Trading medical equipment, mainly referring to those direct costs incurred for operating our business and costs for purchasing the raw materials, represented 27.6%, 41.8% and 38.4% of our cost of sales in 2021, 2022 and 2023, respectively.
Financial Information · p. 395
Volatility in the price of trading medical equipment could negatively affect our gross margins and results of operations.
Financial Information · p. 395
We expect that costs of trading medical equipment and depreciation of property, plant and equipment to continue to be significant costs and expenses going forward, particularly in light of the continued expansion of our medical imaging center network.
While we are generally able to pass on increases in cost of raw materials of our products to our customers by increasing the prices of our products accordingly and we have effective mechanism to keep monitoring the supply and price trends of our raw materials, we cannot assure that our key suppliers will not be interrupted and will be able to continue to supply raw materials to us on commercially acceptable terms or that can meet our standards.
Financial Information · p. 310
Our procurement policy adopts the following cost control measures: (i) collecting market data on the prices of our raw materials on a regular basis and analysing the same to predict potential changes in the market prices of our raw materials; (ii) negotiating and determining the purchase prices of raw materials with our suppliers, with reference to the market data collected and analysed; and (iii) identifying alternative raw materials suppliers who may provide more competitive and stable prices.
Business · p. 218
We made more purchases and kept more inventories since FY2021 and have continued to do so in 9M2023 also to reduce the risk of supply interruption after years of the pandemic from 2020 to 2022, with intermittent lockdowns in various regions.
Among all direct materials, the purchase costs of KCL accounted for approximately 77.7%, 86.6%, 90.4%, 90.3% and 92.2% of our total purchase of all direct materials for FY2021, FY2022, FY2023, 8MFY2023 and 8MFY2024, respectively.
Financial Information · p. 357
Assuming all other variables remain constant, the following sensitivity analysis illustrates the impact of hypothetical fluctuations in the unit cost of goods sold of our KCL per tonne on our profit before tax for the years/periods indicated.
Financial Information · p. 358
Our Directors believe our purchase prices of KCL and thus our unit cost of goods sold of KCL will continue to fluctuate and we do not hedge our exposure to the fluctuation in the Sea Import Master Contract Price.
For FY2020, FY2021, FY2022 and the nine months ended 30 September 2023, our Group purchased steel material in the amount of approximately HK$150.6 million, HK$62.3 million, HK$73.7 million and HK$85.9 million, representing approximately 55.9%, 32.2%, 27.3% and 45.7% of our cost of services for the corresponding year/period, respectively.
Summary · p. 8
the price index of steel plates in Hong Kong recorded a significant increase from 123.1 in 2020 to 184.3 in 2021, representing an annual growth rate of approximately 49.7%
Financial Information · p. 285
Notwithstanding the increase in market steel price would generally lead to an increase in our Group’s costs of materials, we were generally able to mitigate any financial impact brought by the increase in market steel price because we generally obtain pre-bid quotations from our steel suppliers during the tender phase and factor in the price trend of steel when determining our tender price.
For the years ended 31 December 2020, 2021 and 2022 and the nine months ended 30 September 2023, traffic acquisition costs represented the largest component of our total cost of services, which accounted for approximately 97.0%, 96.7%, 96.9% and 97.6%, respectively, of our cost of services for the corresponding year/period.
Financial Information · p. 253
We expect that the traffic acquisition costs will continue to be our most significant costs of service going forward, particularly in light of the continued expansion of our mobile advertising services.
Financial Information · p. 253
Under the bidding process, when there is any increase in the price of advertising space, such increase will generally be passed on to our customers in full.
For the years ended December 31, 2020, 2021 and 2022 and the six months ended June 30, 2023, the cost of raw materials consumed by us was RMB24.5 million, RMB97.5 million, RMB89.2 million and RMB27.3 million, representing 37.1%, 48.0%, 41.4% and 34.4% of our total cost of sales for the same years/period, respectively.
Business · p. 198
In order to minimize the impact of possible fluctuations in costs and raw material prices during the course of a project, we usually enter into a long-term contract with our suppliers in fixed unit price with market price taken into consideration at the time of procurement and establish a price adjustment mechanism from time to time based on actual negotiations.
Business · p. 192
During the Track Record Period, we did not pass on any cost increase to our customers because (i) there were no material differences between the estimated costs and the actual costs of our projects since we did not experience material cost fluctuations and we have established effective internal control measures to ensure that the total cost of each construction project is estimated accurately; and (ii) we would like to maintain good relationship with our customers and to maintain our competitiveness.
Raw material costs is the largest component in our Group’s cost structure and accounted for approximately 46.7%, 49.2%, 47.4% and 52.5%, respectively, of our total cost of revenue for the Track Record Period.
Business · p. 166
Price adjustment terms may be included in certain construction contracts entered into between our Group and the customers, which allow us to mitigate part of the risk of price fluctuations by passing it to our customers.
Business · p. 167
The budgeted project cost will regularly be reviewed and typically be updated to reflect the volume of work or additional work, as agreed by us and our customers or, when necessary, to reflect material change of key cost components and related unit prices (the ‘‘Rolling Budget’’).
In particular, the procurement costs of raw materials and consumables under our cost of sales increased from RMB136.6 million in 2021 to RMB336.8 million in 2022, which was mainly attributable to (i) the increase in sales of products and (ii) the supply crunch of semiconductor chips from late 2021 to the second half of 2022 due to a global supply shortage.
Summary · p. 7
In relation to the procurement of power management chips, we incurred expedited fees of approximately RMB1.1 million and RMB33.8 million in 2021 and 2022, respectively.
Business · p. 225
Indeed, our gross profit recovered and turned positive in the six months ended June 30, 2023 with a gross profit margin of 3.9%, from a gross loss margin of 7.4% in 2022.
Our cost of raw materials and consumable goods used, mainly included compliers, PCB boards, electronic parts, plastic parts and electromechanical parts, represented the largest portion of our cost of sales, accounted for 53.1%, 62.6%, 64.2%, 54.6% and 61.0% of our total cost of sales for FY2020, FY2021, FY2022, 6M2022 and 6M2023, respectively.
Financial Information · p. 438
We are subject to the risks of fluctuations in the price of these materials.
Financial Information · p. 438
maintain a register of alternative suppliers of raw materials and consumable goods which is updated on a regular basis in order to ensure that the cost of raw materials and consumables used in our production processes are in line with the latest market trends, minimize our production costs and safeguard against unexpected price and supply fluctuations.
The industry average purchase price of raw materials of companies operating on a fabless model (i.e. untested patterned wafers) experienced a continuously increasing trend during the Track Record Period, according to Frost & Sullivan, reaching RMB2,500 to RMB4,500 in 2020, RMB2,800 to RMB5,000 in 2021, and RMB3,000 to RMB5,300 in 2022, respectively.
Business · p. 198
In spite of the increasing industry average untested patterned wafer purchase price during the Track Record Period, our average overall purchase price did not experience significant fluctuation during the same periods, reaching RMB3,248.6 in 2020, RMB3,630.5 in 2021 and RMB3,454.0 in 2022, respectively.
Business · p. 198
This was because we pre-ordered untested patterned wafers based on our anticipated product mix and delivery schedule before the price hike.
The purchasing prices of our raw materials fluctuate due to a variety of factors, including supply and demand, our ability to negotiate prices with suppliers, logistics and others.
Summary · p. 8
Our good stock of approximately 3,700 tonnes of rough tea leaves and in-process tea leaves sourced in 15 different years from major mountains in the three major production areas of Pu’er tea in Yunnan as of June 30, 2023, is able to effectively stabilize our cost of raw materials year over year and mitigate the impact on our performance from raw material price fluctuation in any particular year.
Historically, when coking coal price increases, the prices of our products usually increase. For example, the prices of our hydrogenated benzene-based chemicals increased from 2020 to 2022 when coking coal price increased; and the prices of our hydrogenated benzene-based chemicals decreased in 1H2023 when coking coal price decreased.
Financial Information · p. 338
For illustration purpose, we set out below a sensitivity analysis of our gross profit margin with reference to the fluctuation on the average raw material cost per unit during the Track Record Period.
Financial Information · p. 339
Given that (i) we closely monitor the size of orders placed by our customers, typically on a monthly or weekly basis, to plan our production; (ii) our production cycle is relatively short thus reducing our exposure to market price fluctuations; and (iii) we endeavour to maintain our inventory at a reasonable level to sustain our production without interruption as well as to avoid inventory risk, we did not enter into any hedging arrangement to hedge our exposure to changes in the prices of raw materials and products during the Track Record Period.
We have limited bargaining power with our upstream suppliers, who have a wider international delivery network and fleets of ground transportation and aircraft, in negotiating increases in transportation costs, as well as seasonal surcharges and fuel surcharges.
Business · p. 264
We are exposed to the market risk of fluctuation of rates of our suppliers, and fluctuation in rates may cause fluctuation in our cost of sales. Any increase in our logistics costs would negatively impact our gross profit margin if we are unable to transfer the increased cost resulting from such increase through increasing our service fees.
Financial Information · p. 346
For illustrative purpose only, the following sensitivity analysis illustrates the impact of hypothetical fluctuations of each of our Group’s logistics costs, sales volume and average selling price in each sub-segment under our end-to-end cross border delivery services segment (while other factors being constant) on our profit before tax during the Track Record Period.
In particular, the cost of lithium carbonate, a key raw material for cathode materials for LFP battery products have experienced considerable fluctuations during the Track Record Period.
Business · p. 263
During the same period, we did not engage in hedging activities against the fluctuation in raw material prices.
Business · p. 263
In response to the rapid and sharp fluctuation in prices of raw materials, we have historically taken and going forward will continue to take measures such as (i) strategic cooperation with major suppliers of raw materials to primarily lock the quantity of our key raw materials in advance based on our prudent estimation of market trend and according to our production plan, (ii) adjusting our selling price by entering into supplemental agreements with some of our customers since November 2021 and introducing price adjustment mechanism into contracts with some of our customers in the second quarter of 2022, and (iii) leveraging on our unique supply chain advantages from Tsingshan Group’s network to actively help our suppliers to source feedstock materials, such as lithium carbonate, thereby ensuring sufficient supply of our raw materials at competitive prices.
Cost of raw materials was the most significant component of our cost of sales during the Track Record Period, accounting for 76.7%, 79.3%, 77.3%, 77.8% and 77.7% of our total cost of sales in 2020, 2021, 2022 and the five months ended May 31, 2022 and 2023, respectively.
Financial Information · p. 263
The procurement price of raw nests and packaging materials could be volatile due to a variety of factors beyond our control, and any increase in the prices of raw nests and packaging materials may cause us to adjust our product prices upward.
Feed and feed ingredients costs represented 68.9%, 70.4%, 71.5%, 72.7% and 72.1% of our total cost of sales for 2020, 2021 and 2022 and the five months ended 31 May 2022 and 2023, respectively.
Financial Information · p. 337
Corn and soybean meal are commodities that are subject to significant price fluctuations, and their market prices are subject to various factors, including demand and supply dynamics, government policies, weather conditions, pests and other acts of nature.
Financial Information · p. 338
We have adopted diverse means to mitigate the impact of fluctuations in feed prices, including flexibly adjusting feed formula while adhering to nutritional standards, diversifying our feed ingredients so that the price fluctuation of one ingredient would not exert material impact on our feed price, maintaining diversified supply channels and conducting raw material procurement with commodity futures.
The cost of raw materials accounted for 73.1%, 81.8%, 89.1% and 79.5% of our total cost of sales for the years ended 31 December 2020, 2021, 2022 and the five months ended 31 May 2023, respectively.
Financial Information · p. 398
Changes in the availability and price of raw materials could have a significant impact on our operating costs and results of operations.
Financial Information · p. 398
During the Track Record Period, the prices of major raw materials and components we purchased from suppliers for our production, mainly including MEAs, hydrogen storage system, air compressor, DC-to-DC converter, batteries and hydrogen circulation pump, did not experience any material increases.
In 2020, 2021 and 2022 and the six months ended June 30, 2023, raw material costs accounted for 41.6%, 51.1%, 52.4% and 45.3% of our cost of sales, respectively, and labor costs accounted for 21.3%, 26.0%, 25.1% and 29.8% of our cost of sales, respectively, machinery utilization costs accounted for 6.5%, 7.3%, 5.5% and 4.5% of our cost of sales, respectively, and subcontracting costs and others accounted for 30.6%, 15.6%, 17.0% and 20.4% of our cost of sales, respectively.
Financial Information · p. 456
We generally pass the risk of price fluctuations in our raw materials to our customers by introducing price adjustment terms into the construction contracting contracts or applying for price adjustment when the market fluctuates greatly.
Business · p. 307
The fluctuation of our gross profit margin for projects we acted as main contractor was mainly due to the fact that our gross profit margin for projects we acted as main contractor slightly decreased compared with the year ended December 31, 2020 as a result of the increase in the raw material price and the increase in labor costs for the year ended December 31, 2021.
The following sensitivity analysis illustrates the effects of hypothetical fluctuations in our cost of inventories sold on our gross profit for the periods indicated, assuming all other factors affecting our profitability had remained unchanged:
Financial Information · p. 378
We have adopted a series of measures to effectively control our procurement costs, including among others, entering into framework agreements with merchandise suppliers to ensure stable prices for our merchandise.
Business · p. 289
We have also been engaging original equipment manufacturing contractors for customized merchandise that have better gross profit margin advantage over branded merchandise.
During the Track Record Period, prices of our raw materials experienced fluctuations.
Business · p. 225
For example, prices of lithium-ion batteries increased significantly in recent years primarily due to the shortage of lithium supply and booming demand of lithium from both NEV and power storage sectors.
Business · p. 225
We do not engage in hedging using derivative instruments relating to the risk exposures in connection with our raw materials.