Good morning, ladies and gentlemen. Welcome to the 2024 Interim Results presentation for Health and Happiness International Holdings Limited. Joining us today is Mr. Luo Fei, Chairman; Mr. Akash Bedi, Group CEO and CEO of North America, Europe, Middle East, and India; Mr. Jason Wang, Chief Financial Officer and Chief Operating Officer; Ms. Joyce Tsai, Investor Relations Director; and Ms. Mavis Liu, Investor and Bank Relations Manager. During today's presentation, Mr. Luo will first provide some opening remarks, after which Mr. Bedi will present the group's business review and outlook. Following this, Mr. Wang will present the group's financial reviews for the first half of 2024. After the presentation, we'll be opening the floor for questions. You may submit a text question at any time by clicking the question mark symbol on the left-hand side of the webcast panel. Kindly submit all questions in English.
Once again, you may submit a question at any time by clicking the question mark symbol on the left-hand side of the webcast panel. I will now pass it over to Mr. Luo Fei for his opening remarks.
Good morning, shareholder and investor. Welcome to H&H 2024 interim result conference. The group's sales revenue declined in H1 2024. It's mainly due to the continuous weakness of the infant formula business industry, and the lack in the transition time of our new and old GP products, which directly leads to the decline of H1 net profit. In addition to the challenge of BNC business, the development of ANC and PNC pillars is basically in line with our expectations. We have made significant and strategic progress towards meeting our long-term goals. Those include, one, stabilize market share of the super premium IMF in China. Biostime rose to the third place, and its market share increased to 13%. At the same time, expand the BNC premium subcategory to lay the foundation of creating the second growth curve for BNC.
Number two, the group's overall nutrition supplement business has achieved revenue and market share growth in the core market, accounting for 61-66.1% total revenue. 3, achieve sustainable profitability. With the effort of team, we have maintained a reasonable and healthy profit level. For example, even the BNC business sales, we can maintain a 15% EBITDA margin level. Number four, diversify finance, financing source and optimize our capital structure. We have broadened the source of a fund and optimized the capital structure, and strengthened our inventory management to improve our working capital. 2024 is the twenty-fifth anniversary of H&H Group. We will pay an interim dividend of HKD 0.3 per share, as a plan to thank our shareholders for their long-term support.
Looking forward to the second half 2024, I have confidence in our efforts to achieve our goals of 2024. Thank you. Now, I pass to Akash for the details.
Thank you, Fei, and good morning, everybody, and welcome again to our first half of 2024 results. I hope you can hear me loud and clear. If not, please reach out to the moderator to confirm at any moment of time. I'm gonna pass through the presentation and go through the business overview, and the financial performance will be led by Jason, so moving on to page four of the presentation. Let's meet the core of our business. We are a CPG company, and our brands remains very strategic to us. These brands will not be new to all of you who have been following our business for a while. Our focus has not changed.
We focus on three strategic segments of adult nutrition and care, baby nutrition care, and pet nutrition and care, which are underpinned by our three global strategic brands, including Swisse for ANC, Biostime for BNC, and Zesty Paws for PNC. In addition to each of these segments, we have regional strategic brands, including Aurelia for skincare and supplements, Beauty Inn, Dodie for baby bottle accessories, primarily operating in France. Good Goût, organic baby food brand, operating out of France, and again, underpinning Biostime's success there, and Solid Gold, through which we enter into pet nutrition care category almost two and a half years ago. The purpose they serve is to help us win in each of the respective regional markets there. Moving on to page number five.
Our H&H framework of growth has remained consistent, and that has able to deliver a stable and a resilient performance despite all macro headwinds. Our vision is very simple, is to become a global leader in premium nutrition and wellness through a very superior products and aspirational brands, while being remaining a purpose-led company to serve our consumers and also the planet. Our strategy is based on three pillars: winning in core, which essentially is about driving growth in our fast-growing and high-margin nutrition supplements business through Swisse, Biostime, Zesty Paws. Also, while stabilizing our market share performance in IMF and retaining superior profitability. In parallel, achieving a stable growth for Solid Gold pet food business in our core markets of North America and China. Globalization and diversification is very dear to us, and this journey started almost in 2015, post-acquisition of Swisse, where we have made great strides.
As we announced, Swisse post-acquisition revenue has almost increased by a factor of 4x since acquisition, and this is driven by globalization efforts. We remain laser-eyed focused. We don't need to be everywhere. We need to be where we have the right to win and where we can succeed through our global strategic plans. We also need to look to the future, which is a third pillar for the growth for us, is about seeding new opportunities through our digital efforts and also launching breakthrough innovation. We are seeking a profitable growth in all our core categories, following a consumer-centric approach and leveraging sustainability as a success driver. In the meanwhile, we are implementing a very disciplined and effective capital management to ensure the overall health of our balance sheet is maintained.
We remain on track to achieve this objective, and Jason will walk through the financial section, what progress we have made in the last six months to continuously aspire those targets. If I move to the next page. In 2024, we continued to drive growth in our fast-growing, high-margin nutrition supplements category. This overall segment contributed 66% of revenue and increased contribution from 60% for the same period last year. The overall revenue increased by 5.6 percentage points. This growth was partially offset by the softness that we observed in our pediatric probiotic and nutrition supplements business due to the high base impact for the period of first half 2023. In terms of our core markets, which is our ANC business in Mainland China and Australia.
For ANC China, our revenue increased by 8.8 percentage points, defying all the softness in the consumer trend and showing the strength of our brand, where we fortified our number one market position in the online VHMS market. Outside of China, our ANZ business delivered a double-digit revenue growth rate of 17.4%, underpinned by growth across all channels and even a very meaningful contribution coming from our corporate Daigou business and export business. North America, very happy to see our third-largest market continues to grow at a robust growth rate of 8.2 percentage points for the first half, primarily driven by the success of Zesty Paws into the offline channel.
PNC business, while the overall sales momentum remained muted with a double-digit decline, but we are pleased to see that the overall strength of the brand is healthy, where we improved our market position from number 4 to number 3 for the first half of 2024, with an overall market share of 13 percentage points and delivering a very stable profitability of 15%, not diluting the overall H&H profitability. We want to be very disciplined in terms of how we manage our capital structure. We have reduced our net leverage from a peak of above 4 times to 3.36 for the first half of 2024. While the overall pace might not be that fast, but we remain very consistent that given all the macro headwinds, we are on the right track.
We remain laser-focused in the next two years to go closer to two times leverage, while equally maintaining a healthy growth for our business. If you move to next page seven, just going slightly deeper dive into our business performance. We delivered overall revenue of 6.7 billion RMB for the first half of 2024, which represented a modest decline of 4.1 percentage points, which was driven by a softness in our IMF business, but also equally to the restructuring that we're doing for our Solid Gold business into China and North America to drive long-term growth and profitability. This decline in revenue also had an impact on our adjusted EBITDA, which declined by 13 percentage points. But we are pleased to see that the overall health of the business from a cash flow perspective remains healthy at 17 percentage points.
As Fei had mentioned, this is a year of twenty-five years for H&H Group, and we are very pleased to announce an interim dividend of HK$0.3 per share, which is 50% of the group's adjusted net profit. Sorry, if you go to page 8. H&H is a CPG business, and consumer-led innovation has always been a key driver for our growth and business success. We remain very focused to bringing the best products for our consumers that drives not only value, but also efficacy for them. Across our three business segments, we had several innovative launches, not mentioning everything, including Swisse men's and women daily nutrition personalization opportunity. In Biostime, we continue to make great strides in our supplements business, launching across various formats and categories like including allergy products.
PNC, while a young business for us, we are launching disruptive innovation, including for China, entry into high growth nutrition business through fish oil, toppers, and other product segments. And even in North America we are also making strides on premiumizing our portfolio through launch of veterinarian line, including healthy aging, which is an extension that we're trying to copy from a humanization trend from Swisse anti-aging product. If you look to page 9, as I'd mentioned earlier, nutrition supplements is now the most significant revenue contributor and even growth driver, accounting for 66% of our top line growth, followed by IMF and other products. If you go to page 10, it provides a quick snapshot of our performance by geography, where you can see that we have further globalized our business, which is one of the key pillar of our framework of growth.
Due to strong growth trajectories outside of Mainland China, revenue contributed from overseas business represented 32% in first half of twenty twenty-four, compared to 27% for the same period last year. We saw very strong growth in all of our international markets, ranging from mid-single digits to high double digits, showing that our globalized strategy is paying off, and as you'll see in the finance section, not only we are delivering growth, but we are also extracting profitability from this business markets as well. If you move to page 11, although Mainland China is under pressure, primarily due to challenging IMF business, we did see this being offset by the growth contribution in all other markets, ANZ, North America, Asia, and Europe. If you look at page 12, a quick snapshot on our performance by business segment.
ANC now formally is our largest business segment, accounting for 49% of the group revenue in first half of 2024, compared to 42% for the same period last year. Our BNC business faces challenges from a sales perspective, but overall, we're still maintaining our market share despite all the headwinds. But this has been partially offset by the growth in our ANC and PNC business, thanks to our diversification strategy. We'll elaborate this in our geographic performance in the coming pages. If we go to page 13, a quick snapshot for our geographic contribution to the business. We have differentiated focus for each segment. Mainland China remains a key market for our ANC and BNC business. While today, PNC business is heavily reliant on North America and China, we are investing for future.
While today overseas business is only 1.2%, we expect in the next 12 to 18 months a meaningful contribution coming from those markets. Go to page 14. We delivered 5.6% growth in nutrition supplements, powered by strong double-digit growth in the VHMS and pet supplements, but partially offsetting by the sales pressure in the pediatric probiotics and nutrition supplements due to the high base from last year. It's interesting to see that for our VHMS business, a double-digit growth outperforming the category growth rate on a global basis. And even pet supplements, we remain focused on delivering mid-teens growth rate for the foreseeable next to two, three years.
If we go to page fifteen, from an adjusted EBITDA perspective, ANC is not only the largest revenue contributor, but also the largest profit contributor, thanks to high growth in this segment, followed by PNC and BNC. We did see a marginal decline in our ANC adjusted EBITDA margins due to change of product mix and a strategic choice to invest into selected markets like Thailand for future. However, we are maintaining this through a disciplined approach of managing our selling and distribution across all our three business segments. For BNC, adjusted EBITDA margins decline, as we had guided, due to an increased requirement to invest for the GB launch, as well as intensifying competition. For PNC, we have seen a marginal margin improvement, thanks to improving our product mix, primarily led by increasing contribution of Zesty Paws to the overall business. If you move to page sixteen.
Before we move into detailed geographic performance, we wanted to take a pause to review the performance of our strategic investment into ANC and PNC. We have demonstrated a proven track record of making strategic investment to build the right foundation for long-term sustainable growth. Our investment in Swisse is not only successful in terms of top line, but also from underlying profitability as well across all our three key regions, ANZ, Mainland China, Asia, and Europe. As you know, that when we bought this business eight years ago, it was primarily an ANZ-led business, and today, 60%, over 65% of the business comes from China, 29% from Australia, and remaining from overseas.
Asia and Europe have recently turned into positive EBITDA contribution after a long period of investment, and we remain confident in the longer term. These regions also will meet the profitability targets of the mature markets like ANZ and China. We are determined to replicate the success of ANC to excel in PNC. For PNC, while we managed to improve the EBITDA margin while supercharging the growth in North America, we are committed to invest for expansion to achieve profitable growth in the long term. Thanks to this strategic investment, we are also resilient to headwinds in China, IMF market as a more diversified and globalized company. Our overall first half PNC margins are in line with our expectation and the guidance that we had provided earlier. If you move to performance by geography, let's start with Mainland China, ANC, which remains our largest and most important market.
China supplement market outlook remains positive. The overall VHMS market size increased by 9.6% on a MAT basis, despite the high base of last year. This growth was primarily driven by the volume growth with a higher category penetration and the purchase volume per buyer. While we see some softness in the unit prices driven by the product mix in terms of consumption. Overall, ANC Mainland China business delivered a growth rate of 8.8%, and we maintained our number one position in the online VHMS market with a market share of 7.9 percentage point. Tmall business continued to grow in double digit at 12.2 percentage point, with a clear number one position at 13.1% market share. Normal trade had a mixed performance, which accounted for 21.9% of overall ANC Mainland China business.
Our online normal trade business grew by 6.8% and continued to gain market share, retaining number three overall brand and MAT share of 2.8 percentage points. While we did see a double-digit decline in the offline channel of 24.5% due to challenging channel dynamics, as was driven by reduced traffic faced by overall online pharmacy channel. In terms of overall market, Swisse elevated to number two position with a 4.2% market share on MAT basis, narrowing the gap with the leading player for the first half of 2024. If you move to the next page, page 19, our BNC business, we did see a double-digit decline of 19 percentage points as we continue to deplete the old GB approved stock.
But this decline, we also saw in terms of the overall category, which declined by 10.3 percentage point on an overall basis. But for the super premium segment, the overall market shrink by 23 percentage points, and that is one of the key success drivers, that we increased our market share from 11.7 to 13 percentage points. While we did see a significant decline in the revenue, but our overall EBITDA margins remain healthy. Our probiotic business also suffered a decline of 32 percentage point due to the high base of last year. As we cycle through Q3 and Q4, we expect this decline to narrow and return to positive growth rate in a six to nine months from here.
If you move to page 20, in terms of Mainland China PNC business, the growth in online China pet food slowed down with 1.7% growth rate for the first half of 2024 across all EC channels, including Douyin. However, we did observe a strong trajectory in the dog and cat health supplement market, which accounted for 7.6% of the overall market, and the market increased by 23.1%. The reason for flagging this remains our key focus in the next two to three years as to how we diversify out of the pet food and build more into high-margin nutrition supplements business into China.
As we have mentioned, that we are restructuring our business for long-term growth and profitability, our overall revenue for PNC Mainland China declined by 14.8% due to the ongoing product optimization and channel optimization in the first half of 2024. If you move to page 21, NZ delivered strong double-digit growth rate of 16.9% on like-for-like basis. This is driven by ongoing product innovation and premiumization efforts in domestic channel, and also incremental contribution from our export and corporate Daigou business. Swisse retained its number one position in the VHMS market for the June of 2024 on a unit basis, and we increased our market share from 11.7% to 12.2 percentage point.
I'm very pleased to say that Swisse was honored as the most trusted vitamin brand for twenty twenty-four, and I thank our team in achieving this accomplishment. If you move to page 22, North America, our third largest market, we continued strong growth along with positive EBITDA margin improvement. The growth was underpinned by both online and offline, but we saw more accelerated growth rate coming of Zesty Paws' offline distribution expansion. Zesty Paws' sales increased by 10.5 percentage points on a like-for-like basis, and Solid Gold was flat, 0.5 percentage points for the first half. Overall, we delivered 8.1% growth rate for the first half of twenty twenty-four. We go to page 23, our rest of the world business. We continue to see strong growth momentum in Asia. Expansion market is driven by our nutrition supplements business.
Asia business delivered 22.3% like-for-like growth rate, with Swisse sustaining number one position in beauty supplements, liver health, and men health in Singapore. Outside of this, we are very excited with the strong accelerated growth that we are seeing in our expansion markets, including Thailand, India, and recent entry into Middle East. We remain confident that while these markets will continue to deliver this level of growth rate in the foreseeable future. For Europe, the overall growth rate was flat at 0.57% like-for-like growth rate, given the challenging consumer spending in those respective markets. Swisse retained number two position in the beauty VHMS market in Italy for the first half of 2024. If we move to page 25, H&H Group is making substantial progress on its sustainability roadmap, and we achieved great strides for the first half of 2024.
In terms of the key areas where we made great strides, Hang Seng and MSCI ratings were upgraded, and H&H Singapore was awarded as a Company of Good, showcasing our positive impact. We want to reduce the impact on the planet, and we are advancing on our decarbonization roadmap. Our factories in China have been certified carbon neutral by their respective agencies. We also want to be not only external driven, but internally empowering our people. H&H Australia was ranked the fourth place in the Great Place to Work, Australia, improving 12 places since 2023. 2,200 of our team members volunteered during our annual World Community Day, showcasing our commitment to community building. We also are now B Corp certified for our five of the largest markets and remain on track to achieve group-wide certification by end of 2025.
In terms of our outlook, looking ahead on page number 27. While we cannot ignore the ongoing headwinds for the China IMF market, we are committed to be resilient and deliver stable top-line growth and profitability. For the second half of 2024, our nutrition supplements business will remain the key focus across the region. We also want to remain laser-eye focused on deleveraging our balance sheet and achieve our long-term target of closer to two times in the next two years, but by end of this year, reaching closer to three times of leverage. In terms of our business units, our nutrition focus on nutrition supplements business will remain the key. We want to maintain our leadership position across the CPG market and online normal trade business.
This will be driven by our mega brand strategy in China, where Swisse Plus+, while it has delivered an accelerated growth in the first half, we remain excited with the new innovations that are coming in the second half to maintain its growth momentum. We'll continue to grow our market share in ANZ to bolster our domestic leadership and drive high growth and improve profitability in Asia and Europe markets. While for our BNC business, we expect nutrition supplements and a weakening base effect to help our pediatric nutrition supplements return to growth, helping to offset the weak performance of our IMF business. We anticipate a further sales decline in the second half of the year for our IMF business as we continue the last phase of our GB transition as well.
For the PNC business, our focus will remain maintaining Zesty Paws market position in North America across the online and the offline channel, while continuing to pursuing expansion opportunities in the UK, Europe, Asia. Meanwhile, the short-term performance of Solid Gold will continue to be impacted by the optimization of its product portfolio and channel in North America and Mainland China. We expect this restructuring to be completed by end of 2024 and early 2025. With this, I pass the floor to Jason to go through the financial section.
Thanks, Akash. So, regarding the PNL summary, as Akash just mentioned, despite the 4.1% revenue decline due to the increase from the PNC sales, the group has maintained healthy adjusted EBITDA margin of 17%, thanks to the healthy gross margin, about 60%, and also the effective cost control. And the group has taken the consistent approach over the years to adjust the non-cash and non-recurring items in order to show the actual underlying business performance. Therefore, in page 30, you can see for the first half of this year, we have taken the same approach to adjust for the non-cash and non-recurring items in order to reach the adjusted EBITDA and the net profit results. And then for the first half this year, the total net adjustment impact has been narrowed to 41 million RMB.
Next page, 31, regarding the gross profit and gross margin. In the first half, the group maintained stable and healthy gross margin. The slight decrease versus last year was just mainly due to the one-time stock provision impact relating to the product portfolio optimization and channel optimization exercises for Solid Gold in North America, as well as the product and the channel mix changes in ANC. The IMF gross margin improved, thanks to the lower slow-moving stock provision impact after the depreciation of old GB stocks. Next, page 32, on the selling and distribution expenses. The group S&D cost ratio increased slightly, mainly due to the unfavorable impact from the revenue decline of BNC and also the higher investment required to complete the GB transition channels. But regarding the ANC cost ratio, it lowered-...
mainly thanks to the continuous efforts made to improve the overall spending efficiency in all the markets where ANC is operating. And the PNC cost ratio increased due to the investment required to support the channel expansion in both core and expansion markets where PNC is operating. Page 32 on the administrative expenses. In terms of absolute value, the administrative expenses decreased by 1.6% in the first half, thanks to the timely expense control measures put in place. But the administrative expense ratio increased slightly, mainly resulting from the decline of the BNC revenue. Now on page 34, let's move from the PNL to the balance sheet. As you can see, in terms of the working capital development, we are very happy to achieve the significant improvement on total base. In particular, the inventory turnover has improved very significantly from last year.
The inventory balance lowered from RMB 2.7 billion one year ago to RMB 1.9 billion at the end of June, and the inventory turnover days decreased from 174 days last year to 146 days this year. Those improvements in the inventory turnover have been achieved for the stocks in all three business segments we are operating, and this significant improvement has contributed to the growth of the overall operating cash flow generation. The inventory turnover improvement for both ANC and the PNC is mainly thanks to the continuous supply chain optimization efforts we have made. While the improvement of the BNC stock was mainly driven by the depreciation of old GB stock. Regarding the receivable turnover days, it increased slightly, mainly due to the higher revenue contribution from the credit sales in the overseas markets outside of Mainland China.
The group has maintained strict controls over the outstanding receivables and the creditors to minimize the credit risk. And regarding the payable turnover days, this decreased slightly, mainly due to the different cutoff dates. So overall, it's a very positive development on the total working capital side. Then let's move to the liquidity and the leverage status in page 35. Thanks to the healthy profitability, the high operating cash flow generation, and the arrangement of the debt instruments in the first half, the group's ending cash balance reached over RMB 2.4 billion. So this is a very strong liquidity position we have achieved. The group's capital structure also got further optimized in the first half through a series of successful financing exercises in order to diversify the sources of funding, to optimize the finance cost, and also to minimize the currency fluctuation exposure.
In addition, in July, the group drew down a new $150 million equivalent in CNH syndicated loan and prepaid $168 million of its outstanding US dollar term loan. And with the completion of this latest round of the financing exercise, the RMB-denominated debt instrument accounts for 34% of the group's total debt now. And also this, the latest round of prepayment for the US dollar term loan has further reduced the outstanding balance of the group's existing US dollar term loan to $581 million. Plus, also, the group secured in July the commitment letter from a group of lead banks for a new syndicated loan with a total aggregate amount of $560 million. This new loan can be used later for the refinancing of the existing outstanding US dollar term loan.
This can enable the group to maintain a stable and long-term focused maturity profile for its overall debt portfolio. In terms of the finance cost, the normalized interest expense, including the benefits of currency and interest rate hedge in the first half, is RMB 329 million. The annualized interest expense margin based on that is 7.07%, which is well in line with the previous guidance provided to the market of around 7% annualized interest margin for 2024.
In terms of the leverage ratio, as you can see from the chart on the right-hand side of this slide, the group has achieved the continuous deleveraging track record since the acquisition of Zesty Paws in Q4 2020, 2022. With the healthy profitability and the strong cash flow generation, the groups, the group aims to continue this gradual deleveraging trend for the rest of this year and also for the years to come, so this is the overview of our financial highlights in the first half. Thank you.
Thank you. We are now ready to take some questions from the audience. As a reminder, you may submit a question by text by clicking the question mark symbol on the left-hand side of the webcast panel. Kindly submit all questions in English. I will now pass it over to Ms. Joyce Tsai, Investor Relations Director, to commence the Q&A.
Hi, everyone. We already got some questions from Andrew Zhang, L.R. Capital. So his first question is, H&H has successfully reduced inventory in the first half. Is that contributed by BNC old national standard products? And what is the outlook of inventory level in the second half? His second question is, what is the latest guidance of revenue and margin on different segments for full year twenty twenty-four? Question is, what strategy would management implement to improve or stabilize the BNC, especially in China and PNC, especially outside of North America's market? Last question is, can the management elaborate more on the bilateral ? Any new loan approved post results? So, that's all Andrew's questions.
Yes, so, I'll take the answer. So, what I can do is, I will cover the first two questions and also the last one regarding the loan, and then I will invite Akash to provide you insights regarding the BNC development and, of course, of PNC development section. So, regarding Andrew's first question about the inventory level reduction. Yes, as we just mentioned, we are very happy with this development. For the achievement actually is really from all three business segments, as we just mentioned. So for BNC, that's driven really by the depreciation of old GB products, while actually the improvements from ANC and the PNC are mainly driven by continuous efforts to drive the inventory management efficiency and also the improvement of the forecast accuracy.
The outlook for the inventory level going forward, what we target is to maintain a stable inventory turnover level of around one hundred fifty days, and we see this adequate level for us to support the continuous business development going forward for all three. Then, regarding Andrew's second question on the latest guidance of the revenue and the margin for different segments in the twenty twenty-four. The group has targeted the overall stable business revenue performance for the full year of twenty twenty-four. So this is slightly below the previous guidance of the low single-digit growth on the full year base. But for the Adjusted EBITDA margin, we maintain the same guidance of keeping the stable EBITDA margin at the mid-teen level for the full year.
Then for ANC business, we target a full year revenue growth at a range of high single digit to low double digits. So this is slightly below the previous guidance of low double-digit growth, but we expect we will maintain a stable market share for the rest of the year. And also for the adjusted EBITDA margin-wise, we will maintain a healthy profitability of over 20%, which is in line with our previous guidance. For PNC, we target on the full year base around 20% decline, which means that the second half, the decline pace will be at the same similar level of the first half, and this decline is bit lower than the previous guidance of the mid-teen level. But for us, we have quite a high level of confidence to target to maintain market share in the super premium IMF segment.
For probiotics, we target low to mid-single-digit growth, which is consistent with our previous guidance. In terms of the EBITDA margin guidance for PNC, then we target the healthy profitability of low to mid-teens, because we do see the investment in the second half also is necessary to drive the consumer education, along with the full rollout of our new GB products, so that then we can maintain a stable market share going forward. For PNC business, we target a full year growth between the high single digit to low-teen level, and when we break down into the two markets, for the U.S. market, we do see the growth is on right track, with the total growth expected at low-teen level. The GCT fourth growth will be well in line with industry, while then for Solid Gold, we will continue this channel optimization exercise.
As Akash just mentioned, we expect to complete this whole exercise around the end of 2024 or early 2025. Then for the China market, we target this single-digit decline due to the ongoing product premiumization and the channel optimization exercise we have informed the market for. For the PNC adjusted EBITDA margin, we target mid- to mid-single-digits level, which is, well in line with we have achieved in the first half, as we are expanding in the market for both core and the expansion markets. But we want to just to highlight here is that it is still the same target for us to increase the PNC EBITDA margin to the double-digit level in the coming three years.
Again, I also want to emphasize, as I also mentioned by Akash just now, the total group net leverage, we still aim to continue to deleverage for the rest of the year and for the end of 2024, we aim to close the year with the net leverage close to three times. So this is answers the second question on the kind of guidance. Then regarding this fourth question on the loan portfolio exercise. So for us, we have already achieved or completed the most of the refinancing exercise we have planned for the year of 2024. After the result announcement, as we just mentioned, we just received the new term loan commitment letter for a total size of $160.
And we see this new term loan is sufficient to provide the liquidity for us to complete the prepayment of the existing U.S. dollar term loan. So with this exercise, we see it can further optimize our capital structure and also to ensure a stable and a long-term focused maturity profile for the overall debt. So now I will invite Akash to elaborate on the BNC development.
Thank you, Andrew, for your question, and thank you, Jason. I think, Andrew, as we had mentioned, BNC business decline of 19 percentage points. I think we have to look at this from two perspectives, from NSR to our off-take performance in the domestic. As you know, Biostime operates in the super premium price segment. And if you look at, on a year-to-date basis, the overall super premium category declined by 22.8 percentage points. However, Biostime overall sell-through decline was only 14.2 percentage points. That is one of the key fundamental reasons that we were able to improve our market position from number four to number three. In fact, today, Biostime is the number one super premium imported IMF brands in China. And how have we achieved this?
We launched a nationwide education campaign on acquiring new consumers through initiatives like mom classes and community events, leveraging on social media platforms such as Xiaohongshu and Douyin to broaden our reach across their presence. We are also working to deepen our distribution and working with distributors to ensure, post this new GB launch, that there is sufficient level of stock. We do not engage into any promotional price activity. That's why we intend to keep a normalized channel inventory of no greater than thirty days. But we want to make sure that our distributors and our retail partners have the new GB available to drive this accelerated growth for us. We do believe that there is still some more softness that is there for our BNC business in Q3, before we started seeing some stabilization coming at the back end of Q4 and 2025.
This overall improvement will also be driven by the normalization of birth rates that we have started seeing. We are seeing a significant increase in vitamin D sales, which is pretty much very essential for the newborns. As these signals come through, this will also have a positive halo impact on Biostime IMF performance, t hank you.
The next question is from Xizhen, Nomura Asset Management, Taiwan. His question is, the RMB 404 million decline in inventories accounted for 40% of the net operating cash flow in the first half of 2024. Can we expect inventories to continue to decline going forward? And what is your projection for the operating cash flow and capital expenditure in the second half of the year and next year? Thank you.
Thanks for your question. I can answer this. So regarding the inventory development outlook, we target stable inventory level and also turnover for the second half. We see this is a quite adequate level with a turnover of around a hundred and fifty days. Inventory balance to be around RMB 2 billion. We would not like to push further down towards the end of the year, because on one hand, we need to support the continuous business, especially the expansion in certain new channels and new markets. And secondly, also, as you be aware, at the end of the year, usually is the time for us to stock up for the coming Chinese New Year sales season. So therefore, we do expect a stable inventory level and a turnover for the second half.
Regarding your second question about the projections for the operating cash flow and also CapEx. As you can see, in the first half, we have achieved the overall operating cash flow conversion rate of 107%, i.e., 107% of the adjusted EBITDA was converted to the pre-tax operating cash flow. But we did indicate, in the results announcement, if we adjust for a kind of one-time effect of cut off the difference for one customer's payment, the actual operating cash flow conversion in the first half was 98.6% of adjusted EBITDA. As we indicated to the market before, we always target at least 90% of the group's adjusted EBITDA to be converted to the pre-tax operating cash flow.
So therefore, based on this good result achieved in the first half, we maintain the same guidance for the second half of this year and also next year, that 9% or at least 90% of the EBITDA to be converted to the pre-tax operating cash flow. Then also the same guidance for the CapEx outlook for rest of year and also 2025, i.e., for each year, target around 100 million RMB CapEx to be invested to drive the business growth. And we do see this is an adequate level in terms of the liquidity resource requirement for us to take going forward.
Okay, and we have the following questions from Iris Chan of Nomura and Aaron Lam from Haitong International . So I'll combine these two questions together. So, does the company have any guidance on the net leverage at the end of the year and 2025? And Aaron wants to know what actions the company take to achieve that target by the end of the year, given that the gross debt and the finance cost increased in the first half of 2024?
Yeah, I can answer these two questions. First question is very clear that we have maintained our guidance for the end of 2024. We will further lower our net leverage to close to three times. Then for end of 2025, we will target net leverage level of close to 2.5 times. So this will show a continuous deleveraging trend for us to achieve going forward. Then regarding the second question about how we will able to achieve that. So to us, we look at the net leverage calculation. So on one hand, we will continue to ensure a healthy profitability, i.e., a healthy EBITDA margin level of at the mid-teen level, as we just indicated, so that then we can have the sufficient cash flow generated from this EBITDA operation.
Then on the other hand, with the further improvement of the cash flow, especially from the operation, from the CapEx and also the financing, then we can have the liquidity available to gradually reduce our gross debt. As we indicated to the market before, for the cash flow generation capability of the company, we can reduce our gross debt in the range of RMB 400-500 million each year. So this is what we target to continue to achieve in the years to come. So therefore, the net leverage reduction will benefit from both the gross debt reduction point and also from the EBITDA point. Then just to comment on this question on gross debt increase in the first half.
Actually, this is just a timing difference, because we arranged the new RMB bilateral loans, and also we did the US dollar bond tap of $120 million in April. But with this liquidity in place, it is for the planned prepayment of part of term loan in July. So therefore, as just mentioned, in July, we have already prepaid $160 million US dollar term loan. This can help us to lower the gross debt. And with the cash flow to be generated on the second half, then we will continue to use the available liquidity to further lower our gross debt.
Okay, we are now taking the last question from the floor. It's from Xinwen Pan of Loomis Sayles. Could you elaborate the tenor cost and advertising schedule for the recent CNH loan, the US dollar 150 equivalent for the new US dollar 514 million three-year loan? And what's the amortization schedule as well? Thank you.
For our new CNH loan, again, it's a long-term loan with the tenor of three years. This is really in line with our approach to ensure overall long-term focused maturity profile for our debt portfolio. The amortization schedule also in line with our principle to have the minimal amortization upfront, with the majority of the repayment at the final part of this total amortization schedule. This will allow us the sufficient flexibility to match our operating cash flow generation with this loan repayment schedule. And certainly regarding the cost, definitely, with this CNH nature, the cost is much lower than our U.S. dollar denominated debt. So again, this is the kind of exercise we are doing to help to lower the overall financial cost.
As we just mentioned, now with the completion of this, new latest round of exercise for this new CNH loan, our RMB denominated debt now account for 34% of our total outstanding debt. So we are very happy to see this, further optimization of the, debt instrument mix.
Thank you. This ends the Q&A session. Thank you for everyone for joining us this morning. Please stay healthy and safe. I now announce the end of today's webcast. Thank you.