洪桥集团(08137) - 2022 Q1 - 季度财报

Financial Highlights Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The company shifted from profit to a HK$56.81 million loss attributable to owners in Q1 2022, with revenue plummeting 87.4% to HK$11.87 million due to declining lithium-ion battery sales, though total comprehensive income reached HK$730 million from exchange gains Key Financial Indicators for Q1 2022 | Indicator | For the three months ended March 31 (HK$ thousands) | For the three months ended March 31 (HK$ thousands) | | :--- | :--- | :--- | | | 2022 | 2021 | | Revenue | 11,865 | 94,346 | | Gross Profit | 7,428 | 29,178 | | (Loss)/Profit before tax | (56,378) | 161,804 | | (Loss)/Profit for the period | (56,378) | 161,804 | | (Loss)/Profit attributable to owners of the Company | (56,806) | 154,992 | | Total comprehensive income for the period | 730,129 | (197,723) | | Basic (loss)/earnings per share | (0.58) HK cents | 1.59 HK cents | Notes to the Financial Statements Notes to the financial statements reveal specific reasons for performance changes, primarily a sharp decline in total revenue from lithium-ion battery sales and a shift from significant other operating income to expenses due to a HK$49.26 million loss on financial assets at fair value through profit or loss, with no dividends declared this quarter Revenue Total revenue for the period was HK$11.87 million, an 87.4% decrease from HK$94.35 million in the prior year, primarily due to a sharp drop in lithium-ion battery sales from HK$92.71 million to HK$10.58 million, alongside a slight decline in battery swapping service income Revenue Composition (HK$ thousands) | Item | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Lithium-ion battery sales | 10,575 | 92,714 | | Battery swapping service income | 1,290 | 1,632 | | Total | 11,865 | 94,346 | Other Operating Expenses/Income The period recorded net other operating expenses of HK$42.94 million, a stark contrast to HK$116 million in income last year, primarily due to a shift from HK$109 million gain to a HK$49.26 million loss on financial assets at fair value through profit or loss - A HK$49.26 million loss on financial assets at fair value through profit or loss was the primary reason for the shift from other operating income to expenses[10] Finance Costs Finance costs decreased by 37.1% year-on-year from HK$3.33 million to HK$2.09 million, primarily due to reduced interest expenses on bank and other borrowings - Interest expenses on bank and other borrowings decreased from HK$3.28 million to HK$2.01 million, significantly contributing to the reduction in finance costs[13] Dividends The Board resolved not to declare any dividends for the three months ended March 31, 2022, consistent with the prior year's policy - The Board resolved not to declare any dividends for the three months ended March 31, 2022[14] Earnings/Loss Per Share Due to the company's shift from profit to loss, basic loss per share was 0.58 HK cents, compared to basic earnings per share of 1.59 HK cents in the prior year - Basic (loss)/earnings per share shifted from 1.59 HK cents in the prior year to (0.58) HK cents for the current period[6][15] Changes in Reserves As of March 31, 2022, the Group's total equity increased to HK$5.416 billion from HK$4.686 billion at the beginning of the year, primarily driven by HK$787 million in exchange reserve gains, offsetting operating losses - Exchange gains of HK$787 million from currency translation during the period were the main driver for the increase in total comprehensive income and total equity[17] Management Discussion and Analysis Business Segment Performance The company's core businesses include lithium-ion batteries, battery sharing services, and the Brazilian SAM iron ore project, with the battery business facing challenges from low capacity utilization and high costs, the GETI battery sharing service experiencing revenue decline due to competition, and the SAM project facing significant delays in environmental permit applications Lithium-ion Battery Business The Group's lithium-ion battery business, primarily through Zhejiang Hengyuan New Energy (52% owned) and Shandong Hengyuan New Energy (24.5% owned), supplies batteries for high-end PHEV models, but faces challenges from insufficient capacity and high costs, leading to the loss of Lynk & Co PHEV orders since 2021, prompting active negotiations with new automotive and energy storage clients - Insufficient battery factory capacity and low utilization rates, leading to higher average costs than competitors, were the primary reasons for losing Lynk & Co orders[20] - The Group conducts its lithium battery business through Zhejiang Hengyuan New Energy (52% owned) and Shandong Hengyuan New Energy (an associate, 24.5% owned)[21][22] Battery Sharing Business The Group operates an e-bike battery sharing business under the 'GETI' brand in Jiangsu and Zhejiang provinces, China, with approximately 676 swapping stations and 2,233 package users as of March 2022, utilizing both self-operated and franchised models - As of March 2022, the GETI brand had approximately 676 battery swapping stations and 2,233 package users[24] Progress of SAM Iron Ore Project The Group's SAM iron ore project in Brazil, a significant long-term investment with cumulative funding of approximately USD157 million, aims for 27.5 million tonnes of high-quality iron concentrate annually with a total estimated investment of USD2.78 billion, but faces severe delays in its preliminary environmental license application due to tightened regulations and lawsuits following other dam failures in Brazil - The Group has cumulatively invested approximately USD157 million in the Brazilian SAM iron ore project[26] Key Expected Indicators for SAM Project | Indicator | Value | | :--- | :--- | | Annual Production (dry basis iron concentrate) | 27,500,000 tonnes | | Total Investment (Capex) | 2.78 billion USD | | Operating Cost (Opex, first 18 years) | Approx. 27.6 USD/tonne | | FOB Cost (first 18 years) | Approx. 40.9 USD/tonne | - The issuance of the preliminary environmental license (LP) for the SAM project has been severely delayed due to two tailings dam failures at other Brazilian mines and related lawsuits[30][32] Financial Performance Analysis In Q1 2022, the Group's revenue plummeted 87.4% to HK$11.9 million due to reduced demand for lithium-ion batteries from Volvo Cars, resulting in a HK$56.8 million loss attributable to owners, primarily from a sharp decline in gross profit and a HK$49.3 million fair value loss on financial assets, though administrative and finance costs decreased, with cash balance at HK$426 million and a 5.3% debt-to-equity ratio - Operating revenue significantly decreased by 87.4%, primarily due to reduced demand for lithium-ion batteries from key client Volvo Cars[35] - Key reasons for the shift from profit to loss include a net loss of approximately HK$49.3 million on financial assets (compared to a HK$109 million gain in the prior year) and a substantial decrease in gross profit[35][38] - Administrative expenses decreased by 18.1% year-on-year, and finance costs declined due to reduced borrowings[36] - As of March 31, 2022, the Group's cash and cash equivalents balance was approximately HK$426 million, with a debt-to-equity ratio of 5.3%[38][39] Business Outlook The company anticipates continued high growth in the new energy vehicle industry but expects a significant revenue decline in H1 2022 for its PHEV battery business due to intense competition and rising industry standards, while actively pursuing new product launches for new clients by mid-2022, advancing the Brazilian SAM iron ore project, and exploring M&A, investment, and cooperation opportunities in smart vehicle sectors as part of its dual-track strategy in new energy and resources - Operating revenue is expected to decline significantly in H1 2022, primarily due to a substantial reduction in PHEV battery orders from Volvo Cars[41] - The company aims to introduce new products for new clients by mid-2022 to adapt to market changes[41] - The company will continue to explore M&A, investment, and cooperation opportunities in areas such as smart vehicle cockpits, automotive chips, autonomous driving, and shared mobility[41] - The Group's overall business strategy is a dual-track development in new energy vehicle-related businesses and resource sectors[42] Corporate Governance and Other Disclosures Directors' and Shareholders' Interests The report discloses directors' and major shareholders' equity as of March 31, 2022, with Chairman Mr. He Xuechu holding approximately 42.07% as the controlling shareholder, and Zhejiang Geely Holding Group Co Ltd and its controlling shareholder Mr. Li Shufu collectively holding approximately 19.83% as major shareholders Major Shareholders' Shareholdings (as of March 31, 2022) | Shareholder Name/Entity | Total Shares Held | Approximate Shareholding Percentage (%) | | :--- | :--- | :--- | | He Xuechu | 4,145,399,189 | 42.07 | | Zhejiang Geely Holding Group Co Ltd | 1,850,675,675 | 18.78 | | Li Shufu | 1,953,739,675 | 19.83 | Share Option Scheme Under the company's share option scheme adopted on May 21, 2012, 8,750,000 unexercised share options granted to employees on May 14, 2015, with an exercise price of HK$2.61 per share, remained outstanding at the end of the reporting period - At the end of the reporting period, 8,750,000 unexercised share options granted to employees remained outstanding, with an exercise price of HK$2.61[49] Connected Transactions During the reporting period, the Group engaged in a connected transaction, selling approximately HK$2.4 million worth of lithium-ion batteries to an associate of Zhejiang Geely, a major shareholder of the company - The Group sold approximately HK$2.4 million worth of lithium-ion batteries to an associate of Zhejiang Geely, a major shareholder[55] Compliance and Audit The company confirmed compliance with all Corporate Governance Code provisions in Appendix 15 of the GEM Listing Rules for the three months ended March 31, 2022, and its Audit Committee reviewed the unaudited results, deeming them prepared in accordance with applicable accounting standards and regulations with adequate disclosure - The company has complied with all Corporate Governance Code provisions set out in Appendix 15 of the GEM Listing Rules[42] - The Audit Committee has reviewed the Group's unaudited results for the three months ended March 31, 2022[58]