Financial Performance - The group's revenue for the six months ended June 30, 2023, was RMB 9,735.2 million, an increase of 0.6% year-on-year[2] - The group's gross profit for the same period was RMB 6,359.3 million, a decrease of 2.7% year-on-year[2] - The group's profit for the period was RMB 1,618.7 million, a decrease of 28.8% year-on-year[2] - Basic earnings per share for the company were RMB 0.19, down from RMB 0.25 in the same period last year[3] - Total comprehensive income for the period was RMB 1,747.8 million, compared to RMB 2,343.9 million in the previous year[5] - The group reported a pre-tax profit of RMB 2,435,048 thousand for the six months ended June 30, 2023, compared to RMB 3,234,748 thousand in the same period of 2022, showing a decrease of about 24.7%[24] - The group's net profit decreased by 28.8% from RMB 2,272.1 million for the six months ended June 30, 2022, to RMB 1,618.7 million for the six months ended June 30, 2023[58] - Income tax expenses decreased by 15.2% from RMB 962.7 million for the six months ended June 30, 2022, to RMB 816.4 million for the six months ended June 30, 2023, due to the reduction in profit before tax[57] Assets and Liabilities - Non-current assets totaled RMB 13,428.8 million as of June 30, 2023, compared to RMB 13,286.1 million at the end of 2022[6] - Current assets amounted to RMB 21,543.8 million, a decrease from RMB 22,229.7 million at the end of 2022[6] - Current liabilities were RMB 6,755.5 million, down from RMB 7,459.7 million at the end of 2022[6] - The company's net asset value was RMB 25,830.8 million as of June 30, 2023, compared to RMB 25,474.9 million at the end of 2022[7] - The total assets of the group as of June 30, 2023, amounted to RMB 34,972,576 thousand, compared to RMB 35,515,773 thousand at the end of 2022, indicating a decrease of about 1.53%[18] - Total liabilities as of June 30, 2023, were RMB 9,141,784 thousand, down from RMB 10,040,830 thousand at the end of 2022, representing a reduction of approximately 8.95%[18] - The group's asset-liability ratio increased from 0.33 as of December 31, 2022, to 0.40 as of June 30, 2023[62] Revenue Breakdown - Revenue from external customers in mainland China was RMB 9,629,346 thousand for the six months ended June 30, 2023, compared to RMB 9,573,781 thousand in 2022, indicating an increase of about 0.58%[21] - For the three months ended June 30, 2023, the company reported revenue of RMB 1,583,551 thousand, compared to RMB 1,728,024 thousand for the same period in 2022, indicating a decrease of approximately 8.4%[35] - The retail sales value of the Chinese infant formula market is expected to remain stable despite the declining birth rate, driven by increased consumer confidence and preferences for quality products[36] Costs and Expenses - The cost of goods sold for the six months ended June 30, 2023, was RMB 3,375,959 thousand, up from RMB 3,136,198 thousand in 2022, reflecting an increase of approximately 7.65%[24] - The cost of sales increased by 7.6% to RMB 3,375.9 million from RMB 3,136.2 million, primarily due to changes in the product mix[49] - Selling and distribution expenses increased by 10.1% to RMB 3,459.9 million, mainly due to higher costs associated with offline activities and promotions[52] - Administrative expenses rose by 15.4% to RMB 757.5 million, primarily due to increased research and development costs[53] - Financial costs surged by 127.4% to RMB 27.3 million, attributed to increased interest-bearing loans from the parent company[55] Market and Industry Trends - The number of newborns in China decreased to approximately 9.6 million in 2022, down from 12.95‰ birth rate in 2016, reflecting a significant decline in the target demographic for infant formula[36] - The average annual disposable income in China reached RMB 36,883 in 2022, with a compound annual growth rate of 7.3% from 2017 to 2022, which is expected to drive demand for high-end infant formula products[37] - The Chinese government aims to maintain a self-sufficiency level of 60% for domestically produced infant formula, promoting local production and quality standards[38] - The new national safety standards for infant formula, effective from February 22, 2023, impose stricter regulations on protein, carbohydrates, and micronutrients, benefiting leading companies in the industry[39] - Urbanization and rising disposable income levels are enhancing consumer purchasing power, particularly in lower-tier cities and rural areas, which are increasingly able to afford higher-quality infant formula[37] Corporate Governance and Compliance - The company has adopted the corporate governance code as its own governance standard, ensuring transparency and accountability to shareholders[69] - The company emphasizes the importance of effective internal control measures to ensure compliance with applicable laws and regulations[69] - The audit committee has been established in accordance with listing rules, consisting of three members, including the chairman, Mr. Fan Yonghong[74] - The independent review of the interim financial information for the six months ended June 30, 2023, was conducted by Ernst & Young in accordance with the relevant standards[75] Future Plans and Strategies - The company is focusing on developing a new generation of infant formula that is more suitable for Chinese consumers, leveraging the unique resources from the 47° north latitude[68] - The company aims to expand into four major business areas: maternal and infant, children and adolescents, health food, and nutrition health, creating a comprehensive product family for all life stages[68] - The company has committed to a green and sustainable development model, actively contributing to rural revitalization and fulfilling social responsibilities[68] - The company is committed to enhancing its core capabilities, including unique resource endowments and integrated online and offline supply chain capabilities[68] Dividends - The company declared a final dividend of HKD 0.1721 per share, totaling approximately RMB 1.42 billion for the year ended December 31, 2022[29] - The company declared an interim dividend of HKD 0.1349 per share, totaling approximately HKD 1,223,021,059 (equivalent to about RMB 1,122,598,800) for the six months ended June 30, 2023[73] - The interim dividend represents 60% of the profit for the six months ended June 30, 2023, based on a policy to distribute no less than 30% of net profit for each financial year[73] - The company plans to maintain a dividend policy of distributing at least 30% of net profit for future financial years, depending on future investment plans[74]
中国飞鹤(06186) - 2023 - 中期业绩