Company Overview - Shenzhou International is one of the largest vertically integrated knitwear manufacturers globally, producing approximately 500 million pieces of knitwear annually[9]. - The company has around 94,340 employees and operates factories covering over 6.44 million sq.m. in China, Vietnam, and Cambodia[9]. - Major clients include international brands such as NIKE, UNIQLO, ADIDAS, and PUMA, with products distributed across Mainland China, Japan, Asia Pacific, Europe, and the US[9]. - Shenzhou International was listed on the Hong Kong Stock Exchange in November 2005, with stock code 2313[10]. - The company has been included in various indices, including the Hang Seng Composite Index and MSCI Index, enhancing its market visibility[10]. - Shenzhou International has received multiple awards for corporate governance and investor relations, including "Best Investor Relations Listed Company" in 2017[13]. - The company aims to be the most competitive knitwear manufacturer globally, focusing on high-end knitwear production through OEM and ODM methods[8]. - Shenzhou International's strategic expansion includes establishing garment factories in key locations to optimize production and distribution[9]. - The company has been recognized as one of Asia's top listed companies by Forbes Asia in 2018[14]. - Shenzhou International's commitment to sustainability and corporate governance has been acknowledged through various awards, reflecting its dedication to responsible business practices[14]. Financial Performance - Total revenue for 2022 reached RMB 27,781,412, an increase of 16.4% from RMB 23,845,006 in 2021[20]. - Profit for the year was RMB 4,563,165, up 35.3% from RMB 3,371,679 in 2021[20]. - Gross profit margin decreased to 22.1% in 2022 from 24.3% in 2021[20]. - Net profit margin improved to 16.4% in 2022 compared to 14.1% in 2021[20]. - Non-current assets increased to RMB 17,328,331 in 2022 from RMB 15,622,465 in 2021[20]. - Current liabilities decreased to RMB 10,259,437 in 2022 from RMB 13,532,431 in 2021[20]. - Revenue from sportswear accounted for 75.1% of total sales in 2022, up from 73.9% in 2021[21]. - Revenue from international markets reached RMB 20,000,000, representing 72.1% of total revenue in 2022[25]. - The gearing ratio improved to 29.9% in 2022 from 38.1% in 2021[20]. - Cash and cash equivalents increased to RMB 7,369,498 in 2022 from RMB 6,687,623 in 2021[20]. Market Challenges - In 2022, the average price of cotton yarns was significantly higher than the previous year, despite fluctuations throughout the year[49]. - The domestic apparel consumption experienced a year-on-year decline for the first time due to unstable income and pandemic-related travel restrictions[49]. - The Group's Ningbo base faced two production suspensions of approximately half a month each due to the pandemic, increasing operational pressure[49]. - Rising costs and weak demand were identified as major difficulties faced by the industry in 2022[49]. - Geopolitical conflicts and high inflation levels in major economies suppressed external demand and consumption[49]. - The apparel brand owners generally undertook destocking actions in response to weakened market demand in the second half of 2022[49]. - The global economic recession risk and high inflation levels in developed countries have contributed to a slowdown in external demand for Chinese textile and apparel products[63]. Sustainability and Corporate Governance - The Group emphasized green production and accelerated transformation and upgrading initiatives[49]. - The Group has made significant progress in promoting green production and corporate transformation, ensuring employee income stability amid fluctuating demand and rising costs[82]. - The Chinese government aims to peak carbon dioxide emissions by 2030, with specific targets for energy consumption and emissions reductions by 2025[79]. - The Group aims to enhance corporate competitiveness and sustainable development capabilities by optimizing regional layouts and strengthening new product development[58]. Production and Sales Insights - Sales of sportswear reached approximately RMB 20,869,553,000, an increase of approximately RMB 3,257,425,000 or 18.5% from RMB 17,612,128,000 in the previous year, driven by increased demand in European and US markets[92]. - Casual wear sales increased to approximately RMB 5,751,836,000, up by approximately RMB 1,031,101,000 or 21.8% from RMB 4,720,735,000, mainly due to rising demand in Japan and other markets[92]. - Lingerie sales decreased to approximately RMB 819,133,000, a decline of approximately RMB 221,113,000 or 21.3% from RMB 1,040,246,000, primarily due to reduced demand from the Japanese market[92]. - Domestic sales in China decreased by 6.5%, with apparel sales down approximately RMB 490,736,000 or 6.6% to approximately RMB 6,904,658,000, mainly due to reduced procurement demand from international brands[100]. Corporate Governance and Board Structure - The Board complied with the requirement of having at least three independent non-executive directors, with independent directors representing at least one-third of the Board[144]. - The Company received written annual confirmations of independence from all independent non-executive directors, affirming their compliance with independence guidelines[144]. - The Board is responsible for formulating the Group's business strategies and management objectives, as well as supervising management performance[153]. - The Company has adopted a shareholders' communication policy to ensure shareholders' views and concerns are appropriately addressed[150]. - The Company has established three Committees: Audit Committee, Remuneration Committee, and Nomination Committee, with a majority of independent non-executive Directors in the latter two[169]. Risk Management and Internal Controls - The risk management and internal control system was reviewed for effectiveness, covering financial reporting, operations, and compliance for the year ended December 31, 2022[194]. - The internal audit function reported directly to the Chairman and had unrestricted access to information for reviewing risk management and governance processes[193]. - The Company established procedures for handling and disclosing inside information to ensure timely reporting to the Board[192]. - The independent external auditor for the Group is Ernst & Young, with audit and non-audit service fees amounting to RMB3,595,000 and RMB874,000 respectively for the year ended December 31, 2022[198].
申洲国际(02313) - 2022 - 年度财报