WEIli Holdings (2372) H2 2023 earnings summary

Executive summary

• FY2023 revenue fell 33.9% YoY to RMB190.9m; gross profit fell 70.9% to RMB17.6m, and shareholders’ result swung to a RMB2.6m loss from RMB25.0m profit.

• Major customers temporarily reduced transfer-paper and laminated-paper orders following revised cigarette-packaging rules requiring QR codes on all packages.

Financial highlights

• Revenue was RMB190.944m versus RMB288.962m in FY2022; cost of sales declined 24.1% to RMB173.3m, less than the revenue decline as fixed costs persisted.

• Gross profit was RMB17.597m versus RMB60.440m; gross margin fell to 9.2% from 20.9%.

• Operating loss was RMB4.934m versus operating profit of RMB28.052m; net loss was RMB2.560m versus net income of RMB24.952m.

• Basic and diluted loss per share was RMB0.3 cents, compared with earnings per share of RMB3.6 cents in FY2022.

Outlook and guidance

• PRC smoker numbers are expected to remain stable; demand for mid- to high-end cigarettes and packaging with advanced technical features is expected to rise.

• Plans include prudent resource management, adapting products and operations, and pursuing opportunities to increase market share.