Fuxing China Group (AWK) H1 2024 earnings summary

Executive summary

• H1 2024 revenue fell 10% YoY to RMB339.0m as lower Trading sales outweighed Zipper growth; gross profit declined 17% to RMB19.7m.

• Net profit rebounded to RMB10.3m from a loss of RMB3.7m, supported by lower expenses, allowance reversals and a disposal gain.

• Operating cash flow rose to RMB56.8m from RMB38.3m, while cash and short-term deposits reached RMB189.7m at 30 June 2024.

Financial highlights

• Revenue RMB339.0m, down 10% YoY; cost of sales decreased 10% to RMB319.3m.

• Gross profit declined 17% to RMB19.7m; average gross margin eased 0.5 percentage points to 5.8%.

• Profit before tax was RMB11.7m versus a loss of RMB2.5m; net profit was RMB10.3m versus a loss of RMB3.7m.

• Net profit included a RMB7.3m gain on disposal of obsolete plant and machinery; administrative expenses fell 57% to RMB10.8m, including reversals of receivable and supplier-advance allowances.

• Selling and distribution costs decreased 20% to RMB6.3m; finance costs fell to RMB4.7m from RMB5.9m.

Outlook and guidance

• Production cost pressures from inflation are expected to continue weighing on gross margins over the next 12 months.

• Marketing outreach will continue to target more customers; expense control and close monitoring of receivables and collections remain priorities.