Financial Performance - The leather manufacturing business reported a significant loss of approximately HKD 17,659,000 (or about HKD 10,393,000 excluding impairment losses on manufacturing properties and equipment) for the fiscal year 2023[18]. - The gross profit margin for the leather retail business is projected to be 40% for fiscal years 2024 and 2025, based on a reference gross profit margin of 44% from fiscal year 2019[68]. - The company's gross profit margin for the fiscal year 2023 was 17.3%, a significant decrease from the adjusted gross profit margin of 26.9% in fiscal year 2022, primarily due to lower production volumes and extraordinary costs related to outdated inventory and supply chain disruptions caused by COVID-19[50]. - For the fiscal years ending December 31, 2024, and December 31, 2025, the company forecasts gross profit margins of 23.5% and 24.5%, respectively, due to streamlined production lines and better cost control[51]. - The company anticipates a rebound in leather retail business growth rates to 10% for the fiscal years 2024 and 2025 after a stagnation in fiscal year 2023[67]. Impairment and Losses - The impairment losses on retail use assets and manufacturing properties were confirmed due to the ongoing losses experienced by the group[20]. - The impairment loss for the fiscal year 2023 was confirmed due to significantly deteriorated performance in the manufacturing cash-generating unit[55]. - The retail workshop recognized an impairment loss of approximately HKD 896,000 due to ongoing losses in the fiscal years 2022 and 2023, primarily attributed to intense competition in the retail environment[19]. Business Strategy and Expansion - The company is actively expanding its e-commerce market and exploring potential sales channels, including collaborations with influencers for live streaming sales on platforms like Taobao[14]. - The management is implementing lean production principles to optimize production processes and reduce waste, aiming to improve efficiency and lower costs without compromising quality[13]. - The company aims to enhance its financial performance through various business strategies and plans[3]. - The company aims to expand its high-end brand offerings, targeting higher profit margins and a more affluent customer base[38]. - The company has developed plans to diversify into industrial hemp cultivation and hemp product manufacturing, although progress has been hindered by strict regulations and the COVID-19 pandemic[7]. - The company will continue to assess the business environment and seek new viable opportunities to diversify its existing business portfolio and revenue sources[16]. Market and Economic Factors - The global leather goods market is projected to grow at an annual growth rate of 6.2% to 9.5% from 2023 to 2030, with an average of 7.31%[50]. - The company believes that the industrial hemp sector holds significant potential for future growth despite current legal and trade challenges[41]. - The company is actively monitoring market recovery and reallocating marketing resources to faster-recovering markets starting in 2024[38]. Financial Metrics - The weighted average cost of capital (WACC) is 13.37%[26]. - The cost of equity is calculated at 14.76% based on the capital asset pricing model, with adjustments for company size and specific risks[29]. - The statutory corporate tax rate is 16.5%[26]. - The weighted average cost of capital is estimated at 12.84%, with a cost of equity at 14.21% and a cost of debt at 5.88%[60]. - The weighted average cost of capital (WACC) is calculated at 12.84%, with the cost of equity estimated at 14.21% using the Capital Asset Pricing Model[69][70]. Production and Cost Management - The management is focusing on optimizing energy consumption and streamlining production processes to achieve cost savings[13]. - The company expects a reduction in unit manufacturing costs due to improved production planning and cost control measures[51]. - The fair value less costs to sell for most properties, plants, and equipment is considered negligible, leading to recoverable amounts being based on their respective use values[50]. - The company has resumed experimental cultivation of industrial hemp "Cloud Hemp No. 8," with a cultivation period of approximately six to eight months[41]. - The company plans to develop new leather products that cater to niche markets with innovative designs and materials[39]. Corporate Governance - The company has not made any significant changes to parameter values and assumptions compared to the previous year, except for sales forecasts and growth rates[31]. - The company has maintained the content of its fiscal year 2023 performance announcement and annual report without changes[71]. - The board of directors includes executive directors Zhao Jingfei, Fan Xin, and Qin Bohan, along with independent non-executive directors Han Yu, Jia Lixin, and Rong Yi[72].
中联发展控股(00264) - 2023 - 年度业绩