Zhengwei Group Holdings Company (2147) H2 2022 earnings summary

Executive summary

• FY2022 revenue rose 4.3% YoY to RMB356.8m and gross profit increased 9.9% to RMB119.3m; profit for the year declined 3.3% to RMB46.7m.

• Revenue growth reflected higher manufacturing sales, partly offset by lower trading sales; gross margin improved as sales increased and product prices generally rose.

Financial highlights

• Revenue was RMB356.847m vs RMB341.998m in FY2021; cost of sales was RMB237.591m vs RMB233.518m.

• Gross profit was RMB119.256m vs RMB108.480m; profit before tax was RMB52.923m vs RMB57.844m, while net profit was RMB46.697m vs RMB48.292m.

• Finance costs fell to RMB3.258m from RMB6.150m; income tax expense declined to RMB6.226m from RMB9.552m.

• Listing expenses were RMB8.690m vs RMB2.003m; other revenue fell to RMB0.775m from RMB4.181m, mainly as government grants decreased by RMB3.4m.

• Total comprehensive income was RMB46.809m vs RMB48.504m; basic and diluted EPS remained RMB0.08.

Outlook and guidance

• Plans include new vegetable and meat snack products, supported by consumer research and feedback from retail customers.

• A planned new factory building and production lines at Guangchang Plant would provide designed annual capacity of 3,000 tonnes for vegetable snacks and 3,700 tonnes for meat snacks.

• Plans include recruiting five sales representatives and opening 14 supermarket concessionary counters in Southwestern China over the next two years.

• Marketing plans include supermarket promotions, traditional and social media advertising, pop-up stores, and potential cross-selling with tea shops, coffee shops, karaoke stores and cinemas.