China Treasures New Materials (2439) H2 2024 earnings summary

Executive summary

• FY2024 revenue rose 11.4% to RMB407.5m; profit for the year increased 32.9% to RMB112.4m, supported by higher gross profit and other income and lower listing expenses.

• Production plans shifted toward Changchun, with Dongguan and Anji operations being consolidated and a new self-owned production base planned on land acquired in Changchun.

Financial highlights

• Revenue was RMB407.5m versus RMB365.8m; gross profit RMB162.0m versus RMB145.5m, with gross margin steady at 39.8%.

• Profit before tax was RMB131.8m versus RMB100.1m; profit for the year was RMB112.4m versus RMB84.6m.

• Profit attributable to owners was RMB111.2m versus RMB84.0m; basic and diluted EPS was RMB11.12 versus RMB8.80.

• Other income increased to RMB20.3m from RMB7.3m, including RMB9.8m in government grants and a RMB7.9m additional lease-payment refund.

• Income tax expense rose to RMB19.4m from RMB15.5m, mainly reflecting higher profit before tax.

Outlook and guidance

• Prospects for biodegradable products were described as optimistic, with demand supported by expanding PRC restrictions on non-biodegradable plastics and changing consumption habits.

• The prohibition on non-degradable plastic bags is expected to expand to various marketplaces by end-2025; market demand has increased as policies extend to more provinces.

• Changchun is the planned production cornerstone, intended to support capacity growth, cost competitiveness, supply-chain efficiency and service to Northeast China customers.

• Unutilized IPO proceeds allocated to the new Changchun production base, R&D equipment, IT systems and biodegradable production-line expansion are expected to be used by December 2025; working capital use is as needed.