Huabao International Holdings (336) H2 2024 earnings summary

Executive summary

• Revenue increased by 2.0% year-over-year to RMB 3,374 million, but gross profit declined by 1.9% to RMB 1,441 million and gross margin fell to 42.7% from 44.4% due to competitive pressures and product mix changes.

• Reported operating loss of RMB 402 million and net loss of RMB 459 million, mainly due to significant goodwill and intangible asset impairments and higher share-based compensation expenses.

• Adjusted (non-HKFRS) profit for the year was RMB 284 million, down 25.9% year-over-year, reflecting underlying operational challenges.

Financial highlights

• Gross margin decreased by 1.7 percentage points to 42.7%; gross profit was RMB 1,441 million.

• Basic and diluted loss per share was RMB 11.94 cents, compared to earnings of RMB 7.23 cents last year.

• Special dividend per share increased to HKD 5.0 cents from HKD 4.2 cents; no final dividend declared, subject to approval.

• Adjusted EBITDA was RMB 624 million, down 18.5% year-over-year; adjusted operating profit margin dropped to 8.7% from 13.6%.

• Operating loss of RMB 402 million, compared to an operating profit of RMB 378 million last year.

Outlook and guidance

• Plans to strengthen R&D innovation, facilitate internationalization, and focus on AI-driven innovation.

• Focus on lean production, supply chain management, and empowering growth through AI and M&A.

• Management expects continued global economic uncertainty, with cost pressures from geopolitical and trade factors.

• Intends to develop incentive schemes and increase capital market communication.

• Plans to strengthen core businesses and pursue growth through M&A and digital transformation.