然而，国金证券研究所认为，相较于寄希望于"顺周期"的传统复苏传导路径，消费领域的"分子端"韧性或边际修复，更可能主要源自两个关键方向：一是聚 焦于那些行业自身仍具备成长性逻辑的领域，二是关注那些具备政策支撑逻辑的细分方向。随着二季度财政政策的进一步发力，这些领域有望率先受益，从 而推动消费市场的进一步复苏。如果这两个因素能够叠加发挥作用，那么相关领域的复苏前景将更为乐观。 那么，哪些板块或赛道有望脱颖而出，成为消费复苏的亮点呢？ 随着上市公司"一季报"的陆续披露，答案逐渐清晰。日前，专注于"全家庭营养健康"赛道的健合（H&H）国际控股有限公司(01112.HK)（以下简称"健合集 团"）发布了一季度财报，表现可圈可点。截至2025年3月31日的三个月内，健合集团营收同比增长10.4%，达到31.7亿元人民币。其中，中国市场成为集团 营收的最大贡献者，增长达18.1%，占集团总收入的68.8%。 龙头企业的率先且显著复苏，往往被视为行业景气度的重要指标。健合集团的优异表现，为投资者提供了一个值得思考的角度：相关赛道是否正在迎来回暖 的契机？ 在全球外需冲击持续加剧的复杂背景下，我国促消费政策不断加码落地，居民收 ...

证券研究报告·海外公司深度·消费者主要零售商(HS) H&H 国际控股（01112.HK） 严冬历尽春雷动，三驾齐驱旭日升 2025 年 04 月 16 日 买入（首次） | [Table_EPS] 盈利预测与估值 | 2023A | 2024A | 2025E | 2026E | 2027E | | --- | --- | --- | --- | --- | --- | | 营业总收入（百万元） | 14,009 | 13,052 | 14,082 | 15,074 | 16,163 | | 同比(%) | 9.23 | (6.84) | 7.90 | 7.04 | 7.23 | | 归母净利润（百万元） | 581.85 | (53.72) | 520.67 | 623.61 | 693.84 | | 同比(%) | (4.89) | (109.23) | 1,069.21 | 19.77 | 11.26 | | EPS-最新摊薄（元/股） | 0.90 | (0.08) | 0.81 | 0.97 | 1.07 | | P/E（现价&最新摊薄） | 9.78 | (105.96) | 10.93 | 9 ...

Core Insights - H&H International Holdings reported a 10.4% year-on-year increase in total revenue to 3.17 billion yuan for the three months ending March 31, 2025 [1] Revenue Breakdown - The infant nutrition and care segment grew by 25.3%, driven by a 46.9% increase in the mainland infant formula milk powder business [1] - The adult nutrition and care segment saw a 3.2% growth on a comparable basis [1] - The pet nutrition and care segment experienced a 7.3% increase [1] - Nutritional supplements accounted for 65.1% of total revenue [1] Market Performance - Revenue from the mainland market grew by 18.1%, representing 68.8% of total revenue [1] - The infant formula milk powder business grew by 44.3% [1] - Swisse ranked first in the mainland market for vitamins, herbs, and mineral supplements [1] - The pet nutrition and care segment grew by 13.7%, with Solid Gold maintaining a leading position in the online cat dry food category [1] - The Australia and New Zealand market declined by 13.5%, while the domestic market grew by 4.5% [1] - North American revenue increased by 1.7% [1] - Other regions saw a revenue growth of 20.3% [1] Financial Position - The company reported a cash balance of 1.4 billion yuan, aiming to maintain a robust cash conversion level [1]

Financial Performance - Total revenue for the year ended December 31, 2024, was RMB 13,051.7 million, a decrease of 6.3% compared to RMB 13,926.5 million in 2023[7] - Adjusted comparable EBITDA for 2024 was RMB 1,952.3 million, down 11.9% from RMB 2,215.5 million in 2023, with an adjusted EBITDA margin of 15.0%, a decline of 0.9 percentage points[7] - The company reported a net loss of RMB 53.7 million for 2024, a significant decline of 109.2% compared to a net profit of RMB 581.8 million in 2023[7] - Gross profit for the year ended December 31, 2024, was RMB 7,915.5 million, a decrease of 4.6% from the previous year, while the gross margin slightly increased from 59.6% to 60.6%[54] - The total EBITDA for the year ended December 31, 2024, was RMB 1,405.8 million, down 29.2% from RMB 1,984.9 million in the previous year[63] - The adjusted comparable net profit for the year ended December 31, 2024, was RMB 541.2 million, a decrease from RMB 778.3 million in 2023[72] Revenue Breakdown - Revenue from nutritional supplements accounted for 67.7% of total revenue, with double-digit growth in vitamins, herbal, and mineral supplements, as well as pet supplements[17] - The infant formula segment faced challenges but continued to expand market share, contributing to the overall revenue despite a contraction in the ultra-premium segment[17] - Revenue from North America represented 12.4% of total revenue, supported by successful distribution expansion in the pet nutrition segment[17] - Revenue from the adult nutrition and care products segment in mainland China grew by 6.9% year-on-year, contributing 64.7% to the total revenue of this segment[44] - The revenue from the infant nutrition and care products segment was RMB 4,003.9 million, down 27.3% year-on-year, primarily due to a decline in infant formula sales[46] - Revenue from the pet nutrition and care products segment in mainland China decreased by 14.8% to RMB 345.8 million, attributed to product portfolio upgrades and channel optimization[47] Market Performance - The adult nutrition and care products business recorded high single-digit growth, driven by continuous product innovation and demand in core markets[19] - The infant nutrition and care products segment faced challenges, with the ultra-premium infant formula market contracting by 17.7% in 2024, although Biostime's market share increased from 12.4% to 13.3%[26] - Swisse maintained its position as the number one brand in the online vitamin, herbal, and mineral supplement market in mainland China for 2024[22] - The company achieved significant growth in various Asian markets, including Hong Kong, Thailand, and Malaysia, with Swisse being awarded the Trusted Brand (Gold) in Singapore[25] - Swisse's gummy series holds a 17.2% market share in Australia, ranking second in the vitamin, herbal, and mineral supplement market[22] Dividends and Financial Strategy - The company announced a total dividend of HKD 0.35 per share for the year, reflecting a cautious approach to leverage reduction[18] - The board recommends a final dividend of HKD 0.05 per share, leading to a total annual dividend of HKD 0.35 per share, which represents approximately 37.6% of the adjusted comparable net profit for the year ended December 31, 2024[82] - The company aims to further reduce leverage ratios and strengthen financial stability in the coming years[36] Corporate Governance - The company emphasizes high standards of corporate governance to enhance shareholder value and accountability[102] - The company has complied with all provisions of the corporate governance code as of December 31, 2024[102] - The board consists of nine members, including two executive directors, four non-executive directors, and three independent non-executive directors[110] - The board has established four committees: Nomination Committee, Audit Committee, Remuneration Committee, and Environmental, Social and Governance Committee[110] - The company has established a code of conduct for directors regarding securities trading, ensuring compliance with regulatory standards[104] Risk Management - The company has established a robust risk management framework based on the COSO risk management framework and ISO 31000, which defines roles, responsibilities, and processes for risk management[177] - The board of directors is responsible for overseeing the risk management and internal control systems, ensuring they are effective in managing risks to achieve business objectives[175] - The audit committee assists the board in supervising the design, implementation, and monitoring of the risk management and internal control systems[176] Management Team - The management team has extensive experience, with the chairman having over 25 years in the biotechnology industry[83] - The CFO has over 25 years of financial management experience, previously serving as the global VP and CFO for Henkel AG & Co. KGaA[84] - Dr. Zhang, a non-executive director, has over 20 years of experience in the biotechnology industry, previously serving as CTO and GM of various subsidiaries[86] Shareholder Engagement - The company has established a shareholder communication policy to facilitate effective communication with shareholders and encourage active engagement[195] - The company participated in 16 investment seminars and non-deal roadshows, conducting approximately 500 individual and group meetings with analysts, institutional investors, and fund managers during the year ending December 31, 2024[189]

Investment Rating - The investment rating for the company is "Buy" with a target price of 11.28 HKD [7][8]. Core Views - The company reported a revenue of 13.05 billion RMB in 2024, a decrease of 6.3% year-on-year, and a net profit of -0.05 billion RMB, down from 0.58 billion RMB in the same period last year. The adjusted comparable net profit was 0.54 billion RMB, a decline of 30.5% year-on-year. The negative net profit in 2024 was primarily due to non-cash foreign exchange losses, one-time marketing and promotional expenses, and restructuring costs related to channel optimization [1][3]. - Looking ahead to 2025, the company is expected to maintain good growth momentum in the nutritional supplement demand, with the probiotic business likely to continue its growth trend. The infant formula business is anticipated to improve year-on-year due to ongoing fertility policy implementations [1][4]. Summary by Sections Business Performance - In 2024, the three main business segments—Adult Nutrition (ANC), Infant Nutrition (BNC), and Pet Nutrition (PNC)—achieved revenues of 6.70 billion, 4.39 billion, and 1.97 billion RMB, respectively, with year-on-year changes of +8.8%, -25.8%, and +4.4%. The ANC segment showed strong growth driven by high demand for beauty, multivitamins, and liver detox products, while the BNC segment faced challenges due to a lengthy transition to new national standards [2][3]. Financial Metrics - The company's gross margin increased by 1.1 percentage points to 60.6% in 2024, attributed to reduced inventory provisions and product mix optimization. The adjusted comparable EBITDA margin decreased by 0.9 percentage points to 15.0% [3][4]. - The forecast for 2025-2026 has been adjusted downward due to the pressure on the infant formula business, with expected EPS of 0.81 and 0.97 RMB, representing a decrease of 41% and 39% from previous estimates [4][6]. Valuation - The target price of 11.28 HKD is based on a 13x PE ratio for 2025, reflecting an increase from the previous target of 10.22 HKD. This adjustment is in line with the recent upward trend in PE valuations for related companies due to new fertility policies being implemented [4][8].

Financial Performance - For the fiscal year ending December 31, 2024, total revenue decreased by 6.3% to RMB 13,051.7 million from RMB 13,926.5 million in 2023[2]. - Gross profit declined by 4.6% to RMB 7,915.5 million, compared to RMB 8,294.3 million in the previous year[2]. - Adjusted comparable EBITDA fell by 11.9% to RMB 1,952.3 million, with an adjusted EBITDA margin of 15.0%, down 0.9 percentage points from 15.9%[2]. - The company reported a net loss of RMB 53.7 million, a significant decline from a net profit of RMB 581.8 million in 2023, representing a 109.2% decrease[2]. - Adjusted comparable net profit decreased by 30.5% to RMB 541.2 million, with an adjusted net profit margin of 4.1%, down 1.5 percentage points from 5.6%[2]. - The company incurred non-cash losses of RMB 286.0 million and non-recurring losses of RMB 260.5 million for the fiscal year 2024[2]. - The company reported a pre-tax profit of RMB 196.8 million, down from RMB 933.6 million in 2023[3]. - The effective tax rate for the year was approximately 56.6%, compared to 37.6% in the previous year[3]. - The company experienced a significant increase in other comprehensive losses, totaling RMB 195.5 million, compared to a gain of RMB 631.8 million in 2023[5]. Assets and Liabilities - Total non-current assets increased to RMB 14,908,570 thousand in 2024 from RMB 14,219,781 thousand in 2023, reflecting a growth of 4.84%[7]. - Current assets rose to RMB 5,133,400 thousand in 2024, up from RMB 4,622,641 thousand in 2023, marking an increase of 11.05%[7]. - Total current liabilities increased significantly to RMB 8,441,189 thousand in 2024, compared to RMB 3,872,369 thousand in 2023, representing a growth of 118.56%[8]. - The net asset value decreased to RMB 750,272 thousand in 2024 from RMB (3,307,789) thousand in 2023, indicating a substantial improvement[8]. - Total non-current liabilities rose to RMB 9,156,682 thousand in 2024, up from RMB 5,305,557 thousand in 2023, an increase of 72.67%[8]. - The company's equity total decreased to RMB 5,813,371 thousand in 2024 from RMB 6,295,224 thousand in 2023, a decline of 7.66%[8]. - Cash and cash equivalents decreased to RMB 1,364,283 thousand in 2024 from RMB 1,603,920 thousand in 2023, a decrease of 14.89%[7]. Cash Flow and Financing - The net cash flow from operating activities for the year ended December 31, 2024, was RMB 1,346,423 thousand, an increase from RMB 1,096,819 thousand in 2023, representing a growth of approximately 22.7%[10]. - The financing costs increased to RMB 920,611 thousand in 2024 from RMB 773,489 thousand in 2023, reflecting a rise of about 19%[10]. - The cash flow from financing activities resulted in a net outflow of RMB 1,070,999 thousand in 2024, compared to RMB 1,994,607 thousand in 2023, indicating a reduction of approximately 46.3%[11]. - The company raised RMB 3,330,048 thousand through new bank loans in 2024, a substantial increase from RMB 610,000 thousand in 2023[11]. - The company reported a significant increase in foreign exchange losses, which amounted to RMB 176,791 thousand in 2024, compared to RMB 4,771 thousand in 2023[10]. Revenue Breakdown - Revenue from the infant formula segment was RMB 3,332,404 thousand, while the probiotics and nutritional supplements segment generated RMB 821,291 thousand[24]. - Revenue from mainland China decreased to RMB 8,685,410 thousand in 2024 from RMB 9,972,668 thousand in 2023, indicating a decline of 12.9%[29]. - The North American market contributed RMB 1,621,676 thousand in revenue for 2024, up from RMB 1,498,193 thousand in 2023, showing an increase of 8.2%[29]. - Revenue from the nutrition supplements segment increased by 4.9% to RMB 8,830.5 million, accounting for 67.7% of total revenue[86]. - The infant formula segment saw a significant decline of 24.2% in revenue, totaling RMB 3,332.4 million, which represented 25.5% of total revenue[86]. - Revenue from the adult nutrition and care products segment grew by 9.0% to RMB 6,696.2 million, making up 51.3% of total revenue[86]. Market Performance - The company operates in five business segments, focusing on high-end children's nutrition products, infant care products, adult nutrition and care products, and pet nutrition and care products[21]. - The ultra-premium infant formula market in China is expected to contract by 17.7% in 2024, but the company anticipates initial signs of market stabilization towards the end of the year[68]. - Biostime's market share in the ultra-premium infant formula segment increased from 12.4% to 13.3% over the year, reaching a peak of 14.5% by December 2024[68]. - The company achieved a market share of 40.1% in organic infant formula and 43.4% in infant goat milk formula in the French pharmacy channel[72]. - The company maintained leading market shares in several categories, ranking first in Singapore for beauty vitamins, herbal and mineral supplements, and liver health, and second in Italy for similar categories[66]. Expenses and Cost Management - Sales and distribution costs for the year ended December 31, 2024, decreased slightly by 0.2% to RMB 5,391.8 million, with the percentage of sales and distribution costs (excluding depreciation and amortization) increasing from 38.8% in 2023 to 41.3% in 2024[105]. - Administrative expenses decreased by 8.1% from RMB 848.5 million in 2023 to RMB 779.4 million in 2024, with the percentage of administrative expenses relative to total revenue slightly declining from 6.1% in 2023 to 6.0% in 2024, reflecting improved operational efficiency and cost management[110]. - Other expenses for the year ended December 31, 2024, amounted to RMB 588.6 million, including research and development expenses of RMB 243.0 million, which increased by 17.9% year-on-year, reflecting the company's ongoing commitment to product innovation[111]. Taxation and Compliance - The total income tax expense for 2024 was RMB 250,514 thousand, a decrease of 28.8% from RMB 351,757 thousand in 2023[39]. - The company’s effective tax rate for its mainland China operations remained at 25% for both 2023 and 2024[41]. - The company is currently under review by the Australian Taxation Office regarding a capital gains tax issue related to the transfer of intellectual property and other assets[117]. - The company maintains a strong stance against the Australian Taxation Office's interpretation of the capital gains tax rules, asserting that the transaction only involved the sale of certain assets[119].

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 6,692.1 million, a decrease of 4.1% compared to RMB 6,980.8 million in the same period of 2023[6]. - Gross profit for the same period was RMB 4,072.3 million, down 4.5% from RMB 4,262.4 million year-on-year[6]. - Adjusted comparable EBITDA was RMB 1,139.8 million, reflecting a decline of 13.0% from RMB 1,309.5 million in the previous year[6]. - Net profit decreased by 49.7% to RMB 305.8 million, compared to RMB 608.0 million in the prior year[6]. - The adjusted comparable net profit margin was 5.2%, down 2.2 percentage points from 7.4% in the same period last year[6]. - The group recorded a decline in revenue due to a drop in the infant formula segment, leading to a decrease in net profit[10]. - The company reported a total comprehensive income of RMB 265,231,000 for the period, down from RMB 724,175,000 in the previous year[91]. - The company reported a net profit before tax of RMB 433,251 thousand for the six months ended June 30, 2024, compared to RMB 357,996 thousand for the same period in 2023, marking an increase of about 21.0%[124][125]. Revenue Breakdown - Revenue breakdown by product for the six months ended June 30, 2024: 66.1% from nutritional supplements, 26.9% from other products, and 7.0% from infant formula[7]. - Revenue by business segment: 49.0% from adult nutrition and care products, 36.3% from infant nutrition and care products, and 14.7% from pet nutrition and care products[7]. - Revenue from the nutrition supplement segment increased by 5.6% year-on-year to RMB 4,425.2 million, accounting for 66.1% of total revenue[23]. - The infant formula segment saw a significant decline of 18.8% year-on-year, with revenue dropping to RMB 1,798.4 million, representing 26.9% of total revenue[23]. - Revenue from the adult nutrition and care products segment grew by 11.5% year-on-year to RMB 3,275.6 million, making up 49.0% of total revenue[23]. - Revenue from the mainland China market was RMB 4,541.4 million, down 10.5% year-on-year, with a 67.9% contribution to total revenue[25]. Market and Product Insights - The infant formula segment experienced a double-digit decline due to intensified competition and unexpected promotional activities in the market[10]. - The adult nutrition and care products segment achieved low double-digit growth, maintaining a strong position in mainland China and Australia/New Zealand[12]. - The company maintains a strong market position in emerging markets such as Thailand, India, and the Middle East, with significant growth contributions from Hong Kong and Italy[14]. - The high-end Swisse Plus+ series contributed significantly to the adult nutrition segment, with a double-digit percentage of revenue in the mainland market[25]. - The infant nutrition segment in mainland China experienced a revenue decline of 23.2% to RMB 2,240.2 million, driven by ongoing industry challenges and intense competition[25]. Cost and Expenses - Sales and distribution costs increased by 1.0% to RMB 2,564.7 million, with the percentage of sales and distribution costs (excluding depreciation and amortization) rising from 36.4% to 38.3%[29]. - Research and development expenses increased by 22.5% to RMB 104.0 million, representing 1.6% of total revenue, up from 1.2% in the previous year[32]. - Financing costs rose by 21.0% to RMB 433.3 million, primarily due to interest rate increases following the U.S. Federal Reserve's rate hikes[35]. - The effective tax rate increased to 41.6% from 32.7% in the previous year, attributed to non-deductible interest expenses and profits from high-tax jurisdictions[37]. Cash Flow and Financing - Net cash generated from operating activities was RMB 1,052.5 million, benefiting from a reduction in inventory by RMB 487.0 million[39]. - The company recorded a net cash flow from investing activities of RMB 8.4 million, primarily from receivables and interest received[40]. - As of June 30, 2024, the cash balance was RMB 2.4 billion, reflecting a strong cash conversion level across all businesses[19]. - The company successfully issued RMB 500 million and USD 120 million in bonds, and voluntarily repaid USD 235 million in existing loans, optimizing its capital structure[19]. - The total debt as of June 30, 2024, was RMB 9,304.2 million, an increase from RMB 8,933.7 million as of December 31, 2023[42]. Shareholder and Governance - The company announced an interim dividend of HKD 0.30 per share, consistent with previous years[10]. - The interim dividend declared was HKD 0.30 per share, representing approximately 50% of the adjusted comparable net profit for the six months ended June 30, 2024[45]. - The company emphasizes effective communication with shareholders to enhance investor relations and understanding of business performance and strategy[53]. - The company established an Environmental, Social, and Governance (ESG) Committee on August 29, 2022, to improve the management of sustainability matters and enhance disclosure quality[51]. Financial Instruments and Valuation - The fair value of financial assets as of June 30, 2024, was RMB 315,514 million, an increase from RMB 251,342 million at the end of 2023[172]. - The fair value of financial liabilities increased to RMB (2,195,037) million from RMB (1,815,170) million, reflecting a rise of approximately 21%[172]. - The group’s financial reporting includes detailed disclosures on the fair value of financial instruments, ensuring transparency and compliance with financial reporting standards[179]. - The total fair value of financial assets measured at level three is RMB 252,796 thousand, an increase from RMB 237,168 thousand as of December 31, 2023[181]. Strategic Initiatives - The company is focusing on new product development and market expansion strategies to enhance future growth prospects[6]. - The company is actively refinancing its debts, with commitments totaling approximately RMB 3,991.0 million from various financial institutions[103]. - The company plans to adopt a new share option plan after the termination of the 2020 plan, which will not affect previously granted options[70].

Investment Rating - The investment rating for H&H International Holdings is "Buy" (maintained) [3]. Core Views - H&H International Holdings reported a revenue of 6.692 billion HKD in H1 2024, a year-on-year decrease of 4.1%, with adjusted net profit at 347 million HKD, down 32.4% year-on-year [4]. - The adult health segment (Swisse) showed growth despite high base effects, achieving a revenue of 3.276 billion HKD in H1 2024, up 11.5% year-on-year, while the infant formula segment faced challenges with an 18.8% decline in revenue [4]. - The company is adjusting its revenue forecasts for 2024-2026, projecting revenues of 14.265 billion HKD, 14.985 billion HKD, and 15.969 billion HKD, with respective year-on-year growth rates of 2.43%, 5.05%, and 6.57% [4]. Summary by Sections Financial Data - Total shares outstanding: 645.56 million - Market capitalization: 5,732.58 million HKD - Book value per share: 10.96 HKD - Debt-to-asset ratio: 68.23% [3]. Revenue and Profitability - H&H's revenue for H1 2024 was 6.692 billion HKD, down 4.1% year-on-year - Adjusted net profit was 347 million HKD, a decrease of 32.4% year-on-year - Adult health revenue increased by 11.5% to 3.276 billion HKD, while infant formula revenue decreased by 18.8% [4]. Future Projections - Revenue projections for 2024-2026 are adjusted to 14.265 billion HKD, 14.985 billion HKD, and 15.969 billion HKD, with growth rates of 2.43%, 5.05%, and 6.57% respectively - Net profit projections for the same period are 637 million HKD, 842 million HKD, and 1,030 million HKD, with growth rates of 9.54%, 32.12%, and 22.28% respectively [4].

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 6,692.1 million, a decrease of 4.1% compared to RMB 6,980.8 million for the same period in 2023[2]. - Gross profit for the same period was RMB 4,072.3 million, down 4.5% from RMB 4,262.4 million year-on-year[2]. - EBITDA decreased by 21.4% to RMB 1,098.4 million from RMB 1,397.9 million in the previous year[2]. - Adjusted comparable EBITDA margin was 17.0%, down 1.8 percentage points from 18.8% in the prior year[2]. - Net profit for the period was RMB 305.8 million, a significant decline of 49.7% compared to RMB 608.0 million in the same period last year[2]. - Adjusted comparable net profit decreased by 32.4% to RMB 347.2 million from RMB 513.4 million year-on-year[2]. - Total comprehensive income for the period was RMB 265.2 million, down from RMB 724.2 million in the previous year[7]. Assets and Liabilities - Non-current assets totaled RMB 14,612.5 million as of June 30, 2024, compared to RMB 14,908.6 million at the end of 2023[8]. - Current assets decreased to RMB 5,719.9 million from RMB 5,133.4 million at the end of 2023[8]. - Current liabilities increased to RMB 9,209.2 million from RMB 8,441.2 million at the end of 2023[8]. - Total assets minus current liabilities as of June 30, 2024, is RMB 11,123,153, a decrease from RMB 11,600,781 as of December 31, 2023[9]. - Non-current liabilities total RMB 4,663,365 as of June 30, 2024, down from RMB 5,305,557 as of December 31, 2023[9]. - As of June 30, 2024, the group recorded net current liabilities of RMB 3,489.3 million, primarily from bank loans and other borrowings totaling RMB 5,555.0 million due within the next twelve months[15]. Cash Flow and Financing - Cash flow from operating activities for the six months ended June 30, 2024, is RMB 1,052,540, a significant increase from RMB 22,069 in the same period of 2023[11]. - The company reported a decrease in pre-tax profit cash flow from operating activities to RMB 523,939 for the six months ended June 30, 2024, compared to RMB 903,152 in the previous year[10]. - The company issued priority notes generating RMB 906,794 in cash flow from financing activities during the six months ended June 30, 2024, compared to RMB 407,985 in the same period of 2023[11]. - The net cash flow used in financing activities was RMB (86,704) for the six months ended June 30, 2024, an improvement from RMB (205,657) in the previous year[12]. - The company has secured refinancing commitments totaling USD 560.0 million (approximately RMB 3,991.0 million) from various financial institutions to manage its borrowings[15]. Segment Performance - For the six months ended June 30, 2024, total revenue from external customers reached RMB 6,692.1 million, with the infant formula segment contributing RMB 1,798.4 million[19]. - The segment performance for infant formula reported a profit of RMB 1,056.9 million, while the adult nutrition segment reported RMB 394.6 million[19]. - Revenue from Mainland China was RMB 4,541,353 thousand, down 10.54% from RMB 5,076,109 thousand in the previous year[22]. - Revenue from the infant nutrition and care products segment in mainland China decreased by 23.2% year-on-year to RMB 2,240.2 million for the six months ended June 30, 2024[60]. - Revenue from infant formula in mainland China declined by 19.0% year-on-year to RMB 1,732.4 million, attributed to ongoing systemic challenges in the industry and intense competition following the transition to the new national standard[60]. Taxation - The company reported a total tax expense of RMB 218,136 thousand for the six months ended June 30, 2024, compared to RMB 295,138 thousand for the same period in 2023, reflecting a decrease of 26.1%[28]. - The corporate income tax rate for the group in mainland China is set at 25% as of June 30, 2023[29]. - Guangzhou Heai and H&H Guangzhou Health Products Co., Ltd. are recognized as high-tech enterprises, allowing them to pay corporate income tax at a reduced rate of 15% for the periods 2022-2024 and 2023-2025 respectively[29]. Dividends and Shareholder Returns - The interim dividend declared for the six months ended June 30, 2024, is HKD 0.30 per share, totaling approximately RMB 173,581,000, compared to RMB 256,700,000 for the same period in 2023[35]. - The company's profit attributable to equity holders for the six months ended June 30, 2024, was RMB 305,803,000, a decrease from RMB 608,014,000 for the same period in 2023[36]. Operational Strategy and Market Position - The company plans to focus on market expansion and new product development to drive future growth[21]. - The company aims to expand its market share in the high-end infant formula segment in mainland China, ranking third in the ultra-high-end category[42]. - The company is focused on consumer education and acquiring new customers to drive future growth in the infant formula segment[48]. - The company continues to expand its product offerings, including Swisse Plus+, Swisse Me, and Little Swisse, to better meet diverse consumer demands[45]. Corporate Governance - The company has adhered to all corporate governance codes as of June 30, 2024[91]. - The Audit Committee is responsible for recommending the appointment, reappointment, and removal of external auditors to the Board[94]. - The interim financial statements for the six months ending June 30, 2024, have been reviewed by the independent auditor, Ernst & Young[95].

Investment Rating - The report gives a "Buy" rating for H&H International Holdings, with a target price of HKD 15.78 per share based on a reasonable overall market value of CNY 94.43 billion for 2024 [4][6][14]. Core Insights - The demand for health supplements is expanding, driven by an aging population and increased health awareness among consumers. The online sales channel has become the primary distribution method, benefiting brands like Swisse [2][11][30]. - H&H International has adopted a "1+3" strategy with its Swisse brand, which includes Swisse Core, Swisse Plus+, Little Swisse, and Swisse Me, aiming for comprehensive family health coverage across all age groups [3][39]. - The company's revenue has shown steady growth, increasing from CNY 101 billion in 2018 to CNY 139 billion in 2023, with a CAGR of 6.57% [1][25]. Summary by Sections 1. Multi-Business Development - H&H International operates in three main segments: infant care, adult health, and pet nutrition, with a diversified business strategy [1][18]. - The adult nutrition segment has seen significant growth, with the acquisition of Swisse in 2015 marking its entry into this market [18][19]. - The revenue from adult nutrition has increased its share from 34.55% in 2020 to 44.10% in 2023, while infant care's share has decreased due to lower birth rates [25]. 2. Industry Expansion - The health supplement market in China has grown from CNY 993 billion in 2013 to CNY 3,335 billion in 2023, with a CAGR of 12.88% [2][33]. - Online retail has surpassed traditional channels, with e-commerce accounting for nearly 60% of sales in 2023 [2][35]. - Swisse's market share in the e-commerce sector reached 5.4% in 2023, positioning it as a strong competitor in the industry [2][36]. 3. Adult Nutrition Care: "1+3" Strategy - The "1+3" strategy allows for targeted marketing across different demographics, with Swisse Plus+ focusing on high-end products for mature consumers and Swisse Me appealing to younger audiences [3][39]. - Swisse Core remains the leading revenue contributor, while Swisse Plus+ has shown rapid growth, expected to continue double-digit growth in 2024 [40]. 4. Financial Forecasts and Valuation - Revenue projections for 2024-2026 are CNY 150.59 billion, CNY 161.84 billion, and CNY 175.01 billion, with corresponding net profits of CNY 8.57 billion, CNY 10.88 billion, and CNY 12.95 billion [4][12]. - The report anticipates a 3-year CAGR of 30.55% for EPS, indicating strong growth potential [4][14].