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Yangtze Business Daily News● Changjiang Business Daily reporter Wang Jing

The performance of Huali Group (300979.SZ), the world's leading sports footwear OEM manufacturer, has been growing steadily.

On the evening of August 5, Huali Group released its performance report, showing that the company achieved operating income of 11.472 billion yuan in the first half of 2024, a year-on-year increase of 24.54%; net profit of 1.878 billion yuan, a year-on-year increase of 29.04%.

Huali Group has established a solid cooperative relationship with Nike, Puma, Converse and other world-renowned brands as OEM. The company said that it sold 108 million pairs of sports shoes in the first half of the year, an increase of 18.25% year-on-year, driving the growth of operating income.

A reporter from the Yangtze Business Daily noticed that Huali Group, which has excellent performance, has been generous in dividends. After the company went public in 2021, it paid dividends four times, with a total cash distribution of 5.252 billion yuan, and a dividend rate as high as 171.32%.

Huali Group's equity is highly concentrated and is actually controlled by Zhang Congyuan's family. On the "2024 Hurun Global Rich List", Zhang Congyuan's family ranked 318th with a wealth of 58.5 billion yuan.

Net profit in the first half of the year increased by 29.04%

The latest performance report shows that Huali Group achieved operating income of 11.472 billion yuan in the first half of 2024, a year-on-year increase of 24.54%; net profit was 1.878 billion yuan, a year-on-year increase of 29.04%.

Huali Group said that in the first half of the year, with the company's continued progress in new customer cooperation and the steady increase in its share of major customers, the company's sports shoe sales and operating income have both grown steadily. During the reporting period, the company sold 108 million pairs of sports shoes, an increase of 18.25% year-on-year.

It is understood that Huali Group was established in 2004 and is mainly engaged in the development, design, production and sales of sports shoes.

The company has always performed well. In 2021, Huali Group was listed on the Shenzhen Stock Exchange, with operating income of 17.47 billion yuan and net profit of 2.768 billion yuan. In 2022, the company achieved operating income of 20.569 billion yuan, a year-on-year increase of 17.74%, and net profit of 3.222 billion yuan, a year-on-year increase of 16.39%, setting a record high.

In 2023, Huali Group's operating income and net profit both fell year-on-year, by 2.21% and 0.86% respectively. In 2023, the company sold 190 million pairs of sports shoes, a year-on-year decrease of 13.85%.

Huali Group explained that this was due to the fact that some sports shoe brand customers were still in the destocking cycle and the uncertainty of the international economic situation, which had a certain impact on the company's orders in the short term. As the inventory level of sports brands' products returned to normal, the company's orders began to gradually resume growth in the fourth quarter of 2023.

Huali Group manufactures for world-renowned brands such as Nike and Puma. It should be noted that although the company stated in its annual report that its customers are relatively scattered and it does not rely heavily on a single customer, and that the company has a long history of cooperation with its major customers, in 2023, the company's sales to the top five customers accounted for 82.37% of its revenue, of which sales to the largest customer accounted for 37.83%.

Many well-known institutions appear in the top ten shareholders

As a labor-intensive industry, the development and transfer of the shoemaking industry are affected and restricted by many factors, including labor resources, raw material supply, international trade environment, and sales market. Therefore, Huali Group has carried out global industrial layout early, with Vietnam as the company's main production base. In addition, the company's shoemaking factory in Indonesia will start production in 2024.

Relying on its scale and labor cost advantages, Huali Group has high gross profit margin and net profit margin, which were 25.59% and 15.91% respectively in 2023.

Huali Group also attaches great importance to the investment and development of new materials and new processes. From 2017 to 2022, the company has invested more than 1.5 billion yuan in research and development in six years. In 2023, the company's research and development investment is about 300 million yuan, involving mold development innovation, process improvement and innovation, upper material and process innovation, etc. By the end of 2023, the company has been granted 139 patents, including 20 invention patents.

As a leading shoemaking enterprise, Huali Group is favored by many well-known institutions.

In the first quarter of 2024, Hong Kong Central Clearing Company Limited increased its holdings by 3.4775 million shares, ranking as the company's third largest shareholder, holding 13.9756 million shares, accounting for 1.2%. Two "national teams" also appeared in the top ten shareholders. The National Social Security Fund 109 Combination and the National Social Security Fund 115 Combination ranked fifth and seventh largest shareholders, holding 5.2823 million shares and 1.9 million shares respectively. In addition, the Fuguo Tianhui Selected Growth Hybrid Securities Investment Fund (LOF) and the Fuguo Tianyi Value Hybrid Securities Investment Fund also appeared.

Huali Group is generous in paying dividends. After its listing, the company paid dividends four times, with a total cash distribution of 5.252 billion yuan, and a dividend rate of 171.32%.

The company's equity is highly concentrated and is actually controlled by Zhang Congyuan's family. Currently, the company's controlling shareholder, Junyao Group, directly holds 84.85% of the company's equity, and its joint actor Zhongshan Hongting holds 2.63% of the company's equity. This also means that most of the dividends go into the pockets of major shareholders.

On March 25, 2024, Hurun Research Institute released the "2024 Hurun Global Rich List", and Zhang Congyuan ranked 318th on the list with a wealth of 58.5 billion yuan.