存货规模大幅上升

Our inventories increased from RMB112.4 million as of December 31, 2021 to RMB155.6 million as of December 31, 2022, RMB242.8 million as of December 31, 2023, and further to RMB272.4 million as of June 30, 2024.

Our inventory turnover days were 174 days, 122 days, 138 days, and 166 days for the three years ended December 31, 2023 and for the six months ended June 30, 2024, respectively.

We believe sufficient provision has been made and there is no material recoverability issue for inventories.

Our inventories increased by RMB65.7 million or 124.2% from RMB52.9 million as at 31 December 2021 to RMB118.6 million as at 31 December 2022, primarily because (i) we started operating our Ningbo Production Plant, Xianyang Production Plant and Qinghai Production Pant in 2022; and (ii) we have produced our new product, namely polyether monomers since June 2022.

During the Track Record Period, write-down of inventories of RMB1.8 million, RMB2.8 million, RMB1.4 million and RMB1.8 million was recorded as at 31 December 2021, 2022 and 2023 and 30 June 2024, respectively.

Our average turnover days of inventories increased from 14.0 days for FY2021 to 21.2 days for FY2022, mainly due to the commencement of operation of Ningbo Production Plant in the second quarter of 2022.

Our inventories increased from RMB61.2 million as of December 31, 2022 to RMB76.3 million as of December 31, 2023 and further to RMB151.3 million as of June 30, 2024 as our business grew.

As of December 31, 2021, 2022 and 2023 and June 30, 2024, we had finished goods of RMB61.3 million, RMB46.3 million, RMB55.5 million and RMB124.9 million, accounting for 87.8%, 75.7%, 72.7% and 82.6% of our total inventories, respectively.

As of October 31, 2024, 74.9% of our total inventories as of June 30, 2024, or RMB120.6 million, were utilized or sold.

As a result, our net inventories increased significantly from approximately RMB24.5 million as at 31 December 2021 to approximately RMB69.4 million as at 31 December 2022.

Our inventory turnover days increased significantly from approximately 98.1 days for FY2021 to approximately 269.0 days for FY2022, which was mainly driven by the significant increase in our inventories balance as at 31 December 2022 as disclosed above.

As at 30 November 2024, approximately RMB42.1 million or 66.8% of our inventories as at 30 June 2024 had been subsequently sold or utilised.

Our inventories further increased to RMB440.7 million as of June 30, 2024, primarily due to an increase in semi-finished products and WIP, as we stockpiled in advance for the anticipated demand.

Our turnover days increased from 119.8 days in 2021 to 263.0 days in 2022, decreased to 159.3 days in 2023 and then increased slightly to 169.1 days in June 30, 2024.

In the six months ended June 30, 2024, we had write down of inventories of RMB45.5 million, primarily because we made provisions for potential losses on certain finished goods whose net realizable value is lower than their carry amount.

We had inventories of RMB32.4 million, RMB46.9 million, RMB73.5 million and RMB85.9 million as of December 31, 2021, 2022, 2023 and June 30, 2024, respectively.

Our inventory turnover days increased from 91.0 days in 2023 to 132.9 days in the six months ended June 30, 2024, primarily due to (i) an increase in finished products in line with the growth in our sales of Medical Device; and (ii) we generally recorded lower amount of cost of sales in the first quarter of the year as customers in the public sector typically conclude contracts in the fourth quarter of the year in accordance with internal financial budget approval procedures and their business plans.

As of October 31, 2024, RMB19.0 million, or 22.1% of inventories as of June 30, 2024, had been used, consumed or sold subsequent to June 30, 2024.

Our inventories further increased from RMB5.8 million as of December 31, 2022 to RMB13.8 million as of December 31, 2023, and further to RMB30.2 million as of June 30, 2024, primarily due to increased medicine stock in relation to our pharmaceutical sales business.

Our average inventory turnover days further increased from 4.2 days in 2023 and 9.3 days in the six months ended June 30, 2024, primarily because we strategically increased the inventories of the drug commonly used to treat Influenza A and B viruses for our pharmaceutical wholesale business.

Our Directors are of the view that there is no recoverability issue for our inventories and no write-down needs to be made.

We had inventories of RMB70.9 million, RMB131.8 million, RMB141.5 million and RMB155.3 million as of December 31, 2021, 2022 and 2023 and June 30, 2024, respectively.

Our inventory turnover days further increased to 395 days for the six months ended June 30, 2024 primarily due to an increase in finished products of our latest CR series products in anticipation of increased demand from overseas markets, as well as the impact of low season for revenue recognition due to seasonality factors, which further prolonged the turnover days for the six months ended June 30, 2024.

Bases on the above considerations, as of December 31, 2021, 2022 and 2023 and June 30, 2024, the write down provision of inventory was RMB8.5 million, RMB13.1 million, RMB21.7 million and RMB26.8 million respectively, representing 11%, 9%, 13% and 15% of costs of inventories.

Our inventories increased by 45.9% from RMB58.1 million as of December 31, 2021, to RMB84.8 million as of December 31, 2022, primarily due to an increase in food ingredients and condiment product as a result of the expansion of our restaurant network as we opened 48 new restaurants in 2022, requiring us to maintain inventories at these restaurants.

Our inventory turnover days increased from 18.9 days in 2021 to 24.0 days in 2022, primarily due to (i) an increase in the amount of raw materials and consumables stored in warehouses as a result of further expansion of our centralized procurement of food ingredients and (ii) increased storage capacity as a result of the extended service radius of our warehouses supported by our own transportation fleet.

As of October 31, 2024, RMB81.9 million, or 83.3% of inventories as of August 31, 2024, had been used, consumed or sold subsequent to August 31, 2024.

In 2021, 2022, 2023 and the six months ended June 30, 2024, our inventory turnover days were 232.6 days, 320.6 days, 273.5 days and 202.4 days respectively.

Our inventory turnover days are within the range of industry average, primarily because we increased our safety inventory level to accommodate our increasing sales volume.

Accordingly, the provisions in relation to our inventories amounted to RMB4.1 million, RMB6.3 million, RMB7.9 million and RMB7.3 million as of December 31, 2021, 2022 and 2023 and June 30, 2024, respectively.

Our inventories increased by 16.1% from RMB216.0 million as of December 31, 2023 to RMB250.7 million as of May 31, 2024, primarily due to the expanded production to fulfill the increased customer orders in our high-end lighting and advanced display businesses.

Our inventory turnover days decreased from 61 in 2022 to 51 in 2023, primarily because (i) we had slower inventory turnover in 2022 as our customers prioritized depleting their existing inventory and (ii) we strengthened our inventory management and optimized inbound warehousing standards subsequently in 2022 and 2023, which effectively reduced the stock of our finished goods.

As of August 31, 2024, RMB172.1 million, or approximately 68.7%, of our inventories as of May 31, 2024 had been delivered or consumed.

Our inventories further increased by 41.3% to RMB153.0 million as of March 31, 2024, primarily because we stocked more finished goods to meet the demand of our growing branded business, in particular in overseas markets where we experienced strong sales growth, including the United States, Western Europe, and Japan.

Our average inventory turnover days increased to 40.1 days for the three months ended March 31, 2024, primarily because we stocked more finished goods in overseas markets to meet the demand of our rapidly growing branded business, as international shipping is generally lengthier in duration.

As of July 31, 2024, RMB153.0 million, or 100.0%, of our inventories as of March 31, 2024 had been sold or utilized.

Our inventories increased to US$134.6 million as of December 31, 2023, primarily due to the higher levels of raw materials and preflown inventory as of December 31, 2023, which are attributable to increases in production rates and output.

The increase in our inventory turnover days from 2021 to 2022 was primarily attributable to increased inventory attributed to global supply chain issues which drove us to hold higher levels of raw materials to mitigate against unexpected delays or shortages from suppliers and in anticipation of increased production.

As of April 30, 2024, US$131.7 million or 97.9% of our inventories as of December 31, 2023 had been subsequently utilized.

Our inventory balance decreased to RMB285.3 million as at December 31, 2023, primarily due to our production and sales strategy in an effort to lower inventory amid a slow market.

For the years ended December 31, 2021, 2022 and 2023, our inventory turnover days were 36 days, 47 days and 47 days, respectively.

As of the Latest Practicable Date, RMB240.3 million or 83.7% of the RMB287.1 million inventories (before impairment) as of December 31, 2023 were subsequently utilized or sold.

Our inventories increased from RMB113.1 million as of December 31, 2021 to RMB192.5 million as of December 31, 2022, and further increased to RMB201.2 million as of December 31, 2023, the growth of which was consistent with our business expansion during the same periods.

As of December 31, 2021, 2022 and 2023, the balance of our finished goods was RMB109.8 million, RMB187.3 million and RMB197.0 million, respectively, representing 97.1%, 97.3% and 97.9% of our total inventory balances as of the same dates, respectively.

Inventories turnover days decreased to 19.2 days in 2023, primarily due to (i) the increased turnover efficiency and inventory management capabilities with the development of our warehousing and distribution network, and (ii) a relatively higher proportion of short shelf-life goods in our inventories, such as fresh milk and fresh fruits.

The increasing trend of our inventories from RMB164.4 million as at 31 March 2021 to RMB740.5 million as at 31 March 2022 was primarily due to the increase in our inventory reserve in view of the growth in sales volume as well as the increase in inventory costs in FY2022 due to the global supply uncertainty of KCL.

Our Group recorded an increase in average inventory turnover days from approximately 24.5 days for FY2021 to approximately 51.5 days for FY2022.

As at the Latest Practicable Date, RMB434.1 million, or approximately 97.8%, of our inventories as at 30 November 2023, were subsequently utilised or sold.

Our inventories increased from RMB21.6 million as of December 31, 2020 to RMB38.1 million as of December 31, 2021, and further to RMB84.8 million as of December 31, 2022, primarily due to an increase in our purchase of medicine and medical materials, generally consistent with the growth of our hospital business, and an increase in our purchase of medical equipment, generally consistent with the growth in our sales and installing of medical equipment and software.

The inventories aged over one year are mainly related to medical equipment, for which the acceptance schedule has been delayed due to some special circumstances.

Our inventories turnover days increased from 21 days in 2021 to 36 days in 2022, primarily due to the increased medical equipment inventory, primarily attributable to the delay in logistics for delivery, installation and acceptance of medical equipment as impacted by the less frequent transportation and travel of the relevant technical staff amid the regional resurgence of COVID-19 pandemic in 2022, especially for certain large-scale medical equipment with higher value which has a greater impact on the balance of inventories.

Our inventories increased from RMB44.4 million as of December 31, 2020 to RMB56.5 million as of December 31, 2021, and further increased to RMB76.3 million as of December 31, 2022 and RMB130.4 million as of June 30, 2023, primarily due to the inventories held in stock based on our customers' needs, which was in line with our business growth.

Our inventory turnover days increased from 158.2 days in 2022 to 203.3 days for the six months ended June 30, 2023, due to an increase in raw materials in anticipation of an increase in customers' demand in the second half of 2023.

As of October 31, 2023, RMB90.8 million, or 68.2% of our inventories as of June 30, 2023 had been subsequently consumed or sold.

Our inventories increased from RMB9.5 million as of December 31, 2020 to RMB47.0 million as of December 31, 2021, and further to RMB272.0 million as of December 31, 2022.

Our inventory turnover days increased from 91 days in 2020 to 122 days in 2021, as the series production of our first SuperVision™project started in the fourth quarter of 2021, resulting in a relatively high ending balance of inventories in 2021, while the cost of sales in 2021 was relatively low.

As of October 31, 2023, RMB117.4 million, or 72.4%, of our inventories as of June 30, 2023 had been subsequently sold or utilized.

As of June 30, 2023, our inventories increased by RMB271.1 million from RMB146.2 million as of December 31, 2022 to RMB417.3 million, representing an increase of 185.4%.

As of the Latest Practicable Date, RMB323.0 million representing 77.4% of our inventories as of June 30, 2023 have been utilized.

Therefore, inventory turnover days are not indicative of our operations and are excluded from our analysis.