China Treasures New Materials (2439) H2 2023 earnings summary

Executive summary

• FY2023 revenue rose 22.0% YoY to RMB365.8m; profit for the year increased 48.5% to RMB84.6m, supported by stronger biodegradable product sales and lower listing expenses.

• Expansion progressed across Changchun, Dongguan and Anji; Dongguan began trial operations in H2 2023, with phase 1 expected at full scale in H1 2024.

Financial highlights

• Revenue was RMB365.811m versus RMB299.789m in FY2022; cost of sales rose to RMB220.357m from RMB179.545m.

• Gross profit increased to RMB145.454m from RMB120.244m; gross margin was 39.8% versus 40.1%, with higher raw material costs weighing on margin.

• Profit before tax was RMB100.130m versus RMB69.829m; net profit was RMB84.607m versus RMB56.987m.

• Other income reached RMB7.345m versus RMB0.747m, including RMB2.889m government grants, RMB2.496m interest income and RMB1.867m lease termination gain.

• Listing expenses, a non-recurring item, fell to RMB2.289m from RMB17.146m after the March 2023 listing.

Outlook and guidance

• Dongguan phase 1 was expected to reach full-scale operation in H1 2024; the Anji factory was expected to commence operations in Q2 2024, subject to setup and licensing arrangements.

• Plans include expanding production capacity, strengthening R&D and technology, and extending the footprint to other PRC regions to meet anticipated biodegradable product demand.

• The outlook cites growth potential from environmental policies and plastic-pollution controls, alongside persistent geopolitical tensions, high interest rates, inflation and weak global economic conditions.