CITIC(00267)2024-08-30 04:00Financial Performance - CITIC Limited achieved a net profit attributable to ordinary shareholders of RMB 32.1 billion in the first half of 2024, a year-on-year increase of 0.1%[1] - Net profit attributable to ordinary shareholders of the company for the first half of 2024 was RMB 32,113 million, slightly up from RMB 32,092 million in the same period of 2023[11] - Net profit for the period was RMB 56,749 million, a slight decrease from RMB 57,471 million in the same period last year[12] - Revenue increased by 13% to RMB 377,647 million in the first half of 2024 compared to RMB 333,986 million in the same period of 2023[70] - Net profit decreased by 1.3% to RMB 56,749 million in the first half of 2024 from RMB 57,471 million in the same period of 2023[70] - Net interest income for the first half of 2024 was RMB 74,136 million, a slight decrease from RMB 75,717 million in the same period of 2023[10] - Fee and commission income for the first half of 2024 was RMB 35,097 million, down from RMB 39,524 million in the same period of 2023[10] - Total revenue for the first half of 2024 reached RMB 377,647 million, compared to RMB 333,986 million in the same period of 2023[10] - Basic earnings per share for the first half of 2024 remained stable at RMB 1.10, consistent with the same period of 2023[11] - The basic and diluted earnings per share for the six months ended June 30, 2024, were RMB 1.10 and RMB 1.09, respectively, compared to RMB 1.10 for both in 2023[34] - Sales revenue increased by 22% to RMB 241,035 million in the first half of 2024 compared to RMB 197,166 million in the same period of 2023[75] - Net interest income decreased by 2.1% to RMB 74,136 million in the first half of 2024 from RMB 75,717 million in the same period of 2023[75] Credit Ratings and Financial Stability - CITIC Limited's credit rating was upgraded by S&P from BBB+ (positive outlook) to A- (stable outlook), reaching the highest level since 2016[1] - CITIC Limited's credit ratings as of June 30, 2024, were A-/Stable by Standard & Poor's and A3/Stable by Moody's[91] Business Segments and Revenue Breakdown - The company operates five business segments: Integrated Financial Services, Advanced Intelligent Manufacturing, Advanced Materials, New Consumption, and New Urbanization[18] - Integrated Financial Services includes banking, securities, trust, insurance, and asset management services[18] - Advanced Intelligent Manufacturing covers heavy machinery, special robots, aluminum wheels, and aluminum castings production[18] - Advanced Materials involves the mining, processing, and trading of resources and energy products such as iron ore, copper, and crude oil, as well as special steel production[18] - New Consumption includes automotive and food sales, telecommunications, publishing, and modern agriculture businesses[18] - New Urbanization encompasses real estate development, sales and holding, engineering contracting and design services, infrastructure, environmental protection, and general aviation businesses[18] - Total revenue for the first half of 2024 reached RMB 377,647 million, with comprehensive financial services contributing RMB 140,815 million, advanced materials RMB 25,545 million, and new consumption RMB 24,270 million[20] - Advanced Materials segment revenue grew by 28% to RMB 166,810 million in the first half of 2024 compared to RMB 130,603 million in the same period of 2023[71] - New Consumption segment revenue declined by 2.6% to RMB 24,221 million in the first half of 2024 from RMB 24,870 million in the same period of 2023[71] - Comprehensive financial services division reported revenue of RMB 139,497 million, with net interest income contributing RMB 76,749 million[21] - Advanced manufacturing division generated revenue of RMB 24,251 million, with sales of goods accounting for RMB 24,092 million[21] - Advanced materials division achieved revenue of RMB 130,740 million, primarily from sales of goods at RMB 129,877 million[21] - New consumption division recorded revenue of RMB 24,929 million, with service income contributing RMB 6,986 million[21] - New urbanization division reported revenue of RMB 16,780 million, with construction services income at RMB 6,556 million[21] Loans and Advances - CITIC Bank's green credit, medium- and long-term manufacturing loans, and inclusive loans increased by 15%, 8%, and 7% respectively compared to the beginning of the year[3] - The company's green credit balance reached RMB 529.1 billion, maintaining its leading position in green bond underwriting[7] - Total loans and advances as of June 30, 2024, amounted to RMB 5,474,256 million, an increase from RMB 5,380,140 million as of December 31, 2023[35] - Corporate loans and advances increased to RMB 2,832,834 million as of June 30, 2024, from RMB 2,626,803 million as of December 31, 2023[35] - Personal loans and advances rose to RMB 2,340,099 million as of June 30, 2024, compared to RMB 2,294,540 million as of December 31, 2023[35] - The loan loss provision for loans and advances measured at amortized cost increased to RMB 144,041 million as of June 30, 2024, from RMB 139,679 million as of December 31, 2023[35] - The fair value of loans and advances measured at fair value through other comprehensive income decreased to RMB 414,838 million as of June 30, 2024, from RMB 572,730 million as of December 31, 2023[35] - Total loans and advances at amortized cost increased by RMB 252.369 billion (5.1%) to RMB 5,193.9 billion as of June 30, 2024, compared to December 31, 2023[79] - Corporate loans grew by RMB 205.158 billion (7.8%) to RMB 2,830.177 billion, while personal loans increased by RMB 45.559 billion (2.0%) to RMB 2,340.099 billion[79] Deposits and Borrowings - Total deposits increased to RMB 5,577,672 million from RMB 5,459,993 million, a growth of 2.2%[37] - Corporate deposits decreased to RMB 2,060,738 million from RMB 2,149,823 million, a decline of 4.1%[37] - Personal deposits increased to RMB 444,924 million from RMB 340,432 million, a growth of 30.7%[37] - Total borrowings increased to RMB 254,893 million from RMB 235,770 million, a growth of 8.1%[38] - Short-term bank borrowings (within 1 year) increased to RMB 92,391 million from RMB 54,033 million, a growth of 71.0%[39] - Total issued debt instruments increased to RMB 1,431,737 million from RMB 1,221,107 million, a growth of 17.3%[40] - Short-term debt instruments (within 1 year) increased to RMB 1,099,157 million from RMB 828,068 million, a growth of 32.7%[40] Asset and Liability Management - Total assets increased to RMB 11,429,264 million from RMB 11,330,920 million at the end of 2023[13] - Loans and advances to customers grew to RMB 5,474,256 million from RMB 5,380,140 million[13] - Deposits from customers increased to RMB 5,577,672 million from RMB 5,459,993 million[14] - Total liabilities rose to RMB 10,024,187 million from RMB 9,994,138 million[14] - Equity attributable to ordinary shareholders of the company increased to RMB 733,482 million from RMB 703,178 million[14] - Non-controlling interests grew to RMB 671,595 million from RMB 633,604 million[14] - The company's financial assets measured at fair value through profit or loss increased to RMB 1,329,560 million from RMB 1,292,115 million[13] - The company's financial assets measured at fair value through other comprehensive income decreased to RMB 934,990 million from RMB 967,803 million[13] - Total assets across all segments amounted to RMB 11,429,264 million, with comprehensive financial services holding RMB 10,708,104 million[20] - Total liabilities across all segments were RMB 10,024,187 million, with comprehensive financial services accounting for RMB 9,526,866 million[20] - Investments in associates totaled RMB 110,560 million, with comprehensive financial services holding RMB 25,867 million[20] - Investments in joint ventures amounted to RMB 56,006 million, with comprehensive financial services contributing RMB 11,363 million[20] - Borrowings across all segments totaled RMB 254,149 million, with comprehensive financial services accounting for RMB 9,406 million[20] - Total assets grew by 0.9% to RMB 11,429,264 million as of June 30, 2024, from RMB 11,330,920 million as of December 31, 2023[77] - Loans and advances increased by 1.7% to RMB 5,474,256 million as of June 30, 2024, from RMB 5,380,140 million as of December 31, 2023[77] - Total liabilities increased by 0.3% to RMB 10,024,187 million as of June 30, 2024, from RMB 9,994,138 million as of December 31, 2023[77] Risk Management - The company has established a comprehensive risk management and internal control system covering all business segments to identify, assess, and manage various risks[84] - The Asset and Liability Management Committee (ALCO) monitors the company's financial risks in accordance with treasury and financial risk management policies[85] - The company manages its capital structure using various funding sources, including long-term and short-term debt and equity, to match funding types with business needs[86] - CITIC Limited manages interest rate risk through a combination of floating and fixed-rate financing and uses interest rate swaps and other approved derivatives to mitigate risks[93] - CITIC Limited's foreign exchange risk is primarily managed through currency matching and the use of forward contracts and cross-currency swaps[94] - CITIC Limited faces counterparty risk in financial product transactions with various financial institutions, managing risks through internal credit processes and regular reporting[95] - The company is exposed to commodity price risks in iron ore, crude oil, natural gas, and coal, using long-term supply contracts and hedging tools to mitigate these risks[96] - CITIC Limited actively monitors price fluctuations in equity and other investments to manage market price risks through diversified asset allocation[97] - The company's financial performance is significantly influenced by global and domestic economic conditions, with uncertainties arising from trade frictions and economic recovery disparities[98] - Operational risks include potential disruptions in IT systems, project delays, and increased costs due to unforeseen technical failures, labor disputes, and environmental damages[99] - Credit risk is heightened by the diversification of trading counterparts and the complexity of new financial products and business models[100] - Intense competition in financial services, engineering, and resource sectors may lead to reduced product prices, lower profit margins, and loss of market share[101] - Regulatory changes at local, national, and international levels could increase operational and capital expenditures, impacting the company's overall investment returns[102] Legal and Litigation Matters - Mineralogy and Mr. Palmer filed a lawsuit claiming AUD 2.324 billion (later reduced to AUD 1.800438 billion) due to alleged losses at the Yabulu refinery[45] - Mineralogy and Mr. Palmer allege that the failure to pay royalties led to the liquidation of Queensland Nickel Pty Ltd. (QNI) in 2016[45] - Mineralogy and Mr. Palmer claim that the value of Yabulu refinery and related joint ventures was impaired due to the liquidation of QNI[46] - Mineralogy and Mr. Palmer argue that they lost the opportunity to sell their shares in QNI and related entities at market value between mid-2015 and mid-2016[46] - Mineralogy filed a lawsuit claiming AUD 2.6754 billion due to the alleged impairment of shares in Palmer Petroleum and Blaxcell Limited[48] - Mineralogy claims that the failure to pay royalties led to the bankruptcy and liquidation of Palmer Petroleum in July 2016[49] - Mineralogy alleges that if royalties had been paid, Palmer Petroleum could have continued operations and retained its oil exploration permits in Papua New Guinea[49] - The court has reserved judgment on several interlocutory applications, including requests for document disclosure and amendments to pleadings[47] - The trial for the Queensland Nickel and Palmer Petroleum claims has not yet been scheduled, and the court has reserved judgment on the order of proceedings[48] - Mineralogy claims that the value impairment suffered by Palmer Petroleum or Blaxcell Limited is equivalent to the sales value of oil that could allegedly be obtained within the scope of the permits[50] - Mineralogy alleges that it lost the opportunity to sell the oil exploration permits between 2016 and mid-2017[50] - CITIC submitted a revised alternative defense on May 17, 2024, including arguments on contract interpretation, causation of loss, mitigation of loss, quantification of loss, and procedural abuse[50] - The court has reserved its judgment on several interlocutory applications, including CITIC's request for Mineralogy to disclose new categories of documents and Mineralogy's request to exempt itself from disclosing financial status[50][51] - The litigation will be heard and determined together with the previously mentioned case CIV 2072/2017, as per the order by Justice K Martin in September 2020[51] - Mineralogy filed a modified application on July 19, 2024, seeking to delay the trial until after the final ruling (including any appeals) in case CIV 2425/2023, or to have it heard concurrently with cases CIV 2425/2023 and CIV 2336/2023[52] - CITIC opposes Mineralogy's modified application, and the court has reserved its judgment following a hearing on August 5, 2024[52] - The 2017 MCP consolidated litigation, which includes claims for breach of contract and unconscionable conduct under the Australian Consumer Law, was heard from February 21 to April 29, 2022[54] - Justice K Martin ruled on March 7, 2023, that Mineralogy has an obligation to submit or agree to the submission of the Small Works Plan and must consider any reasonably proposed additional land requirements in good faith[55] - Justice K Martin confirmed that a piece of land held by Mineralogy, located south of the current tailings dam, is necessary for future tailings and waste rock disposal for the CITIC Australia Mining Project[55] - The Small Engineering Plan was approved on July 28, 2023, allowing the company to proceed with necessary exploration for mine expansion and new tailings dam construction[57] - Iron concentrate production is expected to decrease in 2024 due to limited mine area and waste rock/tailings storage capacity[57] - The company filed an appeal (CACV 35/2023) on March 31, 2023, challenging the initial judgment in the 2017 MCP consolidated litigation[58] - The appeal hearing for the 2017 MCP consolidated litigation took place from August 12-15 and August 19-21, 2024, with the court reserving its judgment[60] - The company filed a new lawsuit (CIV 2336/2023) on November 27, 2023, seeking to compel Mineralogy to submit the 2023 Project Development Proposal[61] - The 2023 Project Development Proposal aims to address mine area limitations and insufficient waste rock/tailings storage capacity[61] - Mineralogy submitted an amended defense on March 11, 2024, alleging breaches of project agreements by the company[62] - The court rejected Mineralogy's application to stay the litigation and the company's application to expedite the trial on July 3, 2024[62] - Mineralogy and Mr. Palmer claimed losses of AUD 200 million due to the inability to follow up on the minimum production royalty in previous litigation[66] - Mineralogy and Mr. Palmer are seeking punitive damages of approximately AUD 500 million, aggravated damages, and interest on the claimed amount[66] Corporate Governance and Leadership - The board of directors consists of 17 members, including 4 executive directors, 7 non-executive directors, and 6 independent non-executive directors, complying with the requirement that independent non-executive directors must constitute at least one-third of the board[112] - The company's audit and risk committee, along with management and external auditors, reviewed the unaudited consolidated interim financial statements for the six months ended June 30, 2024[113] - The semi-annual report for 2024 will be published on September 16, 2024, on both CITIC Limited's website and the Hong Kong Exchanges and Clearing Limited's website[119] - The announcement was issued by CITIC Limited's Chairman, Xi Guohua, on August 30, 2024[119] - The executive directors of CITIC Limited include Xi Guohua (Chairman), Zhang Wenwu, Liu Zhengjun, and Wang Guoquan[119] - Non-executive directors of CITIC Limited include Yu Yang, Zhang Lin, Li Yi, Yue Xuekun, Yang Xiaoping, Mu Guoxin, and Li Zimin[119] - Independent non-executive directors of CITIC Limited include Xiao Weiqiang, Dr. Xu Jinwu, Anthony Neoh, Mr. Kerr, Toshikazu Tawara, and Chen Yuyu[119] Dividend and Shareholder Information - The company declared a final dividend of RMB 0.335 per share for 2023, compared to a final dividend of HKD 0.451 per share for 2022[32] - The company announced an interim dividend of RMB 0.19 per share (equivalent to HKD 0.2079455 per share) for the fiscal year ending December 31, 2024, payable on November 15, 2024[114] - Share