恒安国际(01044) - 2023 - 中期财报

Financial Highlights Key financial indicators for H1 2023 show revenue growth, but declining profitability and improved asset turnover Key Financial Indicators for H1 2023 | Indicator | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 12,204,605 | 11,200,021 | +9.0% | | Core Business Revenue | 11,054,709 | 9,604,649 | +15.1% | | Gross Margin | 31.0% | 35.2% | -4.2pp | | Operating Profit | 1,701,681 | 1,885,753 | -9.8% | | Profit Attributable to Equity Holders | 1,225,768 | 1,276,191 | -4.0% | | Basic Earnings Per Share | RMB 1.055 | RMB 1.098 | -3.9% | | Finished Goods Turnover Days | 33 days | 39 days | -6 days | | Accounts Receivable Turnover Days | 43 days | 51 days | -8 days | Interim Condensed Consolidated Financial Statements Interim Condensed Consolidated Statement of Profit or Loss In H1 2023, total revenue grew 9.0% to RMB 12.205 billion, but rising costs and expenses led to a 4.1% decline in gross profit and a 9.8% drop in operating profit Key Profit or Loss Data (For the Six Months Ended June 30) | Item | 2023 (RMB thousands) | 2022 (RMB thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 12,204,605 | 11,200,021 | +9.0% | | Cost of Sales | (8,416,055) | (7,257,830) | +16.0% | | Gross Profit | 3,788,550 | 3,942,191 | -3.9% | | Operating Profit | 1,701,681 | 1,885,753 | -9.8% | | Profit Before Income Tax | 1,541,482 | 1,795,900 | -14.2% | | Profit for the Period | 1,226,901 | 1,291,618 | -5.0% | | Profit Attributable to Equity Holders of the Company | 1,225,768 | 1,276,191 | -4.0% | | Basic Earnings Per Share | RMB 1.055 | RMB 1.098 | -3.9% | Interim Condensed Consolidated Balance Sheet As of June 30, 2023, total assets increased 14.3% to RMB 48.397 billion, while total liabilities rose 24.6% to RMB 28.117 billion, primarily due to a significant increase in current borrowings Balance Sheet Summary | Item | June 30, 2023 (RMB thousands) | December 31, 2022 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Total Assets | 48,397,012 | 42,337,242 | +14.3% | | Non-current Assets | 13,598,908 | 14,228,720 | -4.4% | | Current Assets | 34,798,104 | 28,108,522 | +23.8% | | Total Liabilities | 28,116,975 | 22,561,505 | +24.6% | | Non-current Liabilities | 406,019 | 2,167,403 | -81.3% | | Current Liabilities | 27,710,956 | 20,394,102 | +35.9% | | Total Equity | 20,280,037 | 19,775,737 | +2.6% | - Significant increase in current assets was primarily driven by cash and bank balances, rising from RMB 18.667 billion at year-end to RMB 26.750 billion[12] - Increase in current liabilities mainly resulted from short-term borrowings growing from RMB 15.029 billion to RMB 23.659 billion[13] Interim Condensed Consolidated Statement of Cash Flows In H1 2023, net cash from operating activities was RMB 1.939 billion, while investing activities resulted in a net outflow of RMB 2.709 billion, and financing activities generated RMB 5.431 billion, leading to a net increase in cash and cash equivalents of RMB 4.661 billion Cash Flow Statement Summary (For the Six Months Ended June 30) | Item | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 1,938,954 | 2,124,023 | | Net Cash (Used in)/Generated from Investing Activities | (2,709,232) | 3,182,282 | | Net Cash Generated from Financing Activities | 5,431,320 | 3,169,399 | | Net Increase in Cash and Cash Equivalents | 4,661,042 | 8,475,704 | | Cash and Cash Equivalents at Beginning of Period | 6,088,603 | 12,339,816 | | Cash and Cash Equivalents at End of Period | 10,793,612 | 20,888,836 | Notes to the Interim Condensed Consolidated Financial Information 6. Segment Information In H1 2023, tissue paper revenue grew 22.7% to become the largest segment, but all major business segments experienced profit declines, with tissue paper profit significantly down 98.3% due to raw material costs Revenue by Business Segment (For the Six Months Ended June 30) | Business Segment | 2023 (RMB thousands) | 2022 (RMB thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Sanitary Napkin Products | 3,219,295 | 3,128,524 | +2.9% | | Disposable Diaper Products | 665,304 | 633,512 | +5.0% | | Tissue Paper Products | 7,170,110 | 5,842,613 | +22.7% | | Others | 1,149,896 | 1,595,372 | -27.9% | | Group Total Revenue | 12,204,605 | 11,200,021 | +9.0% | Profit by Business Segment (For the Six Months Ended June 30) | Business Segment | 2023 (RMB thousands) | 2022 (RMB thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Sanitary Napkin Products | 1,149,778 | 1,330,726 | -13.6% | | Disposable Diaper Products | 30,152 | 101,566 | -70.3% | | Tissue Paper Products | 5,180 | 305,995 | -98.3% | | Others | 40,350 | 42,106 | -4.2% | 10. Dividends The Board proposed an interim dividend of RMB 0.70 per share for 2023, consistent with the prior year, totaling approximately RMB 0.813 billion, which is not yet recognized as a liability - The Board proposed an interim dividend of RMB 0.70 per share on August 24, 2023, consistent with the same period in 2022[78][79] - The total interim dividend amounts to approximately RMB 813,485,000, payable in HKD[79] 16. Borrowings As of June 30, 2023, total borrowings increased 40.1% to RMB 23.860 billion, driven by new ultra-short-term commercial papers and increased short-term bank loans, with the average effective annual interest rate rising to 3.31% Borrowings Composition | Item | June 30, 2023 (RMB thousands) | December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Non-current Borrowings | 201,251 | 2,001,334 | | Current Borrowings | 23,658,741 | 15,028,618 | | Total | 23,859,992 | 17,029,952 | - During H1 2023, the company issued four tranches of ultra-short-term commercial papers totaling RMB 5.0 billion, with coupon rates ranging from 2.39% to 2.40%[100][101] - As of June 30, 2023, the Group's average effective annual interest rate on borrowings was approximately 3.31%, an increase from 2.10% at the end of 2022[98][99] Management Discussion and Analysis Business Review In H1 2023, despite raw material price pressure, overall revenue grew 9.0% to RMB 12.205 billion driven by effective omnichannel sales, though high-cost wood pulp inventory led to a decline in gross margin and operating profit - Overall revenue increased by 9.0% to approximately RMB 12.205 billion, with the three core business segments' revenue growing by approximately 15.1%[131][133] - E-commerce sales (including Retail Link and New Channels) increased by approximately 30.0%, raising their contribution to nearly 29.0%[134][136] - Affected by raw material prices, the overall gross margin decreased to 31.0% (from 35.2% in the prior period), but is expected to improve in H2[135][137] - Profit attributable to equity holders decreased by approximately 4.0% to RMB 1.226 billion, primarily due to high-cost wood pulp inventory; the Board declared an interim dividend of RMB 0.70 per share, consistent with the prior year[138][139][141] Segment Performance In H1 2023, all core businesses achieved revenue growth, with tissue paper leading at 22.7%, though its gross margin was pressured by high wood pulp prices, while sanitary napkins and disposable diapers also saw steady growth Sanitary Napkin Business Sanitary napkin revenue grew 2.9% to RMB 3.219 billion, driven by product upgrades and new retail channels, despite a gross margin decline to 61.8% due to rising raw material costs Sanitary Napkin Business Performance | Indicator | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Revenue | RMB 3.219 billion | RMB 3.129 billion | | Revenue Growth Rate | +2.9% | - | | Revenue Contribution | 26.4% | 27.9% | | Gross Margin | 61.8% | 65.3% | - Sales of 'Pants-style' series products increased by over 76.0% year-over-year, serving as a key growth driver for the business[149] Tissue Paper Business Tissue paper revenue surged 22.7% to RMB 7.170 billion, accounting for 58.7% of total revenue, though gross margin declined to 17.7% due to high wood pulp costs, with improvement expected in H2 Tissue Paper Business Performance | Indicator | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Revenue | RMB 7.170 billion | RMB 5.843 billion | | Revenue Growth Rate | +22.7% | - | | Revenue Contribution | 58.7% | 52.2% | | Gross Margin | 17.7% | 23.1% | - Sales of the high-end 'Cloud Soft' series grew by over 40.0%, accounting for more than 12.0% of total tissue sales[158] - E-commerce channel sales increased by over 40.0%, representing nearly 33.3% of tissue sales[158] Disposable Diapers Business Disposable diaper sales rebounded with a 5.0% increase to RMB 0.665 billion, driven by adult and high-end infant diapers, leading to a slight gross margin improvement to 36.0% Disposable Diapers Business Performance | Indicator | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Revenue | RMB 0.665 billion | RMB 0.634 billion | | Revenue Growth Rate | +5.0% | - | | Revenue Contribution | 5.5% | 5.7% | | Gross Margin | 36.0% | 35.3% | - Adult disposable diaper business recorded approximately 45.1% growth, accounting for 29.2% of overall disposable diaper sales[164] - Sales of high-end product 'Q • MO' increased by nearly 19.1% year-over-year, representing over 35.0% of the disposable diaper business[164] E-commerce and New Retail Channel Strategies In H1 2023, e-commerce channel sales grew over 30% to RMB 3.5 billion, increasing their contribution to 29.0% of total revenue, with significant impact across all core product categories - E-commerce channel sales increased by over 30.0%, reaching approximately RMB 3.5 billion[184] - E-commerce channel sales as a percentage of the Group's total revenue increased from 24.2% in the prior period to approximately 29.0%[184] Financial Review Sales and administrative expenses rose 19.8% to 21.0% of total revenue due to increased online marketing, while operating exchange losses significantly narrowed, and the Group maintained a strong net cash position with a -23.9% net gearing ratio - Sales and administrative expenses increased by 19.8% to RMB 2.565 billion, representing 21.0% of total revenue[189] - The Group recorded an operating exchange loss of approximately RMB 0.182 billion, a significant 50.4% reduction from RMB 0.368 billion in the prior period[190] Liquidity and Gearing Position (As of June 30, 2023) | Indicator | Amount/Ratio | | :--- | :--- | | Cash and Bank Balances | RMB 28.646 billion | | Bank and Other Borrowings | RMB 18.860 billion | | Ultra-short-term Commercial Papers | RMB 5.0 billion | | Gearing Ratio | 119.1% | | Net Gearing Ratio | -23.9% (Net Cash) | Outlook For H2 2023, the Group anticipates improved tissue paper gross margin as high-cost wood pulp inventory is consumed, while continuing to execute core strategies of focusing on main businesses, enhancing brands, and pursuing long-term growth, alongside planned capacity expansion and diversification into health industries - The positive impact of declining wood pulp prices is expected to materialize in H2, leading to an improvement in the tissue paper business's gross margin[232] - The Group will adhere to three core strategies: 'Focus on Core Businesses' (tissue paper, sanitary napkins, disposable diapers), 'Brand Enhancement', and 'Long-Termism'[234] - Plans are in place to expand production capacity in Fujian, Xiaogan, Hunan, and Guangdong, with new capacities expected to commence operation sequentially in H2 2023[239][241] - Long-term development goals include expanding into women's health, infant and child health, and elderly health industries, while gradually promoting brand internationalization[240][242] Corporate Governance and Other Information Directors' and Major Shareholders' Interests As of June 30, 2023, Chairman Mr. Sze Man Bok and Vice Chairman Mr. Hui Lin Chit held approximately 20.60% and 23.16% equity interests respectively, with An Ping Holdings Limited and Tin Lee Investments Limited also being major shareholders Directors' Shareholdings (As of June 30, 2023) | Director Name | Total Shares | Equity Percentage | | :--- | :--- | :--- | | Mr. Sze Man Bok | 239,399,999 | 20.60% | | Mr. Hui Lin Chit | 269,192,733 | 23.16% | | Mr. Xu Qingliu | 10,500,000 | 0.90% | Share Option Scheme As of June 30, 2023, there were 51,606,000 unexercised share options under the 2021 scheme, with no grants, exercises, or cancellations during the period, and 71,480,742 shares remaining available for grant - As of June 30, 2023, the total number of unexercised share options was 51,606,000[271][272] - For H1 2023, expenses recognized from the share option scheme amounted to RMB 22,006,000, with RMB 47,178,000 remaining to be amortized in the future[276]