Zhongxin Fruits has reported earnings of RMB21.76 million ($4.04 million) for the 1HFY2025 ended Dec 31, 2024, a surge in earnings from the same period a year before which saw earnings of RMB2.9 million.
For the reporting period, earnings per share grew to RMB2.06, up from RMB0.27 from the same period a year ago.
The company recorded a 187.7% y-o-y increase in revenue for the 1HFY2025 to RMB168.14 million, from RMB58.44 million a year ago. Meanwhile, gross profit grew 155.7% y-o-y to RMB27.46 million in the 1HFY2025.
However, the group saw a decrease in gross profit margin from 18.4% in 1HFY2024 to 16.3% in 1HFY2025, mainly due to lower average selling prices of the concentrated fruit juices and fructose.
The group says that the fruit juice industry is cyclical in nature, and the harvest season of the group’s raw materials such as apples and pears is during the first half of its financial year. The group’s subsidiary Yuncheng Zhongxin Fruit & Juice Company generally produces fruit juice concentrate during this period for this annual supply.
The increase in revenue for the group is due to the substantial increase in purchasing activity from the end customers which are multinational F&B corporations in overseas markets such as the US. Zhongxin says that these customers may be looking to increase their inventory holding levels to maintain a stable supply chain.
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Profit from Zhongxin’s equity-accounted joint venture, Linyi SDIC Zhonglu Fruit Juice of RMB2.8 million compared to the loss of RMB163,000 in the same period a year ago is due to higher sales volume from increased customer demand.
Cash and cash equivalents decreased by about RMB30.1 million. Net cash used in operating activities of RMB97.6 million in 1HFY2025 was mainly due to the positive cash flows before working capital changes and the changes in working capital outflow largely from the increase in notes receivables and receivable from immediate holding company, and offset by the decrease in inventories.
Current assets increased to RMB271.1 million as at Dec 31, 2024 compared to RMB181.3 million as at Jun 30, 2024 due to trade receivables and notes receivables from its subsidiaries.
In its outlook, Zhongxin said that while its significant growth in revenue and profitability in 1HY2025 could be attributable to end customers looking to increase its inventory levels, the group is cognisant that there is significant uncertainty as to whether this performance can be sustained in the next reporting period.
Zhongxin says that it will continue to face challenges which include fluctuating market demand, trade tensions, market competition as well as unpredictable climate change that adversely affects the harvesting conditions and causes reduction in the supply of quality raw materials and drives volatility of raw material prices.
The ability to procure sufficient raw materials during the harvesting seasons will impact the group’s ability to maximise the utilisation of the production capacity for economies of scale and cost competitiveness of the products produced by the group.
Shares in Zhongxin Fruit closed 0.1 cents higher or 2.041% up at 5 cents.
