NONGFU SPRING(09633)2024-03-26 11:37Financial Performance - Total revenue for 2023 reached RMB 42,667 million, a year-on-year increase of 28.4%[1] - Net profit attributable to the parent company's owners was RMB 12,079 million, up 42.2% compared to the previous year[1] - Basic earnings per share were RMB 1.07, an increase of 40.8% year-on-year[1] - Gross profit for 2023 was RMB 25,406.8 million, compared to RMB 19,095.4 million in 2022[2] - Other income and gains amounted to RMB 1,841.5 million, up from RMB 1,709.2 million in 2022[2] - The company's revenue from customer contracts in 2023 increased to RMB 42,667,221 thousand, up from RMB 33,239,187 thousand in 2022, reflecting a significant growth in sales[17] - Interest income in 2023 rose to RMB 991,247 thousand, compared to RMB 623,360 thousand in 2022, indicating improved financial performance[19] - Government subsidies and grants related to income increased to RMB 505,897 thousand in 2023 from RMB 412,529 thousand in 2022, supporting the company's operations[19] - The company's pre-tax profit for 2023 was RMB 11,050,332 thousand, with a significant portion attributed to the performance of its beverage segments[14] - Income tax expenses for 2023 were RMB 3,608,704 thousand, compared to RMB 2,555,082 thousand in 2022, reflecting higher profitability[23] - The company's net profit attributable to shareholders in 2023 increased to RMB 12,079 million from RMB 8,495 million in 2022[34] - The company's operating cash flow in 2023 increased by 43.7% year-on-year to RMB 17,305 million[34] - Total revenue for 2023 was RMB 42,667 million, a 28.4% increase from 2022, with gross profit rising 33.1% to RMB 25,407 million[51] - Gross margin increased by 2.1 percentage points to 59.5% in 2023, driven by lower costs for materials such as cartons and labels[51] - Net profit for 2023 increased by 42.2% to RMB 12,079 million, up from RMB 8,495 million in 2022[56] Dividend and Shareholder Returns - The company proposed a final dividend of RMB 0.75 per ordinary share[1] - The company declared a final dividend of RMB 0.75 per share for 2023, totaling approximately RMB 8,434,850,000, subject to shareholder approval[26] - The company proposed a final cash dividend of RMB 0.75 per share for the year ended December 31, 2023, totaling approximately RMB 8,435 million[34] - The company plans to distribute a final dividend of RMB 0.75 per share for the year ended December 31, 2023, totaling approximately RMB 8,435 million[81] - The company will suspend share registration from May 16 to May 21, 2024, and from May 25 to May 30, 2024, for the final dividend eligibility[83][84] Segment Performance - Revenue from external customers for water products reached RMB 20.26 billion, accounting for 47.5% of total revenue[13] - Revenue from ready-to-drink tea products was RMB 12.66 billion, representing 29.7% of total revenue[13] - Functional beverage products generated RMB 4.90 billion in revenue, contributing 11.5% to total revenue[13] - Juice beverage products contributed RMB 3.53 billion in revenue, making up 8.3% of total revenue[13] - Other products, including agricultural and other beverages, generated RMB 1.31 billion in revenue, accounting for 3.1% of total revenue[13] - Segment profit for water products was RMB 7.35 billion, the highest among all segments[13] - Ready-to-drink tea products achieved a segment profit of RMB 5.62 billion[13] - Functional beverage products recorded a segment profit of RMB 2.07 billion[13] - Juice beverage products and other products had segment profits of RMB 945.63 million and RMB 396.21 million, respectively[13] - Total revenue from external customers in 2022 reached RMB 33,239,187 thousand, with water products contributing RMB 18,262,614 thousand, ready-to-drink tea products contributing RMB 6,905,986 thousand, functional beverages contributing RMB 3,837,605 thousand, and juice products contributing RMB 2,878,830 thousand[14] - Packaging water products revenue reached RMB 20,262 million in 2023, a 10.9% increase from 2022, accounting for 47.5% of total revenue[40] - Tea beverage products revenue grew by 83.3% to RMB 12,659 million in 2023, representing 29.7% of total revenue[42] - Functional beverage products revenue increased by 27.7% to RMB 4,902 million in 2023, making up 11.5% of total revenue[44] - Juice beverage products revenue was RMB 3,533 million in 2023, accounting for 8.3% of total revenue[39] - Other products revenue decreased to RMB 1,311 million in 2023, representing 3.0% of total revenue[39] - Juice beverage products recorded annual revenue of RMB 3,533 million in 2023, a 22.7% increase from 2022, accounting for 8.3% of total revenue[45] - Other products, including soda water and coffee beverages, generated revenue of RMB 1,311 million in 2023, a slight decrease of 3.1% from 2022, accounting for 3.0% of total revenue[47] Assets and Liabilities - Property, plant, and equipment increased to RMB 17,179.6 million in 2023 from RMB 15,397.6 million in 2022[4] - Cash and bank balances rose to RMB 24,125.2 million in 2023, compared to RMB 15,211.2 million in 2022[4] - Total current assets increased to RMB 28,461.4 million in 2023 from RMB 18,361.5 million in 2022[4] - Total equity attributable to the parent company's owners was RMB 28,570.9 million in 2023, up from RMB 24,084.1 million in 2022[5] - The company's long-term bank deposits, pledged deposits, cash, and bank balances increased by 32.7% to RMB 25,639 million as of December 31, 2023, compared to RMB 19,316 million in 2022[57] - The company's inventory increased by 46.7% to RMB 3,092 million as of December 31, 2023, compared to RMB 2,108 million in 2022, with inventory turnover days increasing from 50.5 days to 55.0 days[59] - Trade receivables and bills increased to RMB 547 million as of December 31, 2023, from RMB 479 million in 2022, with turnover days decreasing from 5.2 days to 4.4 days[60] - Trade payables and bills increased to RMB 1,770 million as of December 31, 2023, from RMB 1,425 million in 2022, with turnover days increasing from 33.3 days to 33.8 days[61] - The company's capital gearing ratio increased to 11.2% as of December 31, 2023, compared to 10.5% in 2022, primarily due to increased use of bill financing[62] - The company holds HKD 1,536 million and USD 462 million in foreign currencies as of December 31, 2023, with a foreign exchange gain of approximately RMB 46 million for the year[65] Research and Development - Research and development costs in 2023 amounted to RMB 349,148 thousand, up from RMB 277,166 thousand in 2022, reflecting increased investment in innovation[20] Marketing and Product Development - The company launched new 4L handle bottle design for natural water products, enhancing user experience and expanding usage scenarios[41] - "Dongfang Shuye" tea brand introduced new flavors and packaging, including a 900ml drinkable size, to meet diverse consumer needs[42] - "Scream" beverage partnered with the Chinese University Basketball League to strengthen its professional image in the sports field[44] - "Power Emperor" vitamin water introduced new flavors and engaged in youth-oriented marketing activities to enhance brand vitality[44] - The "17.5°" juice brand launched a seasonal fresh-squeezed orange juice, emphasizing freshness with a 36-hour process from picking to packaging[45] - The "NFC" series introduced a 900ml large bottle of 100% NFC guava mixed juice, expanding the product matrix and receiving positive consumer feedback[46] - The company upgraded its marketing system in 2023, integrating brand and channel marketing to achieve efficient, automated, and intelligent operations[50] Corporate Governance - The company has adopted all code provisions of the Corporate Governance Code as its corporate governance guidelines and has complied with them for the year ended December 31, 2023, except for a deviation from Part C.2.1 of the Code[88] - Zhong Shanshan serves as both the Chairman and General Manager of the company, a dual role that the Board believes benefits the company's management[89] - The Board consists of four executive directors (including Zhong Shanshan), two non-executive directors, and three independent non-executive directors, ensuring a high level of independence[89] - The Board has adopted the Standard Code as the rules governing the trading of the company's listed securities by directors and supervisors, and all directors and supervisors confirmed compliance with the Standard Code for the year ended December 31, 2023[89] - The 2023 annual report will be sent to shareholders upon request and will be available on the Hong Kong Stock Exchange website and the company's website[90] Employee and Equity Incentives - The company has over 20,000 employees as of December 31, 2023, with total employee welfare expenses (including director remuneration) of RMB 4,931 million for the year[73] - The company implemented an employee equity incentive plan in 2022, granting a total of 6,636,400 H shares, representing 0.059% of the total issued shares and 0.1318% of the issued H shares[75] - The employee equity incentive plan has a validity period of 10 years, with approximately 7 years remaining as of the announcement date[75] - As of April 2022, 2,610,000 shares from the equity incentive plan have met the first vesting condition, while 44,184 shares were forfeited due to unmet conditions[75] - 1,708,200 incentive shares met the second vesting condition and were vested, while 285,048 shares were forfeited due to unmet conditions, and 102,760 shares were forfeited due to employee resignations or demotions[76] Financial Commitments and Investments - The company has committed RMB 4,437 million in capital commitments as of December 31, 2023, primarily for the construction of production facilities and the purchase of production equipment[66] - The company signed an investment agreement for a RMB 5 billion project in Jiande, Zhejiang Province, involving the acquisition of approximately 1,000 mu of industrial land[67] - As of December 31, 2023, the company has utilized approximately HKD 4,900 million (52.26%) of the total net proceeds from its IPO, with the remaining HKD 4,477 million to be used according to the prospectus[69] - Total available net amount for brand building is HKD 2,344 million, with HKD 1,003 million used and HKD 1,341 million remaining, expected to be fully utilized by December 31, 2024[70] - Total available net amount for purchasing sales equipment is HKD 2,344 million, with HKD 371 million used and HKD 1,973 million remaining, expected to be fully utilized by December 31, 2024[70] - Total available net amount for purchasing production facilities and building new factories is HKD 1,875 million, with HKD 1,438 million used and HKD 437 million remaining, expected to be fully utilized by December 31, 2024[70] - Total available net amount for basic capacity building is HKD 938 million, with HKD 212 million used and HKD 726 million remaining, expected to be fully utilized by December 31, 2024[70] - Total available net amount for all purposes is HKD 9,377 million, with HKD 4,900 million used and HKD 4,477 million remaining, expected to be fully utilized by December 31, 2024[70] - The company has sufficient financial resources to continue operations in the foreseeable future based on current financial forecasts and available financing[71] Audit and Compliance - The Audit Committee reviewed the consolidated annual results for the year ended December 31, 2023, and is chaired by Stanley Yi Chang[86] - The company's independent auditor, Ernst & Young, has agreed with the figures in the consolidated financial statements for the year ended December 31, 2023, as presented in the performance announcement[87] - The company did not purchase, sell, or redeem any of its listed securities during the year ended December 31, 2023[85] Taxation - The corporate income tax rate for the company's Chinese subsidiaries is 25%, with certain subsidiaries in western China eligible for a preferential tax rate of 15% if their encouraged business activities account for over 60% of total income[24] - The company's Hong Kong subsidiaries had no taxable profits in 2023, resulting in no provision for Hong Kong profits tax[25] Receivables and Payables - Trade receivables and bills receivable increased to RMB 547,021,000 in 2023 from RMB 478,587,000 in 2022, with a credit period typically of one month, extendable to three months for major direct sales customers[28] - The aging analysis of trade receivables and bills receivable shows that RMB 506,235,000 was due within 90 days in 2023, compared to RMB 440,293,000 in 2022[29] - The impairment loss allowance for trade receivables increased to RMB 34,680,000 in 2023 from RMB 30,511,000 in 2022, reflecting a net impairment loss of RMB 4,169,000[29] - The company uses a simplified approach to calculate expected credit losses for trade receivables under IFRS 9, allowing for a lifetime expected credit loss provision[29] - Bank acceptance bills, which are unconditionally accepted by banks within the term, are not subject to impairment loss provisions[30] - The company employs a provision matrix for impairment analysis of trade receivables, reflecting probability-weighted outcomes and time value of money[30] - Trade receivables are written off when there is evidence of severe financial difficulty of the counterparty and no realistic possibility of recovery[30] - The expected credit loss rate for accounts within 90 days in 2023 was 3.52%, with a total book value of RMB 520,886 thousand and an expected credit loss of RMB 18,352 thousand[31] - The expected credit loss rate for accounts between 91 to 180 days in 2023 was 13.64%, with a total book value of RMB 32,605 thousand and an expected credit loss of RMB 4,447 thousand[31] - The expected credit loss rate for accounts between 181 to 365 days in 2023 was 44.36%, with a total book value of RMB 22,698 thousand and an expected credit loss of RMB 10,069 thousand[31] - The expected credit loss rate for accounts over 365 days in 2023 was 100%, with a total book value of RMB 1,812 thousand and an expected credit loss of RMB 1,812 thousand[31] - The company's trade payables and notes payable within 90 days in 2023 amounted to RMB 1,598,162 thousand, a significant increase from RMB 1,355,022 thousand in 2022[33] Sales and Distribution - Sales and distribution expenses were RMB 9,284 million in 2023, an 18.7% increase from 2022, but the expense ratio decreased by 1.7 percentage points to 21.8%[52] Statutory Reserves - The company's statutory reserve fund is currently set at 10% of the post-tax profit attributable to equity holders, and no further allocation is required once the reserve reaches 50% of the registered capital[82]