Financial Performance - For the six months ending June 30, 2024, the group's revenue reached RMB 604.63 million, a decrease of approximately 24.27% compared to the same period last year[2] - The net profit attributable to shareholders was RMB 170.13 million, compared to a net loss of RMB 158.24 million in the same period last year[2] - Earnings per share were approximately RMB 0.2132, compared to a loss per share of RMB 0.1983 in the same period last year[2] - The total operating revenue was RMB 604,627,930.88, compared to RMB 798,419,015.10 for the same period in 2023, indicating a significant decrease[11] - The operating profit for the same period was approximately $6.56 million, compared to $132.72 million in the previous year, indicating a significant decline[15] - The total comprehensive income for the period was RMB 794,276.38, reflecting the company's financial performance[2] - Total profit for the six months ended June 30, 2024, was 170,134,914.07, compared to a loss of 158,242,397.13 in the same period of 2023[25] Operating Costs and Expenses - The total operating costs for the six months were RMB 717.97 million, down from RMB 798.42 million in the previous year[4] - Research and development expenses amounted to RMB 12.09 million, significantly reduced from RMB 135.86 million in the same period last year[4] - Financial expenses totaled approximately $41.32 million, a decrease from $43.62 million in the same period of 2023[17] - The company reported a credit impairment loss of (741,269.32) for the first half of 2024, a significant decrease from (2,115,579.66) in the same period of 2023[18] - The company recognized an asset impairment loss of (8,955,173.29) for the first half of 2024, compared to (1,465,146.60) in the same period of 2023[19] - The company incurred a current income tax expense of 62,936.72 for the first half of 2024, with a total tax expense of (394,994.52) after considering deferred tax[24] Assets and Liabilities - The total assets as of June 30, 2024, were RMB 2.79 billion, an increase from RMB 1.96 billion as of December 31, 2023[5] - Current assets totaled RMB 1.24 billion, compared to RMB 858.92 million in the previous year[5] - As of June 30, 2024, the company reported current liabilities totaling approximately 2.16 billion, a significant increase from 52.8 million in the previous year[6] - Total liabilities amounted to approximately 2.19 billion, compared to 130.26 million in the previous year, indicating a substantial rise[6] - The company’s total assets minus current liabilities stood at approximately 626.58 million, a notable improvement from a negative 1.50 billion in the previous year[6] - The company’s retained earnings showed a negative balance of 1.26 billion, indicating ongoing financial challenges[6] Revenue Breakdown - Revenue from machinery products was RMB 542,742,258.39, while the revenue from casting and forging products was RMB 5,724,946.04, showing a decline from RMB 716,389,280.84 in the previous year[11] - Revenue from domestic transactions was approximately $372.37 million, while revenue from other countries was approximately $232.25 million for the six months ended June 30, 2024[16] - The company reported a significant decrease in external transaction revenue from other countries, down from $635.77 million in the previous year[16] - The company's main products, particularly pipe products, accounted for nearly 90% of total operating revenue, with a significant increase in export sales[33] Corporate Governance and Compliance - The financial statements are prepared in accordance with the accounting standards issued by the Ministry of Finance and relevant regulations, with no changes in accounting policies during the reporting period[10] - The company has adhered to all corporate governance codes as per the listing rules during the reporting period[40] - The company reported a net decrease in capital of RMB 77,607,634.64 during the reporting period[2] - The company has not adopted foreign currency hedging policies but does not foresee any significant currency risks in the near future[39] Future Outlook and Strategy - The company aims to expand its market presence and enhance its product offerings in the energy equipment sector[9] - The company plans to continue investing in research and development to innovate and improve its product lines in the energy sector[9] - The outlook for the energy equipment industry remains positive, driven by high international oil prices and increased investment in oil and gas exploration and development[35] - The National Energy Administration plans to enhance oil and gas exploration and development efforts, which is expected to boost demand for oil service equipment[36] - The group has no major investments or capital asset purchases planned for the future as of June 30, 2024[38] Dividends and Shareholder Information - The company did not declare an interim dividend for the six months ending June 30, 2024[2] - The board of directors proposed no interim dividend for the six months ending June 30, 2024, consistent with the previous year[44] - The interim report for the six months ending June 30, 2024, will be made available to shareholders and on the company's website at a later date[44]

Corporate Governance Structure - The company held 1 annual general meeting and 1 extraordinary general meeting during the reporting period, both convened and presided over by the board of directors[1] - The board of directors consists of 9 members, including 3 independent directors[4] - The board has established four specialized committees: Strategy Committee, Nomination Committee, Compensation and Evaluation Committee, and Audit Committee[4] - The company has an independent organizational structure, with the general meeting of shareholders, board of directors, board of supervisors, and various functional departments independently exercising their respective powers[16] - The company's actual governance status does not differ significantly from the regulations on corporate governance issued by laws, administrative regulations, and the China Securities Regulatory Commission[10] - The company's board of directors consists of 7 members, including 3 independent directors[48] - The company's board of directors is responsible for approving the compensation scheme for directors, supervisors, and senior management[52] - The company's board of directors is responsible for approving the compensation scheme for directors, supervisors, and senior management[52] - The Audit Committee held 6 meetings in 2023, focusing on reviewing annual reports, internal control evaluations, profit distribution plans, and audit firm reappointment[65] - The Nomination Committee held 4 meetings in 2023, addressing proposals for electing board members, adjusting committee members, and appointing senior management[69] - The Strategy Committee approved a proposal to increase capital in a wholly-owned subsidiary through debt-to-equity conversion[69] - The Compensation and Assessment Committee reviewed and approved the 2023 compensation plan for directors, supervisors, and senior management[65] - No directors raised objections to company matters during the reporting period[62] - All directors attended board meetings, with some participating via communication methods, and no director missed two consecutive meetings[61] - The Board of Directors actively monitored company operations and ensured scientific, timely, and efficient decision-making[63] - The Supervisory Committee found no risks during its oversight activities in the reporting period[70] Shareholder and Ownership Structure - The controlling shareholder is Molong Holdings, and the actual controller is the Shouguang State-owned Assets Supervision and Administration Commission[2] - The 2022 Annual General Meeting had a participation rate of 31.10% and was held on May 19, 2023[19] - The 2023 First Extraordinary General Meeting had a participation rate of 29.80% and was held on September 26, 2023[19] - No changes in shareholdings were reported for any directors, supervisors, or senior management during the reporting period[21] - The company's board members and senior management have no shareholding changes, with all holding 0 shares at the beginning and end of the period[21] - The company's total number of ordinary shareholders at the end of the reporting period was 36,837, with 36,795 being A-share holders[85] - The company's controlling shareholder changed in 2021, with Moulong Holdings acquiring 235,617,000 A shares, representing 29.53% of the total shares[154] - The company maintains a public shareholding level in compliance with the Hong Kong Stock Exchange listing rules[170] Financial Performance - Total revenue for 2023 was RMB 1,317,496 thousand, a significant decrease from RMB 2,765,645 thousand in 2022[111] - Net loss for 2023 was RMB 578,534 thousand, compared to a net loss of RMB 448,935 thousand in 2022[111] - Total assets decreased to RMB 2,888,082 thousand in 2023 from RMB 4,038,606 thousand in 2022[112] - Total liabilities decreased to RMB 2,553,379 thousand in 2023 from RMB 3,128,252 thousand in 2022[112] - The company reported a basic loss per share of RMB 0.71 in 2023, compared to a loss of RMB 0.53 in 2022[111] - Revenue for 2023 decreased by 52.36% to RMB 1,317,495,782.20 compared to RMB 2,765,645,281.40 in 2022[194] - Net profit attributable to shareholders of the listed company in 2023 was a loss of RMB 566,861,510.82, a 33.39% increase in loss compared to 2022[194] - Operating cash flow for 2023 improved significantly to RMB 134,992,577.56, a 1,272.85% increase from RMB (11,509,782.41) in 2022[194] - Total assets decreased by 28.49% to RMB 2,888,081,988.80 at the end of 2023 compared to RMB 4,038,605,559.51 at the end of 2022[194] - Net assets attributable to shareholders of the listed company decreased by 57.08% to RMB 424,013,364.43 at the end of 2023 compared to RMB 987,960,842.88 at the end of 2022[194] - The company's operating income for Q4 2023 was RMB 315,372,550.55, with a net loss attributable to shareholders of RMB 319,951,459.01[199] Leadership and Management Changes - Yuan Rui was elected as Chairman on February 24, 2023, and no longer serves as Vice Chairman[27] - Yao Youling was appointed as General Manager on October 8, 2023, and no longer serves as Deputy General Manager[27] - Li Zhixin was appointed as Deputy General Manager on October 8, 2023, and no longer serves as General Manager[27] - Zhao Xiaotong was elected as a Director on May 19, 2023, and was appointed as Acting CFO on January 9, 2024[27] - Yang Yunlong resigned as Chairman and Director on February 24, 2023, due to personal work arrangements[27] - Liu Jilu resigned as a Director on April 7, 2023, due to personal work reasons[27] - Wang Quanhong resigned as a Director on July 7, 2023, due to personal work arrangements[27] - Hao Yunfeng resigned as Deputy General Manager and CFO on November 11, 2023, due to personal reasons[27] - Ding Yi was elected as a Non-Executive Director on September 26, 2023[27] - Zhang Min was elected as a Non-Executive Director on May 19, 2023[27] - Liu Shubao, male, Chinese, born in April 1970, holds a college degree, joined the company in 1990, and currently serves as the Director of the Audit Department and Chairman of the Supervisory Board[37] - Li Jingwei, male, Chinese, born in August 1982, holds a bachelor's degree in finance from Shandong University, and currently serves as a partner at Yongtuo Accounting Firm and a supervisor of the company since September 2022[37] - Liu Cheng'an, male, Chinese, born in March 1973, holds a Ph.D. in law, and currently serves as a teacher at Shandong Jianzhu University and a supervisor of the company until his resignation on March 5, 2024[38] - Zhang Quanjun, male, Chinese, born in August 1970, joined Shandong Molong in 1992, and currently serves as the Deputy General Manager and General Manager of the Marketing Company[38] - Yuan Rui serves as a director at Shouguang Molong Holding Co., Ltd. since October 1, 2020, and as Chairman at Shouguang Industrial Investment Holding Group Co., Ltd. since December 19, 2023[41][42] - Ding Yi serves as Chairman and General Manager at Shouguang Financial Investment Group Co., Ltd. since November 29, 2023, and as a director at Shouguang Industrial Investment Holding Group Co., Ltd. since December 19, 2023[42] - Zhang Min serves as Assistant General Manager at Shouguang Financial Investment Group Co., Ltd. since June 1, 2022, and as a director at Shandong Longxing Plastic Film Technology Co., Ltd. since June 19, 2020[44] - Tang Qingbin serves as an independent director at Energy International Investment Holdings Ltd. since January 1, 2019, and at Luxin Venture Capital Group Co., Ltd. since January 18, 2019[44] - Song Zhiwang serves as Chairman and General Manager at Shandong Jiuan Insurance Broker Co., Ltd. since March 1, 2003, and as Executive Director at Shandong Jiuan Investment Management Co., Ltd. since March 21, 2014[44] - Cai Zhongjie serves as a senior partner at Beijing Jincheng Tongda (Jinan) Law Firm since September 1, 2014, and as an independent director of the company since December 2018[44] Compensation and Benefits - Total compensation for directors, supervisors, and senior management in the reporting period was RMB 2.8283 million[54] - The highest-paid executive was Li Zhixin, with a total pre-tax compensation of RMB 595,400[48] - The lowest-paid executive was Yuan Rui, with a total pre-tax compensation of RMB 0[48] - The company has a total of 17 directors, supervisors, and senior management personnel[54] - The compensation scheme for directors, supervisors, and senior management is determined by the Remuneration and Assessment Committee and approved by the board of directors and shareholders' meeting[52] - The compensation is determined based on the scope of responsibilities, importance of the position, and other factors[53] Business Operations and Strategy - The company has a complete and independent business system, with independent procurement, production, and sales systems[12] - The company has established an independent financial accounting system and financial management system in accordance with the Accounting Law of the People's Republic of China and the Enterprise Accounting Standards[15] - The company has an independent and complete R&D, procurement, production, and sales business system, with the ability to operate independently in the market[17] - The company's main business remains unchanged, focusing on energy equipment products such as oil drilling machinery, oil and gas transportation equipment, and wind power castings[182] - The company has established a comprehensive risk management system covering all business divisions to monitor and manage risks[186] - The company's compliance and risk management policies are regularly reviewed to ensure adherence to major legal and regulatory requirements[188] - The company manages interest rate risk by balancing fixed and floating rate financial instruments based on market conditions[72] - The company has no significant investment, acquisition, or disposal plans for subsidiaries, associates, or capital assets as of December 31, 2023[174] - The company has no significant contracts with its controlling shareholder or its subsidiaries[166] - The company has no share repurchase, sale, or redemption activities for its listed securities in 2023[167] - The company has no stock-linked agreements in place as of December 31, 2023[176] - The company has no contingent liabilities as of December 31, 2023, except for those disclosed in the report[172] Financial Reporting and Internal Controls - The company maintained effective financial reporting internal controls as of December 31, 2023, according to the internal control audit report[107] - The company's internal control audit report was disclosed on March 29, 2024, with a standard unqualified opinion[108] - The company's share capital changes for 2023 are detailed in the "Share Capital and Shareholders" section[114] - The group's reserves and distributable reserves changes for 2023 are detailed in the "Undistributed Profits" subsection of the consolidated financial statements[115] - The group's property, plant, and equipment changes for 2023 are detailed in the financial report section[116] - The company did not capitalize any interest in 2023[117] - The company plans not to distribute cash dividends, issue bonus shares, or convert capital reserves into share capital[126] - The company did not recommend any dividend payment for the 2023 fiscal year[184] Investor Relations and Communication - The company held an online investor communication event on April 20, 2023, to discuss its 2022 annual operating performance[73] - The company's annual report is disclosed on the Shenzhen Stock Exchange and Hong Kong Stock Exchange websites[153] Sustainability and Corporate Responsibility - The company has implemented energy-saving arrangements in offices and operational locations as part of its sustainability efforts[179] Business Scope and Expansion - The company's business scope was expanded in 2021 to include manufacturing of oil pumps, oil rods, oil pipes, petroleum machinery, textile machinery, and other related products[154] Address and Contact Information - The company's registered address was changed from "No. 999, Wensheng Street, Shouguang City, Shandong Province" to "No. 99, Xingshang Road, Gucheng Street, Shouguang City, Shandong Province" in 2022[140][141][142] - The company's office address is located at "8-10/F, Building 19, Enterprise Headquarters Group, Shengcheng Street, Shouguang City, Shandong Province"[143] - The company's website is https://www.molonggroup.com[145] - The company's electronic mailbox is dsh@molonggroup.com[146] Miscellaneous - The company did not disclose a "Quality and Return Dual Improvement" action plan in its 2023 annual report[74] - The company's asset-liability ratio increased to 88.41% in 2023 from 77.46% in 2022, with total liabilities of RMB 2,553,379 thousand and total assets of RMB 2,888,082 thousand[171]

Financial Performance - Operating revenue for Q1 2024 was CNY 193,609,052.43, a decrease of 52.55% compared to CNY 408,037,331.85 in Q1 2023[12] - Operating costs decreased by 51.09% to CNY 187,933,014.42 from CNY 384,212,165.48 year-on-year[12] - R&D expenses decreased by 42.01% to CNY 2,633,923.36, attributed to reduced investment in new product development[12] - The company reported a significant increase in non-operating income, reaching CNY 2,710,092.85, a 295.97% increase year-on-year[13] - Net profit attributable to shareholders for the current period is ¥216,912,792.77, a significant increase of 349.05% from a loss of ¥87,097,310.59 in the previous year[41] - Operating profit for the current period is ¥213,767,499.26, compared to a loss of ¥88,076,596.24 in the previous period[56] - Net profit for the current period is ¥216,128,932.23, a significant recovery from a loss of ¥89,259,022.14 in the previous period[56] - The total comprehensive income attributable to the parent company's owners is ¥216,884,397.83, recovering from a loss of ¥86,882,950.39 in the previous period[64] Asset and Liability Management - Non-current asset disposal profit amounted to CNY 281,593,361.45, primarily from the sale of subsidiary equity[8] - Total liabilities increased by 54.02% to CNY 84,299,028.72, primarily due to an increase in advance payments[11] - Non-current liabilities decreased from CNY 130,258,420.38 at the beginning of the year to CNY 41,125,512.44 at the end of the period, a reduction of approximately 68.4%[20] - Total liabilities decreased from CNY 2,553,379,468.25 at the beginning of the year to CNY 2,346,490,000.35, a reduction of approximately 8.1%[20] - Current liabilities total ¥2,305,364,487.91, down from ¥2,423,121,047.87 in the previous year[36] Cash Flow Analysis - Cash flow from operating activities showed a significant decline of 107.62%, dropping to CNY (2,664,458.90) compared to CNY 34,975,015.23 in the same period last year[26] - Cash flow from investing activities increased dramatically by 3596.19%, reaching CNY 141,716,637.04, primarily due to proceeds from the sale of subsidiary equity[26] - The company reported a net cash flow from operating activities of -¥2,664,458.90, a decline of 107.62% compared to ¥34,975,015.23 in the previous year[41] - Cash flow from investment activities shows a net inflow of ¥141,716,637.04, compared to a net outflow of ¥4,053,463.91 in the previous period[105] - The net cash flow from financing activities was negative at approximately ¥114.67 million, an improvement from the previous period's negative ¥165.82 million[114] Shareholder Information - The total number of ordinary shareholders at the end of the reporting period was 35,472, with H-share holders numbering 42[28] - Shareholders' equity attributable to the parent company increased by 51.42% to ¥642,034,543.92 from ¥424,013,364.43 at the end of the previous year[41] Investment and Other Income - Investment income for the period was CNY 282,197,481.17, primarily from subsidiary equity transfer gains[13] - Other income for the current period is ¥33,789.37, while investment income is ¥282,197,481.17, indicating strong performance in these areas[56] Future Outlook - The company plans to focus on market expansion and new technology development in the upcoming quarters[12]

Financial Performance Announcement - The company clarified the dates mentioned in the 2023 Annual Performance Announcement, correcting them to "May 22, 2024" and "May 16, 2024" respectively[3] - The 2023 Annual Performance Announcement was published on April 2, 2024, covering the financial results up to December 31, 2023[4] - Other information in the 2023 Annual Performance Announcement remains unchanged[5]

Financial Performance - The total revenue for the year ended December 31, 2023, was RMB 1,317,495,782.20, a significant decrease of approximately 52.3% compared to RMB 2,765,645,281.40 in 2022[12] - Revenue from foreign transactions originating from China was RMB 990,219,379.24, down from RMB 2,359,717,382.90 in the previous year, representing a decline of about 58.0%[13] - The company reported a net loss of RMB 231,188,456.56 for the year, compared to a loss of RMB 16,980,412.51 in the previous year, indicating a significant increase in losses[15] - The loss attributable to equity owners was RMB 566,861,510.82, an increase of approximately 33.39% from RMB 424,969,725.59 in the prior year[26] - The loss per share was approximately RMB 0.71, up about 33.96% from RMB 0.53 per share in the previous year[26] - The total operating revenue was approximately 1.32 billion, a decrease from 2.77 billion in 2022, representing a decline of about 52.3%[104] - The operating profit for 2023 was approximately -549.18 million, compared to -441.51 million in 2022, reflecting a worsening of about 24.4%[104] - The total comprehensive loss for 2023 was $(578.84) million, compared to $(450.44) million in 2022, indicating a worsening of approximately 28.5%[108] Assets and Liabilities - The total liabilities amounted to RMB 2,553,379,468.25, a decrease from RMB 3,128,252,351.27 in the previous year, indicating a reduction of approximately 18.3%[4] - Total assets decreased from $4.04 billion in 2022 to $2.89 billion in 2023, a decline of approximately 28.4%[109] - Total liabilities decreased from $2.97 billion in 2022 to $2.42 billion in 2023, a reduction of approximately 18.5%[109] - The company reported a total accounts receivable of RMB 302,629,749.21 with a bad debt provision of RMB 49,365,077.21 for the year 2023[20] - The total accounts payable amounted to RMB 509,647,241.72, down from RMB 611,264,285.51 in the previous year[22] - Non-current assets decreased from $2.39 billion in 2022 to $1.96 billion in 2023, a decline of about 17.9%[109] Research and Development - The company has ongoing research and development efforts aimed at new product innovations, although specific details were not disclosed in the earnings call[1] - Research and development expenses in 2023 were approximately 35.48 million, down from 41.65 million in 2022, showing a decrease of about 14.8%[104] - The company is committed to innovation and product development, aiming to create marketable and profitable products through effective incentive mechanisms[75] Strategic Initiatives - The company is exploring market expansion strategies, particularly in international markets, to recover from the significant revenue decline experienced in 2023[1] - The company plans to implement cost-cutting measures to improve financial performance in the upcoming fiscal year[1] - The company plans to adjust sales strategies based on market conditions and focus on developing new markets and customers in 2024[52] - The company will continue to optimize its product and customer structure, aiming to improve market share and restore market confidence[52] - The group plans to enhance financing efforts to ensure capital safety, focusing on communication with banks and optimizing the debt structure to reduce high-interest debt rates[59] - The group will strengthen marketing efforts and optimize sales strategies to adapt to market dynamics and customer needs[73] Governance and Management - The management expressed optimism about future growth prospects, contingent on market recovery and successful execution of strategic initiatives[1] - The company is committed to maintaining high governance standards and has adhered to the corporate governance code throughout the year[180] - The management's ability to continue as a going concern is uncertain and depends on meeting future operational funding and financing needs[86] - The company has taken measures to address significant uncertainties regarding its ability to continue as a going concern, including improving financial management[174] Dividend and Shareholder Information - The board of directors does not recommend the distribution of a final dividend for the year ended December 31, 2023[26] - The company will not recommend the distribution of a final dividend for the year ending December 31, 2023, pending shareholder approval[163] - The annual report for the year ending December 31, 2023, will be sent to shareholders and is available for download on the company's website and the stock exchange websites[185] Market Conditions - The group acknowledges the impact of global economic growth, oil and gas price cycles, and carbon neutrality policies on the industry and will adjust product structure and market layout accordingly[72] - The company anticipates growth in the oil service industry due to rising oil prices and increased capital expenditure in upstream oil and gas[128]

Financial Performance - The company reported a net loss attributable to shareholders of $(0.71) per share for 2023, compared to $(0.53) per share in 2022, indicating a worsening in earnings per share[5]. - Net loss attributable to the owners of the parent company increased to RMB (1,425,879,061.33) from RMB (859,017,550.51) in the previous year, marking an increase of about 66.0%[43]. - The total net profit for the current period is (578,534,451.16), compared to (448,935,447.37) in the previous period, indicating a significant increase in losses[69]. - The net profit attributable to shareholders of the parent company is (566,861,510.82), up from (424,969,725.59), reflecting a worsening financial performance[69]. - The loss per share was approximately RMB 0.71, up about 33.96% from RMB 0.53 per share in the previous year[66]. Revenue and Costs - Total operating revenue for the year ended December 31, 2023, was RMB 1,317,495,782.20, a decrease from RMB 2,765,645,281.40 in 2022, representing a decline of approximately 52.3%[40]. - Total operating costs for the year were RMB 1,627,990,434.22, down from RMB 3,129,597,158.90 in the previous year, indicating a reduction of about 48.0%[40]. - Revenue from external transactions originating in China was ¥990,219,379.24 in 2023, down from ¥2,359,717,382.90 in 2022, indicating a decrease of approximately 58.0%[80]. Assets and Liabilities - Total assets as of December 31, 2023, were RMB 2,888,081,988.80, down from RMB 4,038,605,559.51 in 2022, a decrease of approximately 28.5%[43]. - Total liabilities as of December 31, 2023, were RMB 2,553,379,468.25, down from RMB 3,128,252,351.27 in 2022, a decrease of approximately 18.3%[43]. - Current assets decreased to 923,407,920.06 from 1,648,063,045.76, representing a decline of approximately 44%[70]. - Cash and cash equivalents significantly dropped to 99,072,876.12 from 459,657,822.57, a decrease of about 78%[70]. Accounts Receivable and Bad Debts - Total accounts receivable decreased to approximately $509.65 million in 2023 from $611.26 million in 2022, a reduction of about 16.6%[9]. - The total bad debt loss for accounts receivable was approximately $(9.72) million in 2023, significantly lower than $(61.27) million in 2022, reflecting improved credit management[2]. - The aging analysis of accounts receivable shows a significant decrease in receivables aged within one year, from approximately $406.34 million in 2022 to $208.81 million in 2023, a decline of about 48.7%[9]. Research and Development - Research and development expenses for the year were RMB 35,480,208.21, down from RMB 41,651,730.15 in 2022, representing a decrease of approximately 14.9%[40]. - The company incurred research and development costs of RMB 30,578,559.41, compared to RMB 33,412,376.94 in the previous year[59]. Strategic Plans and Market Outlook - The company plans to enhance its financing efforts to ensure capital safety and optimize its debt structure, aiming to reduce high-interest debt rates[28]. - The outlook for the domestic oil and gas industry remains positive, driven by increased exploration and development efforts, which is expected to boost demand for oilfield services[17]. - The company aims to adjust sales strategies for 2024, focusing on new markets and customers, with a goal to improve market share and restore confidence[101]. - The company plans to strengthen marketing efforts and optimize sales strategies, focusing on new markets and customers to improve operational conditions in 2024[137]. Governance and Compliance - The company has adopted the corporate governance code and has complied with all relevant provisions for the year ending December 31, 2023[167]. - The board does not recommend the distribution of a final dividend for the year ending December 31, 2023, pending shareholder approval[156]. - The company has not repurchased, sold, or redeemed any of its listed securities during the year ending December 31, 2023[172]. Risk Management - The company emphasizes risk management strategies to mitigate operational risks, including monitoring raw material price fluctuations and currency exchange rates[25][26]. - The company aims to enhance financing efforts to ensure capital safety and improve internal control management systems to mitigate operational risks[130][131].

Financial Performance - As of December 31, 2023, the total revenue of the group reached RMB 1,317,495,782.20, a decrease of approximately 52.36% compared to RMB 2,765,645,281.40 in the same period last year [1] - The loss attributable to equity owners amounted to RMB 566,861,510.82, an increase of approximately 33.39% from RMB 424,969,725.59 in the same period last year [1] - The loss per share was approximately RMB 0.71, up about 33.96% from a loss of RMB 0.53 per share in the previous year [1] - Total revenue for the year 2023 was RMB 1.317 billion, a decrease of 52.36% year-over-year [27] - Net loss attributable to shareholders for 2023 was RMB 567 million, compared to a net loss of RMB 448.94 million in 2022 [27] - The company reported a basic and diluted loss per share of RMB (0.71) for 2023, compared to RMB (0.53) in 2022 [17] - The total comprehensive income attributable to the parent company's owners for 2023 was RMB (567,133,930.95), down from RMB (426,327,037.05) in 2022, a decline of 33.0% [124] - The net profit for 2023 was RMB (578,534,451.16), compared to RMB (448,935,447.37) in 2022, indicating a loss increase of 28.9% [124] Dividend and Shareholder Information - The board of directors did not recommend the distribution of a final dividend for the year ended December 31, 2023 [1] - The board does not recommend the distribution of a final dividend for the year ending December 31, 2023, pending shareholder approval [64] Company Operations and Structure - The group primarily engages in the design, research and development, manufacturing, sales services, and export trade of products required for the energy equipment industry [7] - The group’s operations are divided into six reporting segments based on internal organizational structure and management requirements [8] - Management regularly evaluates the performance of these reporting segments to allocate resources and assess their performance [8] - The accounting policies and measurement standards used in the segment reporting are consistent with those used in preparing the financial statements [9] Market and Strategic Focus - The company plans to focus on market expansion and customer service, particularly in new markets and with new customers, in 2024 [31] - The company aims to optimize product and customer structure while enhancing the order volume of high-value-added products [31] - The marketing strategy for 2024 focuses on adjusting sales tactics based on market conditions, emphasizing exports and oil pipes while strengthening the general pipe segment [59] - The company aims to enhance product and customer structure, targeting major oilfield markets and improving bidding processes to boost market share and restore confidence [59] Financial Position and Liabilities - Total assets at the end of the reporting period were RMB 2.888 billion, down 28.49% year-over-year [27] - Net assets attributable to shareholders decreased by 57.08% to RMB 424 million [27] - The company has no significant liabilities at the end of the reporting period [24] - The company has approximately 1.679 billion RMB of interest-bearing liabilities due within one year, with some debts in default and creditors initiating lawsuits, leading to account freezes and asset seizures [57] - The company’s total liabilities included RMB 1,039,227,174.84 in segment liabilities [158] Cost Management and Efficiency - The company aims to enhance production management and cost control to improve profitability, focusing on reducing high-interest debt and optimizing the debt structure [74] - Employee costs, including director remuneration, decreased to CNY 193,620,108.47 from CNY 253,656,649.51, a decline of about 23.6% [104] - Inventory costs recognized as expenses dropped to CNY 1,215,719,694.55 from CNY 2,675,212,319.74, a decrease of approximately 54.5% [104] - Total operating costs for 2023 were approximately ¥1.63 billion, down from ¥3.13 billion in 2022, reflecting a reduction of 48% [123] Research and Development - Research and development costs decreased to CNY 30,578,559.41 from CNY 33,412,376.94, a decline of about 8.3% [104] - The company will continue to innovate in technology and product development, aiming to create marketable and profitable products [42][51] Risk Management and Compliance - The company is committed to strengthening internal control management and enhancing risk management to reduce operational risks [44][53] - The company acknowledges the uncertainty regarding the execution of its plans and the ability to continue as a going concern based on future operational and financing needs [75] - The company is focused on improving financing efforts to ensure capital safety and reduce financing costs through better communication with banks [52] - The company will closely monitor currency fluctuations and interest rate risks to mitigate their impact on financial performance [48] Environmental and Regulatory Compliance - The company is committed to improving environmental protection measures in response to stricter national safety and environmental regulations, which will increase operational costs [70] Asset Management and Divestitures - The company plans to divest low-efficiency subsidiaries to optimize its asset-liability structure, which is expected to enhance liquidity and improve profitability [57] - The company has entered into two sale agreements to sell 70% of Shouguang Baolong Petroleum Equipment Co., Ltd. for RMB 1 and 98.0769% of Weihai Baolong Petroleum Special Materials Co., Ltd. for RMB 141,606,708.94, with the completion of these transactions expected by March 2024 [62] Industry Outlook - The domestic oil and gas industry is expected to experience strong growth due to increased exploration and development efforts driven by national policies [29] - High oil prices and a favorable industry outlook are expected to enhance overall performance for oil companies, leading to increased business volume for oil service companies [161]

Financial Performance - Operating revenue for the reporting period was CNY 203,704,216.55, a decrease of 68.66% compared to the same period last year[1] - Net profit attributable to shareholders of the listed company was a loss of CNY 88,667,654.68, representing a 4.89% improvement year-on-year[1] - Basic and diluted earnings per share were both CNY (0.1112), an increase of 4.79% compared to the previous year[1] - Operating revenue for the first nine months of 2023 was CNY 1,002,123,231.65, a decrease of 54.88% compared to CNY 2,220,897,730.20 in the same period of 2022[22] - Operating costs for the same period were CNY 929,267,750.89, down 56.49% from CNY 2,135,736,337.65 year-on-year[22] - Total profit for the current period was (252,776,791.83), which is an improvement from (281,618,097.30) in the previous period, showing a reduction in losses by approximately 10.3%[44] - Net profit for the current period was (254,682,267.47), compared to (283,377,622.15) in the previous period, indicating an improvement of about 10.1%[44] Assets and Liabilities - Total assets decreased by 18.15% to CNY 3,305,574,889.93 from CNY 4,038,605,559.51 at the end of the previous year[9] - Total current assets as of September 30, 2023, amounted to CNY 1,068,000,643.78, down from CNY 1,648,063,045.76 at the beginning of the year[34] - Total liabilities amount to 2,648,409,531.96 CNY, a decrease of 15.4% from 3,128,252,351.27 CNY in the previous period[61] - Total equity attributable to the parent company is 742,586,010.04 CNY, down 25.0% from 987,960,842.88 CNY in the previous period[62] - The company’s total equity as of September 30, 2023, was CNY 657,165,357.97, down from CNY 910,353,208.24 at the beginning of the year[40] Cash Flow - Cash flow from operating activities for the year-to-date was CNY 20,395,954.15, down 19.79% year-on-year[1] - The company’s cash flow from operations was reported at 803,038,653.98, a decrease from 2,109,038,730.95 in the previous period, indicating a decline of approximately 61.9%[48] - Net cash flow from financing activities was CNY (292,004,557.16), a significant increase of 519.39% compared to CNY (47,143,640.15) in the previous year, primarily due to increased debt repayment[16] - Cash inflow from financing activities totaled approximately ¥3.26 billion, a decrease of 4.4% from the previous period's ¥3.41 billion[98] - Cash outflow for debt repayment was approximately ¥3.48 billion, an increase of 9.0% compared to ¥3.19 billion in the prior period[98] Shareholder Information - The total number of common shareholders at the end of the reporting period was 35,609, including 35,565 A-share accounts and 44 H-share accounts[27] - The top ten shareholders held a combined 62.81% of the shares, with Shouguang Molong Holdings Co., Ltd. holding the largest share at 29.53%[18] Other Income and Expenses - The company reported a total of CNY 124,442.60 in non-operating income for the reporting period, with a total of CNY 1,597,626.90 for the year-to-date[4] - Other income decreased by 82.37% to CNY 132,723.59 from CNY 752,905.98, mainly due to a reduction in subsidy income[22] - The company reported a significant increase in gains from asset disposal, which rose by 28,880.86% to CNY 325,712.98 compared to CNY 1,123.89 in the previous year[22] Impairment and Litigation - The company reported a credit impairment loss of (1,713,385.47) compared to a gain of 3,641,035.54 in the previous period, reflecting a significant negative shift[44] - The company has ongoing litigation and arbitration cases totaling 78, with a combined amount of approximately 147.95 million, accounting for 14.98% of the latest audited net assets[55]

[Important Notice, Table of Contents and Definitions](index=2&type=section&id=Item%201.%20Important%20Notice%2C%20Table%20of%20Contents%20and%20Definitions) The board, supervisory board, and senior management guarantee the report's truthfulness, accuracy, and completeness, with all directors attending the review meeting - Company board, supervisory board, and senior management guarantee the report content's truthfulness, accuracy, and completeness, assuming legal responsibility; all directors attended the board meeting reviewing this semi-annual report[41](index=41&type=chunk)[42](index=42&type=chunk) - Company head, chief accountant, and accounting department head declare the financial report in this semi-annual report is true, accurate, and complete[36](index=36&type=chunk) - The company plans no cash dividends, bonus shares, or capital increase from capital reserves for the 2023 semi-annual period[38](index=38&type=chunk) [Company Profile and Key Financial Indicators](index=5&type=section&id=Item%202.%20Company%20Profile%20and%20Key%20Financial%20Indicators) This section provides an overview of the company and its key financial performance metrics for the reporting period [Company Profile](index=5&type=section&id=I.%20Company%20Profile) Shandong Molong Petroleum Machinery Company Limited is a dual-listed company on the Shenzhen Stock Exchange (002490) and Hong Kong Stock Exchange (00568), primarily engaged in petroleum machinery business | Item | Content | | :--- | :--- | | **Company Chinese Name** | 山東墨龍石油機械股份有限公司 | | **Company English Name** | Shandong Molong Petroleum Machinery Company Limited | | **Stock Abbreviation** | Shandong Molong | | **Stock Code** | 002490 (SZSE), 00568 (HKEX) | | **Legal Representative** | Yuan Rui | [Key Accounting Data and Financial Indicators](index=6&type=section&id=IV.%20Key%20Accounting%20Data%20and%20Financial%20Indicators) During the reporting period, the company's operating revenue significantly decreased by 49.18% year-on-year, while net loss attributable to shareholders narrowed by 8.38%; net cash flow from operating activities turned negative, decreasing by 141.77% year-on-year 2023 Half-Year Key Financial Indicators | Indicator | Current Reporting Period | Prior Year Period | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **Operating Revenue (Yuan)** | 798,419,015.10 | 1,570,941,941.65 | -49.18% | | **Net Profit Attributable to Listed Company Shareholders (Yuan)** | (158,242,397.13) | (172,717,715.72) | 8.38% | | **Net Cash Flow from Operating Activities (Yuan)** | (23,770,597.65) | 56,906,850.11 | -141.77% | | **Basic Earnings Per Share (Yuan/share)** | (0.1983) | (0.2165) | 8.41% | | **Weighted Average Return on Net Assets** | (17.42%) | (13.02%) | –4.40% | | **Total Assets (Yuan)** | 3,721,541,449.42 | 4,038,605,559.51 | -7.85% (vs. end of prior year) | | **Net Assets Attributable to Listed Company Shareholders (Yuan)** | 829,910,098.20 | 987,960,842.88 | -16.00% (vs. end of prior year) | [Non-recurring Gains and Losses and Amounts](index=7&type=section&id=VI.%20Non-recurring%20Gains%20and%20Losses%20and%20Amounts) The company's non-recurring gains and losses totaled 1.47 million Yuan during the reporting period, primarily from non-repayable accounts payable, partially offset by asset disposal losses Non-recurring Gains and Losses Items | Item | Amount (Yuan) | Explanation | | :--- | :--- | :--- | | Losses from disposal of non-current assets | (131,293.77) | Primarily losses from disposal and scrapping of certain company assets | | Government grants included in current profit/loss | 132,723.59 | Primarily cross-border e-commerce subsidies and individual income tax withholding fee refunds received in the current period | | Other non-operating income and expenses | 1,759,208.98 | Primarily non-repayable accounts payable transferred in the current period | | **Total** | **1,473,184.30** | - | [Management Discussion and Analysis](index=8&type=section&id=Item%203.%20Management%20Discussion%20and%20Analysis) This section provides a detailed analysis of the company's operations, financial performance, core competencies, and risks during the reporting period [Main Business Activities During the Reporting Period](index=8&type=section&id=I.%20Main%20Business%20Activities%20During%20the%20Reporting%20Period) The company primarily engages in R&D, manufacturing, and sales of energy equipment, with pipe products for oil and gas drilling accounting for nearly 90% of revenue; despite growth in oilfield-related business, overall production and sales volumes declined due to poor market conditions for general pipes and castings/forgings, leading to a loss and a decrease in total assets and net assets - The company operates on a "production based on sales" model, with pipe products accounting for nearly **90% of operating revenue**, and a significant increase in export sales proportion[81](index=81&type=chunk) Financial Status at Report End | Indicator | Amount (Yuan) | Change from Beginning of Year | | :--- | :--- | :--- | | **Total Assets** | 3.72 Billion | -7.85% | | **Net Assets Attributable to Listed Company Shareholders** | 830 Million | -16.00% | Operating Performance During Reporting Period | Indicator | Amount (Yuan) | Year-on-Year Change | | :--- | :--- | :--- | | **Operating Revenue** | 798 Million | -49.18% | | **Net Profit Attributable to Listed Company Shareholders** | (158 Million) | - | [Analysis of Core Competencies](index=9&type=section&id=II.%20Analysis%20of%20Core%20Competencies) The company's core competencies include leading HIsmelt technology, strong R&D, continuous new product development, strict quality management, robust market networks, and a strong brand reputation - The company possesses internationally leading **HIsmelt molten reduction metallurgy technology**, with authorized projects becoming new profit growth points[86](index=86&type=chunk) - The company operates provincial-level enterprise technology centers and a national accredited laboratory (CNAS), recognized as a high-tech enterprise[87](index=87&type=chunk) - During the reporting period, the company successfully developed new products, including special connection threaded oil casing, special pumps, and anti-corrosion sucker rods, with bulk shipments to the Middle East market[89](index=89&type=chunk) - In the first half of 2023, the company developed **4 new market regions** and **11 new clients** overseas, demonstrating strong market expansion capabilities[91](index=91&type=chunk) [Analysis of Main Business](index=11&type=section&id=III.%20Analysis%20of%20Main%20Business) Operating revenue decreased by 49.18% year-on-year due to lower sales of general pipes and castings/forgings; pipe product revenue grew 20.62% to 89.73% of total, while castings/forgings revenue plummeted 98.31%; domestic revenue fell 57.83%, but international revenue surged 156.48% with improved gross margins Operating Revenue Composition and Changes | Category | Amount in Current Reporting Period (Yuan) | Proportion | Year-on-Year Change | | :--- | :--- | :--- | :--- | | **By Product** | | | | | Pipe Products | 716,389,280.84 | 89.73% | +20.62% | | Castings and Forgings | 14,860,414.01 | 1.86% | -98.31% | | **By Region** | | | | | Domestic Region | 635,768,739.52 | 79.63% | -57.83% | | International Region | 162,650,275.58 | 20.37% | +156.48% | Key Financial Data Year-on-Year Changes | Item | Current Reporting Period | Prior Year Period | Year-on-Year Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | **Operating Revenue** | 798 Million Yuan | 1.57 Billion Yuan | -49.18% | Decrease in sales volume of general pipes and castings/forgings | | **Operating Cost** | 746 Million Yuan | 1.52 Billion Yuan | -50.86% | Decrease in sales volume of general pipes and castings/forgings | | **Net Cash Flow from Operating Activities** | (23.77 Million Yuan) | 56.91 Million Yuan | -141.77% | Decrease in VAT refund received compared to last year | | **Net Cash Flow from Financing Activities** | 40.21 Million Yuan | 16.62 Million Yuan | +141.92% | Decrease in repayment of matured financing | [Analysis of Non-Main Business](index=13&type=section&id=IV.%20Analysis%20of%20Non-Main%20Business) Non-main business activities negatively impacted profit, primarily due to credit impairment losses of (2.12 million Yuan) and asset impairment losses of (1.47 million Yuan) from accounts receivable and inventory, while non-operating income from non-repayable accounts payable was unsustainable Non-Main Business Gains and Losses Items | Item | Amount (Yuan) | Reason for Formation | Sustainability | | :--- | :--- | :--- | :--- | | **Non-operating income** | 2,044,943.45 | Primarily non-repayable accounts payable transferred in the current period | No | | **Non-operating expenses** | 742,741.22 | Primarily losses from disposal of certain assets in the current period | No | | **Asset impairment losses** | (1,465,146.60) | Primarily inventory impairment losses recognized in the current period | No | | **Credit impairment losses** | (2,115,579.66) | Primarily impairment losses recognized on accounts receivable in the current period | No | [Analysis of Assets and Liabilities](index=14&type=section&id=V.%20Analysis%20of%20Assets%20and%20Liabilities) As of the reporting period end, total assets were 3.72 billion Yuan, a 7.85% decrease from the beginning of the year; accounts receivable increased due to higher oilfield business volume, while inventory decreased from sales; short-term borrowings increased as a proportion of total assets; over 1 billion Yuan in assets were restricted, mainly for guarantees, frozen litigation funds, and mortgage loans - At the end of the reporting period, accounts receivable increased by **2.5 percentage points** from the beginning of the year, primarily due to increased oilfield business volume; inventory proportion decreased by **2.92 percentage points** due to sales of existing products[110](index=110&type=chunk) Restricted Asset Rights at Report End | Item | Book Value at Period End (Yuan) | Reason for Restriction | | :--- | :--- | :--- | | Monetary Funds | 433,131,291.60 | Guarantees and litigation freezes | | Notes Receivable | 7,558,071.96 | Notes pledged | | Fixed Assets | 342,981,934.52 | Mortgage loans | | Intangible Assets | 195,998,183.84 | Mortgage loans / Seizure | | Accounts Receivable | 23,004,870.47 | Factoring financing | | **Total** | **1,002,674,352.39** | - | [Analysis of Investment Status](index=16&type=section&id=VI.%20Analysis%20of%20Investment%20Status) The company made a significant non-equity investment of 400 million Yuan during the reporting period, increasing capital in its wholly-owned subsidiary Shouguang Maolong through debt-to-equity conversion, with no other major non-equity, securities, or derivative investments Major Equity Investment During Reporting Period | Investee Company Name | Main Business | Investment Method | Investment Amount (Ten Thousand Yuan) | | :--- | :--- | :--- | :--- | | Shouguang Maolong | Research, production, and sales of new energy equipment materials | Capital Increase | 40,000 | - The company had no use of raised funds, no ongoing significant non-equity investments, and no securities or derivative investments during the reporting period[18](index=18&type=chunk)[127](index=127&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk) [Analysis of Major Holding and Participating Companies](index=18&type=section&id=VIII.%20Analysis%20of%20Major%20Holding%20and%20Participating%20Companies) Both major subsidiaries, Shouguang Baolong and Shouguang Maolong, experienced severe losses and significant revenue declines; Shouguang Baolong's revenue fell 95.60% with a loss of 24.05 million Yuan, while Shouguang Maolong's revenue dropped 93.83% with a loss of 72.48 million Yuan due to reduced demand and high raw material prices Major Subsidiary Operating Performance (Unit: Yuan) | Company Name | Operating Revenue | Operating Revenue Year-on-Year Change | Net Profit | | :--- | :--- | :--- | :--- | | **Shouguang Baolong** | 16,769,187.92 | -95.60% | (24,054,167.99) | | **Shouguang Maolong** | 59,130,557.05 | -93.83% | (72,477,719.93) | [Risks Faced by the Company and Countermeasures](index=19&type=section&id=X.%20Risks%20Faced%20by%20the%20Company%20and%20Countermeasures) The company faces market, raw material price, policy, exchange rate, and interest rate risks, stemming from energy industry cycles, cost pressures, tightening environmental regulations, and macroeconomic financial changes, which it addresses through product structure adjustments, price locking, increased environmental investment, and financial market monitoring - The company faces risks including: - **Market risk**: Energy industry prosperity and oil price fluctuations directly impact company operations - **Raw material price fluctuation risk**: Directly affects product manufacturing costs - **Policy risk**: Increasingly stringent safety and environmental policies may increase environmental compliance costs - **Exchange rate risk**: RMB exchange rate changes affect operating performance - **Interest rate risk**: Market interest rate changes affect the fair value or future cash flows of financial instruments[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) [Disclosures Under HKEX Listing Rules](index=19&type=section&id=XI.%20Disclosures%20Under%20HKEX%20Listing%20Rules) As per HKEX rules, the company's total operating revenue for H1 2023 was 798.42 million Yuan (down year-on-year), with a net loss of 163.93 million Yuan (narrowed from prior year); total assets were 3.72 billion Yuan, total liabilities 2.97 billion Yuan, and a debt-to-asset ratio of approximately 79.94%; no interim dividend was recommended, and the company complied with corporate governance code Financial Summary (RMB Thousand Yuan) | Item | 2023 Half-Year | 2022 Half-Year | | :--- | :--- | :--- | | **Total Operating Revenue** | 798,419 | 1,570,942 | | **Net Loss** | (163,934) | (183,171) | | **Total Assets** | 3,721,541 | 5,047,428 | | **Total Liabilities** | 2,974,997 | 3,871,015 | - As of June 30, 2023, the Group's asset-liability ratio was approximately **79.94%**, an increase from **77.46%** at the end of 2022[168](index=168&type=chunk) - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2023[179](index=179&type=chunk) - The company has fully adopted all code provisions of the HKEX Corporate Governance Code, with no deviations during the reporting period[147](index=147&type=chunk)[155](index=155&type=chunk) [Corporate Governance](index=27&type=section&id=Item%204.%20Corporate%20Governance) This section details changes in the company's board, supervisory board, and senior management, as well as profit distribution plans [Changes in Directors, Supervisors, and Senior Management](index=27&type=section&id=II.%20Changes%20in%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) During the reporting period, significant personnel changes occurred, with former Chairman Yang Yunlong and Director Liu Jilu resigning for personal work arrangements, and Mr. Yuan Rui elected as the new Chairman, alongside Mr. Zhao Xiaotong and Ms. Zhang Min as new directors Senior Management Changes | Name | Position Held | Type | Date | Reason | | :--- | :--- | :--- | :--- | :--- | | Yang Yunlong | Chairman, Director | Resigned | February 24, 2023 | Resigned due to personal work arrangements | | Yuan Rui | Chairman | Elected | February 24, 2023 | Elected by the Board of Directors | | Liu Jilu | Director | Resigned | April 7, 2023 | Resigned due to personal work arrangements | | Zhao Xiaotong | Director | Elected | May 19, 2023 | Elected by the Shareholders' Meeting and Board of Directors | | Zhang Min | Director | Elected | May 19, 2023 | Elected by the Shareholders' Meeting and Board of Directors | [Profit Distribution and Capital Reserve Conversion to Share Capital in the Reporting Period](index=28&type=section&id=III.%20Profit%20Distribution%20and%20Capital%20Reserve%20Conversion%20to%20Share%20Capital%20in%20the%20Reporting%20Period) The company plans no profit distribution for the 2023 semi-annual period, meaning no cash dividends, bonus shares, or capital increase from capital reserves - The company plans no cash dividends, bonus shares, or capital increase from capital reserves for the semi-annual period[192](index=192&type=chunk) [Environmental and Social Responsibility](index=29&type=section&id=Item%205.%20Environmental%20and%20Social%20Responsibility) This section outlines the company's environmental protection efforts as a key polluter and its commitment to social responsibility, including employee welfare and community engagement [Significant Environmental Issues](index=29&type=section&id=I.%20Significant%20Environmental%20Issues) The company and its subsidiaries are key polluting units, strictly adhering to environmental policies, investing 1.65 million Yuan in environmental governance, paying 19,600 Yuan in environmental taxes, maintaining comprehensive wastewater and exhaust gas treatment facilities, and having emergency plans, with no administrative penalties for environmental issues during the period - The company and its subsidiaries are designated as **key polluting units** and hold valid pollutant discharge permits[196](index=196&type=chunk)[197](index=197&type=chunk) Environmental Investment and Taxes During Reporting Period | Item | Amount (Ten Thousand Yuan) | | :--- | :--- | | Environmental Governance and Protection Investment | 164.73 | | Environmental Protection Tax Paid | 1.96 | - During the reporting period, the company received no administrative penalties for environmental issues[4](index=4&type=chunk) [Social Responsibility](index=32&type=section&id=II.%20Social%20Responsibility) The company fulfills its social responsibilities by improving governance, safeguarding shareholder rights, caring for employees, and actively participating in public welfare, including providing 52,000 Yuan in aid to employees and organizing blood donation drives - The company protects shareholder rights by establishing a sound governance structure and internal control system, and by holding general meetings with a combination of on-site and online voting[8](index=8&type=chunk) - The company values employee rights, provides social insurance, and established a hardship assistance fund, distributing **52,000 Yuan** in 2023[9](index=9&type=chunk) - In 2023, the company organized **1 voluntary blood donation** public welfare activity, actively participating in social welfare undertakings[118](index=118&type=chunk) [Significant Matters](index=33&type=section&id=Item%206.%20Significant%20Matters) This section covers commitments, significant related party transactions, major contracts, and important matters concerning company subsidiaries [Commitments](index=33&type=section&id=I.%20Commitments) During the reporting period, there were no unfulfilled or overdue commitments from the actual controller, shareholders, related parties, acquirers, or the company - The company had no significant commitments requiring disclosure during the reporting period[14](index=14&type=chunk) [Significant Related Party Transactions](index=34&type=section&id=XI.%20Significant%20Related%20Party%20Transactions) No significant related party transactions related to daily operations occurred, but there were related party debt and credit transactions; the company received interest-free financial assistance from Shouguang Jinxin, the controlling shareholder's controlling shareholder, with an outstanding balance of 80 million Yuan at period-end - The company had no related party transactions related to daily operations, nor related party transactions involving asset or equity acquisitions/disposals during the reporting period[371](index=371&type=chunk)[372](index=372&type=chunk) Related Party Debt and Credit Transactions | Related Party | Relationship | Reason for Formation | Beginning Balance (Ten Thousand Yuan) | New Additions in Current Period (Ten Thousand Yuan) | Repayments in Current Period (Ten Thousand Yuan) | Ending Balance (Ten Thousand Yuan) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Shouguang Jinxin | Controlling shareholder's controlling shareholder | Financial assistance | 0 | 23,700 | 15,700 | 8,000 | - The company accepted interest-free loans of up to **500 million Yuan** from related party Shouguang Jinxin, with a term not exceeding 1 year[399](index=399&type=chunk) [Significant Contracts and Their Performance](index=36&type=section&id=XII.%20Significant%20Contracts%20and%20Their%20Performance) The company had no trusteeship or contracting arrangements; it engaged in two sale-and-leaseback financing lease transactions for up to 60 million Yuan and 85 million Yuan respectively, and newly leased an office building for business operations - The company engaged in sale-and-leaseback transactions with Changjiang United Financial Leasing Co., Ltd. and Zhejiang Zhongda Yuantong Financial Leasing Co., Ltd., using some production equipment as collateral for financing[390](index=390&type=chunk)[401](index=401&type=chunk) [Significant Matters Concerning Company Subsidiaries](index=38&type=section&id=XIV.%20Significant%20Matters%20Concerning%20Company%20Subsidiaries) During the reporting period, the company significantly increased capital in its wholly-owned subsidiary Shouguang Maolong by 400 million Yuan through debt-to-equity conversion, with the relevant industrial and commercial changes completed on May 22, 2023 - The company increased capital in its wholly-owned subsidiary Shouguang Maolong by **400 million Yuan** through debt-to-equity conversion[419](index=419&type=chunk) [Share Changes and Shareholder Information](index=39&type=section&id=Item%207.%20Share%20Changes%20and%20Shareholder%20Information) This section details the company's share capital structure and major shareholder information as of the reporting period end [Share Change Information](index=39&type=section&id=I.%20Share%20Change%20Information) As of the reporting period end, the company's total share capital was 797,848,400 shares, with unrestricted shares accounting for 99.99% and restricted shares for 0.01%; no changes occurred in total share capital or structure during the period Share Structure | Share Type | Quantity (Shares) | Proportion | | :--- | :--- | :--- | | **I. Restricted Shares** | 104,625 | 0.01% | | **II. Unrestricted Shares** | 797,743,775 | 99.99% | | Of which: RMB Ordinary Shares | 541,617,375 | 67.88% | | Overseas Listed Foreign Shares | 256,126,400 | 32.10% | | **III. Total Shares** | **797,848,400** | **100.00%** | [Number of Shareholders and Shareholding Information](index=41&type=section&id=III.%20Number%20of%20Shareholders%20and%20Shareholding%20Information) As of the reporting period end, the company had 39,651 common shareholders; the top three were Shouguang Molong Holding Co., Ltd. (29.53%), HKSCC Nominees Limited (13.19%), and Shandong Zhimeng Holding Co., Ltd. (8.23%), with some shareholders having concerted action relationships - At the end of the reporting period, the total number of common shareholders was **39,651**, comprising **39,609 A-share** holders and **42 H-share** holders[412](index=412&type=chunk) - Shareholders Shandong Zhimeng Holding Co., Ltd., Shouguang Hongsen Logistics Co., Ltd., Shouguang Panjin Real Estate Co., Ltd., and Shouguang Ruisen New Building Materials Co., Ltd. are parties acting in concert[413](index=413&type=chunk)[425](index=425&type=chunk) [Information on Preferred Shares](index=44&type=section&id=Item%208.%20Information%20on%20Preferred%20Shares) This section confirms the absence of preferred shares during the reporting period [Preferred Shares](index=44&type=section&id=8.1%20Preferred%20Shares) The company had no preferred shares during the reporting period - The company had no preferred shares during the reporting period[455](index=455&type=chunk) [Information on Bonds](index=45&type=section&id=Item%209.%20Information%20on%20Bonds) This section confirms the absence of bond-related situations during the reporting period [Bonds](index=45&type=section&id=9.1%20Bonds) The company had no bond-related situations during the reporting period - The company had no bond-related matters during the reporting period[434](index=434&type=chunk) [Financial Report](index=46&type=section&id=Item%2010.%20Financial%20Report) This section presents the company's unaudited semi-annual financial statements, including the consolidated balance sheet, income statement, and cash flow statement, along with detailed notes and risk disclosures [Financial Statements](index=46&type=section&id=II.%20Financial%20Statements) The company's 2023 semi-annual financial report is unaudited; the consolidated balance sheet as of June 30, 2023, shows total assets of 3.72 billion Yuan, total liabilities of 2.97 billion Yuan, and equity attributable to parent company owners of 830 million Yuan; the consolidated income statement shows operating revenue of 798 million Yuan and a net loss of 164 million Yuan (158 million Yuan attributable to parent company) for the half-year; the consolidated cash flow statement shows net cash flow from operating activities of (23.77 million Yuan) - The company's semi-annual financial report is unaudited[435](index=435&type=chunk) Key Data from Consolidated Balance Sheet (June 30, 2023) | Item | Amount (Yuan) | | :--- | :--- | | **Total Current Assets** | 1,428,910,478.13 | | **Total Non-current Assets** | 2,292,630,971.29 | | **Total Assets** | 3,721,541,449.42 | | **Total Current Liabilities** | 2,844,140,833.18 | | **Total Non-current Liabilities** | 130,856,348.80 | | **Total Liabilities** | 2,974,997,181.98 | | **Total Equity Attributable to Parent Company Owners** | 829,910,098.20 | | **Total Owners' Equity** | 746,544,267.44 | Key Data from Consolidated Income Statement (2023 Half-Year) | Item | Amount (Yuan) | | :--- | :--- | | **Total Operating Revenue** | 798,419,015.10 | | **Total Operating Costs** | 959,074,308.28 | | **Operating Profit** | (163,777,582.87) | | **Total Profit** | (162,475,380.64) | | **Net Profit** | (163,933,635.03) | | **Net Profit Attributable to Parent Company Shareholders** | (158,242,397.13) | Key Data from Consolidated Cash Flow Statement (2023 Half-Year) | Item | Amount (Yuan) | | :--- | :--- | | **Net Cash Flow from Operating Activities** | (23,770,597.65) | | **Net Cash Flow from Investing Activities** | (4,053,463.91) | | **Net Cash Flow from Financing Activities** | 40,211,252.36 | | **Net Increase in Cash and Cash Equivalents** | 14,160,456.10 | [Notes to Consolidated Financial Statements](index=95&type=section&id=VII.%20Notes%20to%20Consolidated%20Financial%20Statements) Financial statement notes detail account compositions and changes; 433.13 million Yuan of monetary funds were restricted at period-end; accounts receivable and notes receivable had impairment provisions based on expected credit loss model; inventory had a book value of 509 million Yuan with 18.61 million Yuan in impairment; short-term borrowings of 2.06 billion Yuan were the main liability; government grants related to assets were recognized, and impairment provisions were made for subsidiary investments - As of the period end, the company's monetary funds totaled **454 million Yuan**, of which **433.13 million Yuan** were restricted due to guarantees, litigation freezes, and other reasons[800](index=800&type=chunk)[801](index=801&type=chunk) - Accounts receivable had a book balance of **470 million Yuan** at period-end, with **105 million Yuan** in bad debt provisions, resulting in a book value of **364 million Yuan**[807](index=807&type=chunk) - Inventory had a book value of **509 million Yuan** at period-end, with raw materials being the largest component, and **18.61 million Yuan** in inventory impairment provisions recognized[847](index=847&type=chunk)[242](index=242&type=chunk) - Short-term borrowings at period-end amounted to **2.06 billion Yuan**, an increase from the beginning of the period, representing the company's most significant liability item[864](index=864&type=chunk) [Risks Related to Financial Instruments](index=139&type=section&id=X.%20Risks%20Related%20to%20Financial%20Instruments) The company faces market risks (exchange rate, interest rate, price), credit risk, and liquidity risk, managed by adjusting sales policies, maintaining appropriate fixed/floating rate borrowing ratios, monitoring customer credit, and ensuring sufficient bank credit lines; sensitivity analysis shows a 5% RMB appreciation would increase net profit by 5.04 million Yuan, while a 1% interest rate rise would decrease net profit by 1.41 million Yuan - The company's exchange rate risk primarily relates to **USD, HKD, and EUR**, managed by favorable settlement terms in contracts and adjusting sales policies[1021](index=1021&type=chunk) - The company's interest rate risk stems from financial institution borrowings, managed by maintaining an appropriate proportion of fixed and floating rate contracts; at period-end, floating rate borrowings were **445 million Yuan**, and fixed rate borrowings were **1.70 billion Yuan**[929](index=929&type=chunk) - The company manages liquidity risk by ensuring sufficient cash flow; at period-end, unused financial institution credit lines totaled **459 million Yuan**[1028](index=1028&type=chunk) [Related Parties and Related Party Transactions](index=143&type=section&id=XII.%20Related%20Parties%20and%20Related%20Party%20Transactions) The company's ultimate controlling party is Shouguang State-owned Assets Supervision and Administration Bureau; related party transactions primarily involved intercompany loans and guarantees, with Shouguang Jinxin providing interest-free financial assistance (80 million Yuan outstanding) and guarantees for financing lease, and the company providing mortgage guarantees for Shouguang Maolong's financial services - The company's controlling shareholder is Shouguang Molong Holding Co., Ltd., and the actual controller is **Shouguang State-owned Assets Supervision and Administration Bureau**[1051](index=1051&type=chunk) - Related party Shouguang Jinxin provided interest-free loans of up to **500 million Yuan** to the company, with multiple borrowings during the reporting period and an outstanding balance of **80 million Yuan** at period-end[967](index=967&type=chunk)[1105](index=1105&type=chunk) - Related party Shouguang Jinxin provided a joint liability guarantee for the company's **60 million Yuan** financing lease; concurrently, the company provided a mortgage guarantee for its subsidiary Shouguang Maolong's financial services of up to **200 million Yuan**[1059](index=1059&type=chunk)[1060](index=1060&type=chunk)

Financial Performance - For the six months ended June 30, 2023, the group's revenue was RMB 798.42 million, a decrease of approximately 49.18% compared to the same period last year[13]. - The net loss attributable to equity holders was RMB -158.24 million, compared to a net loss of RMB -172.72 million in the same period last year[13]. - Earnings per share were approximately RMB -0.1983, compared to RMB -0.2165 in the same period last year[13]. - The company reported a net loss of approximately $163.93 million for the six months ended June 30, 2023, compared to a profit of $2.06 million in the same period last year[32]. - The total comprehensive loss for the period was approximately $164.60 million[32]. - The company reported a total profit of RMB -16.25 million for the first half of 2023, down from a profit of RMB 18.11 million in the same period last year[76]. Dividends and Shareholder Returns - The board recommended not to declare an interim dividend for the six months ended June 30, 2023, consistent with the previous year[8]. - The company did not declare an interim dividend for the six months ended June 30, 2023, consistent with the previous year[71]. Assets and Liabilities - Total assets as of June 30, 2023, were approximately $3.72 billion[32]. - As of June 30, 2023, the company's current liabilities totaled approximately 2.84 billion, a significant increase from 87.33 million in the previous year[34]. - Total liabilities amounted to approximately 2.97 billion, a substantial increase from 155.26 million in the previous year[34]. - Shareholders' equity as of June 30, 2023, was approximately -83.37 million, compared to 746.54 million as of December 31, 2022[34]. - The company reported cash and cash equivalents of RMB 453,841,221.77 as of June 30, 2023[94]. - The total assets of the company as of June 30, 2023, were RMB 3,721,541,449.42, up from RMB 2,390,542,513.75[94]. Operational Highlights - The company operates five reportable segments, including pipe products, castings, three-extraction equipment, and petroleum machinery components[40]. - The company operates a "sales-driven production" model, aligning production with market demand and customer orders[88]. - The company has established a dedicated sales and export team responsible for market research, product sales, and after-sales service[88]. Research and Development - Research and development expenses amounted to approximately $15.51 million, down from $136.19 million year-over-year[32]. - Research and development expenses for the first half of 2023 were RMB 4,569,208.80, down from RMB 26,108,899.14 in the previous year[94]. Governance and Compliance - The company has adopted corporate governance principles emphasizing a high-quality board and transparency[3]. - The audit committee held three meetings during the six months ended June 30, 2023, to discuss accounting standards and internal controls[4]. - The company has not changed its accounting policies for the preparation of financial statements during the reporting period[38]. Market Outlook - The global economy is slowly recovering, with improved market expectations in China, which may positively impact future performance[79]. - The energy equipment industry, including oil and gas, is expected to see continued growth driven by global economic growth, oil and gas price trends, and carbon neutrality policies[89]. - Future outlook includes a focus on expanding product lines and enhancing market presence, with a total revenue target of approximately 798.42 million for the upcoming period[1]. Financial Management - The company has no significant future investment or capital asset plans as of June 30, 2023[1]. - The company does not currently have a foreign currency hedging policy but anticipates no significant currency risk in the near future[2]. - The company has not made any significant investments during the reporting period[80]. - The company has no major acquisitions or disposals planned for the future[81]. - The company has a centralized procurement model to ensure quality and establish long-term strategic partnerships with suppliers[88].