Financial Review

Highlights

In 2022, despite the complex and severe internal and external environment, including the slowdown of global economic growth, the challenges to domestic economy with the superimposed impacts brought by repeated epidemics and the overlay of the “triple pressures”^note, the Group maintained a growth trend with its operating performance outperforming the market. In 2022, the Group achieved revenue of HK$771,133 million, representing a year-on-year increase of 8.8%. Besides, the Group recorded profit attributable to ordinary shareholders of HK$75,481 million, representing a year-on-year increase of 7.5%. Excluding the foreign translation impact of RMB depreciation, the revenue and profit attributable to ordinary shareholders of the Group recorded a year-on-year increase of 13% and 11%, respectively.

The comprehensive financial services segment recorded a year-on-year increase of 21% and 7.2% in revenue and profit attributable to ordinary shareholders, respectively. Among which, CITIC Bank’s revenue exceeded RMB210 billion, achieving a new record high again, and recorded a year-on-year increase of 12% in profit attributable to its shareholders, maintaining a double-digit growth. CITIC Securities further consolidated its leading position in the industry, ranking first in the global market for the first time in terms of equity underwriting scale, while maintaining its first position in the domestic industry in terms of revenue and net profit for seventeen consecutive years. CITIC Trust firmly promoted its innovative business, and its profit attributable to the parent company remained the second place in the industry. CITIC-Prudential Life maintained double-digit growth in premium income, keeping sufficient comprehensive and core solvency margin.

The non-financial segments recorded a year-on-year increase of 2.0% in revenue and a year-on-year decrease of 37% in profit attributable to ordinary shareholders. Among which, the advanced intelligent manufacturing segment expanded its overseas business landscape and constantly promoted scientific and technological innovation, with an increase in revenue of 26% in a declining market. The advanced materials segment actively supported the supply of resources and energy, remaining stable in revenue, with a decrease in net profit due to the decline in commodity prices. The operating performance of new consumption segment and new-type urbanisation segment were respectively affected by the slowdown in the sales of fuel vehicles and the downturn in the real estate industry, as well as the increase in provisions for certain assets, both recording a decrease in net profit.

Earnings per share and dividends

Earnings per share of profit attributable to ordinary shareholders was HK$2.59 in 2022, an increase of 7.5% from HK$2.41 in 2021. As at 31 December 2022, the number of outstanding ordinary shares was 29,090,262,630.

At the forthcoming annual general meeting, the Board will recommend a final dividend of HK$0.451 per share to ordinary shareholders. Together with the interim dividend of HK$0.20 per share paid in November 2022, the total ordinary dividend will be HK$0.651 (2021: HK$0.606 per share). This equates to an aggregate cash distribution of HK$18,938 million.

Segment Results

Comprehensive Financial Services

In 2022, this segment achieved revenue of HK$310,135 million, with a net profit of HK$101,399 million and profit attributable to ordinary shareholders of HK$55,803 million, up by 21%, 30% and 7.2% year-on-year , respectively.

CITIC Bank maintained stable and positive growth. It achieved revenue of RMB211,109 million for the year, up by 3.2% year-on-year, reaching a new historical high, with profit attributable to its shareholders of RMB62,103 million, up by 12% year-on-year, maintaining the double-digit growth. Both balances of deposits and loans exceeded RMB5 trillion, with the percentage of loans for inclusive finance, green credit and strategic emerging industries significantly increased. The asset quality has been improving, with the provision coverage ratio increased by 21.12 percentage points to 201.19%, hitting a new record high in eight years. The Non-Performing Loans (“NPL”) balance decreased by 3.3% to RMB65.2 billion and the NPL ratio declined 0.12 percentage point to 1.27%. Both the NPL balance and NPL ratio have decreased simultaneously for two consecutive years.

CITIC Trust innovative business had exceeded RMB1 trillion, representing a continuous rise in the scale and proportion. Against the sharp decline in overall performance of the trust industry, its revenue and net profit still ranked in the top tier of the industry. It achieved revenue of RMB6,438 million, representing a decrease of 25% year-on-year, ranking third in the industry. Its profit attributable to the parent company amounted to RMB3,012 million, representing a decrease of 14% year-on-year, ranking second in the industry and remaining constant from last year.

CITIC Securities was steadily building itself into a world-class investment bank. It has stepped up efforts in market expansion to maintain the leading position in the industry. Specifically, its equity underwriting scale ranked first for the first time globally, and the revenue from brokerage business, the scale of customer asset under custody, AUM, the balances of margin financing and securities lending and onshore bonds underwriting scale all ranked first in the domestic industry. As affected by the fluctuations in capital markets, CITIC Securities achieved revenue of RMB85,941 million^note1 for the year, representing a decrease of 12% year-on-year. Its profit attributable to owners of the parent company amounted to RMB21,317 million, representing a decrease of 7.7% year-on-year. Both its revenue and net profit have ranked first in the industry for seventeen consecutive years.

CITIC-Prudential Life continued to implement a diversified and differentiated channel development strategy. It achieved premium income of RMB31,189 million^note2 up by 16% year-on-year. Due to the impact of capital market fluctuations and the downward trend of long-term interest rates, profit attributable to the parent company decreased by 63% year-on-year to RMB1,076 million. CITIC-Prudential Life actively expanded the utilisation of insurance funds, increasing the investment in major infrastructure and construction projects for people’s livelihood, with an increase in investment in real economy amounted to RMB9.3 billion for the year.

Advanced Intelligent Manufacturing

In 2022, this segment achieved revenue of HK$60,023 million, net profit of HK$1,375 million and profit attributable to ordinary shareholders of HK$618 million, representing a year-on-year increase of 26%, 0.1%, and a decrease of 2.2%, respectively.

CITIC Dicastal responded to unfavorable factors of rising energy prices and shipping costs by taking full advantage of its global manufacturing layout to effectively ensure stable supply of raw materials and product delivery. The sales of aluminum wheels and aluminum casting parts increased in a declining market. It achieved revenue of RMB42,773 million and profit attributable to the parent company of RMB1,068 million, representing a year-on- year increase of 34% and 6.4%, respectively. The company continued to strengthen its management, service and support capabilities in overseas projects. In December, the aluminum wheels manufacturing base in Mexico and the aluminum casting parts manufacturing base in Morocco successfully commenced production.

CITIC Heavy Industries recorded steady growth in traditional businesses such as critical equipment and integrated engineering works, and made effective breakthroughs in new energy equipment and in intelligent mines business, with revenue increasing by 17% year-on-year to RMB8,827 million. CITIC Heavy Industries is committed to achieving breakthroughs of critical technologies in “bottleneck” fields. Investment in R&D increased by RMB120 million year-on-year, up by 0.4 percentage point to 7.2%, with a profit attributable to the shareholders decreased by 36% year-on-year to RMB146 million. Newly effective orders for the year amounted to RMB11 billion, another historical high level. A number of scientific and technological innovation achievements have received external recognition, laying a solid foundation for long-term sustainable development.

Advanced Materials

In 2022, this segment achieved revenue of HK$282,185 million, net profit of HK$16,825 million and profit attributable to ordinary shareholders of HK$15,127 million, representing a year-on-year decrease of 0.1%, 20% and 21% respectively.

CITIC Pacific Special Steel actively responded to the cyclical downturn of the industry, timely optimised its product mix, and maintained full scale production. The sales of steel recorded a year-on-year increase of 4.4% to 15.18 million tonnes for the year. The company recorded revenue of RMB98,345 million, remaining stable. Profit attributable to ordinary shareholders decreased by 8.6% year-on-year to RMB7,105 million, the profitability remained top in the industry. CITIC Pacific Special Steel continued to optimize the resource integration and business deployment, and successfully acquired the controlling right of Tianjin Pipe Corporation in February 2023. The production capacity of seamless steel tubes exceeded 5 million tonnes annually, leaping to first in the world.

Sino Iron overcame adverse factors of labor shortage, extreme weather conditions and inflation by focusing on active operation and marketing, and realised 21.41 million wet metric tonnes of concentrate output, with a profit attributable to the parent company of US$475 million, remaining the largest supplier of magnetite concentrate to China.

CITIC Metal recorded revenue of HK$139,887 million with a profit attributable to the parent company of HK$2,249 million, representing a year-on-year growth of 1.6% and 6.5%, respectively. The revenue from trade business has maintained growth for four consecutive years. Sales of Niobium and iron ore continued to maintain the leading position in the industry, and the sales of non-ferrous metals maintained sustainable growth. The Kamoa-Kakula Copper Mine Phase II went into production 4 months ahead of schedule, with annual production of copper reaching a historic record of over 333,000 tonnes, contributing to a profit of HK$800 million.

CITIC Resources seized the opportunity of rising prices of crude oil, aluminum and coal, recording revenue of HK$5,866 million, with a profit attributable to ordinary shareholders of HK$1,336 million, up by 35% and 21% year-on-year, respectively. Output of crude oil attributable to the company reached 9.66 million barrels, hitting the highest level in five years. The crude oil business achieved revenue of HK$1,854 million and a profit of HK$890 million, representing a year-on-year growth of 38% and 20%, respectively. Non-oil business realised revenue of HK$4,012 million and a profit of HK$705 million, representing a year-on-year growth of 33.7% and 13% respectively. With continuous improvement of the company’s financial position, the interest-bearing debt ratio reduced by 8.0 percentage points to 20.8% compared with the beginning of the year.

CITIC Pacific Energy achieved a 9.81% year-on-year increase in electricity generation, with revenue of HK$12,898 million, representing a year-on-year growth of 7.0%. Benefiting from the profit growth of Xin Julong coal mine and relocation compensation for urban renewal projects, CITIC Pacific Energy realised a profit attributable to the parent company of HK$1,095 million, an increase of 3.3 times year-on-year. The company is committed to the transformation of green energy, and the total installed capacity of Photovoltaic grid-connected throughout the year amounted to 126MW, an increase of 126% year-on-year. The centralised wind power projects with a capacity of 1,000MW in Xilin Gol League overcame the impact of the epidemic and successfully completed the annual construction target.

New Consumption

In 2022, this segment achieved revenue of HK$61,697 million, with a net profit of HK$1,295 million and profit attributable to ordinary shareholders of HK$619 million, representing a year-on-year decrease of 5.9%, 45% and 62% respectively.

CITIC Press maintained its leading position in the book market, with active efforts promoting digital innovation, and exploring new media as well as live streaming channels, its market share rose by 0.15 percentage point to 3.03% compare to the previous year, returning to the top position among Chinese publishers. Among these, economics and business books, sciences books as well as biography books continued to rank first in the market. Due to the impact of the overall downturn in the industry, CITIC Press recorded revenue of RMB1,801 million for the year, down by 6.3% year-on-year and profit attributable to ordinary shareholders was RMB126 million, down by 48% year-on-year.

Dah Chong Hong’s luxury and commercial vehicle business grew rapidly, and healthcare distribution maintained sustainable growth. Affected by decline of car sales, the company recorded a year-on-year decrease of 7.3% in revenue to HK$49,640 million. The company continued improvements in operating efficiency and costs control, the growth in gross profit of the automobile sales business contributed to a year-on-year increase of 11% in profit attributable to the parent company to HK$612 million.

CITIC Telecom International continued to vigorously expand into information services market. It recorded a year- on-year increase of 6.6% in revenue to HK$10,111 million and a year-on-year increase of 11% in profit attributable to ordinary shareholders to HK$1,191 million. Its subsidiary, CTM, successfully obtained 5G license, becoming the first telecommunications operator to launch 5G services in Macau, as a result of which its market leading position remained solidified.

CITIC Agriculture incurred a loss of RMB680 million, mainly due to the provision for certain equity investments and sharing of loss from Longping Hi-Tech.

New-Type Urbanisation

In 2022, this segment achieved revenue of HK$57,060 million, up by 1.2% year-on-year, a profit of HK$902 million and profit attributable to ordinary shareholders of HK$2,095 million, down by 89% and 73% year-on-year respectively. Excluding the impact of provision for CITIC Envirotech’s goodwill and certain projects, this segment achieved operating profit of HK$8,831 million, down by 7.6% year-on-year.

The property development and operation companies achieved revenue of HK$12,644 million, up by 34% year- on-year, and operating profit of HK$6,489 million, up by 2.0% year-on-year. Projects such as Guangzhou Harbour City, Shanghai Nove Mansion, Ningbo Fenghua and Lushan Courtyard were delivered with revenue recognised, effectively compensating for the decrease in net profit contributed by COLI and driving a growth in both revenue and profit.

The construction and engineering and urban operation companies achieved revenue of HK$46,326 million, down by 3.0% year-on-year. Excluding the impact of provision for CITIC Envirotech’s goodwill and certain projects, this segment realised operating profit of HK$2,342 million, down by 27% year-on-year, mainly due to the exchange loss on foreign currency debt of CITIC Environment and the decrease in gain on disposal of equity interests. These companies actively integrated into national regional strategies and efficiently served the markets along the “Belt and Road” route, achieving high-quality delivery of the Chongli Prince City Ice and Snow Town project and 31,000 housing units of the RED project in Angola.