Zhengwei Group Holdings Company (2147) H1 2024 earnings summary

Executive summary

• 6MFY2024 revenue rose 55.5% YoY to RMB298.1m, but higher direct material costs cut gross profit to RMB1.1m and turned a RMB29.7m profit into a RMB40.6m net loss.

• Cash and cash equivalents were RMB189.1m at 30 June 2024; borrowings fell to RMB0.5m from RMB18.2m at 31 December 2023.

Financial highlights

• Revenue was RMB298.1m, up 55.5% YoY; cost of sales increased 133.5% to RMB297.0m, mainly due to higher direct material costs.

• Gross profit fell to RMB1.1m from RMB64.6m; gross margin was 0.36% versus 33.7%.

• Net loss was RMB40.6m versus net profit of RMB29.7m; loss before tax was RMB20.9m, and income tax expense was RMB19.7m.

• Selling and distribution expenses fell to RMB6.8m from RMB14.5m; administrative expenses rose to RMB18.8m from RMB14.8m.

• Basic and diluted loss per share was RMB0.05 versus earnings per share of RMB0.04.

Outlook and guidance

• Plans include new vegetable and meat snacks, including mushrooms, boneless chicken feet, beef jerky, pork trotters, quail eggs and quail meat snacks.

• Growth initiatives include expanding supermarket and concession-counter coverage in Southwestern China, especially Sichuan, and increasing promotions through supermarket partners, traditional media, high-traffic locations and social media.