Investment Rating - The report initiates coverage with an "Outperform" rating, indicating expected performance above the market average [2][15]. Core Insights - The company is a leading domestic plastic pipe enterprise with an annual design production capacity of 3.25 million tons for plastic pipe systems, supported by over 30 advanced production bases across China and overseas [12][13]. - The company is focusing on optimizing its product structure around its core pipe business, diversifying its product offerings, and reducing reliance on the real estate sector by developing new products for hydrogen and oil transportation [13][14]. - The company is actively expanding its international market presence, with overseas revenue accounting for 9.8% of total income in the first half of 2024, and plans to establish production bases in Vietnam and Tanzania [14][15]. Financial Summary - Revenue projections for the company are as follows: Rmb 30.87 billion in 2023, Rmb 24.32 billion in 2024 (a decrease of 21%), Rmb 25.34 billion in 2025 (an increase of 4%), and Rmb 27.19 billion in 2026 (an increase of 7%) [7][10]. - Net profit is expected to be Rmb 2.37 billion in 2023, Rmb 1.20 billion in 2024 (a decrease of 49%), Rmb 1.40 billion in 2025 (an increase of 16%), and Rmb 1.60 billion in 2026 (an increase of 15%) [7][10]. - The report forecasts diluted EPS of Rmb 0.76 for 2023, Rmb 0.39 for 2024, Rmb 0.45 for 2025, and Rmb 0.52 for 2026 [7][10]. Valuation - The target price for the company is set at HKD 4.25, based on a valuation of 8.5 times the expected earnings for 2025, considering the exchange rate of HKD to RMB at 0.9 [2][15].

Company and Industry Summary Company Overview - The company operates in the construction materials industry, specifically focusing on plastic pipes and related products. Key Points Industry Performance - The first half of the year showed weak performance, particularly in July and August, with sales, volume, and operational efficiency being below expectations. However, there was a slight improvement in September, with October and November showing more significant recovery [1][2] - The overall gross margin remained stable, similar to the first half of the year, but the second half of the year is expected to be challenging, especially in the real estate sector, which is primarily focused on renovation projects [2][3] Market Demand and Trends - Demand pressure has increased across the industry, affecting both volume and pricing. The agricultural, industrial, and commercial sectors are showing relatively strong demand for plastic pipes [3][11] - Specific regions such as Northeast, Northwest, and North China are experiencing better demand compared to other areas, attributed to market dynamics and competitive factors [4][5] Competitive Landscape - The industry is witnessing a phase of consolidation, with approximately 25% of competitors exiting the market due to intense competition and pricing pressures. Remaining players are adjusting their pricing strategies to capture market share [6][7] - The company has opted for a more conservative approach, focusing on risk control and maintaining stable pricing rather than aggressive market capture [8][9] Strategic Adjustments - The company plans to enhance its capital expenditures on equipment upgrades and technology improvements to maintain competitiveness in the market [10] - There is a strategic shift towards focusing on agricultural markets and enhancing distribution channels to reach end-users more effectively [12][13] Product Development and Innovation - The company has introduced new products under the "Anjiabao" brand, targeting hidden engineering projects, which have seen a 20% growth in sales [17][18] - The focus is on providing comprehensive services alongside products to improve customer engagement and satisfaction [20] International Expansion - The company is actively expanding its overseas market presence, particularly in Southeast Asia and Africa, with plans to increase production capacity in these regions [21][22] - The goal is to grow the overseas sales contribution from 10% to 15-20% in the near future, with a long-term target of 40-45% [22][23] Financial Considerations - The company has not declared interim dividends since 2021 due to financial pressures from the real estate sector and ongoing loan repayments, with a total debt of over 200 billion [26][27] Future Outlook - The company anticipates continued pressure on demand in the upcoming year, leading to potential adjustments in strategy to maintain stability and profitability [9][10] Additional Insights - The company is leveraging technology to enhance the management of its distribution channels, aiming for better control and efficiency in operations [15][16] - There is a focus on building a more robust network of distributors to ensure better market penetration and customer service [14][15]

Financial Performance - Revenue decreased by 11.3% to RMB 13,563.5 million in H1 2024 compared to RMB 15,296.9 million in H1 2023[6] - Gross profit declined by 12.5% to RMB 3,727.8 million in H1 2024 from RMB 4,259.1 million in H1 2023[6] - Profit attributable to owners of the Company dropped by 30.2% to RMB 1,043.2 million in H1 2024 from RMB 1,493.7 million in H1 2023[6] - Revenue for the six months ended 30 June 2024 was RMB 13,563,523 thousand, a decrease from RMB 15,296,931 thousand in the same period in 2023[118] - Gross profit for the six months ended 30 June 2024 was RMB 3,727,786 thousand, down from RMB 4,259,138 thousand in the same period in 2023[118] - Profit before tax for the six months ended 30 June 2024 was RMB 1,283,304 thousand, compared to RMB 1,680,506 thousand in the same period in 2023[118] - Profit for the period ended 30 June 2024 was RMB 1,016,596 thousand, a decrease from RMB 1,435,599 thousand in the same period in 2023[118] - Total comprehensive income for the period ended 30 June 2024 was RMB 340,102 thousand, significantly lower than RMB 1,614,515 thousand in the same period in 2023[118] - Profit attributable to owners of the company was RMB 1,016,596 thousand, a decrease from RMB 1,435,599 thousand in the same period last year[122] - Total comprehensive income for the period attributable to owners of the company was RMB 340,102 thousand, significantly lower than RMB 1,614,515 thousand in the previous year[122] - Basic and diluted earnings per share attributable to owners of the company decreased to RMB 0.34 from RMB 0.49 in the same period last year[122] Assets and Liabilities - Total assets decreased by 0.7% to RMB 59,592.8 million as of June 30, 2024 compared to RMB 60,031.3 million as of December 31, 2023[6] - Cash and bank deposits increased by 2.3% to RMB 6,701.6 million as of June 30, 2024 from RMB 6,553.0 million as of December 31, 2023[6] - Total debts increased by 1.6% to RMB 21,034.0 million as of June 30, 2024 compared to RMB 20,695.6 million as of December 31, 2023[6] - Total non-current assets decreased to RMB 38,027,502 thousand from RMB 39,217,270 thousand compared to the previous year[124] - Total current assets increased to RMB 21,565,322 thousand from RMB 20,814,000 thousand compared to the previous year[124] - Total current liabilities decreased to RMB 21,023,447 thousand from RMB 24,512,720 thousand compared to the previous year[124] - Total non-current liabilities increased to RMB 14,679,907 thousand from RMB 11,207,472 thousand compared to the previous year[126] - Equity attributable to owners of the company decreased slightly to RMB 23,333,642 thousand from RMB 23,503,483 thousand compared to the previous year[126] - Non-controlling interests decreased to RMB 555,828 thousand from RMB 807,595 thousand compared to the previous year[126] - Reserves of the company stood at RMB 23,198,298 thousand as of 30 June 2024[128] - Non-controlling interests decreased by RMB 26,555 thousand to RMB 807,595 thousand[129] - Total equity increased by RMB 1,043,151 thousand to RMB 23,503,483 thousand[129] - Retained profits grew by RMB 1,043,151 thousand to RMB 20,408,075 thousand[129] - Exchange fluctuation reserve decreased by RMB 466,225 thousand to RMB (539,078) thousand[129] - Fair value reserve decreased by RMB 182,553 thousand to RMB (1,122,946) thousand[129] - Share premium remained unchanged at RMB 1,905,618 thousand[129] - Share capital remained unchanged at RMB 135,344 thousand[129] - Capital reserve decreased by RMB 7,121 thousand to RMB (91,756) thousand[129] - Statutory reserve decreased by RMB 13,558 thousand to RMB 2,862,310 thousand[129] - Share option reserve remained unchanged at RMB 0 thousand[129] - Total retained profits increased to RMB 19,649,086,000, reflecting a growth of RMB 1,493,672,000 compared to the previous period[131] - The company's total equity reached RMB 22,660,911,000, with a net increase of RMB 48,156,000[131] - Exchange fluctuation reserve improved by RMB 215,610,000, reducing the deficit to RMB (604,392,000)[131] - Fair value reserve decreased by RMB 58,918,000, resulting in a total of RMB (1,014,562,000)[131] - Statutory reserve increased to RMB 2,739,838,000, up by RMB 12,002,000[131] - Share premium remained stable at RMB 1,905,618,000 with no changes during the period[131] - Share capital stayed constant at RMB 135,344,000[131] - The company's total noncontrolling interests amounted to RMB 791,124,000, showing a slight decrease of RMB 3,135,000[131] - Employee defined benefit reserve remained unchanged at RMB 551,000[131] - Merger reserve stayed consistent at RMB 5,515,000[131] Operational Performance - The company operates over 30 advanced production bases across 19 provinces in China and foreign countries, with a network of 2,891 independent distributors[4] - Revenue from plastic piping systems accounted for 82.7% of total revenue in the first half of 2024, a slight increase from 80.0% in the same period in 2023[19] - Revenue from Southern China accounted for 44.7% of total revenue in the first half of 2024, down from 45.5% in the same period in 2023[17] - Revenue from outside China increased by 15.0% year-on-year to RMB 1,323 million in the first half of 2024[17] - The number of independent and exclusive first-tier distributors increased to 2,891 in the first half of 2024, up from 2,807 in the same period in 2023[18] - Revenue from building materials and home improvement products decreased by 19.4% year-on-year to RMB 1,080 million in the first half of 2024[19] - Revenue from other businesses decreased by 26.6% year-on-year to RMB 1,265 million in the first half of 2024[19] - Total revenue for the first half of 2024 was RMB 13.564 billion, a decrease from RMB 15.297 billion in the same period of 2023[22] - Gross profit for the first half of 2024 was RMB 3.728 billion, with a gross margin of 27.5%, slightly down from 27.8% in 2023[22] - EBITDA decreased by 15.1% year-on-year to RMB 2.644 billion, with an EBITDA margin of 19.5%, down from 20.4% in 2023[23] - Profit before tax decreased by 23.6% year-on-year to RMB 1.283 billion, with a profit margin of 7.5%, down from 9.4% in 2023[23] - Profit attributable to owners of the company decreased by 30.2% year-on-year to RMB 1.043 billion, with basic earnings per share of RMB 0.34, down from RMB 0.49 in 2023[23] - Revenue from the plastic piping systems business was RMB 11.219 billion, accounting for 82.7% of the Group's total revenue, down from RMB 12.233 billion in 2023[32] - Revenue from Southern China decreased by 8.6% to RMB 5.191 billion, while revenue from regions outside Southern China decreased by 9.0% to RMB 5.506 billion[28] - Revenue from water supply applications decreased by 9.0% to RMB 4.411 billion, while revenue from drainage applications decreased by 7.3% to RMB 4.131 billion[31] - The Group developed new products such as piping for hydrogen and oil transmission to diversify its product portfolio and reduce reliance on the property sector[32] - The Group leveraged its piping business to support rural revitalization, recording an uptrend in sales volume to the agricultural sector and rural villages[33] - Plastic piping systems business revenue was RMB 11.219 billion, accounting for 82.7% of the Group's total revenue[34] - The Group's annual designed production capacity for plastic piping systems was 3.25 million tonnes, with a capacity utilization rate of approximately 74.1%[38] - Sales volume of PVC products decreased by 5.4% year-on-year to 887,769 tonnes, while revenue from PVC products decreased by 8.4% to RMB 6.48 billion[45] - Sales volume of non-PVC products decreased by 6.3% year-on-year to 314,700 tonnes, with revenue decreasing by 8.1% to RMB 4.739 billion[45] - The average selling price of plastic piping products decreased by 2.8% year-on-year to RMB 9,330 per tonne, with a gross profit margin of 29.5%[46] - The Group launched "Anjiabao," a new one-stop solution for hidden installation of water, electricity, and heating mains, enhancing user experience and delivery efficiency[36] - The Group is expanding into new markets such as hydrogen and oil pipelines, and leveraging its pipeline technology in agriculture to support rural revitalization[34] - The Group is promoting intelligent manufacturing by integrating AI, 5G, IoT, and digitalized operations to establish smart factories, improving efficiency and reducing carbon emissions[38] - The Group optimized its client mix by strengthening partnerships with government departments and state-owned infrastructure enterprises, focusing on national development projects[37] - The Group maintained stable pricing and sales volume of piping systems despite intense competition and industry downtrend, keeping gross profit margins at a reasonable level[41] - The Group's production base in Vietnam is expected to start operation in the fourth quarter of 2024, enhancing its overseas market expansion[47] - The Group's building materials and home improvement business recorded revenue of RMB1,080 million, accounting for 8.0% of the Group's total revenue in the first half of 2024[49] - The Group's environmental protection business recorded revenue of RMB131 million in the first half of 2024, with plans to explore more government projects[54] - The Group's supply chain service platform business recorded revenue of RMB769 million in the first half of 2024, with a focus on the Southeast Asian market[55] - The Group successfully spun off its subsidiary, EDA Group Holdings Limited, through a separate listing on the main board of the Stock Exchange on 28 May 2024[55] - The Group is actively optimizing its client mix by shifting focus to government and state-owned enterprise-led projects, reducing reliance on civilian-owned enterprises[50] - The Group plans to diversify its sales channels and increase investment in product research and development to innovate and upgrade green products[50] - The Group is preparing to develop markets in Tanzania and Vietnam, with preliminary work for setting up factories in these countries progressing well[47] - The Group is pressing on with intelligent manufacturing to enhance sustainable development capability[47] - The Group's overseas market expansion strategy includes localizing production and sales in Indonesia, Cambodia, Thailand, and Malaysia[47] - Environmental business revenue for the first half of 2024 was RMB 131 million, impacted by reduced project activity and overcapacity in the industry[56] - Supply chain service platform business revenue for the first half of 2024 was RMB 769 million, with a focus on the Southeast Asian market and plans to optimize overseas assets[56] - New energy business revenue for the first half of 2024 was RMB 157 million, facing challenges from oversupply and intense competition in the photovoltaic industry[58] - The Group's total debt at the end of the reporting period was RMB 21.034 billion, with 58.9% denominated in RMB and 19.4% in USD[60] - The Group's gearing ratio stood at a healthy 46.8%, with current assets of RMB 21.565 billion and current liabilities of RMB 21.023 billion[60] - Cash and bank deposits, including restricted cash, amounted to RMB 6.702 billion, ensuring sufficient working capital for operations and future development[60] - The Group's capital expenditure for the reporting period was approximately RMB 1.559 billion, primarily used for automation improvements and production base expansions[60] - The Group's current ratio increased to 1.03 from 0.85, and the quick ratio rose to 0.68 from 0.57 as of December 31, 2023[60] - The Group plans to reduce investment in the new energy business and adjust its development strategy in response to market conditions[58] - The Group aims to expand its overseas market presence through localization of brand, production, and sales to enhance market penetration and income sources[58] - The Group employed approximately 21,000 employees at the end of the reporting period, with total staff costs amounting to RMB1,351 million[63] - Xingfa Aluminium recorded a revenue of RMB8,350 million and a profit attributable to shareholders of RMB378 million during the reporting period[69] - Keda recorded a revenue of RMB5,494 million and a profit attributable to shareholders of RMB454 million during the reporting period[70] - The Group's investment properties totaled RMB9,045 million at the end of the reporting period, with a decrease mainly due to construction costs of RMB185 million and a warehouse addition in Malaysia of RMB32 million[71][72] - The Group held long-term financial investments of approximately RMB1,783 million and short-term financial investments of RMB22 million at the end of the reporting period[75] - The Group recognized a fair value loss of approximately RMB32 million and a mark-to-market valuation net loss of approximately RMB169 million during the reporting period[75] - Income from the financial investment portfolio amounted to approximately RMB14 million, representing dividend and interest incomes[75] - The Group acquired an additional 1% shares in Keda for a consideration of RMB172 million during the reporting period[66][67] - The Group held 26.11% equity interest in Xingfa Aluminium and 8.01% in Keda at the end of the reporting period[66][67] - The Group's investment portfolio consisted of 12.5% listed equity securities, 6.8% listed debt securities, 6.1% unlisted securities, 70.7% unlisted equity securities, and 3.9% other investments[75] - China Lesso has resolved not to declare an interim dividend for the six months ended 30 June 2024 (1H2023: Nil)[80] - A final dividend of HK20 cents per share was paid on 18 July 2024 for the year ended 31 December 2023[80] - As of 30 June 2024, Wong Luen Hei holds 2,140,793,000 shares, representing 69.00% of the company's issued share capital[84] - Zuo Xiaoping directly holds 2,308,000 shares of the company[84] - Zuo Manlun holds 6,042,000 shares, representing 0.19% of the company's issued share capital[84] - Luo Jianfeng holds 1,927,000 shares, representing 0.06% of the company's issued share capital[84] - Tao Zhigang holds 30,000 shares of the company[84] - The company has adopted the Model Code for Securities Transactions by Directors, and all directors confirmed compliance during the reporting period[80] - No significant events occurred subsequent to 30 June 2024[80] - The company is committed to maintaining high standards of corporate governance and business ethics[79] - Zuo Manlun holds a 4.80% interest in Jiangsu Yongbao Environmental Technology Co., Ltd. with 3,840,000 shares[88] - Luo Jianfeng holds a 3.30% interest in Jiangsu Yongbao Environmental Technology Co., Ltd. with 2,640,000 shares[88] - Zuo Manlun and Luo Jianfeng jointly hold a 41.14% interest in EDA Group Holdings Limited with 180,974,000 shares[88] - Zuo Manlun holds a 1.76% interest in Guangzhou KingHing Construction Technology Ltd. with 3,054,475 shares[88] - Luo Jianfeng holds a 1.20% interest in Guangzhou KingHing Construction Technology Ltd. with 2,083,658 shares[88] - UBS Trustees (B.V.I.) Limited holds a 68.93% interest in the company with 2,138,485,000 shares[92] - The company's share award scheme holds 22,991,000 shares in trust as of 30 June 2024[97] - The share award scheme has a remaining life of approximately 4 years as of the report date[97] - No shares have been awarded under the share award scheme since its adoption in 2018[97] - The company and its subsidiaries did not purchase, sell, or redeem any listed securities during the reporting period[94] - The Controlling Shareholder, New Fortune, holds approximately 68.93% of the Company's issued share capital[99] - The Company established a share reward plan in 2018, with a trust holding 22,991,000 shares as of June 30, 2024[99] - The Company entered into a dual-currency syndicated term and revolving credit facility agreement for up to US$800 million at an interest rate of HIBOR +1.44% for HKD loans and SOFR +1.51% for USD loans[103] - The Wong family must maintain at least 51% beneficial shareholding in the Company's issued share capital, carrying at least 51% voting rights, to avoid default under the Facility Agreement I[103] - The Company entered into another

Investment Rating - Maintains "Buy" rating [4] Core Views - The company released its 2024 interim report, with performance in line with expectations [3] - Revenue for 2024H1 was RMB 13.564 billion, a year-on-year decrease of 11.33%, and net profit was RMB 1.043 billion, a year-on-year decrease of 30.19% [4] - The company is transitioning its pipeline business sales and optimizing its debt structure [2][3] - The company is actively expanding into non-real estate sectors, such as oil and hydrogen pipelines, and the agricultural and rural markets are showing growth trends [4] - The company's gross margin remained stable year-on-year, with the pipeline business gross margin estimated at around 29.5% [4] - The company's debt structure is being optimized, with total debt at the end of 2024H1 at RMB 21.03 billion, a year-on-year decrease of 12.8% [4] Financial Summary - Revenue for 2024H1: RMB 13.564 billion, a year-on-year decrease of 11.33% [4] - Net profit for 2024H1: RMB 1.043 billion, a year-on-year decrease of 30.19% [4] - Gross margin for 2024H1: 27.48%, relatively stable year-on-year [4] - Total debt at the end of 2024H1: RMB 21.03 billion, a year-on-year decrease of 12.8% [4] - Expected net profit for 2024-2026: RMB 2.088 billion, RMB 2.280 billion, and RMB 2.546 billion respectively [4] Market Data - Current stock price: HKD 2.64 [5] - 52-week price range: HKD 2.64 - HKD 4.55 [6] - Current market capitalization: HKD 8.19 billion [6]

Investment Rating - The investment rating for China Liansu (02128) is "Buy" with a target price of 2.79 HKD, maintaining the rating for the next six months [1]. Core Views - The report highlights that the company's performance is temporarily under pressure due to weak downstream demand, but there is optimism regarding its overseas expansion prospects [1]. - Revenue for the first half of 2024 is reported at 13.564 billion, a year-on-year decrease of 11.33%, with EBITDA at 1.283 billion, down 23.64%, and net profit attributable to shareholders at 1.043 billion, down 30.16% [1]. - The company has established over 30 advanced production bases and has a wide distribution network across the country, with an increase in independent exclusive distributors from the beginning of the year to 2,891 [1]. Summary by Sections Financial Performance - The company has adjusted its profit forecast for 2024-2026, expecting net profits of 2.08 billion, 2.28 billion, and 2.51 billion respectively, with corresponding PE ratios of 5.5, 5.1, and 4.6 times [1]. - The revenue breakdown for the first half of 2024 shows plastic pipeline systems, building materials, environmental protection, supply chain services, and new energy generating revenues of 11.219 billion, 1.080 billion, 0.131 billion, 0.769 billion, and 0.157 billion respectively, with year-on-year changes of -8.3%, -19.4%, -25.57%, +32.82%, and -78.76% [1][2]. Market and Competitive Landscape - The report notes that raw material prices are at low levels, impacting gross margins due to industry competition [1]. - The average selling price of plastic pipeline systems decreased by 266 to 9,330 per ton, with total sales volume down by 5.7% [1]. - The company has seen significant growth in overseas markets, particularly in Southeast Asia and Africa, with production bases established in Indonesia, Cambodia, Thailand, and Malaysia, and plans for local production in Tanzania and Vietnam [1]. Cost Structure and Profitability - The company’s expense ratio for the first half of 2024 is reported at 18.81%, with a net profit margin of 7.5%, down from the end of 2023 [1]. - The debt-to-asset ratio is reported at 46.8%, a decrease of 3.0% year-on-year, indicating an ongoing optimization of the debt structure [1].

Financial Performance - Revenue decreased by 11.3% to RMB 13.564 billion compared to the six months ended June 30, 2023[2] - Gross profit decreased by 12.5% to RMB 3.728 billion compared to the same period last year[2] - Net profit for the period decreased by 29.2% to RMB 1.017 billion compared to the previous year[2] - Basic earnings per share were RMB 0.34, a decrease of 30.6% compared to RMB 0.49 in the same period last year[6] - Total comprehensive income for the period amounted to RMB 340.1 million, a significant decrease from RMB 1.615 billion in the previous year[6] - The company reported a pre-tax profit of RMB 1,283,304,000 for the period[14] - The group's pre-tax profit before tax was RMB 8,694,771 thousand for the six months ended June 30, 2024, compared to RMB 9,291,231 thousand for the same period in 2023, representing a decline of approximately 6.4%[21] - The company reported a total operating profit of CNY 4,259,138,000 for the period, with a pre-tax profit of CNY 1,680,506,000[15] - The effective tax rate increased to 20.8% in the first half of 2024, compared to 14.6% in the same period of 2023[60] Dividends - The board has resolved not to declare an interim dividend for the six months ended June 30, 2024[2] - The company declared a final dividend of HKD 0.20 per share for the year 2023, totaling HKD 620,483,000, compared to HKD 0.30 per share for 2022, which amounted to HKD 930,725,000, reflecting a reduction of 33.3%[28] - The company has not proposed an interim dividend for the six months ended June 30, 2024, compared to no interim dividend for the same period in 2023[28] - The final dividend of HKD 0.20 per share will be paid to shareholders for the year ending December 31, 2023, on July 18, 2024[90] Assets and Liabilities - Non-current assets totaled RMB 38.028 billion as of June 30, 2024, down from RMB 39.217 billion at the end of 2023[7] - Current assets increased to RMB 21.565 billion from RMB 20.814 billion at the end of 2023[7] - Cash and cash equivalents stood at RMB 6.702 billion, slightly up from RMB 6.553 billion at the end of 2023[7] - As of June 30, 2024, the total current liabilities decreased to RMB 21,023,447 thousand from RMB 24,512,720 thousand, representing a reduction of approximately 14.5%[8] - The total assets minus current liabilities increased to RMB 38,569,377 thousand compared to RMB 35,518,550 thousand, indicating a growth of about 8.8%[8] - Non-current liabilities rose to RMB 14,679,907 thousand from RMB 11,207,472 thousand, reflecting an increase of approximately 31.5%[8] - The net assets decreased slightly to RMB 23,889,470 thousand from RMB 24,311,078 thousand, showing a decline of about 1.7%[8] - The company's total borrowings amounted to RMB 20,618,487 thousand, a decrease from RMB 19,844,586 thousand, indicating a reduction of approximately 3.7%[8] - The company's equity attributable to owners decreased to RMB 23,333,642 thousand from RMB 23,503,483 thousand, a decline of about 0.7%[8] Revenue Segmentation - The company operates primarily in manufacturing and selling building materials and home products, with a focus on geographic segmentation for resource allocation[12] - The company’s operational segments include Southern China, areas outside Southern China, and overseas markets, with performance evaluated based on adjusted profit before tax[12] - For the six months ending June 30, 2024, total revenue from external customers reached RMB 13,563,523,000[14] - Sales related to building materials amounted to RMB 12,141,577,000, representing a significant portion of total revenue[14] - Revenue from new energy business, including sales and services, amounted to CNY 738,823,000, with specific contributions from installation contracts and environmental projects[15] - The logistics and related services generated revenue of CNY 467,559,000, while financial services and property leasing contributed CNY 25,644,000[15] - The total income from external customers in China and overseas was highlighted as a key revenue source[13] Operational Strategy - The company maintained a stable operating strategy, focusing on core business development and optimizing customer structure[56] - The company is actively upgrading production technology and equipment to enhance operational efficiency and control costs[60] - The group plans to diversify its pipe products and reduce reliance on the real estate sector by developing new products such as hydrogen and oil pipelines[64] - The group is actively optimizing its customer structure and strengthening strategic partnerships with government departments and leading state-owned enterprises[65] - The group is leveraging new technologies such as AI and IoT to enhance manufacturing capabilities and improve operational efficiency[66] - The company aims to improve operational efficiency through technology advancements and process optimizations in its service delivery[16] Market Outlook - The company anticipates continued growth in revenue from construction materials and new energy sectors, projecting a strong performance in the upcoming quarters[16] - Future guidance indicates a positive outlook for revenue growth, driven by ongoing projects and market demand in both construction and renewable energy sectors[16] - The company plans to enhance its overseas market presence, with production bases expected to commence in Vietnam by Q4 2024[68] - The group is responding to national rural revitalization policies by expanding the application of pipe systems in agriculture, contributing to the modernization of traditional agriculture[64] Employee and Operational Costs - The company employed approximately 21,000 staff, with total employee costs amounting to RMB 1.351 billion during the reporting period[79] Other Financial Metrics - The company reported a significant reduction in trade payables from RMB 8,369,185 thousand to RMB 1,856,318 thousand, a decrease of approximately 77.8%[8] - The company reported a net loss from the sale of subsidiaries of RMB (123,471) thousand for the six months ended June 30, 2024, compared to a loss of RMB (1,173) thousand for the same period in 2023, indicating a significant increase in losses[22] - The total income tax expense for the six months ended June 30, 2024, was RMB 266,708,000, compared to RMB 244,907,000 for the same period in 2023, representing an increase of approximately 8.5%[24] - The company has adopted new and revised Hong Kong Financial Reporting Standards during the reporting period, which may impact financial performance and disclosures[10]

Financial Performance - Revenue for the year ended December 31, 2023, was RMB 30,868,289, representing a slight increase of 0.3% compared to RMB 30,767,211 in 2022[8]. - Gross profit decreased by 1.5% to RMB 8,121,014 from RMB 8,241,423 in the previous year[8]. - Finance costs increased significantly by 63.4% to RMB 1,112,761 from RMB 681,084 in 2022[8]. - Profit before tax declined by 16.5% to RMB 2,664,169 compared to RMB 3,190,424 in the prior year[8]. - Profit for the year decreased by 7.9% to RMB 2,320,346 from RMB 2,520,550 in 2022[8]. - Total assets increased by 1.7% to RMB 60,031,270 from RMB 59,004,001 at the end of 2022[8]. - Cash and bank deposits decreased by 11.0% to RMB 6,552,984 from RMB 7,361,770 in the previous year[8]. - Total equity rose by 7.4% to RMB 24,311,078 compared to RMB 22,641,086 in 2022[8]. - Proposed final dividend per share decreased by 33.3% to HK 20 cents from HK 30 cents in the previous year[8]. - Profit attributable to owners of the Company for 2023 was RMB 2,368 million, down from RMB 2,521 million in 2022, representing a decrease of approximately 6.06%[13]. Assets and Liabilities - Non-current assets increased to RMB 39,217 million in 2023 from RMB 35,011 million in 2022, reflecting a growth of approximately 6.29%[12]. - Total liabilities decreased to RMB 35,720 million in 2023 from RMB 36,363 million in 2022, a reduction of approximately 1.77%[12]. - Total assets reached RMB 60,031 million in 2023, compared to RMB 59,004 million in 2022, indicating a growth of about 1.73%[12]. - Equity attributable to owners of the Company rose to RMB 23,503 million in 2023 from RMB 21,842 million in 2022, marking an increase of about 7.58%[12]. Strategic Initiatives - China Lesso aims to enhance its core competency by establishing smart factories that integrate intelligent manufacturing and automated production[21]. - The company plans to capitalize on ongoing demand for infrastructure construction driven by state policy and economic recovery[21]. - China Lesso continues to focus on product innovation and quality improvement in its core piping business to maintain its market leadership[15]. - The company is committed to providing high-quality green, low-carbon, and environmentally friendly products and solutions, actively managing its operational environmental impact to reduce its operational footprint[24]. - The company plans to leverage national policies and the recovering economy to meet the ongoing demand for infrastructure construction, focusing on deepening its pipeline sector and expanding its industrial layout[24]. - The company aims to enhance its core capabilities through the integration of AI, Internet, and IoT technologies, creating smart manufacturing and automated production facilities[24]. - Despite facing challenges and uncertainties, the management team is confident in continuing to innovate and upgrade in line with market trends, while seizing overseas opportunities[24]. - The company is focused on optimizing its product mix and increasing market share in its main industry products[24]. Corporate Governance - The company emphasizes good corporate governance practices and business ethics as essential for sustainable development and investor confidence[72]. - The Board currently comprises 14 directors, including 9 executive directors and 5 independent non-executive directors[79]. - The company has adopted a Model Code governing securities transactions by directors, ensuring compliance throughout the year[74]. - The company has confirmed compliance with all applicable code provisions during the reporting period[73]. - The company has a commitment to continuous improvement in corporate governance practices to meet shareholder expectations[73]. - The independent non-executive directors have confirmed their independence under Rule 3.13 of the Listing Rules[164]. - The Board reviews its independence and effectiveness annually[163]. - The Company follows a formal and transparent procedure for the appointment of new directors[148]. - The Board diversity policy aims to enhance diversity through factors such as gender, age, cultural background, and professional experience[169]. - The Nomination Committee believes the existing Board is adequate in size, diversity, and composition for effective decision-making[177]. Risk Management - The Group has established a risk management and internal control system aligned with COSO standards to manage operational risks[182]. - The Audit Committee continuously monitors and annually reviews the effectiveness of the risk management and internal control system[183]. - The Group has developed a risk management project team responsible for assessing the Group's risk profile and tracking mitigation plans[184]. - The comprehensive risk management program aims to enhance the implementation of risk management across all functional departments[200]. - The internal control team assists in formulating internal control plans based on risk assessment results[199]. - The internal audit department evaluates the effectiveness of risk management through measures such as walk-through tests and analytical reviews[199]. Board Composition and Diversity - The Company has achieved the requirement of at least one female director on the Board according to the Listing Rules[171]. - The Board consists of 14 directors, with 3 female directors, achieving the target of at least one female director[175]. - Over one-third of the Board members are independent non-executive directors, promoting critical review and control of management processes[176]. - Women employees represent 30.1% of the Group's total workforce and 16.0% of middle or above managerial levels[178]. - The Board believes that the current gender ratio in the workforce is appropriate for the Group's development[180].

Investment Rating - The report assigns a "Buy" rating to the company, with a target price of 4.89 HKD per share based on a PE of 5 times for 2024 [3]. Core Insights - In 2023, the company achieved a revenue of 30.868 billion CNY, a year-on-year increase of 0.3%, while the pre-tax profit decreased by 16.49% to 2.664 billion CNY, and the net profit attributable to shareholders fell by 6.1% to 2.368 billion CNY. The decline in profit was primarily due to increased impairment provisions for receivables and rising dollar borrowing rates. Future impacts from these factors are expected to diminish, allowing net profit margins to gradually return to historical levels of 11-12%, which could lead to significant profit elasticity [1][13]. Summary by Sections 1. Revenue and Profit Trends - The company reported a stable revenue of 30.868 billion CNY in 2023, with a slight increase of 0.3% year-on-year. However, pre-tax profit decreased by 16.49% to 2.664 billion CNY, and net profit attributable to shareholders fell by 6.1% to 2.368 billion CNY, influenced by higher impairment provisions and increased dollar borrowing rates [1][13]. 2. Market Position and Growth Opportunities - The domestic plastic pipe market is stabilizing, with the company solidifying its leading position and accelerating market share growth, reaching 16.3% in 2023. The company is actively expanding into non-residential sectors and exploring overseas opportunities, particularly in Southeast Asia, the US, and Africa [1][19][22]. 3. Operational Quality and Financial Health - The company has maintained high operational quality, with a decreasing debt-to-asset ratio and ample cash reserves. The strategic shift back to core pipe business is expected to reduce capital expenditures significantly, enhancing shareholder returns after short-term operational pressures are alleviated [1][13]. 4. Profit Forecast and Investment Recommendations - The company is projected to achieve net profits of 2.8 billion CNY in 2024 and 3.3 billion CNY in 2025. The current market capitalization corresponds to a PE ratio of 3.19 and 2.71 for 2024 and 2025, respectively. The report recommends a target price of 4.89 HKD per share based on a 5x PE for 2024, supporting a "Buy" rating [1][3][22].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 3.97 HKD [2][4][6] Core Insights - The company reported a revenue of 31 billion CNY in 2023, a slight increase of 0.4% year-on-year, while the net profit attributable to shareholders decreased by 5.9% to 2.4 billion CNY [1][6] - Despite a decline in revenue from major products, the company saw an increase in sales volume and gross margin, with total product sales reaching 2.65 million tons, up 10.6% year-on-year [1] - The infrastructure investment, particularly in water conservancy projects, is expected to support demand for related pipeline products in 2024, contributing to stable performance [1][6] Financial Summary - The company’s EPS for 2023-2025 is projected to be 0.76, 0.73, and 0.77 CNY respectively, reflecting a downward adjustment from previous estimates due to ongoing pressures in the real estate sector [2][6] - The average selling price of plastic pipeline systems decreased by 13.2% to 9,289 CNY per ton, while the gross margin for these systems increased by 1 percentage point to 28.5% due to lower raw material prices [1][6] - The company is expected to maintain stable performance in 2024, with infrastructure investment remaining a key growth driver [1][6]

港股公司报告 | 公司点评 中国联塑（02128） 证券研究报告 2024年04月 02日 投资评级 业绩短暂承压，多元化业务布局前景可期 行业 地产建筑业/建筑 6个月评级 买入（维持评级） 业绩短暂承压，看好公司中长期发展潜力 当前价格 3.3港元 公司发布23年年报，全年实现营收308.68亿，同比+0.3%；归母净利润为 目标价格 4.62港元 23.68亿，同比-6.1%。其中，23H2 下半年实现营收155.71亿，同比-1.93%， 归母净利润为8.7亿，同比-28.6%。利润下降主要系公司23 年对客户应收 基本数据 账款计提减值以及借款利率上升致使利息支出增长，财务费用同比 港股总股本(百万股) 3,102.42 +63.38%，考虑到目前地产下行压力，我们将公司 24-25 年归母净利润从 港股总市值(百万港元) 10,237.98 30.95/34.90亿调整为26.0/29.4亿，预估26年归母净利润为33.6亿元，对 应PE为4.0/3.6/3.2 倍，考虑到港股流动性较弱，给予公司24年6 倍PE， 每股净资产(港元) 8.37 对应目标价为4.62港元，维持“买入”评级。 资产负 ...