Good afternoon, investors. Thank you so much for your attendance to the 2024 China Lilang annual result investors meeting. This is Angela from SPRG. The meeting is in the form of both telephone, online and offline. Investors using the online should have received before the event the PPT. If you have not received the slides, please contact the SPRG team. Please be reminded that the English channel is only for listening. If there is any question from the investors after the meeting, please dial into the Chinese channel to ask your questions. Let me now introduce the management. Mr. Wang Dong Xing, Chairman and Non-Executive Director. Mr. Wang Liang Xing, Vice Chairman and CEO. Mr. Wang Cong Xing, Vice Chairman and Executive Director. Mr. Shen ZhiZhong, CFO. Mr. Song Chen , Director of the Group Strategic and Development Department.
The following agenda is, first of all, Mr. Wang Cong Xing will share the result highlights, followed by Mr. Frankie Shum to the financial status, and Mr. Song Chen to review business and operation. Finally, the Chairman will share the group's views on outlook and strategy. Then the Q&A session. Now, Mr. Wang.
Thank you, moderator. Good afternoon. I am Wang Cong Xing. Let me brief you the 2024 annual result highlights. In 2024, the global situation remained complex and volatile, with the exception of the Chinese economy, which show greater resilience and a gradual pickup in the retail market as a result of the central government's policy of promoted consumption. Despite the recovery in overall consumption growth, consumer confidence was still affected by external uncertainties, and the market sentiment was cautious.
Facing ever-changing business environment, the group proactively pursue strategic transformation, increase R&D, enhance the competitiveness of brand diversification, reinforce corporate management, and improve operational efficiency during the year in order to lay a solid foundation for achieving higher quality and sustainable development. In the past year, the group recorded revenue of CNY 3.65 billion, profit attributable to shareholders of CNY 0.461 billion, and gross profit margin of 47.7%, of which, due to the strong uplift of in-average sales per store and the remarkable results of the new retail pipeline, the smart casual collection continue the positive momentum of 2023 and recorded an overall turnover growth of 27.2%.
The group further optimize its channels and enhance its operational efficiency by leveraging on the information accumulated in the retail business of the smart casual collection and the valuable experience gained from the successful implementation of direct sales to reform the business model of the core collection. During the year, the group recovered the operating rates of its distributors in the three northeastern provinces and the four provinces in Jiangsu and initiated the implementation of the direct-to-consumer DTC model of the core collection and the operation of this new business model appears positive. Meanwhile, the group implemented a brand new retail strategy and recorded a rapid sales growth of 24% during the year, demonstrating that the group's efforts to enhance the development of TikTok and other e-commerce platforms, and also new platforms including PDD and Poizon, to enrich an e-commerce platform's coverage, and we have achieved desirable outcomes.
In terms of brand management and promotion, the group has successfully reached out to consumers in different cities and age groups through diversified marketing strategies and brand strategy upgrades with different kind of age groups, consumers, which is much better and outperforming the industry. The group's financial strength was solid during the year. The board has resolved to pay a final dividend of HKD 0.09 per share and a special final dividend of HKD 0.03 per share. A total of HKD 0.30 per share for 2024, resulting in a stable dividend payout ratio of 73.1%.
The accumulated dividend paid since the listing was HKD 7.3 billion, and the dividend per share has reached HKD 6.1 per share, which demonstrates the commitment in creating values for the shareholders. I will now hand over to Mr. Shen. Thank you.
Thank you, Vice Chairman. Good afternoon. I'm Frankie Shum, company CFO. I will now present you the financial situation of 2024. Revenue on page seven is revenue gross margin with 3% YoY to CNY 3.65 billion, of which the smart casual collection has enjoyed from the strong expansion of the outlets and the significant results of TikTok live streaming, generating revenue of 27.2%. Revenue from the core collection down 3%.
During the year, the group recovered the district rights of distributors in Northeast China, in Jiangsu Province, and switched to the DTC mode, resulting in a drop in the distributing sales. The group was required to pay one-off compensation to the former distributors in the two regions, which was deducted directly from sales revenue. GP margin recorded a slight increase of 0.5% YoY. A correction, down 0.5% YoY, mainly due to the payment of one-off compensation to distributors and the decrease in the reverse provision for inventories. The reverse provision for inventories during the year amounted to CNY 31.42 million, which further increased the sales cost. On page eight, it is about the selling, distribution, and administrative expenses.
On the left chart, it is the selling and distribution expenses total CNY 1.059 billion or CNY 102 million compared to 2023. Part A is the advertising and renovation accounting to 13.1% of revenue, ranging from CNY 38 million - CNY 483 million compared to 2023. Part B is the direct stores and e-commerce expenses accounting to 9.7% of revenue, ranging from CNY 68 million - CNY 56 million. Part C is other selling and distributing expenses ranging from CNY 72 million - CNY 220 million, accounting for 6% of the total revenue. The right chart shows the administrative expenses, which amounted to CNY 188 million, accounting for 5.2% of sales. The reason was mainly the increase in staff salaries and bonuses.
Page nine summarizes the group's earnings and margins. GP margin was approximately 47.7%, down 0.5 percentage points YoY. Reverse provision for inventories amount due to CNY 31.42 million as compared to 2023. Profit from operation down by 9.5% to CNY 609 million and operating profit margin down by 19 percentage points to 15.1%. Profit attributable to shareholders was approximately CNY 460 million, down 13.1%. Profit margin attributable to shareholders, down 2.4 percentage point to 12.6%. On page 10, it is the working capital turnover days. During the year, the group's average accounts receivable turnover day were 36 days. The decrease in turnover days is because of the increased direct store sales.
For inventory, the average inventory turnover was 183 days. The increase is because mainly due to the increase in the proportion direct operation and distribution during the year. In addition, sales of winter collection were down due to the warm winter at the end of 2024. The total inventory balance increased by CNY 260 million. As at December 31st, 2024, the total provision of CNY 49 million had been made in accordance with the group's inventory provisioning policy. As for trade payables, the average turnover days during the year was 157 days. The increase was due to the increase of using trade bills, which will repay at a later stage, and the year it was amounted to CNY 185 million - CNY 951.49 million. On page one is the cash flow.
Operating cash flow for the period was CNY 527.3 million. The main adjusting items compared to the net profit were inventories of CNY 252.6 million and an increase in trade and other receivables of CNY 94.8 million. Meanwhile, depreciation expenses amount to CNY 250.8 million.
For investing activities, the net cash outflow was CNY 306.3 million, which mainly include the capital expenses of CNY 112.8 million, placement of time deposit, CNY 207.2 million, and deduction of interest comes from CNY 19.5 million. For financing activities, net cash outflow amounted to CNY 471.6 million, with payments of 2023 final dividend and 2024 interim dividend totaling CNY 392.2 million and lease payment totaling CNY 109.8 million, net of net bank borrowings of CNY 20.2 million. On page 12, it is the bank and cash balances. The group's cash position remains healthy and strong. As at December 31st, 2024, we had a net cash of CNY 1.972 billion.
This concludes my presentation. I will now hand over to Mr. Song. Mr. Song, please.
Thank you, Frankie. My name is Song Chen, Director of Strategy Investment. I'd like to give you an overview of the business operation for the year 2024. Let me first talk about the sales of the collection. For the past years, we have insist on the dual policy of through the differentiation position to satisfy more consumers and to satisfy the shareholders' requirement to maximize our profit. In 2024, the dual collection has also performed Lilang's success. In 2024, the core collection because of recovering of the North China, Northeast China, and also the Jiangsu Province. For this original distributors, we have to pay them compensation and to be deducted from the sales revenue. This is a one-off payment causing the down of the revenue of 3% mainly due to this.
Other than that, we are still going up in 2024. The consumption sentiment is also down. That is because of the situation. In addition, in 2024, the smart casual was also a kind of double growth, which was also maintained a high-speed growth with 27% up in the smart casual, which is already 25%, which was 5% up compared to last year. Next page. In page 16, we can see our sales by regions and the change in the store numbers. Eastern China contributed more larger sales, with sales of CNY 1.563 billion, up CNY 41.3 billion. The lower sales growth in the Central South and Southeast was mainly due to the stabilization of the stores and the short-term impact sales during, especially in Chongqing.
Sales in the Northwest local and North China regions recording significant of CNY 32.1 million and CNY 40.8 million respectively during the period, mainly benefiting from the increase in the regional stores as well as the favorable sales performed of the outlets. The declined sales of Northeast Region was mainly due to the one-off deduction from sales revenue of the compensation paid for the recovery rights of the distributors during the year. Excluding the factor, sales revenue in the Northeast Region grew substantially, reflecting improved operation efficiency after the implementation of the DTC model. In terms of store numbers, as at the end of December 2024, we have a total of 202,773 retail stores with an increase of 462,050 sq m , representing a year-on-year increase of 7.1% overall.
Although there was slight fluctuation for sales and store numbers in some regions, we maintained a steady growth. On page 16, the group continue its pipeline restructuring and streamlining of organization. The group has planned for pipeline transformation during the year by increasing the proportion of the DTC model and taking the lead in Heilongjiang, Liaoning, Jiangsu province, and with the Lilang's core collection DTC model. Terminating the distributors with direct sales and also second-tier shows it's a mixed operation through this kind of direct sales. On the second-tier distributors, there were also a kind of Lilang's core collection. Collections is also a kind of improvement at the same time with kind of standardization to have this kind of improvement, offering to the local consumers high-end and high-quality products.
Up to the end of 2024, it was altogether 2,773. This kind of measure is already with a lot of in Jiangsu of altogether 203. We expect on this long-term development will be also foreseen. As number two, we also have our overall. With the core cities and also on the shopping malls and the premium location together with our existing shop, we also increase our brand better, so increasing our. In terms of the inventories, we also have number one on the transformation the original distributors to have the inventories in 2024. We have also 95% of the clearing. Number two, in the outlets on the platform and also e-commerce platform. In 2024, we have also a very good growth.
In 2024, it is already, again, 83 days turnover with a very healthy development up to the end of last year. Altogether, we have 2,773 with an increase of 78.4, and also on the 20 for the smart management shops. On page 16, it will be a highlight of a new retail business development. The e-commerce outperformed the overall group by 24%. In terms of the products, we have already on the inventory to be changed into a kind of direct sales in the past one year. In terms of the channels, there are also new products for whole offered and in terms of the coverage, we insist on also our own full channels. Last year, we have also maximized our PDD and also Poizon's our sales.
Now we also have our upgrade of our retail reinforce also on the distributors to have a very more convenient and high-quality products for the consumers. We are talking about the latest project, product design development. The group together with our pioneer designer on the design, so offering consumers the best products. Last year, we have also worked together with our Chen Peng with the capsule down and also with the water-repellent down, the product supply. It's low scale, and it's also very motivating the whole group's growth with 41% year-on-year on the down sales. The group also launched Lilang's first original with the long iron durable white shirt, which is this kind of DP 3.5 level non-iron and super high whiteness. At the same time to guarantee also the washing.
In response to the young consumers, a sense of serendipity, the group also launched a SMART Elite Collection in the TikTok and Xiaohongshu, with praised by the general consumers. Page 19. This is the data segment in the group's brand management and promotion. Through the year, the group continues to explore new ways to diversify marketing with innovation, quality, and uniqueness as the keywords. The group has successfully reached out to consumers, various influencers, and also celebrities, also to all kinds of consumers at different age groups in particular, with many of the consumers realize also the business group. We also worked together with Mango TV for three times is the Forged by Fire promotion the brand, which is strength and simplicity but not simple.
We also worked with the Paris Olympics and Chinese National Geography to launch a Follow the Silk Road to Paris with the Lilang SMART Elite suits. At the same time, we also worked together with many of the celebrities to dress in Lilang LESS IS MORE series to have meeting with sessions in various locations across the country to promote this kind of young businessmen, promoting the group's penetration in regional markets. Now, Thank you.
Good afternoon. I'm the Chairman of the company, Wang Dong Xing. Allow me to present the group's development strategy for 2025. Looking to 2025, the global economic and political environment remains uncertain. China Lilang will continue to capitalize on its leadership position and market consolidation opportunities.
Focusing on the core development of the Lilang's core collection and the Lilang LESS IS MORE smart casual collection, as well as the multi-brand strategy, internationalization process, and the promotion of the retail business. In order to expand our market share and enhance our brand competitiveness. First of all, the group will continue its channel reform for the Lilang's core collection. The group will further strengthen the connection between the brand. Hence, pursuant of the implementation of DTC model, and expect the positive impact of the DTC sales growth to be realized from 2025 onwards. Meanwhile, the smart casual has gained momentum in recent years.
With the rise of the new middle class and the emergence of young consumers, we will increase our investment in product R&D, enhance product quality and design, and further strengthen our brand differentiation to meet the needs of more and develop its sales network with a net increase of additional stores in shopping centers, providing capitals and prefecture, and also outlets in order to effectively clear inventory and boost sales. In addition, the group will practically close inefficient stores, improve the overall store efficiency, and expects to add a net increase of 100 stores in 2025. For the new retail, the group will continue to develop related businesses to achieve faster growth.
The group will continue to set up its online promotional efforts and continue to leverage social media platforms such as TikTok to reach consumers nationwide through live streaming and other means to drive the sales growth. With last year's transformation of inventory clearing channel to a retail channel focusing on new products, the group will increase the proportion of online sales of new products up to 80% this year. Through the implementation of these new retail initiatives, the group will aim to achieve a growth of 15% or more in 2025 for its new retail business. During the year, the group has acquired, in August last year, the operation right of the high-end golf apparel brand, Munsingwear, in China, which further enriched the group's high-end product portfolio.
According to the plan, the group will launch online sales in first half of this year and open our first physical store in the second half of the year. In terms of developing the Southeast Asian market, the group has already organized a company in Malaysia, and is expected to open its first store in Malaysia in the first half of this year. It will also introduce China's quality and affordable men's fashion products to overseas markets, as well as to broaden the group's new sources of income and master more market opportunities. By the end of 2025, the group aims to achieve its goal of operating in both China and Malaysia under the brands Lilang, Lilang's Basic Small, and Munsingwear.
To implement various development plans to further consolidate its leading position in the men's apparel industry and to create greatest value for shareholders and consumers. This is the end of my report. Thank you very much.
Thank you. It is now the Q&A sessions, where we'll answer the questions on-site, and then we'll open up to the online floor. Now the floor is open.
Management, my name is Jiang Ying Guo. Thank you very much for your presentation, and thank you for your transformation of your channels. I do have three questions here. Number one is regarding the I remember last year that at the end, would there be any kind of things that we can achieve as promised at online, offline, and also wholesale and retail? Would there be any kind of more strategies? Question number one.
Number two is on the target for this year. The growth is also quite minimum. How much is your confidence in achieving this target? On the e-commerce. Currently, on the e-commerce, how do you define the e-commerce currently? Last year, what were the sales of the e-commerce? This year, what would be operation, what kind of contribution on the e-commerce? Any kind of, kind of effect to change? What about comparing to their peers? Number three, regarding the possible development of like, in terms of the brand and also any other cooperation. I would like to ask all of you. Management, thank you very much for these three questions. Thank you.
Regarding question number one. For the growth, for the overall environment, relatively, it is still promising.
The growth in the second half of the year. The strategy would be to ensure very healthy like this financial station including operation and also on the products giving the following three years targets. Naturally, for our sales, we expect it would be good. That of course there will definitely be some inventory, but with so many online, offline channels for 2025. There will be also some aggressive sales and that's why in 2025, if we can achieve our target, first of all, we can see consumers' confidence. First of all is the nationwide conditions.
That they have also have the national meetings or the political leaders have also through this kind of conference, it will offer to the whole China, including ourselves. On the AI's sustainable operation with kind of a very strong move, so we can be rest assured to have our motivation in creations to understand the overall capital market, including also security markets, including Hong Kong. Of all these kind of factors, we can still that 2025 would be. Including the product panels. This is also. That is why we are having this kind of 2025 as a steady growth. For the e-commerce and retail. Put it this way. For the traditional sales and the new retail sales, with also e-commerce being all together. This is number one.
Number two, in fact, overall, the retail percentage is still approximately at 10%, plus the live streaming and also the online is another 20%. I do not think that this is within the industry is a low percentage. That is why we are having this kind of a sales target is relatively reasonable. Even for the whole industry. Enable also the online sales is the more we can see that we are still under observation. Hopefully, we can have a much better performance. Question number three, let me say something. A lot of the people would like to engage in this business. It is a kind of online. It has a much better gene, so in terms of apparel business for the last two sales and also operation and also talent-wise and R&D.
We have already accumulated a lot of the benefits and also competitiveness. In terms of the brand gene, we have accumulated for so many years of our experience. We believe that we should, within two, three years, be able to have a very promising development.
Thank you. Now we are now taking questions both online and offline or on the floor. Any question from the floor, please? Gentleman from the first row.
My name is Jason Kwok. Do not please remind for my question. My question number one.
To quantify, we have What percent of influence we Reality in terms of technology operation, regardless of channels or profit or net profit. Would there be also some influence? Last, on the law, etc. The inventory of 10%, what do you have for your target? What about the net profit being affected? Thank you.
The recovery of the distributors. Originally, of the recovery of the distributor's rights, the management feels that it feels it's a very good thing about that because for those distributors who have done very good. Recovering those distributors are some of the less efficiency. Some of them is doing some kind of tens of millions per year. We have spent very far less effort to recover the provinces in Jiangsu and the other regions.
In one or two years or three years, we should be able to be profitable on this distributor's competition. After three years, I feel that this is a very promising future for development. Put it this way, if we have to recover those rights, we are able to have multiple channels. We have online, having so many connections and also on the shopping malls. This is what the distributors are doing, including the online or outlets. We are very unique, very good operating teams for the online sales. That is why we also want a good sign. Previously, the distributors or the agents were dealing with the inventories in the past. Why they now rely as this kind of a huge recovery rate on inventory.
The reason why from this point on our legacy sales, we are selling all products, but in 20% is to deal with the inventories. Now, the inventory is only dedicated online, so that at the end, gradually. After doing this apparel industry for so such a long time. 60% of our inventory, if we can have them sold, we can feel very happy now that if we can sell up to 90% of the products, the new products, this is something beyond imagination. Previously, with this kind of sales through, with the recovery of the distributors right now, we feel that we are still confident in the future. Thank you.
In terms of the net profit and also the gross profit, having those recoveries, in terms of their gross and net profit, there will be also some differentiate.
We have expected that, in within three years, we will still recover for this kind of one-off compensation. We can still make it possible, we can make the money back. For the online sales, if we are confident, and we will do it ourselves with this kind of competitiveness, this is our upper hand. In the future, the gross profit, net profit will definitely be more profitable, and that's why we are more confident on that. What was the third question about? Yeah, the target and the team. Because in terms of the short term on the profit, there is some kind of influence of the recovery. In the middle long term, the group's profit is still maintained at a higher percentage. In the future, we will, depending on the market situation, to expedite this trend transformation.
If the plan is to be expedited to guarantee the target and the profitability is still good.
I like to follow up another question. Now, for this transformation in terms of our new stores and also on the profit and loss in the group, in terms of the inventory. If we have to put the inventory to be listed here in the profit and liabilities, if they'll be over engaged in the long run, would there be also different kinds of figures shown in the books? Would it be also different? Number two. I'm curious about on the profit target after recoveries in the next one-two years, would there be also continuous recovery?
This is only a one-off. There will be also in the follow back on the recovery. It is still on the one-off in about six months.
We can also start seeing the profits. For the recovered inventories, we have also tried to have also consignments franchise or on the smart casuals. The reason why we do it this way, especially on the smart casual. On this kind of operation, it is already in a very stable approach in 2024. We believe it's already in on the track and believe it will improve in 2025. In other words, it means that including the people, more importantly, is that the products will be maximized. Originally, we have only about 30 shops or stores. They can only sell through those stores, and there's no way for them to sell more. If it's a best sale, if it's a worst sale, you will accumulate. Through this kind of operation mode to solve this situation, this dilemma.
Ordering the new products does not affect their inventory or to sell. That is why 2024, if you order more and the market is not going to be consumed, but it can still maintain this growth. Especially now, we have really built up the system on each of the stores. In other words, now that if there will be some consignments or franchise, we can still be more competitive. We have the recovery despite that there will be some influence in our competitors. The weight on the recovery and also the sales will be improved. For the smart casual, it is believed that it will be also be improved in this sector.
Thank you. The floor is now open for other questions.
At the same time, we also take questions online, but please be reminded that the English channel is not for you to ask questions because you have to dial in for the Chinese channel to ask your questions only, not in English channel. Investors can also ask on line one into the Chinese channel. Please press your star and also one to continue to ask your questions online. This is a repeat of the instruction to ask your question online through channel one, Chinese channel. Any other questions from the floor, please?
I have another question. Regarding the smart casual for the last couple of years, we have also added. Also in terms of the customer groups, they're more focused on the young people and the age distributions. Would there be more data for us to share?
One is on the Mila, on the online platform. Less than 30 years old consumers. This is one compared to the others, which is a very big differentiation. This number two is almost like 50% of the 40 years old plus consumers representing a different age group. Which of course, the age group is coming, becoming younger and younger. Those are what we can see in the smart casual, and the result is quite promising. What about the past few years? Will there be any change of directions? On the age going up, age groups?
Well, the tendency is. We did not have any kind of study on this age tendency, but we only compare for last year. On the special, the smart casual, we have never paid attention to the change of the age groups in the past.
Thank you very much. Again, we'd like to see if there's any question from online. Please press one, and then the asterisk for your question and wait it to be answered.
This is Dong Xifei from Haitong Securities. Thank you, management, for me to answer this question. I'd like to ask two questions. Number one, last year, Lilang has been transformed. My question is whether of last year, the brand, and then also opportunities, what will be also the growth? Would that be the same question number one? Number two is on the transformation. Last year, overall, it was quite quick with four provinces. In 2025, would there be also other transformation to other provinces? How many provinces? What will be the final expectation for the direct sales stores to a certain other level? These are the two of my questions. Thank you.
Other brands. We have just started for the brand last year, so this is the initial operation. We did not have any kind of plan for last year. Number two, for the distributors and wholesale, this has already been taking off of the reference recovery of the rights. For the northeastern part of China, we have already recovered that. The first batch, DTC, also having been recovered, is quite promising in terms of the brand. That we consider in the future, of course, there might be more opportunities for us to have advantage from this kind of recovery rights of the operations.
Thank you very much. Thank you.
Let's see if there's any other questions from the floor now. Good afternoon.
First question.
Can you explain on the expenses on the online and also the store efficiency in terms of the difference? Can you explain? What I want to find out is the e-commerce percentage outside and also the retail stores. In terms of expenses, what would be your expectation of the future expenses? Thank you.
I'm sorry. You said that direct sales and also on the e-commerce channels. Well, most of the stores are in direct sales. What is the percentage of the e-commerce? In terms of the direct sales, direct stores. Most of the percentage are the expenses, right? In the future, the growth is higher than the revenue because we are also having some progress on the northeast part of China.
If there will be some unfavorable sales, then we'll reinforce our e-commerce so that we can maintain a very favorable ratio. That is why on the sales expense. Second reason is that we have to maintain the smart casual direct stores, and the 20% will increase to 35% of the growth. For the smart casual, for the expenses, they will be much closer. We're talking about two years. It's ratio. The second is also to maintain a healthy growth. Number two is on future trend. In terms of the future trend, we believe the store efficiency upgrade. In the future, the sales expenses will have a reasonable deployment in a reasonable range. Hopefully we can follow up the 2025, including 2026 transformation or the smart casual growth.
The store efficiency will increase further. Minimize also on the expenses of the store.
Okay, thank you. Any other question? We're now taking questions both from online and offline.