-mixed Concrete | 148,220 | 130,000 | 14.0% | | Precast Concrete Components | 870 | 10,600 | (91.8%) | | Iron Ore Tailings Recycling and Eco-friendly Bricks | 110,600 | 103,500 | 6.8% | | Total Revenue | 259,700 | 244,100 | 6.4% | - The ready-mixed concrete segment incurred losses due to intense competition and narrowing profit margins in the Xiamen market[20] - Precast concrete components revenue significantly decreased and resulted in a segment loss, also impacted by fierce competition[20] Cost of Sales Cost of sales increased by 26.8% year-on-year to RMB251.8 million, primarily due to increased revenue from iron ore tailings recycling and eco-friendly bricks, and rising raw material costs for ready-mixed concrete Comparison of Cost of Sales | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | Change % | | :--- | :--- | :--- | :--- | | Cost of Sales | 251,800 | 198,600 | 26.8% | - The increase in cost of sales was mainly influenced by higher revenue from iron ore tailings recycling and eco-friendly bricks and rising raw material costs for ready-mixed concrete[21] Gross Profit and Gross Margin Overall gross profit significantly decreased by 82.6% to RMB7.9 million, primarily because the increase in cost of sales outpaced revenue growth, particularly as the ready-mixed concrete business shifted from a gross profit in the prior period to a gross loss of approximately RMB19.3 million in the current period Comparison of Gross Profit | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | Change % | | :--- | :--- | :--- | :--- | | Gross Profit | 7,900 | 45,500 | (82.6%) | - The ready-mixed concrete business shifting from a gross profit of approximately RMB12.9 million in the same period of 2024 to a gross loss of approximately RMB19.3 million in the current period is the primary reason for the overall gross profit decline[23] Operating Expenses and Profit Other income increased by 83.4% to RMB5.2 million, selling expenses decreased by 38.1%, and administrative expenses increased by 46.5% to RMB42.6 million, mainly due to reclassification of precast concrete component production line depreciation, while net finance costs decreased by 13.6%, and income tax shifted from a credit to an expense, resulting in a loss of RMB49.1 million for the period Other Income Other income increased by 83.4% to RMB5.2 million, primarily due to non-recurring government grants and awards, as well as compensation for delayed settlement of trade receivables Comparison of Other Income | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | Change % | | :--- | :--- | :--- | :--- | | Other Income | 5,200 | 2,800 | 83.4% | - The increase in other income was mainly attributable to non-recurring government grants and compensation for delayed settlement of trade receivables[24] Selling Expenses Selling expenses decreased by 38.1% to RMB6.5 million, primarily due to reduced sales volume of precast concrete components Comparison of Selling Expenses | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | Change % | | :--- | :--- | :--- | :--- | | Selling Expenses | 6,500 | 10,500 | (38.1%) | - The decrease in selling expenses was mainly due to lower sales volume of precast concrete components[25] Administrative Expenses Administrative expenses increased by 46.5% to RMB42.6 million, primarily due to the reclassification of depreciation for the precast concrete component production line to administrative costs following its temporary suspension Comparison of Administrative Expenses | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | Change % | | :--- | :--- | :--- | :--- | | Administrative Expenses | 42,600 | 29,100 | 46.5% | - The increase in administrative expenses was primarily due to the reclassification of depreciation for the precast concrete component production line[26] Net Finance Costs Net finance costs decreased by 13.6% to RMB8.7 million, mainly due to a reduction in interest on bank borrowings Comparison of Net Finance Costs | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | Change % | | :--- | :--- | :--- | :--- | | Net Finance Costs | 8,700 | 10,000 | (13.6%) | - The decrease in net finance costs was mainly due to lower interest on bank borrowings[27] Income Tax Expense/Credit Income tax expense for the period was approximately RMB1.2 million, compared to an income tax credit of approximately RMB1.3 million in the prior period, primarily due to losses in the ready-mixed concrete and precast concrete components businesses Comparison of Income Tax Expense/Credit | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Income Tax Expense/(Credit) | 1,200 | (1,300) | - Income tax expense was primarily due to losses in the ready-mixed concrete and precast concrete components businesses[28] Loss/Profit for the Period Considering the aforementioned factors, the Group recorded a loss of approximately RMB49.1 million for the current period, compared to a profit of RMB1.2 million in the prior period Comparison of Loss/Profit for the Period | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Loss/(Profit) for the Period | (49,100) | 1,200 | Liquidity and Financial Resources The Group primarily funds its operations through cash generated from operating activities and borrowings, reporting net current liabilities of approximately RMB37.5 million and cash and cash equivalents of approximately RMB15.7 million as of June 30, 2025, with a significant decrease in current borrowings and a substantial increase in non-current borrowings, leading to a rise in the gearing ratio to 54% - The Group primarily funds its operations through cash generated from operating activities and borrowings[30] Liquidity and Borrowing Status | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Current Liabilities | 37,500 | 72,500 | | Cash and Cash Equivalents | 15,700 | 19,000 | | Current Borrowings | 121,100 | 227,700 | | Non-current Borrowings | 260,200 | 132,700 | | Gearing Ratio | 54% | 48% | Financial Risk Management The Group primarily faces market risks (including foreign exchange and interest rate risks), credit risk, and liquidity risk, currently having no foreign currency hedging policy but with management continuously monitoring, and no contingent liabilities for the period - The Group faces market risks (foreign exchange risk and interest rate risk), credit risk, and liquidity risk[32] - There is currently no foreign currency hedging policy, but management will continue to monitor it[32] - There were no contingent liabilities for the current period or at the end of the previous year[35] Capital Commitments and Significant Events As of June 30, 2025, the Group's capital commitments totaled approximately RMB451.8 million, a significant increase from the end of the previous year, with no major acquisitions, disposals, or investments during the period, and the capital structure remaining unchanged Comparison of Capital Commitments | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Capital Commitments | 451,800 | 404,300 | - There were no significant acquisitions or disposals during the period[37] - There were no significant investments during the period[38] Employees and Remuneration Policy As of June 30, 2025, the Group had 376 employees, a decrease from the prior period, with remuneration determined by factors such as qualifications, responsibilities, contributions, and experience, and some factory workers outsourced for efficiency Comparison of Employee Numbers | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Number of Employees | 376 | 462 | - The remuneration policy considers factors such as qualifications, responsibilities, contributions, and experience[39] - Some factory workers are outsourced to enhance human resource efficiency and flexibility[39] Use of Proceeds The net proceeds from the share offer amounted to approximately HKD238.7 million, of which HKD5.4 million had been utilized as of June 30, 2025, primarily for expanding precast concrete component production capacity, with the majority remaining unutilized Use of Proceeds from Share Offer | Purpose | Updated Intended Use of Net Proceeds (million HKD) | Utilized as of December 31, 2024 (million HKD) | Utilized from January 1 to June 30, 2025 (million HKD) | Unutilized as of June 30, 2025 (million HKD) | | :--- | :--- | :--- | :--- | :--- | | Expand precast concrete component production capacity | 24.5 | 5.4 | — | 5.4 | | Enhance IT systems | 1.2 | — | — | — | | Improve environmental protection systems | 1.2 | — | — | — | | Purchase mixer trucks and concrete pump trucks | 2.0 | — | — | — | | General working capital | 105.3 | — | — | — | | Repay borrowings | 104.5 | — | — | — | | Total | 238.7 | 5.4 | — | 5.4 | - The majority of the net proceeds remain unutilized, with the remaining funds for expanding precast concrete component production capacity expected to be utilized before December 2025[40] Prospects Increased competition in Xiamen's ready-mixed concrete and precast concrete component markets is pressuring the Group's profitability, while the iron ore tailings comprehensive utilization business in Hainan is expected to remain a strong revenue source due to ample tailings supply and demand from neighboring regions - Increased competition in the Xiamen ready-mixed concrete and precast concrete component markets is exerting significant pressure on profitability[41] - The iron ore tailings comprehensive utilization business in Hainan is expected to continue as a strong source of revenue[41] Condensed Consolidated Interim Statement of Comprehensive Income Key Income Statement Data For the six months ended June 30, 2025, the Group reported revenue of RMB259,673 thousand, gross profit of RMB7,905 thousand, a loss for the period of RMB49,061 thousand, and basic loss per share of RMB0.066 Condensed Consolidated Interim Statement of Comprehensive Income (For the Six Months Ended June 30) | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 259,673 | 244,079 | | Cost of Sales | (251,768) | (198,562) | | Gross Profit | 7,905 | 45,517 | | Other Income | 5,203 | 2,837 | | Operating Profit/(Loss) | (39,187) | 9,891 | | Net Finance Costs | (8,669) | (10,032) | | Loss Before Income Tax | (47,856) | (141) | | Income Tax Expense/(Credit) | (1,205) | 1,313 | | Loss/(Profit) for the Period Attributable to Owners of the Company | (49,061) | 1,172 | | Basic and Diluted Loss/Earnings Per Share (RMB) | (0.066) | 0.002 | Condensed Consolidated Interim Statement of Financial Position Key Balance Sheet Data As of June 30, 2025, the Group's total assets were RMB1,129,847 thousand, total liabilities were RMB800,959 thousand, and total equity was RMB328,888 thousand, with non-current assets increasing while current assets and total equity decreased Condensed Consolidated Interim Statement of Financial Position (As of June 30) | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 646,184 | 601,421 | | Current Assets | 483,663 | 531,233 | | Total Assets | 1,129,847 | 1,132,654 | | Equity | | | | Total Equity | 328,888 | 377,949 | | Liabilities | | | | Non-current Liabilities | 279,768 | 150,989 | | Current Liabilities | 521,191 | 603,716 | | Total Liabilities | 800,959 | 754,705 | | Total Equity and Liabilities | 1,129,847 | 1,132,654 | - Non-current assets increased, primarily reflected in an increase in property, plant and equipment[44] - Current assets decreased, mainly due to a reduction in trade receivables and cash and bank balances[44] - Non-current liabilities significantly increased, primarily driven by higher borrowings[46] Condensed Consolidated Interim Statement of Changes in Equity Changes in Shareholders' Equity As of June 30, 2025, total equity attributable to owners of the Company was RMB328,888 thousand, a decrease from RMB377,949 thousand at the beginning of the period, mainly due to a loss of RMB49,061 thousand recorded during the period Condensed Consolidated Interim Statement of Changes in Equity (For the Six Months Ended June 30) | Metric | Share Capital (RMB thousand) | Reserves (RMB thousand) | Retained Earnings/(Accumulated Losses) (RMB thousand) | Total (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | January 1, 2025 | 6,358 | 364,659 | 6,932 | 377,949 | | Loss for the Period | — | — | (49,061) | (49,061) | | June 30, 2025 | 6,358 | 364,659 | (42,129) | 328,888 | | January 1, 2024 | 6,358 | 364,659 | 82,131 | 453,148 | | Profit for the Period | — | — | 1,172 | 1,172 | | June 30, 2024 | 6,358 | 364,659 | 83,303 | 454,320 | - A loss of RMB49,061 thousand was recorded for the current period, leading to a shift from retained earnings to accumulated losses[47] Condensed Consolidated Interim Statement of Cash Flows Key Cash Flow Data For the six months ended June 30, 2025, net cash generated from operating activities was RMB8,262 thousand, net cash used in investing activities was RMB70,506 thousand, and net cash generated from financing activities was RMB58,933 thousand, resulting in a decrease in cash and cash equivalents at the end of the period compared to the beginning Condensed Consolidated Interim Statement of Cash Flows (For the Six Months Ended June 30) | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 8,262 | 53,998 | | Net Cash Used in Investing Activities | (70,506) | (28,874) | | Net Cash Generated from/(Used in) Financing Activities | 58,933 | (24,780) | | Net Decrease/(Increase) in Cash and Cash Equivalents | (3,311) | 344 | | Cash and Cash Equivalents at End of Period | 15,705 | 26,212 | - Net cash generated from operating activities significantly decreased, while net cash used in investing activities substantially increased[49] - Financing activities shifted from a net cash outflow in the prior period to a net cash inflow in the current period, primarily due to an increase in proceeds from bank borrowings[49] Notes to the Condensed Consolidated Interim Financial Statements 1. General Information of the Group The Company was incorporated in the Cayman Islands on November 14, 2018, primarily engaged in the manufacturing and sale of ready-mixed concrete and precast concrete components in China, and since 2022, in eco-friendly bricks and iron ore tailings recycling, with its shares listed on the Main Board of the Hong Kong Stock Exchange since March 26, 2021 - The Company was incorporated in the Cayman Islands on November 14, 2018[50] - Principal businesses include manufacturing and sale of ready-mixed concrete and precast concrete components, as well as eco-friendly bricks and iron ore tailings recycling[50] - The Company's shares have been listed on the Main Board of the Hong Kong Stock Exchange since March 26, 2021[51] 2. Basis of Preparation The condensed consolidated interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2024 - The financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting"[55] - They should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2024[55] 3. Significant Accounting Policies The accounting policies adopted for the current period are consistent with those of the previous year, except for the adoption of new and revised standards, such as HKAS 21 (Amendment) "Lack of Exchangeability," and management is currently assessing the full impact of new and revised standards not yet effective, such as HKFRS 18 - The current period adopted HKAS 21 (Amendment) "Lack of Exchangeability," effective from January 1, 2025[57][58] - Management is assessing the impact of new and revised standards not yet effective, including HKFRS 18 "Presentation and Disclosure in Financial Statements" (effective January 1, 2027)[59] 4. Estimates The preparation of interim financial statements requires management to make judgments, estimates, and assumptions, and actual results may differ from these estimates, with significant judgments and sources of estimation uncertainty remaining consistent with the prior year - The preparation of interim financial statements involves management judgments, estimates, and assumptions, and actual results may differ[60] - Significant judgments and sources of estimation uncertainty for the current period are consistent with the prior year[60] 5. Financial Risk Management The Group faces market risks (foreign exchange and interest rate risks), credit risk, and liquidity risk, with risk management policies unchanged since the prior year-end, credit risk primarily related to cash, bank balances, and trade receivables, measured using a simplified approach for expected credit losses, and liquidity risk managed by analyzing contractual maturities of non-derivative financial liabilities, while the carrying amounts of liquid financial assets and liabilities approximate their fair values 5.1 Financial Risk Factors The Group faces market risk, credit risk, and liquidity risk, with credit risk primarily arising from cash and bank balances and trade receivables, for which expected credit losses are measured using the simplified approach under HKFRS 9, grouped by overdue days and customer credit risk characteristics, and total loss allowance for trade receivables was RMB32,885 thousand as of June 30, 2025 - The Group's risk management program aims to minimize the adverse effects of financial market unpredictability on financial performance[61] - Credit risk for trade receivables is measured using the simplified approach under HKFRS 9 for expected credit losses[66] Loss Allowance for Trade Receivables (As of June 30) | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Gross Carrying Amount | 408,621 | 422,274 | | Total Loss Allowance | 32,885 | 31,291 | 5.2 Fair Value Estimation of Financial Assets and Liabilities Measured at Amortized Cost The carrying amounts of the Group's current financial assets and liabilities approximate their fair values due to their short-term nature - The carrying amounts of current financial assets and liabilities approximate their fair values due to their short-term nature[71] 6. Segment Information The Group's operations are divided into three segments: ready-mixed concrete, precast concrete components, and recycled iron ore tailings and bricks, with ready-mixed concrete and precast concrete components segments recording losses, while the recycled iron ore tailings and bricks segment recorded a profit, and contract liabilities are primarily related to recycled iron ore tailings and bricks and ready-mixed concrete businesses 6(a) Segment Information of the Group For the six months ended June 30, 2025, the ready-mixed concrete segment reported revenue of RMB148,220 thousand and a gross loss of RMB19,268 thousand, the precast concrete components segment reported revenue of RMB870 thousand and a gross profit of RMB330 thousand but a segment loss of RMB10,371 thousand, and the recycled iron ore tailings and bricks segment reported revenue of RMB110,583 thousand, a gross profit of RMB26,843 thousand, and a segment profit of RMB11,933 thousand Segment Results (For the Six Months Ended June 30) | Segment | 2025 Revenue (RMB thousand) | 2025 Gross Profit (RMB thousand) | 2025 Segment Result (RMB thousand) | | :--- | :--- | :--- | :--- | | Ready-mixed Concrete | 148,220 | (19,268) | (39,124) | | Precast Concrete Components | 870 | 330 | (10,371) | | Recycled Iron Ore Tailings and Bricks | 110,583 | 26,843 | 11,933 | | Total | 259,673 | 7,905 | (37,562) | - The ready-mixed concrete segment shifting from a gross profit in the prior period to a gross loss in the current period is the main reason for the overall gross profit decline[75] - The recycled iron ore tailings and bricks segment continues to contribute positive gross profit and segment results[75] 6(b) Contract Liabilities As of June 30, 2025, total contract liabilities amounted to RMB7,156 thousand, primarily arising from the recycled iron ore tailings and bricks and ready-mixed concrete businesses, with RMB4,255 thousand of revenue recognized during the period related to the opening balance of contract liabilities Contract Liabilities (As of June 30) | Business Segment | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Recycled Iron Ore Tailings and Bricks | 469 | 3,732 | | Precast Concrete Components | 100 | — | | Ready-mixed Concrete | 6,587 | 1,321 | | Total | 7,156 | 5,053 | Revenue Recognized Related to Contract Liabilities (For the Six Months Ended June 30) | Business Segment | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Ready-mixed Concrete | 975 | 233 | | Precast Concrete Components | — | 320 | | Recycled Iron Ore Tailings and Bricks | 3,280 | 2,427 | | Total | 4,255 | 2,980 | 7. Expenses by Nature For the six months ended June 30, 2025, the Group's total expenses were RMB300,868 thousand, an increase from the prior period, with raw materials and consumables used, employee benefit expenses, and transportation expenses being the main components Expenses by Nature (For the Six Months Ended June 30) | Expense Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Raw Materials and Consumables Used | 195,381 | 126,214 | | Employee Benefit Expenses | 28,220 | 27,645 | | Outsourcing Service Fees | 16,949 | 18,101 | | Depreciation of Property, Plant and Equipment | 15,375 | 15,637 | | Transportation Expenses | 16,758 | 17,232 | | Utilities | 7,938 | 10,897 | | Total | 300,868 | 238,131 | - The significant increase in raw materials and consumables used was the primary reason for the rise in total expenses[80] 8. Income Tax Expense/(Credit) For the six months ended June 30, 2025, the Group's income tax expense was RMB1,205 thousand, compared to an income tax credit of RMB1,313 thousand in the prior period, with China corporate income tax at 25% and some subsidiaries enjoying a preferential rate of 15%, and no provision for China withholding income tax made for the period Income Tax Expense/(Credit) (For the Six Months Ended June 30) | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Current Income Tax — China Income Tax | 1,274 | (1,868) | | Deferred Income Tax | (69) | 555 | | Income Tax Expense/(Credit) | 1,205 | (1,313) | - China corporate income tax rate is 25%, with some subsidiaries enjoying a preferential tax rate of 15%[84] - No provision for China withholding income tax was made for the period, as the parent company can control the timing of distributions from its subsidiaries[84] 9. Basic and Diluted Loss/Earnings Per Share For the six months ended June 30, 2025, basic loss per share attributable to owners of the Company was RMB0.066, compared to basic earnings per share of RMB0.002 in the prior period, with diluted loss per share being the same as basic loss per share due to no potential dilutive ordinary shares Basic Loss/Earnings Per Share (For the Six Months Ended June 30) | Metric | 2025 (RMB) | 2024 (RMB) | | :--- | :--- | :--- | | Basic Loss/Earnings Per Share | (0.066) | 0.002 | - The weighted average number of ordinary shares in issue was 748,000,000 shares[86] - Diluted earnings per share is the same as basic earnings per share due to no potential dilutive ordinary shares for the period[87] 10. Dividends No dividends were paid, declared, or proposed for the six months ended June 30, 2025 - No dividends were paid, declared, or proposed for the period[88] 11. Property, Plant and Equipment, Right-of-Use Assets, Investment Properties and Intangible Assets As of June 30, 2025, the carrying amount of property, plant and equipment increased to RMB456,253 thousand, primarily due to additions, while right-of-use assets, investment properties, and intangible assets remained relatively stable, and some of the Group's assets are pledged as security for borrowings Non-current Asset Movements (As of June 30) | Metric | Property, Plant and Equipment (RMB thousand) | Right-of-Use Assets (RMB thousand) | Investment Properties (RMB thousand) | Intangible Assets (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | January 1, 2025 | 412,302 | 100,367 | 31,085 | 39,403 | | Additions | 60,758 | — | — | 19 | | Depreciation/Amortization | (15,375) | (1,695) | (557) | (17) | | June 30, 2025 | 456,253 | 98,672 | 30,528 | 39,405 | - Additions to property, plant and equipment amounted to RMB60,758 thousand[89] - The Group has pledged certain assets as security for borrowings[89] 12. Inventories As of June 30, 2025, total inventories amounted to RMB18,521 thousand, slightly lower than the prior year-end, with an impairment provision for inventories of RMB1,410 thousand Inventory Composition (As of June 30) | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Raw Materials | 13,047 | 12,702 | | Finished Goods | 6,884 | 7,892 | | Less: Impairment Provision for Inventories | (1,410) | (1,601) | | Total | 18,521 | 18,993 | - The impairment provision for inventories at the end of the period was RMB1,410 thousand[90] 13. Trade Receivables As of June 30, 2025, total trade receivables amounted to RMB413,619 thousand, a decrease from the prior year-end, comprising current trade receivables of RMB403,782 thousand and non-current retention receivables of RMB9,837 thousand, with the majority of trade receivables aged within one year Trade Receivables (As of June 30) | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Current Trade Receivables | 403,782 | 451,217 | | Non-current Retention Receivables | 9,837 | 13,810 | | Total | 413,619 | 465,027 | - The carrying amount of trade receivables includes receivables subject to factoring arrangements of RMB49,890 thousand[92] Aging Analysis of Trade Receivables (As of June 30) | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within 1 Year | 261,330 | 261,204 | | 1 to 2 Years | 51,130 | 74,880 | | 2 to 3 Years | 71,449 | 99,729 | | Over 3 Years | 62,595 | 60,505 | | Total | 446,504 | 496,318 | 14. Prepayments, Deposits and Other Receivables As of June 30, 2025, total prepayments, deposits, and other receivables amounted to RMB45,655 thousand, an increase from the prior year-end, primarily due to an increase in prepayments for raw materials and operating expenses Prepayments, Deposits and Other Receivables (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Prepayments for Raw Materials and Operating Expenses | 15,100 | 12,796 | | Recoverable Deductible VAT | 7,430 | 6,973 | | Rental Receivables | 4,089 | 4,840 | | Refundable Deposits | 10,110 | 9,285 | | Other Receivables | 8,926 | 8,093 | | Total | 45,655 | 41,987 | 15. Cash and Bank Balances As of June 30, 2025, cash and bank balances amounted to RMB15,705 thousand, a decrease from the prior year-end, with restricted bank balances pledged for the issuance of bills payable Cash and Bank Balances (As of June 30) | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Cash on Hand and at Bank | 15,705 | 19,036 | - Restricted bank balances have been pledged for the issuance of bills payable[95] 16. Share Capital As of June 30, 2025, the Company's authorized share capital was 3,000,000,000 shares, and issued share capital was 748,000,000 shares, with a share capital amount of RMB6,358 thousand, remaining unchanged from the beginning of the period Share Capital Status (As of June 30) | Metric | Number of Ordinary Shares | Share Capital (RMB thousand) | | :--- | :--- | :--- | | Authorized Share Capital | 3,000,000,000 | 25,500 | | Issued Share Capital | 748,000,000 | 6,358 | - Issued share capital has remained unchanged since January 1, 2025[96] 17. Reserves As of June 30, 2025, the Group's total reserves amounted to RMB364,659 thousand, including share premium, capital reserve, and statutory reserve, remaining unchanged from the beginning of the period Reserve Composition (From January 1 to June 30, 2025) | Reserve Type | 2025 (RMB thousand) | | :--- | :--- | | Share Premium | 220,966 | | Capital Reserve | 127,135 | | Statutory Reserve | 16,558 | | Total | 364,659 | - Total reserves have remained unchanged since January 1, 2025[96] 18. Trade Payables As of June 30, 2025, total trade payables amounted to RMB322,425 thousand, an increase from the prior year-end, with the majority of payables aged within one year Trade Payables (As of June 30) | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade Payables — Third Parties | 322,425 | 299,173 | Aging Analysis of Trade Payables (As of June 30) | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within One Year | 266,976 | 246,851 | | One to Two Years | 15,555 | 50,035 | | Over Two Years | 39,894 | 2,287 | | Total | 322,425 | 299,173 | 19. Other Payables and Accrued Expenses As of June 30, 2025, total other payables and accrued expenses amounted to RMB70,362 thousand, largely consistent with the prior year-end, primarily including payables for property, plant and equipment purchases and amounts due to related parties Other Payables and Accrued Expenses (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Payables for Purchase of Property, Plant and Equipment | 31,972 | 31,079 | | Amounts Due to Related Parties | 16,605 | 7,919 | | Accrued Operating Expenses | 9,691 | 10,432 | | Employee Benefit Payables | 2,903 | 7,138 | | Other Tax Payables | 3,436 | 6,336 | | Others | 5,755 | 7,060 | | Total | 70,362 | 69,964 | 20. Borrowings As of June 30, 2025, the Group's total borrowings amounted to RMB381,300 thousand, with a significant increase in non-current borrowings, and bank borrowings are secured by company assets, subsidiary equity, and related party guarantees, while the Group has RMB248,640 thousand in undrawn borrowing facilities 20(a) Bank Borrowings As of June 30, 2025, total bank borrowings amounted to RMB381,300 thousand, including secured borrowings of RMB331,410 thousand and factoring borrowings of RMB49,890 thousand, with borrowings secured by the Group's assets, subsidiary equity, and related parties Borrowing Composition (As of June 30) | Type | June 30, 2025 Current (RMB thousand) | June 30, 2025 Non-current (RMB thousand) | June 30, 2025 Total (RMB thousand) | | :--- | :--- | :--- | :--- | | Bank Borrowings — Secured | 71,200 | 260,210 | 331,410 | | Bank Borrowings — Factoring | 49,890 | — | 49,890 | | Total Borrowings | 121,090 | 260,210 | 381,300 | - Secured bank borrowings are pledged by property, plant and equipment, construction in progress, right-of-use assets, investment properties, and transferred receivables[100][101] 20(b) Repayment Schedule As of June 30, 2025, the Group's total borrowings amounted to RMB381,300 thousand, of which RMB121,090 thousand are repayable within one year, and the majority of borrowings (RMB190,310 thousand) are repayable after three years Borrowing Repayment Schedule (As of June 30) | Repayment Period | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Within One Year | 121,090 | 227,698 | | One to Two Years | 25,000 | 16,058 | | Two to Three Years | 44,900 | 19,980 | | Over Three Years | 190,310 | 96,653 | | Total | 381,300 | 360,389 | 20(c) Undrawn Borrowing Facilities As of June 30, 2025, the Group had RMB248,640 thousand in undrawn borrowing facilities, all of which are floating-rate bank borrowings maturing within one year Undrawn Borrowing Facilities (As of June 30) | Maturity Period | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Maturing Within One Year | 248,640 | 800 | | Maturing One to Two Years | — | 25,550 | | Maturing Two to Three Years | — | — | | Maturing After Three Years | — | 187 | | Total | 248,640 | 26,537 | 21. Commitments As of June 30, 2025, the Group's total capital commitments amounted to RMB451,719 thousand, all of which were contracted but not provided for property, plant and equipment 21(a) Capital Commitments As of June 30, 2025, the Group's capital commitments for property, plant and equipment, contracted but not provided for, amounted to RMB451,719 thousand, a significant increase from RMB115,447 thousand at the prior year-end Capital Expenditure Commitments (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Contracted but not Provided For — Property, Plant and Equipment | 451,719 | 115,447 | | Authorized but not Provided For — Property, Plant and Equipment | — | 288,805 | | Total | 451,719 | 404,252 | 22. Related Party Transactions During the period, there were advance transactions with Mr. Ye Zhijie, and amounts payable to Mr. Ye Zhijie and Mr. Huang Kaining as related party balances, with key management compensation totaling RMB1,645 thousand 22(a) Transactions with Related Parties For the six months ended June 30, 2025, the Group received advances of RMB8,686 thousand from Mr. Ye Zhijie, compared to repayments of RMB1,553 thousand in the prior period Transactions with Related Parties (For the Six Months Ended June 30) | Related Party | 2025 Advances from/(Repayments to) (RMB thousand) | 2024 Advances from/(Repayments to) (RMB thousand) | | :--- | :--- | :--- | | Mr. Ye Zhijie | 8,686 | (1,553) | 22(b) Balances with Related Parties As of June 30, 2025, amounts payable to Mr. Ye Zhijie were RMB9,233 thousand and to Mr. Huang Kaining were RMB7,372 thousand, both being unsecured, interest-free, and repayable on demand related party advances Balances with Related Parties (As of June 30) | Related Party | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Mr. Ye Zhijie | 9,233 | 547 | | Mr. Huang Kaining | 7,372 | 7,372 | | Total | 16,605 | 7,919 | - Amounts due to related parties are unsecured, interest-free, and repayable on demand advances, used to supplement working capital needs[105] 22(c) Key Management Compensation For the six months ended June 30, 2025, key management compensation amounted to RMB1,645 thousand, a decrease from the prior period Key Management Compensation (For the Six Months Ended June 30) | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Key Management Compensation | 1,645 | 2,144 | Corporate Governance and Other Information Compliance with Corporate Governance Code The Board is committed to establishing sound corporate governance principles and confirms the Company's compliance with the principles and provisions of the Corporate Governance Code during the period - The Board is committed to establishing sound corporate governance principles and practices[107] - The Company has complied with the principles and provisions of the Corporate Governance Code[108] Standard Securities Dealing Code for Directors and Chief Executive The Company has adopted a code of conduct for directors' securities transactions no less exacting than the Model Code and confirms that directors have complied with it during the period, also adopting the Model Code as the standard for relevant employees' dealings in company securities - The Company has adopted a code of conduct for directors' securities transactions no less exacting than the Model Code[109] - Directors confirm compliance with the Model Code and relevant codes of conduct[109] Directors' and Chief Executive's Interests in Shares of the Company and its Associated Corporations As of June 30, 2025, Mr. Ye Zhijie held 36.73% of shares through controlled corporations, Mr. Huang Wengui held 16.25% through controlled corporations, and Mr. Lai Quanshui, Mr. Qiu Limiao, and Mr. Ye Dan held small beneficial interests, with no other disclosable interests or short positions during the period Directors' Interests in Shares of the Company (As of June 30) | Director | Nature of Interest | Number of Shares Interested | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Ye Zhijie | Interest in controlled corporation | 274,706,100 (L) | 36.73% | | Mr. Huang Wengui | Interest in controlled corporation | 121,568,700 (L) | 16.25% | | Mr. Lai Quanshui | Beneficial interest | 10,000,000 (L) | 1.34% | | Mr. Qiu Limiao | Beneficial interest | 56,000 (L) | 0.01% | | Mr. Ye Dan | Beneficial interest | 50,000 (L) | 0.01% | - Mr. Ye Zhijie is the sole shareholder of Zhixin Investment Holdings Limited, and Mr. Huang Wengui is the sole shareholder of Yaohao Holdings Limited[113] Major Shareholders' Interests in Shares and Underlying Shares of the Company As of June 30, 2025, Zhixin Investment Holdings Limited held 36.73% of shares, and Yaohao Holdings Limited held 16.25% of shares, with the spouses of Mr. Ye Zhijie and Mr. Huang Wengui deemed to have the same share interests due to spousal interests, and Huatai Securities Co., Ltd. and its subsidiaries collectively held 5.04% of shares Major Shareholders' Long Positions in Shares of the Company (As of June 30) | Name/Designation | Nature of Interest | Number of Shares Interested | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Zhixin Investment Holdings Limited | Beneficial interest | 274,706,100 | 36.73% | | Ms. Hong Wei | Spouse's interest | 274,706,100 | 36.73% | | Yaohao Holdings Limited | Beneficial interest | 121,568,700 | 16.25% | | Ms. Lin Lingling | Spouse's interest | 121,568,700 | 16.25% | | Huatai Securities Co., Ltd. | Interest in controlled corporation | 37,718,000 | 5.04% | | Huatai International Financial Holdings Company Limited | Interest in controlled corporation | 37,718,000 | 5.04% | | Huatai Financial Holdings (Hong Kong) Limited | Beneficial interest | 37,718,000 | 5.04% | - Ms. Hong Wei is the spouse of Mr. Ye Zhijie, and Ms. Lin Lingling is the spouse of Mr. Huang Wengui, and are deemed to have interests under the Securities and Futures Ordinance[117] - Huatai Securities Co., Ltd. holds shares through its wholly-owned subsidiaries Huatai International Financial Holdings Company Limited and Huatai Financial Holdings (Hong Kong) Limited[117] Changes in Directors and Competing Business Interests There were no changes in directors during the period, and no director had any interest in any business that competes or is likely to compete, directly or indirectly, with the Group's business - There were no changes in directors during the period[118] - No director had any interest in any business that competes with the Group's business[119] Purchase, Sale or Redemption of Listed Securities During the period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - Neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period[120] Review of Interim Financial Statements and Dividends The Company's interim financial statements have been reviewed by the Review Committee, and the Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The interim financial statements have been reviewed by the Review Committee[121] - The Board does not recommend the payment of an interim dividend for the period[122] Glossary Definitions of Terms in the Report This section provides definitions for key terms and abbreviations used in this interim report to ensure a clear understanding of its content - This section defines key terms used in the report, such as "Review Committee," "Board," "Company," and "Group"[123]