WANT WANT CHINA(00151)2023-06-27 04:04Financial Performance - Revenue decreased by 4.4% to RMB 22,928,219 thousand compared to RMB 23,984,891 thousand in the previous year[2] - Gross profit declined by 6.3% to RMB 10,071,028 thousand from RMB 10,747,394 thousand[2] - Operating profit dropped by 11.2% to RMB 4,846,711 thousand from RMB 5,456,813 thousand[2] - Net profit attributable to equity holders of the company fell by 19.8% to RMB 3,371,584 thousand from RMB 4,202,655 thousand[2] - Gross margin decreased by 0.9 percentage points to 43.9% from 44.8%[2] - Operating profit margin declined by 1.7 percentage points to 21.1% from 22.8%[2] - Net profit margin attributable to equity holders of the company decreased by 2.8 percentage points to 14.7% from 17.5%[2] - Total revenue for the fiscal year ending March 31, 2023, was RMB 22,928,219 thousand, a decrease of 4.4% compared to RMB 23,984,891 thousand in the previous year[15][16] - Total revenue for fiscal year 2022 decreased by 4.4% year-on-year to RMB 22.9282 billion, with dairy and beverage categories declining by double digits due to pandemic restrictions[33] - Gross profit margin for fiscal year 2022 decreased by 0.9 percentage points to 43.9%, but rebounded to 44.9% in the second half of the year, up 1.9 percentage points year-on-year[33] - Net profit attributable to equity holders decreased by 19.8% year-on-year to RMB 3.3716 billion in fiscal year 2022[33] - Operating profit for FY2022 decreased by 11.2% to RMB 4.8467 billion, with the operating profit margin dropping by 1.7 percentage points to 21.1%[54] - Net profit attributable to equity holders for FY2022 decreased by 19.8% to RMB 3.3716 billion, with the profit margin dropping by 2.8 percentage points to 14.7%[55] Segment Performance - The Dairy and Beverage segment generated the highest revenue at RMB 11,130,495 thousand, accounting for 48.5% of total revenue, but saw a 13.5% decline from the previous year[15][16] - The Rice Snacks segment revenue increased by 4.5% to RMB 5,843,348 thousand, representing 25.5% of total revenue[15][16] - The Snack Foods segment revenue grew by 7.8% to RMB 5,820,262 thousand, contributing 25.4% to total revenue[15][16] - The Other Products segment revenue rose by 9.9% to RMB 134,114 thousand, though it only accounted for 0.6% of total revenue[15][16] - Rice cracker category revenue grew by 4.5% to RMB 5.8433 billion, driven by channel diversification and double-digit growth in overseas markets[43] - Dairy and beverage category revenue declined by 13.5% to RMB 11.1305 billion, with a double-digit decline in "Want Want Milk" but recovery in Q4 FY2022 and further acceleration in FY2023[45] - Snack category revenue grew by 7.8% to RMB 5.8203 billion, with double-digit growth in ice cream, beans, and jelly subcategories, and mid-single-digit growth in the candy subcategory[46] Financial Position - Total assets decreased to RMB 25,974,077 thousand from RMB 29,857,981 thousand[6] - Total equity decreased to RMB 14,704,070 thousand from RMB 16,708,778 thousand[7] - Total liabilities decreased to RMB 11,270,007 thousand from RMB 13,149,203 thousand[7] - Total assets decreased by 13.0% to RMB 25,974,077 thousand as of March 31, 2023, compared to RMB 29,857,981 thousand in the previous year[18][20] - Total liabilities decreased by 14.3% to RMB 11,270,007 thousand as of March 31, 2023, from RMB 13,149,203 thousand in the previous year[18][20] - Net cash as of March 31, 2023, was RMB 8.3173 billion, a decrease of RMB 1.7833 billion compared to March 31, 2022, primarily due to dividend payments[55] Cost and Margin Analysis - Cost of goods sold decreased by 2.9% to RMB 12.8572 billion, with significant price increases for key raw materials such as whole milk powder and sugar, but cost pressures eased in the second half of the year[47] - Gross profit margin decreased by 0.9 percentage points to 43.9%, but improved by 2.1 percentage points in the second half of the year to 44.9% due to cost optimization and product mix adjustments[48] - Rice cracker category gross margin increased by 1.2 percentage points to 42.6%, with a significant improvement in the second half of the year to 45.3% due to higher sales of high-margin gift packs and lower palm oil costs[49] - Dairy and beverage category gross margin decreased by 1.9 percentage points to 44.8%, primarily due to an 18% increase in the cost of imported whole milk powder, but is expected to improve as raw material costs stabilize[50] - Snack category gross margin decreased by 0.8 percentage points to 43.4%, but improved in the second half of the year to 44.7% due to cost management and product structure optimization[51] Expenses and Profitability - Distribution costs for FY2022 were RMB 3.0181 billion, a decrease of RMB 115.1 million compared to FY2021, with the distribution cost to revenue ratio rising by 0.1 percentage points to 13.2%[52] - Administrative expenses for FY2022 increased by 4.2% to RMB 2.8492 billion, with the administrative expense to revenue ratio rising by 1.0 percentage points to 12.4%[53] - Operating profit for FY2022 decreased by 11.2% to RMB 4.8467 billion, with the operating profit margin dropping by 1.7 percentage points to 21.1%[54] - Net profit attributable to equity holders for FY2022 decreased by 19.8% to RMB 3.3716 billion, with the profit margin dropping by 2.8 percentage points to 14.7%[55] Capital Expenditures and Investments - The company's capital expenditures increased by 15.4% to RMB 531,292 thousand in FY2023, up from RMB 460,547 thousand in FY2022[16][19] - Capital expenditures for FY2022 were RMB 531.3 million, with significant investments in production facilities for rice products, dairy and beverages, and snack foods[58] Contract Liabilities and Revenue Recognition - Contract liabilities for rice products increased to RMB 402,635 thousand, up 36.4% year-over-year[21] - Contract liabilities for dairy and beverages rose to RMB 775,203 thousand, a 14.2% increase compared to the previous year[21] - Contract liabilities for snacks grew to RMB 404,499 thousand, marking a 46.8% year-over-year growth[21] - Total contract liabilities reached RMB 1,591,926 thousand, up 26.8% from the previous year[21] - Revenue recognized from contract liabilities for rice products was RMB 295,195 thousand, down 24.8% year-over-year[22] - Revenue recognized from contract liabilities for dairy and beverages was RMB 678,570 thousand, a 13.1% decrease compared to the previous year[22] - Total revenue recognized from contract liabilities was RMB 1,255,592 thousand, down 19.3% year-over-year[22] Exchange Gains and Other Income - Net exchange gain was RMB 17,600 thousand, compared to a net loss of RMB 2,171 thousand in the previous year[23] - Long-term bank deposit income increased to RMB 241,394 thousand, up 70.3% year-over-year[23] Earnings Per Share and Dividends - Basic earnings per share were RMB 28.35 cents, down from RMB 35.16 cents in the previous year[26] - The company proposed a final dividend of 2.10 US cents per share for the 2022 fiscal year, amounting to approximately 385 million, representing 79% of the company's profit attributable to equity holders for the year[65] - The company proposed a final dividend of 2.10 US cents per share for the fiscal year ending March 31, 2023, subject to approval at the Annual General Meeting, with payment expected on or around September 14, 2023[75] Share Repurchases - The company repurchased a total of 17,445,000 shares on the Hong Kong Stock Exchange during the fiscal year ending March 31, 2023, at a total cost of HK13,383,000 (excluding fees)[73] - The company's board believes that the share repurchases are in the best interests of the company and its shareholders and can enhance the company's earnings per share[73] Corporate Governance and Meetings - The company's Annual General Meeting is scheduled to be held on August 22, 2023, with the notice to be published on the company's website and sent to shareholders in due course[74] - The company's share register will be closed from August 26 to August 30, 2023, to determine eligibility for the proposed final dividend[75] Overseas Expansion and New Products - Overseas business achieved double-digit growth in fiscal year 2022, with balanced growth across three major categories[37] - The Vietnam factory has officially commenced production, marking the first step in the company's global expansion strategy[32] - New products launched within the last five years accounted for nearly double-digit percentage of the company's total revenue in fiscal year 2022[33] - The company plans to launch a new dairy product, "Daily Milk Drink," in small blue bottles to meet diverse consumer needs[35] - The company will continue to expand its presence in emerging channels such as content e-commerce and social e-commerce, which showed significant growth in fiscal year 2022[36] - The company has established five new overseas subsidiaries in Southeast Asia, America, and Europe to support its overseas market expansion strategy[37] Inventory and Receivables Management - Inventory turnover days increased to 90 days in FY2022, up from 79 days in FY2021, due to increased raw material reserves in response to pandemic uncertainties[60] - Trade receivables turnover days remained stable at 15 days for both FY2022 and FY2021[62] - Trade payables turnover days increased slightly to 29 days in FY2022, up from 28 days in FY2021[63] Employee and Compensation - The company's average number of employees in FY2022 was 41,229, a slight decrease of 36 compared to FY2021, with total employee compensation at RMB 4.564 billion[63] Financial Reporting Standards - The company adopted revised Hong Kong Financial Reporting Standards (HKFRS) for the first time in the current year, including amendments to HKFRS 3, HKAS 16, and HKAS 37, with no material impact on financial performance[10] - HKFRS 3 amendments replaced previous financial reporting frameworks with the 2018 Conceptual Framework, with no significant changes to recognition principles, and had no impact due to no business combinations during the year[11] - HKAS 16 amendments prohibit deducting costs from proceeds of property, plant, and equipment sales before intended use, with retrospective application from April 1, 2021, and no impact as no such sales occurred[11] - HKAS 37 amendments clarify that costs directly related to contracts include incremental costs and allocated costs, with prospective application from April 1, 2022, and no impact as no loss-making contracts were identified[11] - HKFRS 9 amendments clarify fees considered when assessing changes in financial liability terms, with prospective application from April 1, 2022, and no impact as no changes or exchanges of financial liabilities occurred[12] - The company has not yet applied newly issued but not yet effective HKFRS standards, including amendments to HKFRS 10, HKAS 28, HKFRS 16, and HKFRS 17, with no expected material impact on financial performance[13] Geographic and Customer Concentration - Over 90% of the company's revenue and non-current assets are located in China[14] - No single customer accounted for 10% or more of the company's total revenue in both FY2023 and FY2022[14]