Company Overview - The company ranks seventh globally in the production of ultra-high power graphite electrodes with a market share of approximately 1.4% as of 2021[11]. - The company has production facilities in Italy and China with actual annual production capacities of 21,000 tons and 14,000 tons respectively[11]. - The company aims to support the transition from blast furnace steelmaking to electric arc furnace steelmaking, which currently dominates steel production globally at 70%[11]. - The company is committed to providing high-quality ultra-high power graphite electrodes as a key industrial material for electric arc furnace steel manufacturers[11]. - The company has established a strong sales and distribution network to ensure product availability across various regions including the Americas, EMEA, Asia-Pacific, and China[12]. - The company has a diverse customer base spanning over 25 countries, including major electric arc furnace steel manufacturers[11]. - The company is actively engaged in research and development for new products and technologies to enhance its market position[11]. - The company is exploring market expansion opportunities to strengthen its global presence[11]. Financial Performance - The company's revenue decreased from approximately 59.7millioninthefirsthalfof2022toabout43.7 million in the first half of 2023, a decline of approximately 26.8%[22]. - Sales volume dropped from around 12,456 tons in the first half of 2022 to 9,603 tons in the first half of 2023, a decrease of about 22.9%[22]. - The average selling price slightly decreased from approximately 4,793pertoninthefirsthalfof2022toabout4,549 per ton in the first half of 2023[22]. - Gross profit fell from approximately 15.6millioninthefirsthalfof2022toabout5.3 million in the first half of 2023, with the gross margin decreasing from about 26.1% to 12.1%[24]. - The total sales cost reduced from approximately 44.1millioninthefirsthalfof2022to38.4 million in the first half of 2023[19]. - The company recorded a loss attributable to owners of approximately 4.2millioninthefirsthalfof2023,comparedtoaprofitofabout6.5 million in the same period of 2022[19]. - The company's profit attributable to owners decreased from approximately 6.5millioninthefirsthalfof2022toalossofapproximately4.2 million in the first half of 2023, primarily due to a decline in gross profit and increases in administrative and financing costs[27]. - Adjusted net profit (loss) under non-Hong Kong Financial Reporting Standards was 476thousandforthefirsthalfof2023,comparedto7.1 million for the same period in 2022[28]. - The company reported a loss before tax of 9,063thousand,comparedtoaprofitof7,930 thousand in the previous year[60]. - The company reported a net cash flow from operating activities of (4,746)thousandforthesixmonthsendedJune30,2023,comparedto(9,063) thousand in the same period of 2022[71]. Production Capacity and Expansion - The company plans to expand its production capacity from the current 35,000 tons to 46,000 tons through acquisitions in Shanxi Province, and aims to further increase it to 68,000 tons through a joint venture in Henan Province[20]. - A joint venture agreement was established on May 16, 2023, with a registered capital of RMB 100 million, where the company will hold a 37% stake[36]. - The joint venture aims to expand the annual production capacity of ultra-high power graphite electrodes to 40,000 tons in Huixian City, Henan Province[37]. - On July 6, 2023, the company’s subsidiary signed an asset purchase agreement to acquire assets for approximately RMB 80.5 million, which is expected to increase the annual production capacity of graphite electrodes from 35,000 tons to 46,000 tons[45]. Cash Flow and Financial Position - As of June 30, 2023, the company's cash and cash equivalents were approximately 28.3million,upfrom11.7 million as of December 31, 2022[30]. - Total interest-bearing bank and other borrowings amounted to approximately 30.0millionasofJune30,2023,comparedto30.2 million as of December 31, 2022[31]. - The company's debt-to-equity ratio improved from approximately 22.7% as of December 31, 2022, to approximately 18.8% as of June 30, 2023[32]. - Capital expenditures during the reporting period were approximately 2.7million,primarilyfortheexpansionofoperations[34].−Thecompanyreportedtotalliabilitiesdecreasedto70,224 thousand from 73,934thousandattheendof2022,reflectingareductionininterest−bearingbankborrowings[66].−Thecompany′sequityattributabletoownersincreasedto159,304 thousand from 132,917thousandattheendof2022[67].CorporateGovernanceandCompliance−ThecompanyhascompliedwiththecorporategovernancecodesinceitslistingonJanuary17,2023,ensuringacleardivisionofrolesbetweenthechairmanandtheCEO[51].−Theauditcommittee,consistingofthreeindependentnon−executivedirectors,hasreviewedtheinterimresultsandfoundnoissueswiththeaccountingprinciplesandpracticesadopted[54].−TheinterimfinancialstatementshavebeenreviewedbyDeloitte,confirmingcompliancewithapplicableaccountingstandards[58].EmployeeandManagementCosts−EmployeecostsfortheperiodamountedtoapproximatelyUSD8.3million,comparedtoUSD4.5millionforthesameperiodlastyear,indicatinga84.42,526,000 in the first half of 2023, up from 446,000inthesameperiodlastyear,drivenbyhighershort−termemployeebenefitsanddiscretionarybonuses[126].ShareCapitalandOwnership−AsofJune30,2023,thecompanyhasissuedatotalof1,000,000,000shares,withMr.HouHaomengholding750,000,000shares,representing750.21 each, raising a total of 35,364,000,whichincreasedthesharecapitalandsharepremiumby1,724,000 and 33,640,000respectively[116].MarketandRevenueAnalysis−RevenueforthesixmonthsendedJune30,2023,was43,685,000, a decrease of 26.9% from 59,706,000inthesameperiodof2022[81].−RevenuefromtheAmericasincreasedto13,578,000 in 2023 from 12,989,000in2022,reflectingagrowthof4.523,272,000 in 2023 from 28,752,000in2022,adeclineof19.06,771,000 in 2023 from $15,698,000 in 2022, a decrease of 56.9%[79].
