芯智控股(02166) - 2025 - 中期业绩

Financial Highlights The company reported a 6.6% increase in total revenue and a 33.4% rise in net profit attributable to owners for the first half of 2025, with an interim dividend of 3 HK cents per share 2025 First Half Key Financial Data | Metric | 2025 (HK$'000) | 2024 (HK$'000) | Year-on-Year Growth (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 2,796,200 | 2,623,900 | 6.6% | | Gross Profit | 162,200 | 143,400 | 13.1% | | Net Profit Attributable to Owners of the Company | 48,500 | 36,300 | 33.4% | | Basic Earnings Per Share | 10.44 HK cents | 7.73 HK cents | 35.1% | | Diluted Earnings Per Share | 10.38 HK cents | 7.72 HK cents | 34.4% | - The Board resolved to declare an interim dividend of 3 HK cents per share for the six months ended June 30, 2025, which is higher than 2 HK cents per share in the same period of 2024[3] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2025, the Group's revenue increased by 6.6% to HK$2,796.2 million, gross profit grew by 13.1% to HK$162.2 million, and net profit attributable to owners significantly rose by 33.4% to HK$48.5 million, with basic earnings per share increasing to 10.44 HK cents Key Data from Condensed Consolidated Statement of Profit or Loss | Metric | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Revenue | 2,796,194 | 2,623,869 | | Cost of Sales | (2,633,954) | (2,480,450) | | Gross Profit | 162,240 | 143,419 | | Other Income | 11,236 | 9,041 | | Trade Receivables (Impairment Loss)/Reversal of Impairment Loss | (1,913) | 7,748 | | Research and Development Expenses | (17,757) | (16,767) | | Administrative Expenses | (36,370) | (36,060) | | Selling and Distribution Expenses | (57,071) | (51,370) | | Share of Results of Associates | 7,668 | 3,581 | | Finance Costs | (13,001) | (15,730) | | Profit Before Tax | 55,566 | 45,229 | | Income Tax Expense | (7,003) | (8,312) | | Profit for the Period | 48,563 | 36,917 | | Profit Attributable to Owners of the Company | 48,458 | 36,326 | | Non-controlling Interests | 105 | 591 | | Basic Earnings Per Share (HK cents) | 10.44 | 7.73 | | Diluted Earnings Per Share (HK cents) | 10.38 | 7.72 | Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, the Group's profit for the period was HK$48.563 million, with total other comprehensive income of -HK$4.828 million, resulting in a total comprehensive income of HK$54.275 million, a significant increase from the prior year Key Data from Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Profit for the Period | 48,563 | 36,917 | | Other Comprehensive Income: | | | | Exchange differences arising from translation of overseas operations | (5,115) | 5,712 | | Share of other comprehensive income of associates | 287 | – | | Other comprehensive income for the period (net of tax) | (4,828) | 5,712 | | Total Comprehensive Income for the Period | 54,275 | 32,089 | | Total Comprehensive Income Attributable to Owners of the Company | 54,136 | 31,566 | | Non-controlling Interests | 139 | 523 | Condensed Consolidated Statement of Financial Position As of June 30, 2025, the Group's total net assets increased to HK$968.511 million, with current assets significantly rising to HK$1,901.506 million driven by inventory and trade receivables growth, while current liabilities also increased, leading to a decrease in the current ratio from 1.84 times to 1.47 times Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Non-current Assets | | | | Property, Plant and Equipment | 5,379 | 6,083 | | Right-of-use Assets | 6,313 | 9,368 | | Goodwill | 20,159 | 20,159 | | Intangible Assets | 4,728 | 4,737 | | Investments in Associates | 129,443 | 121,011 | | Deferred Tax Assets | 1,697 | 1,304 | | Total Non-current Assets | 362,532 | 354,841 | | Current Assets | | | | Inventories | 421,562 | 190,118 | | Trade and Bills Receivables | 1,114,965 | 658,354 | | Bank and Cash Balances | 160,204 | 239,455 | | Total Current Assets | 1,901,506 | 1,339,075 | | Current Liabilities | | | | Trade and Bills Payables | 580,252 | 341,874 | | Bank and Other Borrowings | 605,303 | 303,659 | | Total Current Liabilities | 1,293,007 | 728,941 | | Non-current Liabilities | | | | Lease Liabilities | 2,669 | 546 | | Bank and Other Borrowings | 2,530 | 1,974 | | Total Non-current Liabilities | 5,199 | 2,520 | | Total Equity | | | | Equity Attributable to Owners of the Company | 967,928 | 959,332 | | Non-controlling Interests | 444 | 583 | | Total Equity | 968,511 | 959,776 | - As of June 30, 2025, the current ratio decreased from 1.84 times as of December 31, 2024, to 1.47 times[69] Notes to the Condensed Consolidated Financial Statements 1. Basis of Preparation The condensed consolidated financial statements are prepared in accordance with HKAS 34 "Interim Financial Reporting" and the Listing Rules, adopting consistent accounting policies and methods as the 2024 annual financial statements - The condensed consolidated financial statements are prepared in accordance with HKAS 34 and the Listing Rules, adopting consistent accounting policies and methods as the 2024 annual financial statements[10] 2. New and Revised Hong Kong Financial Reporting Standards The Group first applied the amendments to HKAS 21 "Lack of Exchangeability" from January 1, 2025, which did not result in changes to accounting policies or retrospective adjustments - The Group first applied the amendments to HKAS 21 "Lack of Exchangeability" from January 1, 2025, but this adoption did not change accounting policies or require retrospective adjustments[11] 3. Segment Information The Group's key operating decision-makers (Directors) review internal reports based on product categories, identifying authorized distribution and hybrid distribution as two reportable segments, with segment profit used for resource allocation and performance assessment, excluding unallocated expenses, share of results of associates, and fair value gains on financial assets Information on Reportable Segment Profit or Loss Reportable Segment Profit or Loss Data | Metric | 2025 Authorized Distribution (HK$'000) | 2025 Hybrid Distribution (HK$'000) | 2025 Total (HK$'000) | 2024 Authorized Distribution (HK$'000) | 2024 Hybrid Distribution (HK$'000) | 2024 Total (HK$'000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue from External Customers | 2,754,011 | 42,183 | 2,796,194 | 2,597,847 | 26,022 | 2,623,869 | | Segment Profit | 40,657 | 5,328 | 45,985 | 31,092 | 2,473 | 33,565 | Reconciliation of Consolidated Profit for the Period to Segment Profit | Metric | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Total Reportable Segment Profit | 45,985 | 33,565 | | Unallocated Expenses | (6,648) | (1,682) | | Fair Value Gain on Financial Assets at Fair Value Through Profit or Loss | 1,558 | 1,453 | | Share of Results of Associates | 7,668 | 3,581 | | Consolidated Profit for the Period | 48,563 | 36,917 | Geographical Information Revenue from External Customers (by Operating Location) | Region | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Hong Kong | 1,432,163 | 1,322,132 | | China | 941,204 | 879,383 | | Singapore | 414,791 | 416,603 | | Japan | 506 | 70 | | Others | 7,530 | 5,681 | | Consolidated Total | 2,796,194 | 2,623,869 | 4. Revenue The Group's revenue primarily derives from the sale of electronic components, totaling HK$2,796.194 million for the six months ended June 30, 2025, all recognized at a point in time, with authorized distribution being the main source, showing significant growth in optoelectronic display, communication products, and optical communication businesses, while storage products and smart display businesses experienced a decline Disaggregation of Revenue from Contracts with Customers | Category of Goods or Services/Sales Channel | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Sale of Electronic Components | 2,796,194 | 2,623,869 | | Timing of Revenue Recognition: | | | | At a point in time | 2,796,194 | 2,623,869 | | Sales Channel/Product Line: | | | | Authorized Distribution | | | | — Optoelectronic Display | 500,380 | 329,107 | | — Storage Products | 553,555 | 645,724 | | — Communication Products | 404,330 | 277,050 | | — Smart Vision | 593,557 | 551,212 | | — Smart Display | 334,129 | 444,514 | | — Optical Communication | 211,136 | 170,966 | | — Others | 156,924 | 179,274 | | Hybrid Distribution | 42,183 | 26,022 | - Revenue from the sale of electronic components is recognized when control of the goods is transferred (i.e., when goods are delivered to the port of delivery specified in the sales agreement or to the customer's designated location), with a general credit period of 0 to 120 days after delivery[20] 5. Income Tax Expense For the six months ended June 30, 2025, the Group's income tax expense was HK$7.003 million, a decrease from HK$8.312 million in the prior year, primarily comprising Hong Kong profits tax, PRC enterprise income tax, and Singapore enterprise income tax Composition of Income Tax Expense | Tax Category | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Current Tax | | | | Hong Kong Profits Tax | 4,247 | 6,282 | | PRC Enterprise Income Tax | 2,246 | 353 | | Singapore Enterprise Income Tax | 669 | 507 | | Others | 81 | – | | Total Current Tax | 7,000 | 7,385 | | Deferred Tax | 1,312 | (382) | | Total Income Tax Expense | 8,312 | 7,003 | 6. Profit for the Period The Group's profit for the period is stated after deducting total staff costs of HK$62.050 million (an 8.9% year-on-year increase), amortization of intangible assets, depreciation of property, plant and equipment, depreciation of right-of-use assets, and cost of inventories, with discretionary bonuses significantly increasing by 90.0% to HK$19.478 million Items Deducted in Arriving at Profit for the Period | Item | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Total Staff Costs | 62,050 | 56,958 | | - Salaries, wages and other allowances | 36,143 | 39,966 | | - Discretionary bonuses | 19,478 | 10,278 | | - Contributions to retirement benefit schemes | 6,429 | 6,714 | | Amortization of intangible assets (included in selling and distribution expenses) | 790 | 790 | | Depreciation of property, plant and equipment | 1,176 | 1,047 | | Depreciation of right-of-use assets | 4,577 | 4,747 | | Cost of inventories recognized as an expense (excluding inventory provision) | 2,624,272 | 2,474,796 | | Provision for inventories (included in cost of sales) | 9,682 | 5,654 | 7. Dividends During the interim period, a final dividend of 10 HK cents per share, totaling HK$46.109 million, was declared and paid to owners of the company, and the Board resolved to declare an interim dividend of 3 HK cents per share, totaling HK$14.660 million, for 2025, exceeding the 2 HK cents per share in the prior year - A final dividend of 10 HK cents per share, totaling HK$46.109 million, for the year ended December 31, 2024, was declared and paid to owners of the company (2024: 5 HK cents per share, totaling HK$23.469 million, for the year ended December 31, 2023)[23] - The Board resolved to declare an interim dividend of 3 HK cents per share for the six months ended June 30, 2025 (2024: 2 HK cents per share), totaling HK$14.660 million (2024: HK$9.774 million)[23] 8. Earnings Per Share For the six months ended June 30, 2025, basic earnings per share were 10.44 HK cents and diluted earnings per share were 10.38 HK cents, both showing an increase from the prior year, with earnings per share calculated based on profit attributable to owners of the company and the weighted average number of ordinary shares Earnings Per Share Calculation Data | Metric | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Profit attributable to owners of the Company | 48,458 | 36,326 | | Number of Shares | | | | Weighted average number of ordinary shares for basic earnings per share | 464,017,770 | 469,780,068 | | Effect of potential dilutive ordinary shares arising from restricted share units | 2,972,376 | 1,000,000 | | Weighted average number of ordinary shares for diluted earnings per share | 466,990,146 | 470,780,068 | 9. Trade and Bills Receivables As of June 30, 2025, trade receivables (net of allowance for credit losses) amounted to HK$1,094.718 million, with the majority being current, and bills receivables totaled HK$20.247 million, while the Group's credit period generally ranges from 0 to 120 days, with strict monitoring of outstanding receivables Ageing Analysis of Trade and Bills Receivables | Ageing | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Trade Receivables: | | | | Not yet due | 1,021,522 | 599,910 | | 0–60 days | 73,150 | 44,189 | | 61–120 days | 46 | 836 | | Over 120 days | – | 2 | | Total Trade Receivables | 1,094,718 | 644,937 | | Bills Receivables: | | | | 0–60 days | 20,247 | 13,417 | - As of June 30, 2025, trade receivables of HK$381.663 million and bills receivables of HK$20.247 million were discounted to banks on a full recourse basis[27] 10. Trade and Bills Payables As of June 30, 2025, total trade and bills payables significantly increased to HK$580.252 million from HK$341.874 million as of December 31, 2024, with a credit period ranging from 0 to 60 days, and the 0-30 day ageing category accounting for the largest proportion Ageing Analysis of Trade and Bills Payables | Ageing | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | 0–30 days | 511,747 | 274,623 | | 31–60 days | 43,000 | 48,047 | | 61–90 days | 14,323 | 11,980 | | Over 90 days | 11,182 | 7,224 | | Total | 580,252 | 341,874 | - The credit period for trade payables ranges from 0 to 60 days[28] 11. Bank and Other Borrowings As of June 30, 2025, the Group's total bank and other borrowings significantly increased to HK$607.277 million from HK$306.189 million as of December 31, 2024, primarily comprising secured bank loans and secured bank supplier financing arrangements Composition of Bank and Other Borrowings | Borrowing Category | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Secured bank loans | 280,510 | 95,540 | | Secured bank supplier financing arrangements | 321,329 | 205,305 | | Other borrowings (secured) | 5,438 | 5,344 | | Total | 607,277 | 306,189 | Repayment Schedule of Bank and Other Borrowings | Repayment Period | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Within one year | 81,573 | 50,121 | | Over one year but not exceeding two years | 1,106 | 1,126 | | Over two years but not exceeding five years | 868 | 1,404 | | Total | 83,547 | 52,651 | | Portion of bank and other borrowings with repayment on demand clause (presented under current liabilities) | 523,730 | 253,538 | | Total | 607,277 | 306,189 | | Less: Amounts settled within 12 months (presented under current liabilities) | (605,303) | (303,659) | | Amounts settled after 12 months | 1,974 | 2,530 | Management Discussion and Analysis Business Review In the first half of 2025, the global economy faced high volatility, low growth, and strong divergence, yet China's economy showed resilience, with AI technology penetration and emerging market demand driving a slight increase in the consumer electronics market and rapid development in the semiconductor industry due to the AI computing power revolution, leading the Group to actively adjust its business layout and achieve total sales of HK$2,796.2 million, a 6.6% year-on-year increase, and gross profit of HK$162.2 million, a 13.1% year-on-year increase Overall Economic and Industry Environment - The 2025 global economic growth forecast was revised downwards from 2.8% to 2.4%, with global merchandise trade volume expected to shrink by 0.2%, and North America being the most affected region[33] - In the first half of 2025, China's GDP grew by 5.3% year-on-year, foreign trade exports maintained steady growth, high-end manufacturing performed outstandingly, and overall freight exports increased by 7.2%[34] - Driven by AI technology penetration, growing demand in emerging markets, and pro-consumption policies, the global consumer electronics market saw a slight overall increase in Q1 2025[35] - From January to May 2025, the global semiconductor market size accumulated to US$283.3 billion, a year-on-year increase of 20.5%, with sales growth in the Americas reaching 45.2%[36] Company Strategy Adjustment and Performance - The company made targeted adjustments and deployments, including actively expanding business areas highly related to AI infrastructure and applications, such as optical module devices, robot vacuum cleaners, edge AI SoCs, and algorithm applications, while optimizing consumer electronics business[37] Group Overall Performance | Metric | 2025 First Half (HK$ Million) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Sales | 2,796.2 | 6.6% | | Gross Profit | 162.2 | 13.1% | Smart Vision Smart Vision business focuses on core scenarios such as smart vision, anti-theft alarms, and access control, providing chips and full-stack technical solutions, and enhancing prevention and control efficiency and expanding application scenarios through AI algorithms - The Smart Vision business focuses on core scenarios such as smart vision, anti-theft alarms, and access control, providing chips and full-stack technical solutions, and enhancing prevention and control efficiency and expanding application scenarios through AI algorithms[37] Smart Vision Business Sales | Metric | 2025 First Half (HK$ Million) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Sales | 593.6 | 7.7% | Optoelectronic Display The Optoelectronic Display business primarily sells driver, TCON, and power chips used in monitors, commercial displays, TV LCD modules, laptop screens, and mobile phone display modules, benefiting from strong demand for large-sized TV panels stimulated by China's "national subsidy policy" - The Optoelectronic Display business primarily sells driver, TCON, and power chips used in monitors, commercial displays, TV LCD modules, laptop screens, and mobile phone display modules[38] - Benefiting from China's "national subsidy policy" stimulating strong demand for large-sized TV panels, panel shipments increased, driving up demand for display driver chips[38] Optoelectronic Display Business Sales | Metric | 2025 First Half (HK$ Million) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Sales | 500.4 | 52.0% | Storage Products Storage is a core segment of semiconductor chips, with HBM (High Bandwidth Memory) becoming a key growth engine, but traditional consumer electronics DRAM market demand remains weak, leading to underperforming results for this business unit in the first half of the year - Storage is a core segment of semiconductor chips, with HBM (High Bandwidth Memory) becoming a core growth engine, but demand for traditional consumer electronics ordinary DRAM market is weak[39] - The storage chips sold by this business unit are primarily used in the consumer electronics sector, leading to lower-than-expected performance in the first half of the year[39] Storage Products Business Sales | Metric | 2025 First Half (HK$ Million) | Year-on-Year Change (%) | | :--- | :--- | :--- | | Sales | 553.6 | -14.3% | Smart Display The Smart Display business primarily provides SoC main control chips for flat-panel TVs and commercial display products, experiencing a decline in sales in the first half of the year due to increased localization rates of mid-to-low-end SoC chips and client adjustments - The Smart Display business primarily provides SoC main control chips for flat-panel TVs and commercial display products[40] - Sales for this business unit declined in the first half of the year due to increased localization rates of mid-to-low-end SoC chips and client adjustments[40] Smart Display Business Sales | Metric | 2025 First Half (HK$ Million) | Year-on-Year Change (%) | | :--- | :--- | :--- | | Sales | 334.1 | -24.8% | Communication Products In the first half of 2025, the global cellular IoT module market significantly recovered, with RedCap module costs plummeting, driving a 50% surge in shipments, and this business unit's 5G PA and small-capacity MCP shipments maintained stable growth, driven by the RedCap demand explosion and accelerated domestic substitution - In the first half of 2025, the global cellular IoT module market significantly recovered, with RedCap module costs plummeting, driving a 50% surge in shipments[41] - Driven by the dual factors of RedCap demand explosion and accelerated domestic substitution, this business unit's 5G PA and small-capacity MCP shipments maintained stable growth[41] Communication Products Business Sales | Metric | 2025 First Half (HK$ Million) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Sales | 404.3 | 45.9% | Optical Communication In the first half of 2025, the global optical communication module market, particularly data center optical modules, showed strong growth driven by the explosion of AI computing power demand, continuous expansion of data centers, and accelerated technological iteration, with 800G optical modules being deployed significantly faster than the previous generation 400G products, becoming the core driver of market growth - In the first half of 2025, the global optical communication module market, especially data center optical modules, showed strong growth driven by the explosion of AI computing power demand, continuous expansion of data centers, and accelerated technological iteration[42] - The deployment speed of 800G optical modules was significantly faster than the previous generation 400G products, becoming the core driver of market growth in the first half of the year[42] Optical Communication Business Sales | Metric | 2025 First Half (HK$ Million) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Sales | 211.1 | 23.5% | Hybrid Distribution In the first half of 2025, the semiconductor industry's destocking neared its end, with supply and demand tending towards a weak balance, and terminal customers' demand for spot and urgent orders generally remaining low, yet this business unit achieved stable recovery by actively expanding overseas markets, improving internal data matching transaction mechanisms, and utilizing online and offline synergistic promotion strategies to acquire customers - In the first half of 2025, the semiconductor industry's destocking neared its end, with supply and demand tending towards a weak balance, and terminal customers' demand for spot and urgent orders generally remaining low[43] - This business unit achieved stable recovery by actively expanding overseas markets, improving internal data matching transaction mechanisms, and utilizing online and offline synergistic promotion strategies to acquire customers[43] Hybrid Distribution Business Sales | Metric | 2025 First Half (HK$ Million) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Sales | 42.2 | 62.1% | Outlook Looking ahead to the second half of 2025, the global economy still faces challenges, but the AI-driven semiconductor industry is expected to continue growing, with China's economic development momentum strengthening, and the cultivation of new quality productive forces and consumption upgrades being key growth drivers, leading the Group to maintain a cautiously optimistic outlook for business development in the second half, focusing on expanding new AI application opportunities and continuously expanding the scale of its distribution business Global Economic and Industry Outlook - The 2025 global GDP growth rate was revised downwards from the late 2024 forecast of 2.7%~3.3% to 2.3%~2.4%, marking the lowest level since the 2008 financial crisis[44] - The global electronics industry size is expected to grow by 6.9% to US$2.719 trillion in 2025, with the server/storage market growing by as much as 27.9%[44] - The global semiconductor chip sales target for 2025 was raised to US$700.9 billion (an 11.2% year-on-year increase), and is expected to further grow by 8.5% to US$760.7 billion in 2026, with logic chips and memory becoming core growth engines[44] China Market Outlook - In the first half of 2025, China's GDP grew by 5.3%, exceeding market expectations, leading several foreign institutions to raise their full-year growth forecasts[45] - China's economic growth is driven by the cultivation of new quality productive forces like AI and low-altitude economy, breakthroughs in green and low-carbon technologies stimulating investment, and consumption upgrades unleashing domestic demand potential[45] - China's semiconductor industry is rapidly making breakthroughs supported by policies and capacity expansion, with integrated circuit imports growing by 7.2% year-on-year[45] Overall Business Outlook - Despite structural challenges in the global semiconductor chip industry in the second half of 2025, the outlook is generally clear, and combined with stable growth policies and continuous funding in the domestic market, the Group maintains a cautiously optimistic view on the industry's business development in the second half[46] Smart Vision Outlook In Q1 2025, global smart camera shipments increased by 4.6%, with Asia-Pacific and Latin America showing the fastest growth, and in-car cameras are becoming a core growth engine for the smart vision business, with the global market expected to reach US$27.3 billion in 2025, and single-vehicle installations increasing to 8–12 units, as smart vision applications accelerate penetration into new areas such as smart wearables, smart glasses, 3D industrial vision, in-car, and robotics, leading the Group to be optimistic about achieving its business goals in the second half - In Q1 2025, global smart camera market shipments increased by 4.6% year-on-year, with Asia-Pacific and Latin America markets showing the fastest growth[47] - In-car cameras are becoming the core growth engine for the smart vision business, with the global market expected to reach US$27.3 billion in 2025, and single-vehicle installations increasing to 8–12 units[48] - Smart vision application scenarios are accelerating penetration into new areas such as smart wearables, smart glasses, 3D industrial vision, in-car, and robotics, leading the Group to be optimistic about achieving its business goals in the second half[48] Optoelectronic Display Outlook Omdia forecasts that overall shipments of medium and large-sized panels will increase by 2.6% year-on-year in 2025, a significant slowdown from 2024, but the termination of Windows 10 service and Windows 11's optimization for 4K/HDR displays are expected to drive a rebound in IT panel demand, with the e-sports monitor market also achieving a 12.4% year-on-year growth, leading the Group to maintain a cautiously optimistic outlook for its optoelectronic display business performance in the second half - Omdia expects overall shipments of medium and large-sized panels to increase by 2.6% year-on-year in 2025, a significant slowdown from 2024[49] - The termination of Windows 10 service and Windows 11's optimization for 4K/HDR displays are expected to drive a rebound in IT panel demand, with the e-sports monitor market also achieving a 12.4% year-on-year growth[49] - The Group maintains a cautiously optimistic outlook for its optoelectronic display business performance in the second half[49] Storage Products Outlook The breakthrough of AI large model parameters to the trillion-level will drive a surge in demand for storage chips, with Yole expecting the global storage market size to reach US$200 billion in 2025, and DRAM and Nand flash prices are still expected to rise in the second half, with market demand driven by AI and year-end peak season recovery, but consumer electronics demand remains uncertain, leading this business unit to maintain a cautiously optimistic outlook for its storage products business performance in the second half - The breakthrough of AI large model parameters to the trillion-level will drive a surge in demand for storage chips, with Yole expecting the global storage market size to reach US$200 billion in 2025[50] - DRAM and Nand flash prices are still expected to rise in the second half, with market demand driven by AI and year-end peak season recovery, but consumer electronics demand remains uncertain[50] - This business unit maintains a cautiously optimistic outlook for its storage products business performance in the second half[50] Smart Display Outlook In the second half of 2025, the global TV market is expected to face overall pressure while undergoing structural upgrades, with the Chinese market potentially becoming a significant highlight, as technological upgrades lead structural changes, with 4K/8K TV penetration exceeding 80%, and smart TV picture quality chips + AI large models being the future development trend, but TV shipments may decrease year-on-year in the second half, and new technologies will contribute to business growth but with limited financial impact, leading the Group to maintain a cautious attitude towards achieving its performance goals in the second half - In the second half of 2025, the global TV market is expected to face overall pressure while undergoing structural upgrades, with the Chinese market potentially becoming a significant highlight[51] - Technological upgrades lead structural changes, with 4K/8K TV penetration exceeding 80%, and smart TV picture quality chips + AI large models being the future development trend[52] - TV shipments may decrease year-on-year in the second half, and new technologies will contribute to business growth but with limited financial impact, leading the Group to maintain a cautious attitude towards achieving its performance goals in the second half[52] Communication Products Outlook Emerging markets, stimulated by policy subsidies, will become the main growth driver for the communication market, with large-scale commercialization of 5G RedCap, AI-upgraded smart modules, and vehicle-to-everything (V2X) scenarios being core growth engines, and with rising storage chip prices and volumes, along with increased 4G/5G PA shipments, supporting this business unit's performance in the second half, the Group maintains an optimistic outlook for its performance in the second half - Emerging markets, stimulated by policy subsidies, will become the main growth driver for the communication market, with large-scale commercialization of 5G RedCap, AI-upgraded smart modules, and vehicle-to-everything (V2X) scenarios being core growth engines[53] - With rising storage chip prices and volumes, along with increased 4G/5G PA shipments, supporting this business unit's performance in the second half, the Group maintains an optimistic outlook for its performance in the second half[53] Optical Communication Outlook The growth momentum of the data center optical module market will continue, with the mass production of NVIDIA GB300 servers and Huawei's all-optical interconnection solution driving an explosion in demand for 1.6T and 800G optical modules, and LightCounting expects data center optical component revenue to exceed US$16 billion in 2025, a year-on-year increase of up to 60%, leading the Group to maintain an optimistic outlook for business growth in the second half, benefiting from rapid short-term market demand and a continuously positive long-term market view - The growth momentum of the data center optical module market will continue, with the mass production of NVIDIA GB300 servers and Huawei's all-optical interconnection solution driving an explosion in demand for 1.6T and 800G optical modules[54] - LightCounting expects data center optical component revenue to exceed US$16 billion in 2025, a year-on-year increase of up to 60%[54] - Benefiting from rapid short-term market demand and a continuously positive long-term market view, the Group maintains an optimistic outlook for business growth in the second half[54] Hybrid Distribution Outlook In the second half of 2025, semiconductor industry inventory is expected to return to healthy levels, but supply chain fluctuations will persist, with storage chips continuing to experience shortages and price increases due to AI demand and original factory capacity adjustments, and the year-end peak season will create new structural opportunities, leading this business unit to leverage its self-built data matching transaction system and expand overseas resources, maintaining a cautiously optimistic outlook for achieving its hybrid distribution business goals in the second half - In the second half of 2025, semiconductor industry inventory is expected to return to healthy levels, but supply chain fluctuations will persist, with storage chips continuing to experience shortages and price increases due to AI demand and original factory capacity adjustments[55] - The year-end peak season will create new structural opportunities, and this business unit will leverage its self-built data matching transaction system and expand overseas resources[55] - The Group maintains a cautiously optimistic outlook for achieving its hybrid distribution business goals in the second half[55] Overall Strategic Focus The Group will continue to deepen its authorized distribution, hybrid distribution, value-added technology, and optical communication chip manufacturing layout, improve its domestic and international business network, promote digitalization, and cultivate "all-round" distribution capabilities, with a future focus on expanding new AI application opportunities, paying attention to cross-border payment changes brought by the popularization of digital currencies and stablecoins, continuously expanding the scale of its distribution business, promoting the growth of value-added technology business, and achieving diversified and synergistic business development - The Group will continue to deepen its authorized distribution, hybrid distribution, value-added technology, and optical communication chip manufacturing layout, improve its domestic and international business network, promote digitalization, and cultivate "all-round" distribution capabilities[58] - Future focus will be on expanding new AI application opportunities, paying attention to cross-border payment changes brought by the popularization of digital currencies and stablecoins, continuously expanding the scale of its distribution business, promoting the growth of value-added technology business, and achieving diversified and synergistic business development[58] Financial Review This section provides a detailed review of the Group's financial performance for the first half of 2025, including revenue, gross profit, various expenses, and net profit, comparing them with the prior year and explaining the main reasons for changes Revenue Revenue Performance | Metric | 2025 First Half (HK$ Million) | 2024 First Half (HK$ Million) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Revenue | 2,796.2 | 2,623.9 | 6.6% | - The increase in revenue was primarily due to increased sales from the authorized distribution business[59] Gross Profit Gross Profit Performance | Metric | 2025 First Half (HK$ Million) | 2024 First Half (HK$ Million) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Gross Profit | 162.2 | 143.4 | 13.1% | | Gross Profit Margin | 5.8% | 5.5% | 0.3 percentage points | - The increase in gross profit margin was primarily due to increased sales from the hybrid distribution business[60] Research and Development Expenses Research and Development Expenses | Metric | 2025 First Half (HK$ Million) | 2024 First Half (HK$ Million) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Research and Development Expenses | 17.8 | 16.8 | 5.9% | - The increase in research and development expenses was primarily due to increased staff costs for R&D personnel[61] Administrative, Selling and Distribution Expenses Administrative, Selling and Distribution Expenses | Metric | 2025 First Half (HK$ Million) | 2024 First Half (HK$ Million) | % of Revenue (2025) | % of Revenue (2024) | | :--- | :--- | :--- | :--- | :--- | | Total Expenses | 93.4 | 87.4 | 3.3% | 3.3% | - The increase in expenses was primarily due to increased staff costs for selling and distribution personnel[62] Finance Costs Finance Costs | Metric | 2025 First Half (HK$ Million) | 2024 First Half (HK$ Million) | Year-on-Year Change (%) | | :--- | :--- | :--- | | Finance Costs | 13.0 | 15.7 | -17.2% | - The decrease in finance costs was primarily due to a reduction in bank and other borrowings used for the Group's operations[63] Profit for the Period Profit for the Period Performance | Metric | 2025 First Half (HK$ Million) | 2024 First Half (HK$ Million) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Profit for the Period | 48.6 | 36.9 | 31.5% | | Net Profit Margin | 1.7% | 1.4% | 0.3 percentage points | Profit Attributable to Owners of the Company Profit Attributable to Owners of the Company | Metric | 2025 First Half (HK$ Million) | 2024 First Half (HK$ Million) | Year-on-Year Growth (%) | | :--- | :--- | :--- | | Net Profit | 48.5 | 36.3 | 33.4% | Use of Proceeds from Global Offering The company was listed in 2016, with net proceeds from the global offering of approximately HK$205.8 million, of which approximately HK$181.9 million had been utilized as of June 30, 2025, with the remaining HK$23.9 million primarily allocated for upgrading, further developing, and maintaining the Group's e-commerce platform and improving its technological infrastructure, expected to be fully utilized by December 31, 2025 Overview of Proceeds - The company was listed on October 7, 2016, with net proceeds from the global offering of approximately HK$205.8 million[66] - As of June 30, 2025, approximately HK$181.9 million had been utilized, and the unutilized net proceeds were placed as deposits with banks[66] Detailed Use of Proceeds Details of Use of Proceeds from Global Offering | Use of Proceeds | Net Proceeds (HK$ Million) | Amount Utilized as of June 30, 2025 (HK$ Million) | Remaining Amount (HK$ Million) | Expected Timeline for Utilization of Remaining Net Proceeds | | :--- | :--- | :--- | :--- | :--- | | Recruitment of new staff for sales and marketing and business development, and upgrading of warehouse facilities | 20.6 | 20.6 | 0.0 | – | | Advertising and marketing activities for promoting e-commerce platform, Chip Globe program, and new products | 41.2 | 41.2 | 0.0 | – | | Upgrading, further developing, and maintaining the Group's e-commerce platform and improving technological infrastructure | 41.2 | 17.3 | 23.9 | Expected to be fully utilized by December 31, 2025 | | For research and development | 20.6 | 20.6 | 0.0 | – | | Funding for potential acquisitions or investments in e-commerce or electronics industry businesses or companies | 61.7 | 61.7 | 0.0 | – | | General working capital | 20.5 | 20.5 | 0.0 | – | | Total | 205.8 | 181.9 | 23.9 | | - The timeline for the utilization of net proceeds was delayed due to rapid technological changes, US-China trade tensions, social unrest in Hong Kong, and the COVID-19 pandemic in recent years[70] Liquidity and Financial Resources The Group's primary funding sources are cash from operating activities and bank credit, with total bank and cash balances of HK$328.1 million and outstanding bank and other borrowings of HK$607.3 million as of June 30, 2025, resulting in an increased gearing ratio to 62.7% and a decreased current ratio to 1.47 times, while trade receivables, payables, and inventory turnover periods remained at reasonable levels Cash and Bank Balances Total Bank and Cash Balances | Metric | June 30, 2025 (HK$ Million) | December 31, 2024 (HK$ Million) | | :--- | :--- | :--- | | Total restricted and unrestricted bank and cash balances | 328.1 | 432.3 | Bank and Other Borrowings Outstanding Bank and Other Borrowings | Metric | June 30, 2025 (HK$ Million) | December 31, 2024 (HK$ Million) | | :--- | :--- | :--- | | Outstanding bank and other borrowings | 607.3 | 306.2 | Gearing Ratio | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Gearing Ratio | 62.7% | 31.9% | Bank Facilities and Unused Amounts Bank Facilities and Unused Amounts | Metric | June 30, 2025 (HK$ Million) | December 31, 2024 (HK$ Million) | | :--- | :--- | :--- | | Total bank facilities | 2,601.3 | 2,323.6 | | Unused amounts | 1,994.0 | 2,017.4 | Current Assets and Liabilities Current Assets and Liabilities | Metric | June 30, 2025 (HK$ Million) | December 31, 2024 (HK$ Million) | | :--- | :--- | :--- | | Current Assets | 1,901.5 | 1,339.1 | | Current Liabilities | 1,293.0 | 728.9 | | Current Ratio | 1.47 times | 1.84 times | Trade Receivables Turnover Period Trade Receivables Turnover Period | Metric | 2025 First Half (Days) | 2024 First Half (Days) | | :--- | :--- | :--- | | Trade Receivables Turnover Period | 57 | 53 | Trade Payables Turnover Period Trade Payables Turnover Period | Metric | 2025 First Half (Days) | 2024 First Half (Days) | | :--- | :--- | :--- | | Trade Payables Turnover Period | 32 | 24 | Inventory Turnover Period Inventory Turnover Period | Metric | 2025 First Half (Days) | 2024 First Half (Days) | | :--- | :--- | :--- | | Inventory Turnover Period | 21 | 15 | Foreign Exchange Risk The Group's transactions are primarily denominated in USD and RMB, recording a net exchange loss of approximately HK$1.0 million for the six months ended June 30, 2025, and while currently not adopting a foreign currency hedging policy, it will consider using foreign exchange forward contracts to mitigate significant foreign exchange risks Net Exchange Loss | Metric | 2025 First Half (HK$ Million) | 2024 First Half (HK$ Million) | | :--- | :--- | :--- | | Net Exchange Loss | 1.0 | 0.1 | - The Group currently does not adopt any foreign currency hedging policy but will consider using foreign exchange forward contracts to mitigate significant foreign exchange risks[72] Pledged Assets As of June 30, 2025, the Group had pledged financial assets, factored trade receivables, and bank deposits totaling approximately HK$681.3 million as collateral for bank borrowings and financing arrangements Pledged Assets | Asset Category | June 30, 2025 (HK$ Million) | December 31, 2024 (HK$ Million) | | :--- | :--- | :--- | | Financial assets at fair value through profit or loss | 131.7 | 130.1 | | Factored trade receivables | 381.7 | 99.0 | | Bank deposits | 167.9 | 192.9 | Capital Commitments and Contingent Liabilities As of June 30, 2025, the Group had no significant capital commitments or contingent liabilities - As of June 30, 2025, the Group had no significant capital commitments or contingent liabilities[74] Material Investments Held Except for the disclosed financial assets and investments in associates, the Group held no other material investments during this interim period - Except for the financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income disclosed above, and investments in associates as stated in the condensed consolidated statement of financial position, the Group held no other material investments for the six months ended June 30, 2025[75] Material Acquisitions and Disposals of Subsidiaries and Associates The Group did not undertake any material acquisitions or disposals of subsidiaries and associates for the six months ended June 30, 2025 - The Group did not undertake any material acquisitions or disposals of subsidiaries and associates for the six months ended June 30, 2025[76] Corporate Governance and Other Information Purchase, Sale or Redemption of Listed Securities Neither the company nor any of its subsidiaries purchased, sold, or redeemed any 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 for the six months ended June 30, 2025[77] Events After 30 June 2025 As of the date of this announcement, the Group had no significant post-balance sheet events requiring disclosure after June 30, 2025 - As of the date of this announcement, the Group had no significant post-balance sheet events requiring disclosure after June 30, 2025[78] Compliance with Corporate Governance Code The company has adopted the Corporate Governance Code set out in Appendix C1 of the Listing Rules, and except for Code Provision C.2.1 (separation of roles for Chairman and Chief Executive), the company has complied with all applicable code provisions during the reporting period, with the Board believing that the current arrangement of the same person holding both Chairman and Chief Executive roles ensures internal leadership consistency and efficient strategic planning, and will continue to review this structure - The company has complied with the applicable code provisions of the Corporate Governance Code for the six months ended June 30, 2025, except for Code Provision C.2.1[79] - The company deviates from Code Provision C.2.1 because Mr. Tian Weidong currently holds both the Chairman and Chief Executive roles, and the Board believes this arrangement ensures internal leadership consistency and more effective and efficient overall strategic planning for the Group[80] Standard Securities Dealing Code The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 of the Listing Rules, and all Directors have confirmed full compliance with the Model Code during the reporting period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 of the Listing Rules, and all Directors have confirmed full compliance with the Model Code for the six months ended June 30, 2025[81] Audit Committee The Audit Committee, comprising three independent non-executive Directors, is primarily responsible for reviewing and monitoring the Group's financial reporting process and internal control system, and has reviewed the interim results, discussing financial statements, independent review results, accounting policies, and internal control matters with the auditors and management - The Audit Committee, comprising three independent non-executive Directors, is primarily responsible for reviewing and monitoring the Group's financial reporting process and internal control system[82] - The Audit Committee has reviewed the Group's interim results for the six months ended June 30, 2025, and discussed relevant matters with the external auditors and management[82] Publication of Interim Report This announcement has been published on the HKEXnews website and the company's website, and the interim report for the six months ended June 30, 2025, will be dispatched to shareholders and published on the HKEXnews and company websites in due course - This announcement has been published on the HKEXnews website (www.hkexnews.hk) and the company's website (www.smart-core.com.hk)[83](index=83&type=chunk) - The company's interim report for the six months ended June 30, 2025, will be dispatched to shareholders and published on the HKEXnews and company websites in due course[83]