Hongbo Co., Ltd. (stock code: 002229) is an enterprise involved in the traditional printing, lottery, and artificial intelligence industries. Despite the saturation and fierce competition in the traditional printing market, Hongbo Co., Ltd. has maintained steady development in the fields of education, advertising, packaging and cultural communication, and is actively exploring the application of intelligent, environmentally friendly and digital technology to improve production efficiency and achieve green printing. In addition, the demand for personalized prints and specialty souvenirs has brought new opportunities for the company to grow. In the lottery industry, Hongbo shares have benefited from the boom in the Chinese lottery market. In 2023, there was a significant increase in lottery sales in China. In particular, sales of sports lottery tickets and welfare lottery tickets increased by 39% and 31%, respectively. The company also has an active layout in new business formats such as instant lottery and “video+lottery”, and is expected to continue to grow in the future. In addition, Hongbo Co., Ltd. is also involved in the artificial intelligence industry, keeping up with global AI technology trends. The company responds positively to the national action plan for the high-quality development of computing power infrastructure, and is committed to achieving breakthroughs in the next-generation productivity tool AGI and promoting the development of new computing power businesses, new models and new business formats.

As of March 31, 2024, the total assets of Hongbo Co., Ltd. were 3.389 billion yuan, an increase of 9.98% over the beginning of the period of 3.81 billion yuan. This increase was mainly due to an increase in inventory, construction in progress, and right-of-use assets. Inventory increased 68.49% from 244 million yuan at the beginning of the period to 411 million yuan at the end of the period, which indicates that the company is preparing for existing orders. Projects under construction and right-to-use assets increased by 436.28% and 76.18%, respectively, reflecting the company's investment in equipment purchase and financial leasing. In terms of liabilities, the total debt at the end of the period was 1,742 billion yuan, an increase of 22.75% over the 1.42 billion yuan at the beginning of the period. The balance ratio rose from 46.07% at the beginning of the period to 51.42% at the end of the maturity period, indicating that the company has increased its liabilities while expanding its business.

In terms of profit, the operating income of Hongbo Co., Ltd. was 155 million yuan in the reporting period, an increase of 7.59% over 144 million yuan in the same period last year. However, the company's gross margin fell from 19.37% in the same period last year to 15.53% in the reporting period, indicating pressure on rising costs or falling sales prices. Operating costs increased by 12.69% from 116 million yuan to 131 million yuan. Net profit attributable to shareholders of listed companies was -25.06 million yuan, down 37.33% from -18.25 million yuan in the same period last year. Net profit after deducting non-recurring profit and loss was -29.08 million yuan, a year-on-year decrease of 44.49%. These data show that while the company's revenue increased, profits declined sharply. The main reason may be the decline in revenue and gross margin of wholly-owned subsidiaries.

In terms of cash flow, the net cash flow from operating activities of Hongbo Co., Ltd. during the reporting period was -43.65 million yuan, compared to 34.43 million yuan in the same period last year, a decrease of 226.79%. The total cash inflow from operating activities was 776 million yuan, an increase of 37.47% over 564 million yuan in the same period last year; however, the cash outflow subtotal was 819 million yuan, an increase of 54.73% over the same period last year. This indicates a significant increase in the company's cash outflow from operating activities, which may be due to undue or unsettled sales payments. In addition, the net increase in cash and cash equivalents was -201 million yuan, down 68.84% from -119 million yuan in the same period last year.

Overall, the financial performance of Hongbo Co., Ltd. in the first quarter of 2024 showed a trend of increasing revenue but declining profits, which were mainly affected by rising costs and falling gross margin. Despite the company's growth in assets and liabilities, net cash flow from operating activities fell sharply, indicating the financial pressure the company faced in expanding its business. In the future, the company will need to make more efforts to increase gross margins and control costs while optimizing cash flow management to achieve sustainable development.