Financial Performance - The total revenue for the year ended December 31, 2022, was RMB 1,201,604,254.24, representing an increase of 8.4% compared to RMB 1,108,139,520.61 in 2021[6] - The operating profit for 2022 was RMB 328,908,764.68, a decrease of 10.5% from RMB 367,591,655.59 in the previous year[6] - The net profit attributable to shareholders for 2022 was RMB 1,136,732,358.10, up from RMB 908,847,424.37 in 2021, marking a growth of 25.1%[5] - The total profit for the year ended December 31, 2022, was RMB 336,879,766.43, a decrease of 8.3% from RMB 367,378,723.41 in 2021[7] - The net profit attributable to the parent company's shareholders for 2022 was RMB 307,719,145.65, down 4.0% from RMB 322,360,736.79 in 2021[9] - Basic earnings per share for 2022 were RMB 0.80, compared to RMB 0.93 in 2021, reflecting a decline of 14.0%[10] - The income tax expense for 2022 was RMB 29,160,620.78, significantly lower than RMB 45,017,986.62 in 2021, indicating a reduction of 35.3%[7] - The total comprehensive income attributable to the parent company's shareholders for 2022 was RMB 307,719,145.65, compared to RMB 322,360,736.79 in 2021, showing a decrease of 4.0%[10] Assets and Liabilities - The total assets as of December 31, 2022, amounted to RMB 3,409,766,690.91, compared to RMB 2,999,657,361.45 in 2021, indicating a growth of 13.7%[2] - The total liabilities as of December 31, 2022, were RMB 690,066,911.19, an increase from RMB 530,579,974.97 in 2021[4] - The total equity attributable to shareholders increased to RMB 2,719,699,779.72 in 2022 from RMB 2,469,077,386.48 in 2021, representing a growth of 10.1%[5] - The cash and cash equivalents as of December 31, 2022, were RMB 957,193,661.02, compared to RMB 767,727,534.25 in 2021, reflecting an increase of 24.7%[2] - As of December 31, 2022, the accounts receivable amounted to RMB 540,695,593.77, with a provision for bad debts of RMB 51,949,099.75, representing 9.61% of the total[14] - The total accounts payable as of December 31, 2022, was RMB 237,786,563.39, an increase of 67.0% from RMB 142,415,529.82 in 2021[3] Research and Development - Research and development expenses increased to RMB 162,340,798.73 in 2022, up from RMB 104,843,140.53 in 2021, reflecting a growth of 55%[6] - The company plans to continue investing in R&D to enhance product offerings and expand market presence in the coming years[6] - The company emphasizes R&D with a team of professionals, including PhDs and experienced personnel, ensuring continuous product innovation[36] - The company collaborates with clinical experts to ensure that its R&D products meet market demands and clinical practicality[36] - The company has initiated a large-scale clinical follow-up project involving over 300 hospitals in China, focusing on joint prosthetics[36] - The company obtained 21 testing qualifications by December 31, 2022, and its laboratory will undertake significant R&D projects for the nation, enhancing the safety and scientific design of new products[37] - The company led the application for a key national R&D project in 2020, focusing on the development and clinical application of multi-channel tantalum bone repair materials, which was approved by the Ministry of Science and Technology of the People's Republic of China[37] Market and Product Development - The orthopedic implant market in China is expected to grow due to factors such as an aging population, increasing medical expenditures, and improvements in public healthcare infrastructure[29] - The company has obtained 16 product registration certificates from the National Medical Products Administration in 2022, enhancing its product line and expanding its presence in the orthopedic field[31] - The company entered the oral field with registration certificates for orthodontic brackets, buccal tubes, and maxillofacial osteosynthesis systems, marking its official entry into this sector[33] - The company is developing an advanced customized joint prosthetic product using 3D reconstruction technology, targeting a broader range of patients and expected to yield higher profit margins[63] - The company anticipates continued growth in demand for its products, aligning with the expansion of the Chinese joint prosthetic market[62] - The company is focusing on the development of spinal products and sports medicine products alongside its joint prosthetic offerings[64] Corporate Governance and Shareholder Information - The company has adhered to all applicable principles and provisions of the corporate governance code as of December 31, 2022[75] - The board of directors proposed a final dividend of RMB 3.13 per 10 shares for the fiscal year ending December 31, 2022, compared to RMB 1.30 per 10 shares for the previous year[69] - The company will hold its annual general meeting on June 28, 2023, for shareholders to approve the proposed final dividend[70] - The company successfully listed on the Shanghai Stock Exchange's Sci-Tech Innovation Board on December 30, 2021, raising a total of RMB 1,145,538,680.00, netting RMB 1,067,128,292.23 after expenses[73] Employee and Talent Management - The company employed a total of approximately 1,303 employees as of December 31, 2022, with total salary and related costs amounting to approximately RMB 193.41 million[67] - The company has established an effective incentive mechanism to motivate employees and attract high-quality talent through a competitive compensation system[66] - The company will recruit more R&D talent and enhance collaboration with renowned medical institutions to strengthen its professional knowledge and competitiveness[64]

[Cover and Table of Contents](index=1&type=section&id=Cover%20and%20Table%20of%20Contents) [Company Information](index=3&type=section&id=Company%20Information) This section provides essential company details, including board and supervisory committee members, company secretary, authorized representatives, registered address, principal place of business, website, and auditor - Executive Directors include Ms. Shi Wenling, Mr. Xie Fengbao, Mr. Shi Chunbao, and Ms. Yue Shujun[3](index=3&type=chunk) - The company's auditor is Da Xin Certified Public Accountants (Special General Partnership)[3](index=3&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) Despite pandemic challenges, the company achieved steady revenue growth in H1 2022 through a "volume-for-price" strategy under national artificial joint procurement policies, advancing product registration, R&D, market network, and financial performance [Industry Overview and Competitive Advantages](index=4&type=section&id=Industry%20Overview%20and%20Competitive%20Advantages) In H1 2022, national artificial joint volume-based procurement policies reshaped the industry, with the company leveraging its comprehensive medical device registrations, strong R&D, high-end ceramic joint products, and extensive sales network to establish significant competitive advantages - National artificial joint volume-based procurement policies were progressively implemented across provinces, significantly influencing the industry landscape[4](index=4&type=chunk) - As of June 30, 2022, the company held **59 medical device registration certificates and filing credentials** in China, making it one of the domestic enterprises with the most comprehensive joint prosthesis registrations[5](index=5&type=chunk) - The company was the first domestic enterprise to obtain registration for BIOLOX®delta fourth-generation ceramic joint prosthesis products and the first to possess registration for BIOLOX®OPTION tapered ceramic heads in 2020[10](index=10&type=chunk) [Financial Review](index=8&type=section&id=Financial%20Review) For the six months ended June 30, 2022, revenue increased by **18.39%** to **RMB 571 million**, driven by joint prosthesis volume-for-price and rapid growth in spine and sports medicine products, while net profit slightly increased by **0.92%** to **RMB 157 million** despite rising R&D expenses Product Category Revenue (RMB Thousand) | Product Category | H1 2022 Revenue (RMB Thousand) | H1 2021 Revenue (RMB Thousand) | YoY Growth | | :--- | :--- | :--- | :--- | | Joint Prosthesis Products | 524,208 | 462,134 | 13.43% | | Spine Products | 41,105 | 18,535 | 121.77% | | Sports Medicine Products | 4,544 | 1,141 | 298.25% | | **Total** | **571,392** | **482,631** | **18.39%** | - Gross margin decreased from **76.51%** in the prior period to **74.52%**, primarily due to increased raw material prices and lower unit selling prices from volume-based procurement policies[16](index=16&type=chunk) - R&D expenses significantly increased by **111.19%** year-on-year to **RMB 72.3 million**, representing **12.65%** of revenue, mainly due to increased investment in new areas such as joint robots, PRP, sports medicine, and dentistry[19](index=19&type=chunk) - Net profit increased by **0.92%** year-on-year to **RMB 157 million**, as the company maintained stable profits through internal cost reduction, efficiency improvements, and external market expansion via a "volume-for-price" strategy[22](index=22&type=chunk) [Liquidity and Financial Resources](index=9&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2022, the company's liquidity decreased to **RMB 1.107 billion** from **RMB 1.737 billion** at the beginning of the year, primarily due to net cash outflow from operating activities of **RMB 81.5 million** and investing activities of **RMB 510 million** - Net cash outflow from operating activities was approximately **RMB 81.5 million**, primarily due to increased cash expenses for sales, R&D, and higher accounts receivable[32](index=32&type=chunk) - Net cash outflow from investing activities was approximately **RMB 510 million**, mainly due to new wealth management investments[32](index=32&type=chunk) - As of June 30, 2022, the principal amount of unredeemed structured deposit wealth management products subscribed by the company was **RMB 738 million**[32](index=32&type=chunk) [Use of Proceeds](index=10&type=section&id=Use%20of%20Proceeds) The company utilized net proceeds of approximately **RMB 186 million** from H-share global offering and **RMB 1.067 billion** from A-share listing on the STAR Market, primarily for developing the Daxing production base, R&D activities, expanding marketing networks, and supplementing working capital H-share Proceeds Use (RMB Million) | H-share Proceeds Use | Available Amount (RMB Million) | Amount Expended as of 2022/6/30 (RMB Million) | Remaining Amount (RMB Million) | | :--- | :--- | :--- | :--- | | Development of Daxing New Production Base Phase I | 92.93 | 87.25 | 5.68 | | R&D Activities | 37.55 | 21.59 | 15.96 | | Expansion of Marketing and Distribution Network | 37.17 | 37.17 | 0.00 | | Working Capital and Others | 18.21 | 18.21 | 0.00 | | **Total** | **185.86** | **164.22** | **21.64** | - Net proceeds from A-share offering amounted to **RMB 1.067 billion**, used to replace **RMB 128 million** of self-raised funds previously invested and to purchase **RMB 415 million** in wealth management products with idle proceeds[26](index=26&type=chunk)[28](index=28&type=chunk) [Future Outlook](index=13&type=section&id=Future%20Outlook) The company anticipates benefiting from an aging population, increased per capita income, and expanded medical insurance coverage, planning to enrich product lines, enhance innovation, expand brand influence, and optimize talent development to achieve its goal of becoming a globally renowned orthopedic medical device manufacturer - The company plans to develop advanced customized individual joint prosthesis products using new materials and 3D reconstruction technologies to meet broader patient needs and achieve higher profit margins[35](index=35&type=chunk) - Plans include establishing a product R&D center at the new Daxing production base and leveraging platforms such as academician expert workstations and postdoctoral research workstations to strengthen R&D talent cultivation and collaboration with external institutions[36](index=36&type=chunk) [Corporate Governance and Other Information](index=15&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section details the company's corporate governance practices, compliance with securities dealing codes by directors and supervisors, and shareholding details of directors, supervisors, and major shareholders, confirming adherence to HKEX Listing Rules' Corporate Governance Code [Corporate Governance and Compliance](index=15&type=section&id=Corporate%20Governance%20and%20Compliance) The company maintains high corporate governance standards, complying with all code provisions of the Corporate Governance Code in Appendix 14 of the HKEX Listing Rules during the reporting period, with the Audit Committee having reviewed the interim financial statements - The Board believes that the company has complied with all code provisions of the Corporate Governance Code during the reporting period[41](index=41&type=chunk) - The Board's Audit Committee has reviewed the company's consolidated financial statements for the six months ended June 30, 2022[43](index=43&type=chunk) [Interests of Directors, Supervisors and Major Shareholders](index=15&type=section&id=Interests%20of%20Directors%2C%20Supervisors%20and%20Major%20Shareholders) As of June 30, 2022, controlling shareholders Mr. Shi Chunbao and Ms. Yue Shujun (a married couple) collectively controlled **54.42%** of the company's total issued share capital, with detailed interests of directors, supervisors, and major shareholders in A and H shares disclosed Interests of Directors (Shares and Percentage of Total Share Capital) | Director Name | Share Class | Number of Shares | Nature of Interest | Percentage of Total Share Capital | | :--- | :--- | :--- | :--- | :--- | | Mr. Shi Chunbao | A-share | 113,685,435 | Beneficial Owner | 29.58% | | | H-share | 1,155,250 | Beneficial Owner | 0.3006% | | | A-share | 95,447,900 | Spouse's Interest | 24.84% | | Ms. Yue Shujun | A-share | 95,447,900 | Beneficial Owner | 24.84% | | | A-share | 113,685,435 | Spouse's Interest | 29.58% | | | H-share | 1,155,250 | Spouse's Interest | 0.3006% | - CITIC Securities Co., Ltd. holds **19,750,000 A-shares** through its controlled entities, representing **5.14%** of the total share capital[47](index=47&type=chunk) [Review Report](index=18&type=section&id=Review%20Report) This section presents the review report by Da Xin Certified Public Accountants (Special General Partnership) on the company's 2022 interim financial statements, concluding that no matters were identified suggesting the statements were not prepared in accordance with enterprise accounting standards or did not fairly reflect the company's financial position, operating results, and cash flows in all material respects - The review institution is Da Xin Certified Public Accountants (Special General Partnership)[50](index=50&type=chunk) - The review conclusion states that "nothing has come to our attention that causes us to believe that the financial statements are not prepared in accordance with enterprise accounting standards, nor do they fairly reflect in all material respects," indicating a standard limited assurance conclusion with no material issues identified[51](index=51&type=chunk) [Financial Statements](index=19&type=section&id=Financial%20Statements) This section includes the company's unaudited consolidated and parent company financial statements for the period ended June 30, 2022, and comparative periods, comprising the balance sheet, income statement, cash flow statement, and statement of changes in equity, comprehensively reflecting the company's financial position, operating results, and cash flows [Consolidated Balance Sheet](index=19&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2022, total assets were **RMB 3.107 billion**, a slight increase from **RMB 3.000 billion** at the beginning of the year, with total liabilities remaining stable at **RMB 531 million** and equity attributable to parent company shareholders increasing to **RMB 2.576 billion** Consolidated Balance Sheet (RMB) | Item | June 30, 2022 (RMB) | December 31, 2021 (RMB) | | :--- | :--- | :--- | | Total Current Assets | 2,500,429,723.24 | 2,447,763,881.22 | | Total Non-current Assets | 606,472,609.72 | 551,893,480.23 | | **Total Assets** | **3,106,902,332.96** | **2,999,657,361.45** | | Total Current Liabilities | 441,738,289.37 | 439,618,888.24 | | Total Non-current Liabilities | 89,060,560.51 | 90,961,086.73 | | **Total Liabilities** | **530,798,849.88** | **530,579,974.97** | | **Total Shareholders' Equity** | **2,576,103,483.08** | **2,469,077,386.48** | [Consolidated Income Statement](index=23&type=section&id=Consolidated%20Income%20Statement) In H1 2022, the company achieved operating revenue of **RMB 571 million**, an **18.4%** year-on-year increase, with operating profit at **RMB 175 million** (down from **RMB 182 million**), and net profit stable at **RMB 157 million**, a **0.9%** increase Consolidated Income Statement (RMB) | Item | Current Period (RMB) | Prior Period (RMB) | | :--- | :--- | :--- | | Operating Revenue | 571,391,616.43 | 482,631,531.05 | | Operating Profit | 174,637,494.77 | 182,432,709.61 | | Total Profit | 172,397,259.62 | 182,250,045.85 | | Net Profit | 156,982,496.60 | 155,555,218.93 | | Basic Earnings Per Share | 0.41 | 0.45 | [Consolidated Cash Flow Statement](index=25&type=section&id=Consolidated%20Cash%20Flow%20Statement) In H1 2022, net cash flow from operating activities was a **RMB 81.51 million** outflow, from investing activities a **RMB 510.36 million** outflow, and from financing activities a **RMB 38.13 million** outflow, resulting in a **RMB 629.64 million** decrease in cash and cash equivalents Consolidated Cash Flow Statement (RMB) | Item | Current Period (RMB) | Prior Period (RMB) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -81,512,729.59 | 18,949,001.41 | | Net Cash Flow from Investing Activities | -510,359,121.29 | -108,484,921.71 | | Net Cash Flow from Financing Activities | -38,133,052.89 | -1,277,869.50 | | Net Increase/Decrease in Cash and Cash Equivalents | -629,642,997.67 | -91,283,894.57 | [Consolidated Statement of Changes in Shareholders' Equity](index=30&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Shareholders'%20Equity) As of June 30, 2022, total equity attributable to parent company shareholders was **RMB 2.576 billion**, an increase from **RMB 2.469 billion** at the beginning of the period, primarily due to **RMB 157 million** in net profit, partially offset by **RMB 49.96 million** in dividend distribution - Beginning balance of equity attributable to parent company shareholders was **RMB 2.469 billion**[71](index=71&type=chunk) - Total comprehensive income (i.e., net profit) for the period was **RMB 157 million**, increasing shareholders' equity[71](index=71&type=chunk) - Profit distribution (distribution to shareholders) for the period decreased shareholders' equity by **RMB 49.96 million**[71](index=71&type=chunk) [Notes to Financial Statements](index=34&type=section&id=Notes%20to%20Financial%20Statements) This section provides detailed notes to the financial statements, covering the company's basic information, basis of preparation, significant accounting policies and estimates, taxation, notes to major items in consolidated financial statements, related party transactions, commitments and contingencies, and other significant matters [Company Profile and Basis of Preparation](index=34&type=section&id=Company%20Profile%20and%20Basis%20of%20Preparation) Beijing Chunli Zhengda Medical Devices Co., Ltd., established in 1998 and headquartered in Beijing, is listed on the HKEX (01858.HK) and Shanghai Stock Exchange STAR Market (688236.SH) within the medical device industry, with financial statements prepared on a going concern basis - The company was listed on the Hong Kong Stock Exchange in March 2015 and on the Shanghai Stock Exchange STAR Market in December 2021[77](index=77&type=chunk) - Financial statements are prepared on a going concern basis, with the ability to continue as a going concern for at least 12 months from the end of the reporting period[78](index=78&type=chunk) [Significant Accounting Policies and Estimates](index=35&type=section&id=Significant%20Accounting%20Policies%20and%20Estimates) This section details the company's key accounting policies and estimates, including revenue recognition upon customer obtaining control, impairment of financial instruments using the expected credit loss model, inventory valuation at the lower of cost or net realizable value using the weighted-average method, and depreciation of fixed assets using the straight-line method - Revenue Recognition: The company recognizes revenue when the customer obtains control of the related goods or services; for distribution, upon dealer's receipt; for direct sales and delivery, upon actual use by the hospital; for overseas sales, upon customs export declaration[125](index=125&type=chunk)[126](index=126&type=chunk) - Expected Credit Loss: The company accounts for impairment of financial assets based on expected credit losses; for receivables without significant financing components, the simplified approach is used to measure loss allowances at an amount equal to the lifetime expected credit losses[98](index=98&type=chunk)[99](index=99&type=chunk) - Inventory Valuation: Inventories are valued using the weighted-average method upon issuance and measured at the lower of cost or net realizable value at period-end[103](index=103&type=chunk) [Notes to Major Items in Consolidated Financial Statements](index=58&type=section&id=Notes%20to%20Major%20Items%20in%20Consolidated%20Financial%20Statements) This section provides detailed notes on key consolidated financial statement items, including accounts receivable increasing to **RMB 657 million** with an **8.14%** bad debt provision, inventory rising to **RMB 182 million**, fixed assets significantly increasing to **RMB 287 million** due to transfers from construction in progress, and substantial R&D expenses primarily for new projects, with **RMB 491 million** in wealth management products purchased with idle funds - Accounts receivable balance increased from **RMB 439 million** at the beginning of the year to **RMB 657 million**, with bad debt provision increasing from **RMB 39.2 million** to **RMB 53.48 million** accordingly[147](index=147&type=chunk)[148](index=148&type=chunk) - Fixed assets book value increased from **RMB 178 million** at the beginning of the year to **RMB 362 million**, primarily due to **RMB 180 million** transferred from construction in progress[166](index=166&type=chunk) - Market development expenses of **RMB 121 million** were a major component of selling expenses[212](index=212&type=chunk) - Technical service fees, employee compensation, and material consumption were the main expenditures within R&D expenses, collectively accounting for over **75%** of total R&D expenses[214](index=214&type=chunk) [Related Party Relationships and Transactions](index=93&type=section&id=Related%20Party%20Relationships%20and%20Transactions) The company's actual controllers are Mr. Shi Chunbao and Ms. Yue Shujun, a married couple; during the reporting period, the company conducted sales of goods totaling **RMB 2.56 million** with Beijing Meizhuo Medical Devices Co., Ltd., a related party, and disclosed key management personnel compensation of **RMB 2.11 million** - The company's actual controllers are Mr. Shi Chunbao (Executive Director) and Ms. Yue Shujun (Executive Director and Deputy General Manager), a married couple, who collectively hold **54.72%** of the company's voting rights[248](index=248&type=chunk) - Sales of goods to related party Beijing Meizhuo Medical Devices Co., Ltd. amounted to **RMB 2,564,968.32**, representing **0.45%** of similar transactions for the period[251](index=251&type=chunk) - Total compensation paid to key management personnel for the period was **RMB 2,109,438.92**[252](index=252&type=chunk)