宏光半导体(06908) - 2025 - 中期业绩

Financial Highlights The Group's H1 2025 unaudited consolidated results show revenue decreased by 3.5% to RMB 33.1 million, gross profit increased by 18.2% to RMB 3.2 million, and net loss widened to RMB 66.0 million Financial Highlights for the Six Months Ended June 30 | Metric | June 30, 2025 (RMB million) | June 30, 2024 (RMB million) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 33.1 | 34.3 | -3.5% | | Gross Profit | 3.2 | 2.7 | +18.2% | | Net Loss | (66.0) | (57.2) | +15.4% (Loss widened) | | Loss per Share (RMB cents) | (7.70) | (7.22) | +6.6% (Loss widened) | Unaudited Condensed Consolidated Interim Results This chapter presents the Group's unaudited condensed consolidated financial statements for H1 2025, including statements of profit or loss, financial position, and changes in equity, reflecting performance and structural changes Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For H1 2025, Group revenue decreased to RMB 33,061 thousand, and despite lower cost of sales, reduced other income and increased administrative expenses led to a widened loss of RMB 66,004 thousand Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the Six Months Ended June 30) | Metric | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 33,061 | 34,252 | | Cost of Sales | (29,847) | (31,534) | | Gross Profit | 3,214 | 2,718 | | Other Income and Gains | 351 | 6,785 | | Selling and Distribution Expenses | (1,437) | (1,595) | | Administrative and Other Expenses | (65,693) | (62,949) | | Provision for Expected Credit Losses | (176) | — | | Finance Costs | (2,263) | (2,164) | | Loss Before Income Tax Expense | (66,004) | (57,205) | | Income Tax Expense | — | — | | Loss for the Period | (66,004) | (57,205) | | Total Comprehensive Expense for the Period | (149,681) | (115,180) | Attribution of Loss and Total Comprehensive Expense for the Period (For the Six Months Ended June 30) | Attributable to | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Loss for the Period: | | | | Owners of the Company | (59,293) | (54,246) | | Non-controlling Interests | (6,711) | (2,959) | | Total Comprehensive Expense: | | | | Owners of the Company | (142,970) | (112,025) | | Non-controlling Interests | (6,711) | (3,155) | Loss per Share (For the Six Months Ended June 30) | Metric | 2025 (RMB cents) | 2024 (RMB cents) | | :--- | :--- | :--- | | Basic and Diluted Loss per Share | (7.70) | (7.22) | Condensed Consolidated Statement of Financial Position As of June 30, 2025, total non-current assets decreased to RMB 301,140 thousand, while net current assets increased to RMB 236,861 thousand, mainly due to higher cash and cash equivalents Condensed Consolidated Statement of Financial Position (As of June 30) | Metric | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Non-current Assets | | | | Property, Plant and Equipment | 196,833 | 189,979 | | Intangible Assets | 338 | 448 | | Financial assets at fair value through other comprehensive income | 98,374 | 181,926 | | Prepayments and Deposits | 1,409 | 1,411 | | Deferred Tax Assets | 4,186 | 4,186 | | Total Non-current Assets | 301,140 | 377,950 | | Current Assets | | | | Inventories | 55,867 | 59,018 | | Trade and Bills Receivables | 75,690 | 67,242 | | Prepayments, Deposits and Other Receivables | 70,734 | 81,994 | | Financial assets at fair value through profit or loss | 32,124 | 34,631 | | Cash and Cash Equivalents | 45,782 | 8,779 | | Total Current Assets | 280,197 | 251,664 | | Current Liabilities | | | | Trade Payables | 15,088 | 19,347 | | Other Payables and Accruals | 15,147 | 15,824 | | Bank Borrowings | 10,000 | 10,000 | | Lease Liabilities | 3,101 | 3,036 | | Total Current Liabilities | 43,336 | 48,207 | | Net Current Assets | 236,861 | 203,457 | | Non-current Liabilities | | | | Lease Liabilities | 5,074 | 3,618 | | Net Assets | 532,927 | 577,789 | | Total Equity | 532,927 | 577,789 | Condensed Consolidated Statement of Changes in Equity Equity attributable to owners decreased from RMB 540,837 thousand to RMB 502,686 thousand in H1 2025, primarily due to loss, fair value changes, and exchange differences, partially offset by new share proceeds Condensed Consolidated Statement of Changes in Equity (For the Six Months Ended June 30) | Equity Item | January 1, 2025 (RMB thousand) | Loss for the Period (RMB thousand) | Total Comprehensive Income (RMB thousand) | Placement of New Shares (RMB thousand) | Share-based Payment Expenses (RMB thousand) | June 30, 2025 (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Equity attributable to Owners of the Company | 540,837 | (59,293) | (142,970) | 84,028 | 20,791 | 502,686 | | Non-controlling Interests | 36,952 | (6,711) | (6,711) | — | — | 30,241 | | Total Equity | 577,789 | (66,004) | (149,681) | 84,028 | 20,791 | 532,927 | Notes to the Condensed Consolidated Financial Statements This chapter details the basis of preparation, accounting policies, and specific changes in financial statement items, offering supplementary information for understanding the Group's financial position and operating results 1. General Information, Basis of Preparation and Accounting Policies Registered in the Cayman Islands and listed in Hong Kong, the Company primarily designs, develops, manufactures, and sells semiconductor products in China, with financial statements prepared under HKAS 34 and reviewed by the audit committee - The Company is incorporated in the Cayman Islands, with its shares listed on the Main Board of the Hong Kong Stock Exchange (Stock Code: 6908)[8] - The Group's principal business involves the design, development, manufacturing, subcontracting services, and sales of semiconductor products in China, including LED beads, GaN chips, GaN devices and related application products, and fast charging products[8] - The unaudited condensed consolidated interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 Interim Financial Reporting issued by the HKICPA and comply with the applicable disclosure provisions of the Listing Rules[9] - The adoption of new and revised HKFRSs has no significant impact on the Group's results and financial position for the current or prior periods[9] - The condensed consolidated financial statements have not been audited by the Company's auditor but have been reviewed by the Company's audit committee[11] 2. Changes in Hong Kong Financial Reporting Standards The Group adopted HKAS 21 (Amendment) "Lack of Exchangeability," which had no significant impact on its interim condensed consolidated financial information - The Group has adopted HKAS 21 (Amendment) "Lack of Exchangeability"[12] - The new and revised standard has no significant impact on the Group's interim condensed consolidated financial information[13] 3. Segment Information The Group operates in LED and GaN semiconductor segments in China, with H1 2025 revenues of RMB 24,930 thousand for LED and RMB 8,131 thousand for GaN - The Group has two reportable operating segments: (i) LED products segment and (ii) GaN and other semiconductor products segment[14] Segment Revenue and Results (For the Six Months Ended June 30) | Segment | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Segment Revenue | | | | LED Products | 24,930 | 33,220 | | GaN and Other Semiconductor Products | 8,131 | 1,032 | | Total | 33,061 | 34,252 | | Segment Results | | | | LED Products | (3,084) | (5,327) | | GaN and Other Semiconductor Products | (31,711) | (44,803) | | Total | (34,795) | (50,130) | | Other Unallocated (Loss before income tax) | (31,209) | (7,075) | | Loss Before Income Tax | (66,004) | (57,205) | 4. Revenue, Other Income and Gains Revenue primarily from LED and GaN products totaled RMB 33,061 thousand in H1 2025, with other income and gains significantly reduced to RMB 351 thousand due to lower government grants - The Group is principally engaged in the design, development, manufacturing, and sales of semiconductor products in China, including LED beads, GaN chips, GaN devices, and related application products[16] Analysis of Revenue, Other Income and Gains (For the Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Revenue: | | | | Sales of LED beads | 24,930 | 33,220 | | Sales of GaN and fast charging products | 8,131 | 1,032 | | Total Revenue | 33,061 | 34,252 | | Other Income and Gains: | | | | Bank interest income | 8 | 23 | | Government grants | 263 | 4,310 | | Other income | 80 | 2,452 | | Total Other Income and Gains | 351 | 6,785 | - A significant decrease in government grants was the primary reason for the decline in other income and gains[18] 5. Finance Costs Finance costs for H1 2025 slightly increased, primarily consisting of interest on bank borrowings and lease liabilities Finance Costs (For the Six Months Ended June 30) | Item | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | | Interest on bank borrowings | 1,935 | 1,797 | | Interest on lease liabilities | 328 | 367 | | Total Finance Costs | 2,263 | 2,164 | 6. Income Tax Expense The Group incurred no income tax expense, with its Chinese subsidiary, Zhuhai Hongguang Semiconductor, benefiting from a 15% preferential corporate income tax rate - For the six months ended June 30, 2025, the Group's income tax expense was zero[20][21] - Zhuhai Hongguang Semiconductor Co., Ltd., as a high-tech enterprise, enjoys a preferential corporate income tax rate of 15% and can continue to pay corporate income tax at this preferential rate until the end of 2025[21][22] 7. Dividends The Company neither paid nor declared any dividends for the six months ended June 30, 2025 - Neither the Company nor any of its subsidiaries paid or declared any dividends during the six months ended June 30, 2025[23] 8. Loss per Share Basic and diluted loss per share for H1 2025 was RMB 7.70 cents, an increase from RMB 7.22 cents, primarily due to the widened loss for the period Loss per Share Calculation (For the Six Months Ended June 30) | Metric | 2025 (RMB thousand/share) | 2024 (RMB thousand/share) | | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company | (59,293) | (54,246) | | Weighted average number of ordinary shares for basic loss per share calculation | 769,727,418 | 751,054,785 | | Basic and diluted loss per share (RMB cents) | (7.70) | (7.22) | - Potential ordinary shares related to share options were not included in the calculation of loss per share as their inclusion would be anti-dilutive[24] 9. Property, Plant and Equipment As of June 30, 2025, property, plant and equipment increased, mainly due to right-of-use assets and acquisitions of approximately RMB 15.0 million - As of June 30, 2025, the Group's right-of-use assets primarily comprise property leases for offices in Hong Kong and factories in Xuzhou and Zhuhai[25] - The cost of property, plant and equipment acquired during the period was approximately RMB 15.0 million (prior period: approximately RMB 9.3 million)[26] 10. Intangible Assets Intangible assets, mainly patent sub-licenses and software, totaled approximately RMB 0.3 million as of June 30, 2025, with amortization expenses of approximately RMB 0.2 million - The Group's intangible assets include patent sub-licenses and computer software[27] - For the six months ended June 30, 2025, the Group did not acquire or dispose of any intangible assets, and amortization expenses were approximately RMB 0.2 million[27] Carrying Amount of Intangible Assets | Date | Carrying Amount (RMB million) | | :--- | :--- | | June 30, 2025 | 0.3 | | December 31, 2024 | 0.4 | 11. Trade and Bills Receivables Trade and bills receivables totaled RMB 75,690 thousand as of June 30, 2025, with the 0-30 day category being the largest and impairment provisions slightly increasing Trade and Bills Receivables (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 60,670 | 54,267 | | Bills receivables | 15,020 | 12,975 | | Total | 75,690 | 67,242 | Aging Analysis of Trade and Bills Receivables (As of June 30) | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | 0 to 30 days | 40,919 | 34,573 | | 31 to 60 days | 7,044 | 8,858 | | 61 to 90 days | 11,983 | 6,719 | | 91 to 120 days | 5,461 | 4,945 | | 121 to 365 days | 8,022 | 7,264 | | Over 1 year | 17,824 | 20,270 | | Gross amount | 91,253 | 82,629 | | Less: Impairment | (15,563) | (15,387) | | Net amount | 75,690 | 67,242 | 12. Prepayments, Deposits and Other Receivables Prepayments, deposits, and other receivables totaled RMB 72,143 thousand as of June 30, 2025, mainly comprising raw material prepayments to third-party suppliers Prepayments, Deposits and Other Receivables (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Other receivables | 32,692 | 36,490 | | Prepayments and deposits | 39,451 | 46,915 | | Total | 72,143 | 83,405 | | Less: Non-current portion | (1,409) | (1,411) | | Current portion | 70,734 | 81,994 | - Prepayments primarily include prepayments for raw materials to independent third-party suppliers of approximately RMB 36.4 million (December 31, 2024: approximately RMB 42.8 million)[29] 13. Financial Assets at Fair Value Through Profit or Loss Financial assets at fair value through profit or loss, primarily unlisted fund investments, totaled approximately RMB 32.1 million as of June 30, 2025, with a fair value loss of approximately RMB 1.6 million recognized - Financial assets at fair value through profit or loss refer to investments in unlisted funds[30] Financial Assets at Fair Value Through Profit or Loss | Date | Fair Value (RMB million) | | :--- | :--- | | June 30, 2025 | 32.1 | | December 31, 2024 | 34.6 | - For the six months ended June 30, 2025, a fair value loss of approximately RMB 1.6 million was recognized[30] 14. Financial Assets at Fair Value Through Other Comprehensive Income ("FVOCI") Financial assets at FVOCI, mainly unlisted equity, totaled approximately RMB 98.4 million as of June 30, 2025, with a RMB 78.4 million fair value loss recognized, primarily from the Vis IC investment Financial Assets at Fair Value Through Other Comprehensive Income | Date | Fair Value (RMB thousand) | | :--- | :--- | | June 30, 2025 | 98,374 | | December 31, 2024 | 181,926 | - The 10% ordinary share investment in a Chinese company (China Company Investment) had a fair value of zero as of June 30, 2025[32] - The investment in Israeli company Vis IC had a fair value of approximately USD 13.7 million (approximately RMB 98.4 million), a significant decrease from USD 24.9 million (approximately RMB 181.9 million) at the end of 2024[33] - For the six months ended June 30, 2025, a fair value loss of approximately RMB 78.4 million was recognized[34] 15. Cash and Cash Equivalents Cash and cash equivalents significantly increased to RMB 45,782 thousand as of June 30, 2025, primarily in RMB and HKD, with RMB balances subject to Chinese government exchange restrictions Cash and Cash Equivalents (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank balances and cash | 45,782 | 8,779 | | Denominated in RMB | 24,541 | 7,473 | | Denominated in HKD | 20,777 | 1,166 | | Denominated in USD | 464 | 141 | - Bank balances and cash denominated in RMB are not freely convertible, and the remittance of such funds out of China is subject to exchange restrictions imposed by the Chinese government[35] 16. Trade Payables Trade payables decreased to RMB 15,088 thousand as of June 30, 2025, with most amounts due within 90 days Trade Payables (As of June 30) | Date | Amount (RMB thousand) | | :--- | :--- | | June 30, 2025 | 15,088 | | December 31, 2024 | 19,347 | Aging Analysis of Trade Payables (As of June 30) | Aging | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | 0 to 30 days | 5,139 | 7,364 | | 31 to 60 days | 3,332 | 4,273 | | 61 to 90 days | 2,677 | 2,852 | | 91 to 120 days | 1,604 | 1,283 | | 121 to 365 days | 1,340 | 1,718 | | Over 1 year | 996 | 1,857 | | Total | 15,088 | 19,347 | 17. Bank Borrowings Total bank borrowings were RMB 10.0 million as of June 30, 2025, comprising unsecured interest-bearing loans at an effective annual rate of 3.35%, with no covenant breaches Bank Borrowings (As of June 30) | Item | June 30, 2025 (RMB thousand) | December 31, 2024 (RMB thousand) | | :--- | :--- | :--- | | Bank loans—unsecured | 10,000 | 10,000 | - The effective interest rate for unsecured interest-bearing bank borrowings was 3.35% per annum[37] - No breaches of covenants relating to the facilities drawn were noted at each reporting period end[37] 18. Related Party Transactions Related party transactions with Zhuhai Special Economic Zone Lijia Electronic Development Co., Ltd. totaled RMB 875 thousand for H1 2025, covering public utility and lease expenses Related Party Transactions (For the Six Months Ended June 30) | Related Party Name | Nature of Transaction | 2025 (RMB thousand) | 2024 (RMB thousand) | | :--- | :--- | :--- | :--- | | Zhuhai Special Economic Zone Lijia Electronic Development Co., Ltd. | Public utility expenses | 689 | 813 | | Zhuhai Special Economic Zone Lijia Electronic Development Co., Ltd. | Lease expenses | 186 | 186 | | Total | 875 | 999 | - This related party is beneficially owned by Mr. Zhao Yiwen, a director of the Company[38] 19. Share-based Payment Transactions The Group offers incentives via share option, share award, and employee share award schemes, recognizing approximately RMB 20.8 million in share-based payment expenses for H1 2025 Share Option Scheme The share option scheme rewards contributors, with some 2021 and 2023 options unexercised and approximately RMB 2.9 million in related expenses recognized for the period - The Share Option Scheme aims to provide incentives and/or rewards to eligible participants for their services and/or contributions to the successful operation of the Group[39] - For the six months ended June 30, 2025, the Company recognized expenses of approximately RMB 2.9 million (prior period: approximately RMB 3.0 million) for services provided during the vesting period under the Share Option Scheme[43] Details of 2021 Share Option Movements (As of June 30, 2025) | Grant Date | Subscription Price (HKD) | Unexercised as of January 1, 2025 | Unexercised as of June 30, 2025 | Vested and Exercisable as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | June 17, 2021 | 7.50 | 9,037,500 | 6,537,500 | 3,537,500 | Details of 2023 Share Option Movements (As of June 30, 2025) | Grant Date | Subscription Price (HKD) | Unexercised as of January 1, 2025 | Unexercised as of June 30, 2025 | Vested and Exercisable as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | | July 28, 2023 | 1.40 | 4,152,500 | 2,057,500 | 2,057,500 | Share Award Scheme The Company adopted a share award scheme to recognize and retain employees, recognizing approximately RMB 17.9 million in expenses for H1 2025 from first and second tranches - The Share Award Scheme aims to recognize and reward the contributions of eligible participants and attract suitable talent[44] - For the six months ended June 30, 2025, the Company recognized expenses of approximately RMB 0.3 million (prior period: approximately RMB 2.0 million) under the first tranche of share awards[48] - For the six months ended June 30, 2025, the Company recognized expenses of approximately RMB 17.6 million (prior period: nil) under the second tranche of share awards[50] Details of First Tranche Share Awards (As of June 30, 2025) | Grant Date | Unexercised as of January 1, 2025 | Unexercised as of June 30, 2025 | Vested and Exercisable as of June 30, 2025 | | :--- | :--- | :--- | :--- | | January 31, 2024 | 7,330,000 | 6,360,000 | 6,360,000 | Details of Second Tranche Share Awards (As of June 30, 2025) | Grant Date | Unexercised as of January 1, 2025 | Unexercised as of June 30, 2025 | Vested and Exercisable as of June 30, 2025 | | :--- | :--- | :--- | :--- | | December 4, 2024 | 66,815,478 | 66,780,000 | — | Employee Share Award Scheme The employee share award scheme allows indirect investment in Jiangsu GaN Semiconductor, but no expenses were recognized for H1 2025 - The Employee Share Award Scheme aims to provide grantees with opportunities to indirectly invest in Jiangsu GaN Semiconductor Co., Ltd. and share in its future growth and achievements[51] - As of June 30, 2024, the fair value of approximately 19.10% equity interest in Shenzhen GaN Semiconductor Co., Ltd. held by the employee shareholding platform was approximately RMB 50.3 million[51] - For the six months ended June 30, 2025, the Company recognized nil expenses under the Employee Share Award Scheme (prior period: RMB 24.8 million)[52] Management Discussion and Analysis This chapter outlines the Group's H1 2025 business development, industry environment, and strategic outlook, focusing on its transition to GaN products and IDM enterprise goals to capture new market opportunities Introduction The Company primarily designs, develops, manufactures, and sells semiconductor products in China, transitioning to third-generation GaN products with the goal of becoming a full-产业链 IDM enterprise - The Group is principally engaged in the design, development, manufacturing, subcontracting, and sales of semiconductor products in China, including LED beads, new generation gallium nitride (GaN) chips, and GaN device-related application products[53] - The Group has been committed in recent years to developing applications for third-generation GaN semiconductor products and gradually achieving business transformation[53] - The goal is to become a full-产业链 semiconductor Integrated Device Manufacturer (IDM) enterprise covering R&D, manufacturing, packaging and testing, and sales, with a particular focus on semiconductor design and manufacturing[53] Industry Review H1 2025 saw challenges in LED lighting but strong growth in semiconductors, particularly in China, driven by government support and demand from new energy, automotive electronics, and AI, with GaN showing robust demand - In H1 2025, the LED lighting industry faced continuous negative impacts, primarily due to a sluggish real estate market, weak consumer electronics spending, and intensified industry competition[54] - China is the world's second-largest semiconductor market, with demand showing strong growth momentum in areas such as technological innovation, power devices, automotive electronics, artificial intelligence, and the Internet of Things[54] - WSTS forecasts the global semiconductor market to grow by 11.2% to USD 700.9 billion in 2025, with the H1 2025 global semiconductor market reaching USD 346.0 billion, a year-on-year increase of 18.9%[55] - The US-China tech war and export control measures have prompted China to increase investment in semiconductor R&D, accelerating domestic substitution and independent innovation, thereby driving rapid industrial development[56] - GaN, as a third-generation semiconductor, is experiencing surging demand in the new energy and new energy vehicle sectors, with China's new energy vehicle market developing rapidly and maintaining strong demand for third-generation semiconductor power devices[57] - The Chinese government advocates accelerating the industrialization of new materials and technologies for third-generation semiconductors in the "14th Five-Year Plan and Long-Range Objectives Through 2035"[58] Business Review In H1 2025, the Group advanced its GaN semiconductor strategy, completing key equipment installations; despite a 3.5% revenue decrease to RMB 33.1 million, gross profit increased by 18.2% to RMB 3.2 million, with GaN revenue reaching 25% of total - While maintaining its LED bead business, the Group continued to fully develop the third-generation semiconductor industry chain, completing the production debugging of GaN epitaxy equipment and the procurement and installation of core equipment for the chip production line[59] - Revenue for the period was approximately RMB 33.1 million, a decrease of approximately 3.5% from the prior period (prior period: approximately RMB 34.3 million), but gross profit increased by approximately 18.2% to approximately RMB 3.2 million[59] - Revenue for the period comprised 75% from LED bead business and 25% from GaN business, indicating a significant increase in the proportion of GaN business[59] - Loss for the period attributable to owners of the Company was approximately RMB 59.3 million[59] Outlook The Group anticipates high growth in the GaN power device market, driven by new energy and green energy, and will invest in R&D, capacity, and partnerships to become a full-产业链 GaN IDM enterprise - The GaN power device market is projected to grow from USD 46 million in 2020 to USD 1.1 billion in 2026, with a CAGR of 70%, primarily driven by green energy generation, electric vehicles, charging piles, and energy storage demand[60] - New energy vehicles are the main driver of growth in the GaN power product market, with local Chinese brands accounting for over 80% of the electric vehicle market share[61] - The Group will continue to intensify efforts to improve the third-generation GaN semiconductor industry chain, accelerate R&D and expand applications for GaN-related products, and actively seek strategic partners[61] - The goal is to become a full-产业链 GaN IDM enterprise integrating R&D, manufacturing, packaging, testing, and sales[61] - The Chinese government has elevated self-reliance and control in the chip industry to a key national strategic level, providing long-term and strong support for the semiconductor sector[62] Financial Performance Analysis This chapter analyzes the Group's H1 2025 financial performance, covering revenue, costs, margins, other income, and expenses, and identifies key reasons for the widened loss Revenue Total revenue for the period was RMB 33.1 million, a 3.5% decrease, mainly due to lower LED sales, while GaN product revenue significantly increased to RMB 8.1 million, reaching 24.6% of total revenue - Total revenue for the period was approximately RMB 33.1 million, a decrease of approximately 3.5% from the prior period (prior period: approximately RMB 34.3 million), primarily due to reduced sales revenue from LED products[63] Revenue Breakdown by Segment (For the Six Months Ended June 30) | Segment | 2025 (RMB thousand) | 2025 (%) | 2024 (RMB thousand) | 2024 (%) | | :--- | :--- | :--- | :--- | :--- | | LED Products | 24,930 | 75.4 | 33,220 | 97.0 | | GaN and Other Semiconductor Products | 8,131 | 24.6 | 1,032 | 3.0 | | Total | 33,061 | 100.0 | 34,252 | 100.0 | - Revenue from GaN and other semiconductor products was approximately RMB 8.1 million (prior period: approximately RMB 1.0 million), accounting for approximately 24.6% of total revenue (prior period: approximately 3.0%)[64] Cost of Sales Cost of sales decreased by 5.4% to RMB 29.8 million, primarily due to lower material costs resulting from reduced LED product sales volume - Cost of sales decreased by approximately 5.4% from approximately RMB 31.5 million in the prior period to approximately RMB 29.8 million in the current period[65] - The decrease was mainly due to a reduction in LED product sales volume, leading to lower material costs incurred[65] Gross Profit and Gross Profit Margin Gross profit increased from RMB 2.7 million to RMB 3.2 million, with gross profit margin rising from 7.9% to 9.7%, driven by significant improvement in GaN product margins despite a slight decline in LED margins - Gross profit increased from approximately RMB 2.7 million in the prior period to approximately RMB 3.2 million in the current period, with the gross profit margin rising from approximately 7.9% to approximately 9.7%[66] Gross Profit and Gross Profit Margin Breakdown by Segment (For the Six Months Ended June 30) | Segment | 2025 Gross Profit (RMB thousand) | 2025 Gross Profit Margin (%) | 2024 Gross Profit (RMB thousand) | 2024 Gross Profit Margin (%) | | :--- | :--- | :--- | :--- | :--- | | LED Products | 2,359 | 9.7 | 3,495 | 10.5 | | GaN and Other Semiconductor Products | 855 | 10.5 | (777) | -75.3 | | Total Gross Profit/Gross Profit Margin | 3,214 | 9.7 | 2,718 | 7.9 | - The gross profit margin for LED beads decreased from approximately 10.5% in the prior period to approximately 9.7% in the current period, mainly due to a decrease in the average selling price of LED beads[66] Other Income and Gains Other income and gains significantly decreased by 94.1% to RMB 0.4 million, primarily due to reduced government grants from the Chinese government - Other income and gains decreased by approximately 94.1% from approximately RMB 6.8 million in the prior period to approximately RMB 0.4 million in the current period[67] - The decrease was mainly due to a reduction in government grants from the Chinese government during the current period[67] Selling and Distribution Expenses Selling and distribution expenses decreased by 12.5% to RMB 1.4 million, mainly due to reduced staff, travel, and entertainment costs - Selling and distribution expenses decreased by approximately 12.5% from approximately RMB 1.6 million in the prior period to approximately RMB 1.4 million in the current period[68] - The decrease was mainly due to a reduction in staff costs for sales and marketing, travel expenses, and entertainment expenses[68] Administrative and Other Expenses Administrative and other expenses increased by 4.5% to RMB 65.7 million, primarily driven by a significant increase in research and development costs - Administrative and other expenses increased by approximately 4.5% from approximately RMB 62.9 million in the prior period to approximately RMB 65.7 million in the current period[69] - The increase in administrative and other expenses was mainly due to an increase in research and development costs[69] - During the current period, the Group's research and development costs were approximately RMB 23.5 million (prior period: approximately RMB 11.4 million)[70] Finance Costs Finance costs for the period were approximately RMB 2.3 million, a slight increase from RMB 2.2 million in the prior period Finance Costs (For the Six Months Ended June 30) | Item | 2025 (RMB million) | 2024 (RMB million) | | :--- | :--- | :--- | | Finance Costs | 2.3 | 2.2 | Income Tax Expense The Group's income tax expense for the current period remained zero, consistent with the prior period - For the current period, the Group's income tax expense was nil (prior period: nil)[72] Loss for the Period Loss for the period increased to approximately RMB 66.0 million from RMB 57.2 million, mainly due to higher administrative and other expenses Loss for the Period (For the Six Months Ended June 30) | Item | 2025 (RMB million) | 2024 (RMB million) | | :--- | :--- | :--- | | Loss for the Period | 66.0 | 57.2 | - The increase in loss for the period was mainly due to an increase in administrative and other expenses during the current period[73] Net Profit Margin The Group recorded a negative net profit margin of approximately 199.6%, up from 167.0% in the prior period, primarily due to widened loss from increased administrative expenses Net Profit Margin (For the Six Months Ended June 30) | Item | 2025 (%) | 2024 (%) | | :--- | :--- | :--- | | Negative Net Profit Margin | 199.6 | 167.0 | - The increase in negative net profit margin during the current period was mainly due to an increase in administrative and other expenses[74] Dividends The Board does not recommend an interim dividend for the current period, aligning with the Group's future business development - To align with the Group's future business development, the Directors do not recommend the payment of an interim dividend for the current period (prior period: nil)[75] Liquidity, Financial Resources and Capital Structure As of June 30, 2025, net current assets and current ratio increased due to higher bank balances from the 2024 rights issue, while total bank facilities remained stable and the gearing ratio slightly rose Liquidity and Financial Resources (As of June 30) | Metric | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Net Current Assets | 236.9 | 203.5 | | Current Ratio | 6.5 | 5.2 | | Total Cash and Bank Balances | 45.8 | 8.8 | | Total Available Bank Facilities | 10.0 | 10.0 | | Total Bank Facilities Utilized | 10.0 | 10.0 | | Equity Attributable to Owners of the Company | 502.7 | 540.8 | - The increase in current ratio was mainly due to an increase in bank balances[76] - The increase in total cash and bank balances was mainly due to the proceeds received from the Company's rights issue in February 2025[76] Gearing Ratio (As of June 30) | Date | Gearing Ratio (%) | | :--- | :--- | | June 30, 2025 | 1.9 | | December 31, 2024 | 1.7 | Material Investments, Significant Investments and Future Plans for Capital Assets The Group holds material investments in Vis IC, Beijing Hongzhi, and HighTec SP2 Fund; Vis IC, a strategic investment, and HighTec SP2 Fund both recognized fair value losses, though the latter has promising prospects Vis IC Technologies Limited In 2021, the Group acquired Vis IC Series E preferred shares for approximately USD 25 million; as of June 30, 2025, its fair value was approximately RMB 98.4 million, with a fair value loss of approximately RMB 78.3 million recognized - Fast Semi Holding Limited, a wholly-owned subsidiary of the Company, acquired 1,749,961 Series E preferred shares of Vis IC in 2021 for approximately USD 25 million, representing approximately 12.87% of its enlarged issued share capital[79] Fair Value of Vis IC Investment | Date | Fair Value (RMB million) | | :--- | :--- | | June 30, 2025 | 98.4 | | December 31, 2024 | 181.9 | - A fair value loss of approximately RMB 78.3 million was recognized through other comprehensive income during the current period[79] - The Group plans to hold its stake in Vis IC as a long-term investment, as it is one of the leading enterprises in the third-generation GaN device sector[79] Beijing Hongzhi Diantong Technology Co., Ltd. In 2021, the Group invested RMB 15 million for a 10% ordinary share stake in Beijing Hongzhi, whose fair value was zero as of June 30, 2025 - Xuzhou Jinshajiang Semiconductor Co., Ltd., a wholly-owned subsidiary of the Company, invested RMB 15 million in 2021 for a 10% ordinary share stake in Beijing Hongzhi[80] - The fair value of this investment was zero as of June 30, 2025[80] HighTec SP2 Fund The Group subscribed for approximately USD 5 million in HighTec SP2 Fund shares in 2021-2022; as of June 30, 2025, its fair value was approximately RMB 32.1 million, with a RMB 1.6 million fair value loss recognized - Fast Semi collectively subscribed for approximately USD 5 million in shares of HighTec SP2 Fund in December 2021 and January 2022[81][82] - The fund's investment strategy primarily involves investing directly or through other investment vehicles in equity securities of world-leading semiconductor design and manufacturing companies[81] Fair Value of HighTec SP2 Fund Investment | Date | Fair Value (RMB million) | | :--- | :--- | | June 30, 2025 | 32.1 | - During the current period, a fair value loss of approximately RMB 1.6 million was recognized through profit or loss[82] Material Acquisitions and Disposals This chapter discloses the termination of a capital increase agreement for Shenzhen GaN Semiconductor due to an investor's failure to pay, leading to an adjustment of registered capital Termination of Capital Increase Agreement The capital increase agreement for Shenzhen GaN Semiconductor was terminated on January 1, 2025, as an investor failed to pay the RMB 45 million second installment, leading to registered capital adjustment based on the RMB 55 million initial payment - The investor (Taizhou Huirong Jianeng Youchuang Equity Investment Partnership (Limited Partnership)) failed to complete the payment of the second capital contribution of RMB 45 million to Shenzhen GaN Semiconductor Co., Ltd. within the extended period[85] - The capital increase agreement, together with its appendices and extension memorandum, was terminated on January 1, 2025, and the investor is no longer required to pay the second capital contribution[86] - Shenzhen GaN's registered capital after the capital increase will be calculated and adjusted based on the actual amount paid by the investor (first capital contribution of RMB 55 million)[87] Other Significant Information This chapter covers capital commitments, pledged assets, contingent liabilities, exchange risk, employee policies, listed securities transactions, 2024 rights issue, directors' dealings, and corporate governance Capital Commitments As of June 30, 2025, contracted capital commitments for property, plant and equipment acquisitions totaled approximately RMB 14.4 million Capital Commitments (As of June 30) | Item | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | | :--- | :--- | :--- | | Capital commitments for acquisition of property, plant and equipment | 14.4 | 18.0 | Pledged Assets of the Group The Group had no pledged assets as of June 30, 2025, and December 31, 2024 - As of June 30, 2025, and December 31, 2024, the Group had no pledged assets[89] Contingent Liabilities The Group had no material contingent liabilities as of June 30, 2025 - As of June 30, 2025, the Group had no material contingent liabilities[90] Exchange Rate Risk Operating primarily in China with RMB-settled transactions, the Group's exchange rate risk is considered immaterial, and no hedging occurred during the period - The Group primarily operates in China, with most of its transactions settled in RMB[91] - The Directors consider the exchange rate risk faced by the Group to be immaterial. During the current period, the Group did not hedge any exchange rate risk[91] Employees and Remuneration Policy As of June 30, 2025, the Group employed 158 staff, with employee costs of approximately RMB 37.1 million, including RMB 20.8 million in share-based payments, aligning remuneration with industry and performance Number of Employees and Costs | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Number of Employees | 158 | 161 | | Employee Costs (RMB million) | 37.1 | 44.2 | | Of which: Share-based Payment Expenses (RMB million) | 20.8 | 29.8 | - Employee remuneration levels are aligned with industry practices and prevailing market conditions, and determined based on the Company's performance and employee contributions[92] Acquisition, Sale or Redemption of the Company's Listed Securities Neither the Company nor its subsidiaries acquired, sold, or redeemed any of the Company's listed securities during the period - During the current period, neither the Company nor any of its subsidiaries acquired, sold, or redeemed any of the Company's listed securities[93] 2024 Rights Issue The 2024 rights issue, completed in February 2025, raised approximately HKD 87.8 million net, primarily for R&D and working capital, with HKD 59.5 million utilized by June 30, 2025 - The Company completed its 2024 rights issue in February 2025, involving the issue and allotment of a total of 187,763,696 new ordinary shares, generating net proceeds of approximately HKD 87.8 million[94] - The purpose of the rights issue was to strengthen the Group's R&D capabilities and provide general working capital to meet its business development plans[94] Use of Proceeds from 2024 Rights Issue (As of June 30, 2025) | Purpose | Net Proceeds (HKD million) | Utilized (HKD million) | Unutilized (HKD million) | Expected Timeline for Utilization of Unutilized Proceeds | | :--- | :--- | :--- | :--- | :--- | | Enhance R&D capabilities | 52.7 | 24.4 | 28.3 | On or before December 31, 2025 | | Provide general working capital | 35.1 | 35.1 | — | — | | Total | 87.8 | 59.5 | 28.3 | | Directors' Securities Dealings The Company adopted the Model Code for Directors' Securities Transactions and confirms no breaches during the period - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules[95] - The Company is not aware of any non-compliance with the required standards for directors' securities dealings during the current period[95] Corporate Governance and Compliance with the Corporate Governance Code The Company adopted and complied with the Corporate Governance Code as set out in Appendix C1 of the Listing Rules during the period - The Company has adopted the Corporate Governance Code as set out in Appendix C1 of the Listing Rules as its own corporate governance code[96] - The Board is satisfied that the Company has complied with the Corporate Governance Code during the current period[96] Audit Committee and Review of Accounts The Audit Committee reviewed the Group's unaudited condensed consolidated financial statements for the period, deeming them compliant, and is chaired by Mr. Zou Haiyan, comprising three independent non-executive directors - The Company's Audit Committee has discussed and reviewed the Group's unaudited condensed consolidated financial statements for the current period with the Group's management[97] - The Audit Committee comprises three independent non-executive directors: Mr. Zou Haiyan (Chairman), Mr. Xiao Miaowen, and Ms. Liu Wanwen[97]