WANT WANT CHINA(00151)2024-07-18 08:34Company Listing and Stock Information - Want Want China Holdings Limited is listed on the Hong Kong Stock Exchange with the stock code 0151[1] - The company's Taiwan Depositary Receipts were listed on the Taiwan Stock Exchange Corporation on April 28, 2009, and voluntarily withdrawn from listing on October 15, 2013[12] - The company was listed on the Hong Kong Stock Exchange on March 26, 2008[12] - The company's subsidiary, Want Want Holdings Ltd., was listed on the Singapore Exchange Securities Trading Limited in May 1996 and delisted in September 2007[12] Financial Performance and Highlights - Gross margin for FY2023 was 43.9%, showing a slight decrease from 46.6% in FY2022 and 44.8% in FY2021[33] - Revenue for the fiscal year 2024 reached RMB 23,586,327 thousand, with a profit before income tax of RMB 5,405,467 thousand and an income tax expense of RMB 1,422,288 thousand[36] - Profit for the year 2024 was RMB 3,983,179 thousand, with RMB 3,990,474 thousand attributable to equity holders of the company and RMB 7,295 thousand to non-controlling interests[36] - Total assets for 2024 were RMB 27,457,068 thousand, with non-current assets at RMB 14,571,187 thousand and current assets at RMB 12,885,881 thousand[37] - Total equity for 2024 was RMB 16,405,738 thousand, while total liabilities were RMB 11,051,330 thousand[37] - Total revenue for 2023FY grew by 2.9% year-on-year to RMB23,586.3 million, with dairy products and beverage segment revenue increasing by 7.4% year-on-year[47] - Gross profit margin increased by 2.7 percentage points year-on-year to 46.6%, driven by lower costs of key raw materials and optimized production labor strategies[48] - Profit attributable to equity holders of the Company increased by 18.4% year-on-year to RMB3,990.5 million, with the margin of profit attributable to equity holders rising by 2.2 percentage points to 16.9%[48] - Inventory turnover days decreased by 9 days compared to the previous year, leading to a shorter cash conversion cycle by 11 days (average 65 days in 2023FY)[49] - Cash generated from operations increased by RMB1,167.7 million year-on-year to RMB6,752.9 million in 2023FY, driven by improvements in working capital efficiency and profit before tax[49] - Total revenue for FY2023 increased by 2.9% year-on-year to RMB 23.5863 billion, with dairy and beverage revenue growing by 7.4% and candy sub-category revenue reaching a historical high[50] - Gross profit margin for FY2023 rose by 2.7 percentage points to 46.6%, driven by lower prices of some bulk raw materials and packaging materials, and optimized labor strategies[50] - Net profit attributable to equity holders increased by 18.4% year-on-year to RMB 3.9905 billion, with the profit margin rising by 2.2 percentage points to 16.9%[50] - Inventory turnover days decreased by 9 days, leading to a 11-day improvement in cash conversion cycle, with average cash conversion cycle at 65 days in FY2023 compared to 76 days in FY2022[50] - Operating cash flow increased by RMB 1.1677 billion year-on-year to RMB 6.7529 billion in FY2023[50] - Traditional channels resumed growth with high single-digit growth in milk sub-category and double-digit growth in beverages sub-category[52] - Modern channels grew by low-to-mid single-digit in revenue, with significant growth in dairy products and beverages segment[53] - Emerging channels maintained high single-digit growth, with vending machine channel achieving double-digit growth driven by new smart models[54] - OEM channel revenue achieved rapid year-on-year growth in 2023FY, benefiting from the Group's production capability and capacity advantage across multiple product categories such as dairy products, beverages, maternal products, rice crackers, and candies[57] - Overseas revenue achieved mid-to-high teen growth rate in 2023FY, with significant progress in developing overseas markets for candy products[57] - Total revenue for 2023FY grew by 2.9% year-on-year to RMB23,586.3 million, with dairy products and beverages segment growing by 7.4% to RMB11,955.6 million[65] - Revenue from the rice crackers segment grew by 2.3% year-on-year to RMB5,976.9 million, driven by continuous growth in overseas markets and emerging channels[65] - Revenue from the snack foods segment decreased by 5.5% year-on-year to RMB5,501.8 million, while the candies sub-category achieved a record high in revenue for the year[65] - The Group's products maintained a balanced development trend, with rice crackers and snack foods segments accounting for 49% of total revenue, and dairy products and beverages segment accounting for 51% in 2023FY[65] - Revenue from the rice crackers segment grew by 2.3% year-on-year to RMB5,976.9 million in 2023FY, with overseas markets and emerging channels contributing 20% and 10% respectively, both maintaining double-digit growth[66] - The new product "Little Rice Crunch" achieved revenue exceeding RMB40 million in 2023FY, driven by its unique taste and healthy concept, particularly popular among white-collar professionals and Generation Z consumers[67] - Revenue of the dairy products and beverages segment grew by 7.4% year-on-year to RMB11,955.6 million in 2023FY, with "O-Bubble Fruit Milk" achieving double-digit revenue growth[68] - Total revenue for the Group in 2023FY increased by 2.9% year-on-year to RMB23,586.3 million, with dairy products and beverages contributing 51% and rice crackers and snack foods contributing 49%[69] - The "56 Ethnic Group Can" series of Hot-Kid Milk returned to the market, driving a double-digit year-on-year growth in sales volume of canned milk in 2023FY[72] - Revenue of the snack foods segment declined by 5.5% year-on-year to RMB5,501.8 million in 2023FY, mainly due to a decline in the popsicles sub-category, though the candies sub-category reached a record high[72] - The cost of sales for the Group in 2023FY decreased by 2.0% year-on-year to RMB12,595.4 million, driven by a double-digit decline in the unit cost of palm oil, paper, and tinplate, offsetting increases in sugar and gelatin costs[73] - Gross profit margin increased by 2.7 percentage points to 46.6% in 2023FY, driven by lower unit costs of key raw materials and improved product pricing management[75][78] - Gross profit rose by 9.1% year-on-year to RMB10,990.9 million due to increased revenue and higher gross profit margin[75][78] - Rice crackers segment gross profit margin increased by 3.4 percentage points to 46.0% in 2023FY, mainly due to a double-digit decrease in palm oil unit cost[76] - Dairy products and beverages segment gross profit margin rose by 3.7 percentage points to 48.5% in 2023FY, driven by lower unit costs of packaging materials and milk powder[76] - Snack foods segment gross profit margin increased by 0.6 percentage points to 44.0% in 2023FY, supported by higher sales of high-margin products and lower unit costs of certain materials[80] - Distribution costs increased slightly by 0.1% to RMB3,021.2 million in 2023FY, while distribution costs as a percentage of revenue decreased by 0.4 percentage points to 12.8%[80] - Administrative expenses rose by 6.8% to RMB3,043.1 million in 2023FY, with the administrative expenses to revenue ratio increasing by 0.5 percentage points to 12.9%[80] - Operating profit increased by 15.7% year-on-year to RMB5,609.8 million in 2023FY, with the operating profit margin rising by 2.7 percentage points to 23.8%[80] - Finance costs increased by RMB59.86 million to RMB281.8 million in 2023FY, mainly due to higher interest rates on USD-denominated borrowings in the first half of the year[81] - Income tax expense amounted to RMB1,422.3 million in 2023FY, with the income tax rate decreasing by 3.3 percentage points to 26.3% compared to 2022FY[82] - Financing costs increased by RMB 59.86 million to RMB 281.8 million in FY2023 due to rising USD interest rates, but decreased significantly in H2 after replacing high-interest USD loans with lower-interest RMB loans[83] - The company's net cash increased by RMB 2.3379 billion to RMB 10.6552 billion as of March 31, 2024, compared to RMB 8.3173 billion as of March 31, 2023[85] - Bank deposits (including long-term deposits) increased by RMB 2.3467 billion to RMB 16.0063 billion as of March 31, 2024, with RMB accounting for approximately 90% (RMB 14.3614 billion)[85] - Total borrowings increased slightly by RMB 8.8 million to RMB 5.3511 billion as of March 31, 2024, with short-term borrowings decreasing by RMB 392.7 million and long-term borrowings increasing by RMB 401.5 million[86] - The company's net gearing ratio improved to -0.65 times as of March 31, 2024, compared to -0.57 times as of March 31, 2023[87] - Operating activities generated a net cash inflow of RMB 5.1514 billion in FY2023, while financing activities resulted in a net cash outflow of RMB 2.4361 billion, mainly due to dividend payments of RMB 1.7911 billion[88] - Capital expenditure decreased to RMB 405.7 million in FY2023 from RMB 531.3 million in FY2022, with investments focused on expanding production plants and equipment in Vietnam and upgrading domestic facilities[89] - The company invested RMB 139.2 million, RMB 93.29 million, and RMB 86.79 million respectively in expanding production facilities for rice crackers, dairy products and beverages, and snack foods[89] - Inventory turnover days decreased by 9 days to 81 days in 2024FY compared to 2022FY, driven by improved supply chain and working capital efficiencies[96] - Inventory as of 31 March 2024 amounted to RMB2,415.1 million, a decrease of RMB727.0 million from RMB3,142.1 million in 2023[96] - Trade receivables turnover days decreased to 13 days in 2024FY from 15 days in 2023FY[96] - Trade payables turnover days remained stable at 29 days for both 2024FY and 2023FY[99] - Average number of employees decreased by 1,342 to 39,887 in 2023FY, with total remuneration expenses decreasing by RMB41.65 million (0.9%) to RMB4,522.4 million[101] - The company recommended a final dividend of US3.30 cents per share for 2023FY, totaling approximately US$390 million, representing 70% of the profit attributable to equity holders[103] Corporate Governance and Board Structure - The company's executive directors include Mr. Tsai Eng-Meng (Chairman and CEO), Mr. Tsai Shao-Chung, and Mr. Tsai Wang-Chia (COO)[4] - The company's independent non-executive directors include Dr. Pei Kerwei, Mr. Hsieh Tien-Jen, and Mr. Lee Kwok Ming[4] - The company's audit and risk management committee is chaired by Mr. Lee Kwok Ming, with members including Dr. Pei Kerwei and Mr. Hsieh Tien-Jen[4] - The company's remuneration committee is chaired by Mr. Hsieh Tien-Jen, with members including Dr. Pei Kerwei and Mr. Tsai Shao-Chung[4] - The company's nomination committee is chaired by Dr. Pei Kerwei, with members including Mr. Tsai Shao-Chung and Mr. Hsieh Tien-Jen[5] - The company's ESG committee is chaired by Mr. Tsai Wang-Chia, with members including Mr. Chu Chi-Wen and Dr. Pei Kerwei[9] - The company's auditor is Ernst & Young, and its legal advisor is Sullivan & Cromwell (Hong Kong) LLP[9] - The company's principal banks include Bank of China (Hong Kong) Limited, China Merchants Bank Co., Limited, and Citigroup Inc.[9] - The company has adopted the Model Code for Securities Transactions by Directors, ensuring compliance with the Listing Rules regarding directors' securities transactions[109] - Directors confirmed compliance with the Model Code for securities transactions during the fiscal year ending March 31, 2024[109] - The company adheres to high standards of corporate governance, aligning with the principles of the Corporate Governance Code, with a minor deviation explained in the corporate governance report[110] - The Board is responsible for establishing the Group's purpose, values, and strategic directions, overseeing financial performance, and approving major financial arrangements and investment projects[111] - The Board ensures effective risk management and internal control systems, and oversees ESG matters and risks[111] - The management team, led by executive Directors, is responsible for the day-to-day management and implementation of Board-approved strategies[112] - The Board has delegated specific responsibilities to various committees, including the Audit and Risk Management Committee, Remuneration Committee, Nomination Committee, and Strategy Committee[112] - The Board consists of 14 Directors as of 31 March 2024, including 7 executive Directors, 2 non-executive Directors, and 5 independent non-executive Directors[114] - The ESG Committee was established in August 2020 to assist the Board in promoting and managing ESG-related matters, including strategies, policies, initiatives, performance, and reporting[114] - The Board is responsible for corporate governance duties, including developing and reviewing corporate governance policies, monitoring compliance with legal and regulatory requirements, and reviewing the code of conduct for employees and Directors[114] - The Company has a Director Nomination Policy in place, which outlines the process and criteria for evaluating, selecting, and recommending candidates for Board nomination and appointment[118] - All Directors are subject to retirement by rotation at least once every three years, with one-third of Directors retiring and being eligible for re-election at each annual general meeting[118] - The Company has entered into formal letters of appointment with all Directors, setting out their duties and major terms and conditions of their appointments[118] - The company has 5 independent non-executive directors who provide valuable business experience, knowledge, and professionalism to the Board for its efficient and effective functioning[123] - Independent non-executive directors have demonstrated their ability to provide independent views and valuable contributions to the company during their terms[119] - Directors appointed to fill casual vacancies or as additions to the Board hold office only until the next general meeting following their appointment[119] - The company complies with Listing Rules 3.10 and 3.10A regarding the appointment of independent non-executive directors with appropriate qualifications[119] - Independent non-executive directors serving more than 9 years are subject to an independence and suitability assessment by the Nomination Committee before re-election[120] - The Board has established a mechanism to ensure independent views and advice are available for effective corporate governance[123] - Independent non-executive directors are explicitly identified as such in all corporate communications disclosing director names[121] - The company has received written confirmations from independent non-executive directors confirming their independence in accordance with Listing Rule 3.13[119] - The Board considers the expertise, experience, and diversity contributed by independent non-executive directors when recommending their re-election[120] - Directors retiring at the 2024 AGM on 27 August 2024 are eligible for re-election[119] - The Board held 6 meetings during the year ended 31 March 2024, primarily to review and discuss the Group's strategies, monitor financial performance, and approve investment projects[124] - The Board reviewed and approved the financial results for the year ended 31 March 2023 and the six months ended 30 September 2023[125] - The Board recommended a final dividend for shareholders' approval at the 2023 AGM[125] - The Board approved the renewal of the service contract with Mr. Tsai Eng-Meng for a term of three years starting from 26 August 2023[125] - The Board granted clearance for Mr. Tsai Eng-Meng to deal in the Company's securities and appointed designated Directors for related notifications[125] - Independent non-executive Directors actively attended Board meetings and provided independent views on the Company's matters[124] - The Board reviewed ESG-related matters, including core ESG strategies and related targets, during the year[125] - The Board approved the adoption of the revised terms of reference of the Remuneration Committee[125] - The Board ensured the effectiveness of the risk management and internal control systems[124] - The Board received reports from the Board Committees and the ESG Committee during the year[124] - The 2023 AGM was held on 22 August 2023[129] - Mr. Liao Ching-Tsun retired as a non-executive Director and ceased to be the vice chairman of the Board and a member of the Strategy Committee upon the conclusion of the 2023 AGM[129] - The Chairman held a meeting with the independent non-executive Directors without the presence of other Directors in March 2024[129] - Regular Board meetings are scheduled in advance with notices served at least 14 days before the meetings[131] - The Chairman ensures that all key and appropriate issues are discussed by the Board in a timely manner[132] - The Chairman promotes a culture of openness and debate, facilitating effective contributions from Directors[133] - Minutes of Board and Board Committee meetings are recorded in sufficient detail, including any concerns or dissenting views raised by Directors[134] - Draft minutes of each Board meeting are sent to Directors for comments before approval at the following meeting[134] - The Chairman ensures that all Directors receive adequate, complete, and reliable information in a timely manner[132] - The Chairman is responsible for ensuring constructive relations between executive and non-executive Directors[133] - The company organized a trip to Vietnam in June 2023 for