GHW INTL(09933) - 2025 - 中期财报

Company Information This section provides essential corporate details, including the composition of the Board of Directors, key committees, and registration and operational information Board of Directors and Committees The company's Board of Directors comprises executive and independent non-executive directors, with established audit, remuneration, nomination, and risk management committees to ensure robust corporate governance - Board members include executive directors Yin Yanbin (Chairman and CEO), Zhuang Zhaohui, Chen Zhaohui, Zhou Chunian, Chen Hua, Diao Cheng, and independent non-executive directors Sun Hongbin, Wang Guangji, Zheng Qing[3] - The company has an Audit Committee (Chairperson: Zheng Qing), Remuneration Committee (Chairperson: Zheng Qing), Nomination Committee (Chairperson: Yin Yanbin), and Risk Management Committee (Chairperson: Chen Zhaohui)[3] Registration and Operational Information The company is registered in the Cayman Islands, with primary operating locations in Nanjing, China, and Hong Kong, detailing key information such as share registrars, legal advisors, principal bankers, and auditors - The company's registered office is in the Cayman Islands, with its principal place of business in the People's Republic of China in Nanjing and its principal place of business in Hong Kong in Causeway Bay[3] - The Hong Kong share registrar is Tricor Investor Services Limited, and the auditor is ZHONGHUI ANDA CPA Limited[4] - The company's website is www.goldenhighway.com, and its stock code is 9933[4] Management Discussion and Analysis This section provides a comprehensive review of the Group's business operations, financial performance, future outlook, and risk management strategies for the reporting period Business Overview The Group is a supplier of application chemical intermediates in the integrated chemical services market, operating seven main business segments including methylamine, new materials, advanced intermediates, green products, health products, iodine derivatives, and selected products - The Group is principally engaged in the manufacture and sale of chemical products and the sale of chemical products manufactured by third-party manufacturers, with operations across mainland China, Southeast Asia, Europe, and the United States[6] - The company has seven main business segments: methylamine industry series, Golden Highway new materials, advanced materials intermediates series, green products, health products, iodine derivatives series and related products, and Gegexiang Selection[6] - The Golden Highway New Materials segment has regrouped all trading products and application chemical series products, and the Health Products segment has been renamed from the Pharmaceutical Intermediates and APIs segment[6] Methylamine Industry Series This segment primarily produces animal nutrition chemicals like choline chloride and betaine, essential feed additives for poultry and livestock, crucial for the downstream animal husbandry industry - Choline chloride is used to accelerate animal growth and can also serve as a clay stabilizer in oil and gas drilling and hydraulic fracturing[7] - Betaine can be used as a dietary attractant to improve growth and survival rates in fish, poultry, pigs, and other animals[7] Golden Highway New Materials This segment focuses on trading fine chemicals, polyurethane materials, and self-produced polyether polyol products, widely used in dye synthesis, cosmetics, building materials, and automotive components - Fine chemicals include carboxylic acids, resins, and oleochemicals, primarily procured from third parties for resale[7] - Polyurethane materials (e.g., polymeric MDI and TDI) are widely used in the manufacturing of insulation materials, building materials, adhesives, sponges, and automotive components[7] - In 2024, the sales structure of polyether polyol products shifted from rigid foam insulation to the flexible foam automotive interior parts industry[7] Advanced Materials Intermediates Series This segment mainly includes self-produced isooctanoic acid and diethyl sulfate, with isooctanoic acid holding a significant market share in mainland China, applied in paint driers, PVC stabilizers, catalysts, and pharmaceutical raw materials - Isooctanoic acid holds a significant market share in mainland China, used in key applications such as paint driers, polyvinyl chloride (PVC) liquid stabilizers, catalysts, and pharmaceutical raw materials[8] Green Products The Group expands its green products segment, primarily producing cardanol products extracted from cashew nutshell liquid, widely used in coatings, resins, and pharmaceuticals, manufactured at its Vietnam plant - The Green Products segment primarily produces cardanol products to address downstream customers' increasing focus on environmental protection and sustainable development[9] - Cardanol is a natural bio-based raw material extracted from cashew nutshell liquid, widely used in coatings, resins, and pharmaceuticals[9] - The Group produces cardanol products at its manufacturing facility in Vietnam[9] Health Products The health products segment primarily sells pharmaceutical products such as Cefpodoxime Proxetil Dispersible Tablets and other pharmaceutical intermediates, with plans to develop a moxifloxacin hydrochloride side chain production line by the end of 2025 - The Group sells pharmaceutical products such as Cefpodoxime Proxetil Dispersible Tablets and other pharmaceutical intermediates[9] - A moxifloxacin hydrochloride side chain production line is under development and is expected to be operational by the end of 2025[9] Iodine Derivatives Series and Related Products This segment primarily offers organic and inorganic iodine derivatives and iodine products - The Iodine Derivatives Series and Related Products segment primarily consists of organic and inorganic iodine derivatives and iodine[10] Gegexiang Selection As a new business segment, Gegexiang Selection primarily sells nutritional products sourced from third parties and promotes its brand and market development through marketing activities such as organizing sports events - The Gegexiang Selection segment primarily sells nutritional products, such as vitamin tablets, procured from third parties[10] - In 2024, the Group organized sports events to effectively promote its product brand and develop the sales market for supplements and related products[10] Business Review In the first half of 2025, the Chinese chemical industry faced challenges including weak demand, supply-demand imbalance, and declining profit margins, yet the Group achieved resilient growth through technological innovation, supply chain management, and market segmentation, actively expanding global markets - In the first half of 2025, the Chinese chemical industry faced challenges such as weak demand, supply-demand imbalance, and declining profit margins, with falling raw material prices leading to widespread price reductions in chemical products[11] - The Group strengthened its core competitiveness and achieved resilient growth by leveraging technological innovation and integrated supply chain management, optimizing its product portfolio[11] - The Group utilized its technological expertise and brand strength to penetrate and cultivate international markets, accelerating global expansion through strategic investments and partnerships, and optimizing its global supply chain[12] 2025 H1 Financial Performance | Indicator | 2025 H1 (RMB million) | 2024 H1 (RMB million) | YoY Change | Primarily Attributable to | | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,856.7 | 1,790.2 | +3.7% | Increased revenue from green products, iodine derivatives series and related products | | Profit for the Period | 7.9 | 4.4 | +77.1% | Increase in net exchange gains and additional VAT credit refund policy, partially offset by a decrease in gross profit | Financial Review This section provides a detailed review of the Group's financial performance for the first half of 2025, including revenue, cost of sales, gross profit, various expenses, and profit for the period, analyzing contributions and changes across business segments and geographical regions Revenue The Group's total revenue for the first half of 2025 was RMB 1,856.7 million, a year-on-year increase of 3.7%, with significant growth in iodine derivatives and green products segments, while methylamine and advanced materials intermediates saw declines Total Revenue by Business Segment (RMB thousand) | Business Segment | 2025 | % of Total Revenue (2025) | 2024 | % of Total Revenue (2024) | | :--- | :--- | :--- | :--- | :--- | | Methylamine Industry Series | 600,981 | 32.4% | 617,525 | 34.5% | | Iodine Derivatives Series and Related Products | 588,339 | 31.7% | 440,302 | 24.6% | | Golden Highway New Materials | 399,090 | 21.5% | 399,570 | 22.3% | | Advanced Materials Intermediates Series | 132,537 | 7.1% | 218,071 | 12.2% | | Green Products | 111,485 | 6.0% | 94,706 | 5.3% | | Health Products | 15,001 | 0.8% | 13,321 | 0.7% | | Gegexiang Selection | 978 | 0.1% | — | 0.0% | | Subtotal | 1,848,411 | 99.6% | 1,783,495 | 99.6% | | Other | 8,301 | 0.4% | 6,699 | 0.4% | | Total | 1,856,712 | 100.0% | 1,790,194 | 100.0% | - Revenue from the Green Products segment increased by 17.7% to RMB 111.5 million, primarily due to market recovery in Europe, increased exports and production capacity, and higher selling prices driven by rising raw material costs[17][24] - Revenue from the Iodine Derivatives Series and Related Products segment increased by 33.6% to RMB 588.3 million, mainly due to increased sales volume from expanded market share and penetration[17][20] - Revenue from the Methylamine Industry Series decreased by 2.7% to RMB 601.0 million, primarily due to intense competition in the methylamine market, new production capacity leading to lower sales volume, market prices, and profit margins[19] - Revenue from the Advanced Materials Intermediates Series decreased to RMB 132.5 million, mainly due to declining domestic demand and production halts caused by reactor facility malfunctions[23] Total Revenue by Geographical Location (RMB thousand) | Geographical Location | 2025 | % of Total Revenue (2025) | 2024 | % of Total Revenue (2024) | | :--- | :--- | :--- | :--- | :--- | | Mainland China | 1,418,926 | 76.4% | 1,411,161 | 78.8% | | Europe | 183,474 | 9.9% | 148,735 | 8.3% | | Vietnam | 85,828 | 4.6% | 77,264 | 4.3% | | Other Asian Countries | 95,906 | 5.2% | 101,916 | 5.7% | | Other | 72,578 | 3.9% | 51,118 | 2.9% | | Total | 1,856,712 | 100.0% | 1,790,194 | 100.0% | - Revenue from mainland China accounted for the majority of total revenue, but its proportion decreased from 78.8% to 76.4%, while revenue from Europe, Vietnam, and other regions increased[27][28] Cost of Sales Cost of sales, primarily composed of raw materials and inventory costs, increased to RMB 1,686.2 million in the first half of 2025, mainly due to higher production costs for iodine and iodine derivatives - Cost of sales increased from approximately RMB 1,595.7 million in the first half of 2024 to approximately RMB 1,686.2 million in the first half of 2025[30] - The increase in cost of sales was primarily due to higher production costs for iodine and iodine derivatives, partially offset by reduced raw material costs for methylamine, isooctanoic acid, and diethyl sulfate[30] Gross Profit and Gross Margin The Group's gross profit decreased to RMB 170.5 million in the first half of 2025, with the overall gross margin falling from 10.9% to 9.2%, primarily impacted by lower gross profit in advanced materials intermediates, green products, and iodine derivatives segments Total Gross Profit and Gross Margin by Business Segment (RMB thousand) | Business Segment | 2025 Gross Profit | 2025 Gross Margin % | 2024 Gross Profit | 2024 Gross Margin % | | :--- | :--- | :--- | :--- | :--- | | Methylamine Industry Series | 93,800 | 15.6% | 83,328 | 13.5% | | Iodine Derivatives Series and Related Products | 27,020 | 4.6% | 36,873 | 8.4% | | Golden Highway New Materials | 26,639 | 6.7% | 31,519 | 7.9% | | Advanced Materials Intermediates Series | 4,294 | 3.2% | 21,318 | 9.8% | | Green Products | 12,803 | 11.5% | 17,568 | 18.6% | | Health Products | 4,299 | 28.7% | 3,219 | 24.2% | | Gegexiang Selection | 480 | 49.1% | 6 | 730.6% | | Other | 1,128 | 13.6% | 669 | 10.0% | | Total | 170,463 | 9.2% | 194,500 | 10.9% | - Overall gross profit decreased from RMB 194.5 million to RMB 170.5 million, and the overall gross margin decreased from 10.9% to 9.2%[31] - The decrease in gross profit and gross margin was primarily due to the Advanced Materials Intermediates Series segment (declining domestic demand, new production capacity, and production interruptions) and the Green Products and Iodine Derivatives Series and Related Products segments (rapid increase in raw material costs exceeding market price growth)[32] Other Income Other income significantly increased to RMB 12.3 million, primarily benefiting from additional value-added tax credit policies and increased government grants - Other income increased from approximately RMB 2.7 million in the first half of 2024 to approximately RMB 12.3 million in the first half of 2025[33] - The increase was mainly due to income of approximately RMB 7.5 million from additional value-added tax credit policies, and an increase in other government grants from approximately RMB 1.4 million to RMB 2.6 million[33] Other Gains and Losses The Group recorded a net other gain of approximately RMB 8.9 million, a turnaround from a net other loss in the prior period, mainly due to exchange gains from the appreciation of the Russian Ruble and Mexican Peso against the RMB - The Group recorded a net other gain of approximately RMB 8.9 million in the first half of 2025, compared to a net other loss of approximately RMB 0.2 million in the first half of 2024[34] - The increase in gain was primarily due to an increase in net exchange gains of approximately RMB 9.5 million as various currencies (such as the Russian Ruble and Mexican Peso) appreciated against the RMB during the period[34] Selling and Distribution Expenses Selling and distribution expenses slightly decreased to RMB 72.3 million, mainly due to reduced logistics costs resulting from lower sales volumes of certain products like methylamine and ethylene glycol - Selling and distribution expenses slightly decreased from approximately RMB 75.8 million in the first half of 2024 to approximately RMB 72.3 million in the first half of 2025[35] - The decrease was mainly due to a slight reduction in logistics costs (including transportation, port charges, and shipping costs) as a result of decreased sales volume for certain products[35] Administrative Expenses Administrative expenses slightly decreased to RMB 65.5 million, primarily due to reduced expenses related to the Macau MMA competition last year, partially offset by increased staff costs for new employees in Singapore and share-based payment expenses - Administrative expenses slightly decreased from approximately RMB 65.8 million in the first half of 2024 to approximately RMB 65.5 million in the first half of 2025[36] - The decrease was mainly due to a reduction in consulting fees of approximately RMB 2.6 million related to the Macau MMA competition last year[36] - This decrease was partially offset by an increase in staff costs arising from new employees in Singapore and share-based payment expenses[36] Research and Development Expenses Research and development expenses decreased to RMB 26.0 million, mainly due to the completion of certain production technology improvement projects last year, leading to lower raw material costs - Research and development expenses decreased from approximately RMB 26.9 million in the first half of 2024 to approximately RMB 26.0 million in the first half of 2025[38] - The decrease was mainly due to the completion of certain production technology improvement projects last year, leading to lower raw material costs[38] Finance Costs Finance costs remained stable at approximately RMB 19.6 million, with no significant fluctuations during the period - Finance costs changed from approximately RMB 19.9 million in the first half of 2024 to approximately RMB 19.6 million in the first half of 2025, with no significant fluctuations during the period[39] Income Tax Expense Income tax expense increased to RMB 2.7 million, consistent with the rise in profit before tax, but the effective tax rate decreased from 35.8% to 25.8%, primarily due to the impact of under-provision for prior period income tax - Income tax expense increased from approximately RMB 2.5 million in the first half of 2024 to approximately RMB 2.7 million in the first half of 2025[40] - The effective tax rate for the first half of 2025 was approximately 25.8% (2024: 35.8%), with the decrease attributable to the impact of under-provision for income tax expense in prior years recognized in the current period[40] Profit for the Period The Group's profit for the period increased to RMB 7.9 million in the first half of 2025, up from RMB 4.4 million in the prior period, reflecting the combined impact of the aforementioned financial fluctuations - Profit for the period was approximately RMB 7.9 million in the first half of 2025, compared to approximately RMB 4.4 million in the first half of 2024[41] Outlook Looking ahead to the second half of 2025, cost pressures in the chemical industry are expected to ease, supply-demand balance to improve, and policies to focus on green environmental protection, while the Group will adhere to intelligent manufacturing, expand production capacity, and diversify markets for long-term sustainable growth - In the second half of 2025, falling prices of key raw materials such as crude oil and coal are expected to alleviate cost pressures, and the supply-demand balance in the chemical industry will improve[42] - Industry policies are anticipated to continue focusing on green environmental protection, further optimizing the supply-demand dynamics[42] - The Group will adhere to intelligent manufacturing, expand production capacity, and diversify regional markets through tiered customer cooperation and customized services, strengthening supply chain resilience[42] Capital Structure, Liquidity and Financial Resources The Group funds its working capital through internal resources and borrowings, with increases in total assets and bank balances and cash, while the gearing ratio rose to 146.6% due to increased borrowings - The Group manages its capital to ensure continuous operation and provides maximum returns to shareholders by optimizing the balance between debt and equity[43] Capital Structure and Liquidity | Indicator | June 30, 2025 (RMB million) | December 31, 2024 (RMB million) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 2,090.5 | 2,046.5 | Increase | | Bank Balances and Cash | 155.3 | 101.5 | Increase | | Total Borrowings | 926.8 | 852.2 | Increase | | Gearing Ratio | 146.6% | 137.1% | Increase | - Borrowings bear interest at fixed annual rates ranging from 2.6% to 7.2% and are repayable between 2025 and 2050[45] Key Risks and Uncertainties and Risk Management The Group faces market risks (currency risk, interest rate risk), credit risk, and liquidity risk, which management addresses through monitoring, credit limit setting, and regular assessments, without implementing foreign currency or interest rate hedging policies - The Group is primarily exposed to currency risk and interest rate risk, but its approach to managing and measuring these risks has not changed[47] - The Group currently has no foreign currency hedging policy, and management monitors foreign exchange risk and considers hedging when necessary[48] - The Group faces fair value interest rate risk on fixed-rate financial instruments and cash flow interest rate risk on variable-rate financial liabilities, with no interest rate hedging policy currently in place[49][50] - Credit risk primarily arises from trade receivables, and management mitigates this risk by setting credit limits, approval, and follow-up procedures, and assessing impairment based on expected credit loss models[51] - Credit risk for bank balances and restricted bank deposits is limited as counterparties are banks with high credit ratings[52] - Liquidity risk is managed by monitoring and maintaining adequate levels of cash and cash equivalents[53] Treasury Policy and Foreign Exchange Risk The Group adopts a prudent treasury policy, continuously reviews customer creditworthiness to mitigate credit risk, and closely monitors its liquidity position, with foreign currency transactions primarily denominated in RMB and USD, but no financial instruments were undertaken to hedge foreign currency exposure during the period - The Group adopts a prudent treasury policy, maintains a sound liquidity position, and continuously conducts credit assessments of its customers[55] - The Group's foreign currency transactions are primarily denominated in RMB and USD, exposing it to currency risk, but no financial instruments were undertaken to hedge its foreign currency exposure during the period[56] Capital Expenditure and Commitments Capital expenditure for the interim period increased to RMB 70.1 million, primarily for the acquisition of property, plant, and equipment, with capital commitments of approximately RMB 10.9 million at period-end, mainly for purchasing machinery and equipment - Capital expenditure during the period, including additions to property, plant and equipment and construction in progress, amounted to approximately RMB 70.1 million (2024: RMB 55.4 million)[57] - As of June 30, 2025, the Group's capital commitments were approximately RMB 10.9 million (December 31, 2024: RMB 17.9 million), primarily for the purchase of machinery and equipment in mainland China[58] Pledge of Assets and Contingent Liabilities The Group pledged restricted bank deposits, right-of-use assets, property, plant and equipment, bills receivable, cash and cash equivalents, inventories, and trade receivables as collateral for borrowings, with no significant contingent liabilities at period-end - As of June 30, 2025, the Group pledged various assets as collateral for borrowings, including restricted bank deposits (RMB 30.4 million), right-of-use assets (RMB 62.9 million), property, plant and equipment (RMB 317.8 million), etc[59] - As of June 30, 2025, the Group had no significant contingent liabilities[60] Dividend Policy The Board of Directors resolved not to recommend the payment of any interim dividend for the six months ended June 30, 2025 - The Board of Directors has resolved not to recommend the payment of any interim dividend for the six months ended June 30, 2025 (2024: nil)[61] Employees and Remuneration Policy As of June 30, 2025, the Group had 1,093 employees, with total staff costs of approximately RMB 71.8 million, and remuneration is determined by market norms and individual performance, supported by share option and share award schemes - As of June 30, 2025, the Group had a total of 1,093 employees (2024: 1,086 employees)[62] - Total staff costs (including directors' emoluments) for the six months ended June 30, 2025, amounted to approximately RMB 71.8 million (2024: RMB 67.9 million)[62] - Remuneration is determined with reference to market norms and employees' individual performance, qualifications, and experience, and the company has a share option scheme and a share award scheme[63][64] Material Investments and Acquisitions The Group held no material investments or capital assets during the interim period and plans to fund future acquisitions through internal resources and other fundraising activities, with no acquisitions or disposals of significant subsidiaries, associates, or joint ventures during the period - As of the six months ended June 30, 2025, the Group did not hold any material investments or capital assets[65] - The Group will fund future acquisitions through internally generated funds and other fundraising activities, including but not limited to the issuance of new debt or equity instruments[67] - The Group did not acquire or dispose of any of its significant subsidiaries, associates, or joint ventures for the six months ended June 30, 2025[68] Events After Reporting Period As of the report date, there have been no significant events subsequent to the six months ended June 30, 2025 - There have been no significant events subsequent to the six months ended June 30, 2025, up to the date of this report[69] Other Information This section covers additional corporate governance practices, directors' interests, related party transactions, and details on share option and award schemes Corporate Governance Practices The company has adopted the HKEX Corporate Governance Code and complied with all code provisions during the first half of 2025, except for the non-segregation of Chairman and CEO roles, with the Board committed to maintaining high standards of corporate governance - The company has adopted the Corporate Governance Code set out in Appendix C1 to the Listing Rules of the Stock Exchange[70] - For the six months ended June 30, 2025, the company has complied with all code provisions of the Corporate Governance Code, except for code provision C.2.1 (which states that the roles of chairman and chief executive should be separate)[70] Chairman and Chief Executive Officer Mr. Yin Yanbin concurrently serves as both Chairman of the Board and Chief Executive Officer, an arrangement the Board believes provides strong and consistent leadership, which will be reviewed periodically - Mr. Yin Yanbin concurrently held the roles of Chairman of the Board and Chief Executive Officer of the company during the period, responsible for overseeing the Group's operations[71] - The Board believes that this arrangement provides strong and consistent leadership for the company and allows for more effective and efficient planning and implementation of business decisions and strategies[71] Directors' Securities Transactions The company has adopted the Standard Code for Securities Transactions by Directors of Listed Issuers as its code of conduct for directors and employees trading company securities, with all directors confirming compliance during the period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix C3 to the Listing Rules as its own code of conduct[72] - Following specific inquiries made to all directors, each director has confirmed compliance with the required standards set out in the Model Code for the six months ended June 30, 2025[72] Material Contracts and Competing Business Interests Except for related party transactions, no director or their associated entity held a direct or indirect material interest in any contract significant to the Group's business, nor did any director have interests in businesses competing with the Group during the period - Save for related party transactions, no director or entity connected with a director had a direct or indirect material interest in any transaction, arrangement, or contract significant to the Group's business during or at the end of the six months ended June 30, 2025[73] - No director had any interest in any business that competes or is likely to compete with the Group's business[74] Related Party Transactions The Group entered into loan agreements with Hanhe Industrial and Jinhan Tianxia, indirect subsidiaries of Mr. Yin Yanbin, each for RMB 100 million at an annual interest rate of 3.5%, which were reviewed by independent non-executive directors and exempted from Listing Rules disclosure requirements - On April 1, 2025, Nanjing Hanhe Industrial Co., Ltd., an indirect subsidiary of Mr. Yin, provided loan financing of RMB 100 million to the Group at an annual interest rate of 3.5%[75] - As of June 30, 2025, the outstanding loan amount from Hanhe Industrial was approximately RMB 26.85 million[75] - On April 1, 2025, Nanjing Jinhan Tianxia Sports Culture Development Co., Ltd., an indirect subsidiary of Mr. Yin, provided a loan totaling RMB 100 million to the Group at an annual interest rate of 3.5%[76] - As of June 30, 2025, the outstanding loan from Jinhan Tianxia was RMB 56.2 million[76] - The aforementioned major loan agreements were reviewed by the independent non-executive directors and were fully exempted from compliance with shareholder approval, annual review, and all disclosure requirements[77] Management Contracts No contracts concerning the management and administration of the company's whole or any substantial part of its business were entered into or existed during the period - No contracts concerning the management and administration of the whole or any substantial part of the business of the company were entered into or existed during the period[79] Directors' and Chief Executive's Interests in Shares As of June 30, 2025, Mr. Yin Yanbin held a 54.79% long position in shares through controlled corporations, with other executive directors also holding varying proportions of beneficial ownership Directors' and Chief Executive's Positions in Shares (Long Position) | Name | Capacity/Nature of Interest | Number of Shares Held | Approximate % of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Yin | Interest in controlled corporation | 553,141,500 | 54.79% | | Mr. Chen Zhaohui | Beneficial owner | 52,536,750 | 5.20% | | Mr. Zhuang Zhaohui | Beneficial owner | 31,509,000 | 3.12% | | Mr. Zhou Chunian | Beneficial owner | 12,323,250 | 1.22% | | Mr. Chen Hua | Beneficial owner | 8,215,500 | 0.81% | | Mr. Diao Cheng | Beneficial owner | 1,232,250 | 0.12% | - Mr. Yin is deemed to have an interest in 375,000,000 shares held by Commonwealth B and 178,141,500 shares held by Commonwealth Happy Elephant[80] Directors' Rights to Acquire Shares or Debentures Except as disclosed, no rights to acquire shares or debentures of the company were granted to or exercised by directors, their spouses, or minor children during the period or up to the report date - Save as disclosed, at no time during the period or up to the date of this report were any rights granted to, or exercised by, the directors, their respective spouses, or minor children to acquire shares or debentures of the company, from which they might benefit[82] Share Option Scheme The company adopted a share option scheme on December 16, 2019, to incentivize or reward selected participants, with no outstanding share options under the scheme as of June 30, 2025 - The company adopted a share option scheme on December 16, 2019, which became effective on January 21, 2020, to incentivize or reward selected participants for their contributions to the Group[83] - Eligible participants for the share option scheme include employees, non-executive directors, suppliers, customers, shareholders, and consultants of the Group[83] - As of June 30, 2025, no share options were granted, cancelled, lapsed, or forfeited under the share option scheme, and there were no outstanding share options[83] - As of the date of this report, the total number of shares available for issue under the share option scheme was 100,000,000 shares, representing approximately 9.91% of the total issued shares[84] Share Award Scheme The company adopted a share award scheme on March 1, 2023, to recognize and reward contributions from eligible participants and provide incentives, with 904,000 share awards granted as of June 30, 2025, primarily to directors and employees - The company adopted a share award scheme on March 1, 2023, to recognize and reward contributions made by eligible participants and to provide incentives to retain and attract talent[85] - The vesting period for any award must be no less than 12 months from the grant date[86] - As of June 30, 2025, the number of awards available for grant was 64,276,000 shares, representing approximately 6.37% of the total issued share capital[86] Number of Shares Under Share Awards (Outstanding as of June 30, 2025) | Grantee Name | Grant Date | Vesting Period | Outstanding as of Jan 1, 2025 | Granted During the Period | Outstanding as of June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Zhuang Zhaohui | Jan 20, 2025 | One year | — | 36,000 | 36,000 | | Mr. Zhou Chunian | Jan 20, 2025 | One year | — | 20,000 | 20,000 | | Mr. Chen Hua | Jan 20, 2025 | One year | — | 12,000 | 12,000 | | Mr. Diao Cheng | Jan 20, 2025 | One year | — | 6,000 | 6,000 | | Connected Persons – Group A | Jan 20, 2025 | One year | — | 20,000 | 20,000 | | Connected Persons – Group B | Jan 20, 2025 | One year | — | 184,000 | 184,000 | | Connected Persons – Group B | Jan 20, 2025 | One year | — | 20,000 | 20,000 | | Employees | Jan 20, 2025 | One year | — | 337,500 | 337,500 | | Employees | Jan 21, 2025 | One year | — | 268,500 | 268,500 | | Total | | | — | 904,000 | 904,000 | - The fair value of the share awards is measured based on the market price of the company's shares on the grant date, with closing prices of HKD 2.20 and HKD 2.24, respectively[90] Share-Linked Agreements During the period, other than the share option scheme, the company did not enter into any share-linked agreements, and no such agreements were in existence as of June 30, 2025 - During the period, save for the share option scheme, the company did not enter into any share-linked agreements, and as of June 30, 2025, no such agreements entered into by the company were in existence[92] Major Shareholders' Interests in Shares As of June 30, 2025, Commonwealth B, Commonwealth Yanbin, Commonwealth Happy Elephant, Commonwealth YYB, and Ms. Wu Hailing were major shareholders holding long positions in the company's shares Major Shareholders' Positions in Shares (Long Position) | Name/Designation | Capacity/Nature of Interest | Number of Shares Held | Approximate % of Shareholding | | :--- | :--- | :--- | :--- | | Commonwealth B | Beneficial owner | 375,000,000 | 37.15% | | Commonwealth Yanbin | Interest in controlled corporation | 375,000,000 | 37.15% | | Commonwealth Happy Elephant | Beneficial owner | 178,141,500 | 17.65% | | Commonwealth YYB | Interest in controlled corporation | 178,141,500 | 17.65% | | Ms. Wu | Spouse's interest | 553,141,500 | 54.79% | | Endless Reward Limited | Beneficial owner | 65,180,000 | 6.46% | | SP Global Trust Limited | Trustee of a trust | 65,180,000 | 6.46% | - Ms. Wu is the spouse of Mr. Yin and is deemed to have an interest in the shares in which Mr. Yin has an interest, pursuant to the Securities and Futures Ordinance[96] Share Capital and Pre-emptive Rights As of June 30, 2025, the company's issued and fully paid share capital was 1,009,500,000 shares at HKD 0.01 each, with no pre-emptive rights provisions in the company's articles of association or Cayman Islands law Share Capital Changes (RMB thousand) | Indicator | Jan 1, 2025 and June 30, 2025 | Jan 1, 2024 and June 30, 2024 | | :--- | :--- | :--- | | Issued and fully paid share capital (Number of shares) | 1,009,500,000 | 1,000,000,000 | | Issued and fully paid share capital (RMB thousand) | 8,930 | 8,844 | - There are no provisions for pre-emptive rights in the company's articles of association, nor are there any restrictions on such rights under Cayman Islands law[100] Dealings in Listed Securities and Interim Dividend Except for the share award scheme, neither the company nor its subsidiaries purchased, sold, or redeemed any listed securities during the period, and the Board resolved not to declare an interim dividend for the first half of 2025 - Save for the share award scheme, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the six months ended June 30, 2025[101] - The Board has resolved not to recommend the payment of any interim dividend for the six months ended June 30, 2025[102] Audit Committee and Review of Financial Statements The Audit Committee, composed of three independent non-executive directors, reviewed the Group's accounting principles, internal controls, risk management systems, and the unaudited condensed consolidated financial statements for the first half of 2025 - The Audit Committee comprises three independent non-executive directors: Ms. Zheng Qing (Chairperson), Mr. Sun Hongbin, and Mr. Wang Guangji[103] - The Audit Committee has reviewed the accounting principles and practices adopted by the Group and discussed matters relating to internal controls, risk management, and financial reporting, including the review of the unaudited condensed consolidated financial statements for the first half of 2025[103] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the Group's consolidated profit or loss and other comprehensive income for the six months ended June 30, 2025, showing a 3.7% revenue growth and a significant 77.1% increase in profit for the period, primarily driven by higher other income and exchange gains Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30, RMB thousand) | Indicator | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Revenue | 1,856,712 | 1,790,194 | | Cost of sales | (1,686,249) | (1,595,694) | | Gross profit | 170,463 | 194,500 | | Other income | 12,315 | 2,691 | | Other gains and losses | 8,905 | (167) | | Selling and distribution expenses | (72,324) | (75,834) | | Administrative expenses | (65,490) | (65,785) | | Research and development expenses | (25,973) | (26,915) | | Finance costs | (19,639) | (19,902) | | Profit before tax | 10,613 | 6,932 | | Tax | (2,736) | (2,485) | | Profit for the period | 7,877 | 4,447 | | Total comprehensive income for the period | 9,996 | 596 | | Profit attributable to owners of the company | 7,036 | 4,447 | | Basic earnings per share (RMB) | 0.007 | 0.005 | - Profit for the period significantly increased by 77.1%, primarily due to an increase in net exchange gains and higher other income from additional VAT credit refund policies[104] - Gross profit decreased, but the significant growth in other income and other gains offset some of the negative impact[104] Condensed Consolidated Statement of Financial Position This statement presents the Group's financial position as of June 30, 2025, showing a slight increase in total assets, an improvement in net current liabilities, but an increase in total borrowings and the gearing ratio Condensed Consolidated Statement of Financial Position (As of June 30, 2025, RMB thousand) | Indicator | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Non-current Assets | | | | Property, plant and equipment | 836,865 | 813,295 | | Right-of-use assets | 73,828 | 74,699 | | Current Assets | | | | Inventories | 426,607 | 414,619 | | Trade receivables | 270,195 | 286,452 | | Cash and cash equivalents | 155,278 | 101,461 | | Current Liabilities | | | | Trade payables and bills payable | 379,703 | 404,024 | | Borrowings (current portion) | 739,967 | 705,211 | | Net Current Liabilities | (87,500) | (127,755) | | Total Assets Less Current Liabilities | 843,438 | 797,415 | | Non-current Liabilities | | | | Borrowings (non-current portion) | 103,773 | 65,939 | | Loans from related companies (non-current portion) | 80,600 | 81,050 | | Net Assets | 632,338 | 621,576 | | Total Equity | 632,338 | 621,576 | - Net current liabilities improved from RMB (127.8) million to RMB (87.5) million, indicating an improvement in short-term solvency[106] - Total borrowings (current and non-current) increased from RMB 771.15 million to RMB 843.74 million, leading to a higher gearing ratio[106][107][143] Condensed Consolidated Statement of Changes in Equity This statement outlines the changes in the Group's equity for the six months ended June 30, 2025, indicating an increase in equity attributable to owners of the company and total equity, primarily influenced by profit for the period and other comprehensive income Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30, RMB thousand) | Item | As of Jan 1, 2025 (Audited) | Profit for the Period | Other Comprehensive Income/(Expense) for the Period | Equity-settled share-based payments recognized | As of June 30, 2025 (Unaudited) | | :--- | :--- | :--- | :--- | :--- | :--- | | Share Capital | 8,930 | — | — | — | 8,930 | | Reserves | 576,852 | — | 2,119 | 766 | 579,737 | | Equity attributable to owners of the company | 585,782 | 7,036 | 2,119 | 766 | 595,703 | | Non-controlling interests | 35,794 | 841 | — | — | 36,635 | | Total Equity | 621,576 | 7,877 | 2,119 | 766 | 632,338 | - Equity attributable to owners of the company increased from RMB 585.8 million to RMB 595.7 million, primarily driven by profit for the period of RMB 7.0 million and other comprehensive income of RMB 2.1 million[109] - Share-based payments recognized resulted in an increase in reserves of RMB 0.766 million[109] Condensed Consolidated Statement of Cash Flows This statement presents the Group's cash flow activities for the six months ended June 30, 2025, showing a significant increase in net cash from operating activities, a slight decrease in net cash used in investing activities, stable net cash from financing activities, and a substantial increase in cash and cash equivalents at period-end Condensed Consolidated Statement of Cash Flows (For the six months ended June 30, RMB thousand) | Indicator | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Net cash from operating activities | 67,386 | 39,923 | | Net cash used in investing activities | (74,557) | (72,363) | | Net cash from financing activities | 57,035 | 54,101 | | Net increase in cash and cash equivalents | 49,864 | 21,661 | | Cash and cash equivalents at beginning of period | 101,461 | 77,393 | | Effect of foreign exchange rate changes | 3,953 | (2,067) | | Cash and cash equivalents at end of period | 155,278 | 96,987 | - Net cash from operating activities increased from RMB 39.9 million to RMB 67.4 million, indicating improved operational efficiency[112] - Cash and cash equivalents at the end of the period significantly increased to RMB 155.3 million, a notable rise from RMB 97.0 million in the prior period[112] Notes to the Condensed Consolidated Financial Statements This section provides detailed explanatory notes to the condensed consolidated financial statements, covering general information, basis of preparation, significant accounting policies, and specific breakdowns of financial items 1. General Information The company was incorporated in the Cayman Islands on April 25, 2018, and listed on the Main Board of the Stock Exchange on January 21, 2020, operating as an investment holding company with subsidiaries primarily engaged in manufacturing and selling chemical and pharmaceutical products - The company was incorporated in the Cayman Islands as an exempted company with limited liability on April 25, 2018, under the Companies Law of the Cayman Islands, and its shares were listed on the Main Board of the Stock Exchange on January 21, 2020[115] - The controlling shareholders of the company are Mr. Yin and Ms. Wu[115] - The company is an investment holding company, and its subsidiaries are principally engaged in the manufacture and sale of chemical and pharmaceutical products[116] 2. Basis of Preparation of the Condensed Consolidated Financial Statements The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the applicable disclosure requirements of Appendix 16 to the Listing Rules, presented in RMB - The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the applicable disclosure requirements of Appendix 16 to the Listing Rules[117] - The condensed consolidated financial statements are presented in RMB, which is the functional currency of the company[118] 3. Significant Accounting Policies The condensed consolidated financial statements are prepared under the historical cost convention, and accounting policies remain consistent with the 2024 annual consolidated financial statements, with no significant impact from new standards applied in the current period - The condensed consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments measured at fair value where applicable[119] - The accounting policies and methods of computation used in the preparation of the condensed consolidated financial statements for the six months ended June 30, 2025, are consistent with those presented in the Group's annual consolidated financial statements for the year ended December 31, 2024[119] - The application of the revised International Financial Reporting Standards and the Committee's agenda decisions during the interim period and prior periods did not have a significant impact on the Group's financial position and performance and/or the disclosures in these condensed consolidated financial statements[119] 4. Revenue and Segment Information The Group's revenue primarily derives from the manufacturing and sale of chemical and pharmaceutical products, totaling RMB 1,856.7 million in the first half of 2025, segmented by product type and customer geography, with mainland China remaining the primary market - Revenue represents revenue generated from the manufacture and sale of chemical and pharmaceutical products for both periods[120] Revenue by Type of Goods (RMB thousand) | Type of Goods | 2025 | 2024 | | :--- | :--- | :--- | | Methylamine Industry Series | 600,981 | 617,525 | | Iodine Derivatives Series and Related Products | 588,339 | 440,302 | | Golden Highway New Materials | 399,090 | 399,570 | | Advanced Materials Intermediates Series | 132,537 | 218,071 | | Green Products | 111,485 | 94,706 | | Health Products | 15,001 | 13,321 | | Gegexiang Selection | 978 | — | | Other | 8,301 | 6,699 | | Total | 1,856,712 | 1,790,194 | Revenue by Geographical Region (RMB thousand) | Region | 2025 | 2024 | | :--- | :--- | :--- | | Mainland China | 1,418,926 | 1,411,161 | | Europe | 183,474 | 148,735 | | Vietnam | 85,828 | 77,264 | | Other Asian Countries | 95,906 | 101,916 | | Other | 72,578 | 51,118 | | Total | 1,856,712 | 1,790,194 | - During both periods, no revenue from individual customers accounted for more than 10% of the Group's total revenue[126] 5. Other Income and Other Gains and Losses The Group's other income significantly increased to RMB 12.3 million in the first half of 2025, mainly due to VAT additional deduction benefits, while other gains and losses turned from a loss to a gain of RMB 8.9 million, primarily driven by increased net exchange gains Other Income (For the six months ended June 30, RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Government grants | 2,560 | 1,409 | | VAT additional deduction benefits | 7,452 | — | | Bank interest income | 600 | 637 | | Interest income from loans receivable | 297 | 299 | | Other | 1,406 | 346 | | Total | 12,315 | 2,691 | Other Gains and Losses (For the six months ended June 30, RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Net exchange gains/(losses) | 9,427 | (114) | | Loss on disposal of plant and equipment | (1,090) | (654) | | Fair value changes of financial assets at fair value through profit or loss | (8) | (144) | | Fair value changes of derivative financial instruments | (79) | (7) | | Other | 655 | 752 | | Total | 8,905 | (167) | - VAT additional deduction benefits were a new source of income for the period, amounting to approximately RMB 7,452,000[129] - Net exchange gains turned from a loss of RMB 114,000 in 2024 to a gain of RMB 9,427,000 in 2025[127] 6. Profit Before Tax The Group's profit before tax for the first half of 2025 was RMB 10.6 million, an increase from RMB 6.9 million in the prior period, mainly affected by inventory costs, depreciation, and inventory write-downs Profit Before Tax Components (For the six months ended June 30, RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Cost of inventories recognized as expense | 1,686,256 | 1,594,853 | | Depreciation of property, plant and equipment | 42,953 | 36,168 | | Depreciation of right-of-use assets | 3,326 | 3,263 | | Total depreciation | 46,279 | 39,431 | | Capitalized as cost of inventories produced | (35,628) | (32,063) | | (Reversal of)/write-down of inventories, net of reversal | (7) | 841 | - Profit before tax for the first half of 2025 was RMB 10,613,000, an increase from RMB 6,932,000 in the corresponding period of 2024[104] - Inventory write-down changed from a recognition of RMB 841,000 in 2024 to a reversal of RMB 7,000 in 2025[128] 7. Taxation The Group's tax expense increased to RMB 2.7 million in the first half of 2025, primarily comprising current tax and under-provision for prior years, with deferred tax being a negative amount Taxation Components (For the six months ended June 30, RMB thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Current tax | 4,311 | 3,495 | | Under-provision in prior years | 9 | 1,324 | | Deferred tax (for the period) | (1,584) | (2,334) | | Total | 2,736 | 2,485 | - Total tax expense increased from RMB 2,485,000 in 2024 to RMB 2,736,000 in 2025[130] 8. Dividends The company neither paid nor declared any dividends for the six months ended June 30, 2025, and 2024 - The company neither paid nor declared any dividends for the six months ended June 30, 2025, and 2024[131] 9. Earnings Per Share Both basic and diluted earnings per share attributable to owners of the company increased to RMB 0.007, up from RMB 0.005 in the prior period, reflecting the increase in profit for the period Earnings Per Share Calculation (For the six months ended June 30) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Profit for the purpose of calculating basic and diluted earnings per share attributable to owners of the company (RMB thousand) | 7,036 | 4,447 | | Weighted average number of ordinary shares for basic earnings per share (thousand shares) | 944,320 | 949,100 | | Weighted average number of ordinary shares for diluted earnings per share (thousand shares) | 944,544 | 949,100 | | Basic Earnings Per Share (RMB) | 0.007 | 0.005 | | Diluted Earnings Per Share (RMB) | 0.007 | 0.005 | - Both basic and diluted earnings per share increased from RMB 0.005 in 2024 to RMB 0.007 in 2025[132] 10. Property, Plant and Equipment and Right-of-Use Assets During the interim period, the Group acquired property, plant, and equipment totaling RMB 70.1 million and disposed of property, plant, and equipment with a gross carrying amount of RMB 1.2 million, with certain assets and leased land pledged for bank financing - During the interim period, the Group acquired property, plant and equipment totaling RMB 70,110,000 (2024: RMB 55,374,000)[133] - The Group disposed of property, plant and equipment with a gross carrying amount of RMB 1,227,000, resulting in a loss on disposal of RMB 1,090,000[133] - As of June 30, 2025, the Group had pledged buildings, plant and machinery, and motor vehicles with a total net carrying amount of RMB 317,759,000 to secure general banking and other facilities[133] - The Group had pledged leasehold land with a net carrying amount of RMB 62,884,000 to secure general banking facilities[134] 11. Trade Receivables The Group's net trade receivables amounted to RMB 270.2 million, with a typical credit period of 60 days, and a reversal of impairment losses of RMB 2.3 million during the period indicates improved receivable quality, with some trade receivables pledged as collateral for borrowings Trade Receivables (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade receivables | 273,203 | 291,869 | | Less: Provision for credit losses | (3,008) | (5,417) | | Net | 270,195 | 286,452 | Ageing Analysis of Trade Receivables (RMB thousand) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 0 to 30 days | 169,508 | 186,358 | | 31 to 60 days | 63,038 | 52,546 | | 61 to 90 days | 25,675 | 34,866 | | Over 90 days | 11,974 | 12,682 | | Total | 270,195 | 286,452 | - For the six months ended June 30, 2025, the Group recognized impairment provisions of RMB 136,000 and reversed impairment provisions of RMB 2,492,000, resulting in a net reversal of RMB 2,356,000[139] - As of June 30, 2025, trade receivables with a carrying amount of RMB 1,103,000 were pledged as collateral for the Group's borrowings[137] 12. Bills Receivable at Fair Value Through Other Comprehensive Income The Group's bills receivable at fair value through other comprehensive income amounted to RMB 117.0 million, all maturing within 180 days, with some bills pledged as collateral for bank financing and supplier payments Bills Receivable at Fair Value Through Other Comprehensive Income (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Bills receivable at fair value through other comprehensive income | 117,027 | 127,229 | - All bills receivable have an ageing of between 0 and 180 days[140] - As of June 30, 2025, the Group had pledged bills receivable with a total net carrying amount of RMB 81,092,000 to secure general banking facilities granted to the Group and payments to suppliers[140] 13. Trade Payables and Bills Payable The Group's total trade payables and bills payable amounted to RMB 379.7 million, with all bills payable maturing within one year and trade payables typically having a credit period of 90 days Trade Payables and Bills Payable (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade payables | 367,213 | 363,403 | | Bills payable | 12,490 | 40,621 | | Total | 379,703 | 404,024 | - All bills payable have a maturity period of less than one year[142] - The credit period for purchases of inventories is normally 90 days[142] Ageing Analysis of Trade Payables (RMB thousand) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 0 to 30 days | 157,804 | 207,405 | | 31 to 60 days | 102,347 | 39,702 | | 61 to 90 days | 60,959 | 67,922 | | Over 90 days | 46,103 | 48,374 | | Total | 367,213 | 363,403 | 14. Borrowings The Group's total borrowings amounted to RMB 843.7 million, with the majority classified as current liabilities, comprising secured bank loans, unsecured bank loans, and other loans Borrowings Composition and Repayment Period (RMB thousand) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Secured bank loans | 249,937 | 360,811 | | Unsecured bank loans | 447,880 | 304,300 | | Other loans | 145,923 | 106,039 | | Total | 843,740 | 771,150 | | Repayable within one year | 739,967 | 705,211 | | Repayable after one year but not more than two years | 44,025 | 45,000 | | Repayable after two years but not more than five years | 58,725 | 19,900 | | Repayable after five years | 1,023 | 1,039 | | Amounts classified as non-current liabilities | 103,773 | 65,939 | - Total borrowings increased from RMB 771.15 million as of December 31, 2024, to RMB 843.74 million as of June 30, 2025[143] 15. Loans from Related Companies The Group obtained loans totaling RMB 83.05 million from related companies Hanhe Industrial and Jinhan Tianxia, both at an annual interest rate of 3.5%, with most loans classified as non-current liabilities Loans from Related Companies (RMB thousand) | Related Company | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Hanhe Industrial | 26,850 | 27,250 | | Jinhan Tianxia | 56,200 | 53,800 | | Total | 83,050 | 81,050 | | Less: Amounts classified as current liabilities | (2,450) | — | | Amounts classified as non-current liabilities | 80,600 | 81,050 | - Hanhe Industrial and Jinhan Tianxia provided loan financing to the Group, each