Shenzhou International Group (2313) investor relations material

Executive summary

• Sales revenue for H1 2026 was RMB14.18 billion, down 5.3% year-over-year, mainly due to subdued end-user demand, cautious ordering by clients, and RMB appreciation against USD impacting export margins.

• Gross profit fell 21.2% to RMB3.20 billion, with gross profit margin declining to 22.6% from 27.1% and net profit attributable to owners dropping 40% to RMB1.90 billion.

• Net profit margin decreased to 13.4% from 21.2% compared to H1 2025.

• The decline was driven by RMB appreciation, subdued global demand, increased labor and raw material costs, and volatile order patterns.

• The Board declared an interim dividend of HK$0.88 per share, down 36.2% from the prior year.

Financial highlights

• Revenue: RMB14.18 billion (down 5.3% YoY); gross profit: RMB3.20 billion (down 21.2% YoY); net profit: RMB1.90 billion (down 40% YoY).

• EPS: RMB1.27 (down from RMB2.11 YoY).

• Gross margin: 22.6% (down 4.5 ppt YoY); net margin: 13.4% (down 7.8 ppt YoY).

• Net cash from operating activities: RMB1.92 billion (down from RMB2.69 billion YoY).

• Cash and cash equivalents: RMB15.28 billion as of 30 June 2026.

Outlook and guidance

• The sector faces persistent weak demand, high costs, and volatile trade environment; recovery in end-consumer spending remains uncertain.

• Strategic focus on global production expansion, digitalisation, automation, and R&D to enhance resilience and competitiveness.

• New garment factory in Indonesia to commence construction in September 2026, with phased operations from Q4 2027.

• Management expects continued cost pressures from rising wages and raw material volatility, with ongoing efforts to enhance supply chain flexibility and efficiency.