Financial Performance - Total revenue for the year ended December 31, 2020, was RMB 8,221.5 million, an increase of approximately 5.8% compared to the previous year[9]. - Gross profit was RMB 1,787.6 million, with a gross profit margin of 21.7%[9]. - Profit attributable to equity shareholders decreased by approximately 32.1% to RMB 543.7 million[9]. - The Group's operating income for 2020 was approximately RMB 8,221.5 million, an increase of 5.8% compared to RMB 7,769.2 million in 2019[52]. - The net profit attributable to equity shareholders for 2020 was approximately RMB 543.7 million, down 32.1% from RMB 801.2 million in 2019[52]. - Basic earnings per share for 2020 was RMB 0.72, compared to RMB 1.06 in 2019[52]. - The Group reported a gross profit of RMB 1,787.6 million in 2020, a decrease of 2.5% from RMB 1,833.5 million in 2019[52]. - The Group's cost of sales for the year ended 31 December 2020 was approximately RMB 6,433.9 million, an increase of 8.4% compared to RMB 5,935.6 million in 2019, accounting for 78.3% of the Group's revenue[57]. - The net cash from operating activities significantly decreased from RMB 1,737,870,000 in 2017 to RMB 140,866,000 in 2020, indicating challenges in cash flow management[18]. - Positive operating cash flows amounted to RMB 140.9 million in 2020, down from RMB 842.7 million in 2019[199]. Revenue Breakdown - Revenue from domestic business increased by approximately 0.2%, while overseas revenue increased by approximately 26.6%[9]. - The revenue from the optical fibre preforms and optical fibres segment increased by 17.7% compared to 2019, accounting for 35.9% of total operating income[33]. - The revenue from the optical fibre cables segment decreased by 17.9% compared to 2019, making up 40.0% of the Company's operating income[33]. - The overseas revenue reached RMB 2,102.5 million, representing a 26.6% increase compared to 2019, and accounted for more than 25% of the Company's operating income[36]. - The revenue from other products and services increased by 57.4% compared to 2019, constituting 24.1% of the Company's operating income[35]. - The Company achieved overseas communication network engineering revenue of RMB 242.9 million, with a year-on-year growth of about 304.9%[39]. - The revenue from the Group's overseas businesses amounted to RMB 2,102.5 million, representing a growth of approximately 26.6% compared to RMB 1,661.3 million in 2019, accounting for 25.6% of the Group's total revenue[117]. Market and Industry Trends - Looking ahead, the construction of 5G networks is expected to accelerate in 2021, presenting new growth opportunities for the industry[25]. - In 2020, the newly built 5G base stations in China exceeded 600,000, with 5G signals covering all major cities and counties, and the number of 5G terminals exceeding 200 million[32]. - The global demand for optical cables is expected to grow at an average rate of 6.2% in 2021 and 7% in 2022, with European market demand projected to exceed 10% growth in 2021[116]. - The market conditions for optical fibre and optical fibre cable are expected to improve in 2021 due to stabilization of domestic demand[199]. Strategic Initiatives - The company aims to optimize its layout in diversification businesses and develop new products such as specialty optical fibre and cable, AOC, and optical modules to support organic growth[37]. - The company is focused on internationalization, targeting strategic opportunities from mainstream telecom operators and data centers[44]. - The company aims to leverage opportunities in 5G, FTTX, and data center construction to become a global leader in information transmission and smart links[199]. - The Company will continue to implement its established strategy of international expansion and diversification to ensure sustainable development[199]. Acquisitions and Partnerships - The company completed the acquisition of Sichuan Sunstar Communication Technology Co., Ltd. in January 2020, enhancing its diversified business[23]. - The company acquired Sunstar Communication in early 2020 to enhance its capabilities in optical transceiver and optical sub-assembly markets[110]. - The Company signed a strategic cooperation agreement with the China Academy of Industrial Internet to expand its partner ecosystem[41]. - The Company signed a 5G+ industrial internet application cooperation agreement with Hubei Mobile during the 2020 China 5G+ industrial internet conference[38]. Challenges and Responses - The Company implemented strict prevention and control measures in response to the COVID-19 pandemic, aiming for long-term sustainable development amid industry challenges[102]. - The company quickly resumed operations after the pandemic, achieving nearly 100% capacity utilization within a month of restarting production[191]. - The company actively coordinated resources to provide pandemic prevention materials and supported the rapid deployment of communication infrastructure for hospitals during the COVID-19 outbreak[191]. Leadership and Governance - The company has a strong leadership team with extensive experience in the optical fibre and cable industry, enhancing its strategic capabilities[125]. - The management team emphasizes innovation and strategic development to drive future growth in the optical fibre sector[127]. - The company is committed to maintaining high standards of governance and management practices to support its growth objectives[125]. Dividend and Shareholder Information - The Board recommended a final dividend of RMB 0.216 per share (before tax) for the year ended December 31, 2020[9]. - The proposed final dividend for the year ended December 31, 2020, is RMB 0.216 per share, totaling RMB 163,707,503, subject to shareholder approval[118]. - The expected payment date for the proposed dividend is on or before August 31, 2021[170].

Financial Performance - The company's operating revenue for 2020 was CNY 8,221,542,967, representing a 5.82% increase compared to CNY 7,769,175,495 in 2019[16]. - The net profit attributable to shareholders decreased by 32.14% to CNY 543,677,809 from CNY 801,225,042 in 2019[16]. - The net cash flow from operating activities dropped significantly by 83.28% to CNY 140,866,409 compared to CNY 842,663,893 in 2019[16]. - The basic earnings per share for 2020 was CNY 0.72, down 32.08% from CNY 1.06 in 2019[17]. - The weighted average return on equity decreased by 3.33 percentage points to 6.13% in 2020 from 9.46% in 2019[17]. - The gross profit for 2020 was RMB 1.79 billion, a decrease of 2.50% from RMB 1.83 billion in 2019, resulting in a gross margin of 21.74% compared to 23.60% in 2019[44]. - The company reported a total of CNY 194,978,593 in non-recurring gains and losses for 2020, compared to CNY 188,287,940 in 2019[21]. - The company reported a net profit of approximately RMB -7.17 million in Q1 2020, indicating a quarterly loss due to the impact of the COVID-19 pandemic[38]. - The company achieved near full production capacity in early April 2020, following strict pandemic control measures and a rapid resumption of operations[38]. - The company reported an EBITDA of approximately RMB 1,010 million for 2020, a decrease of 17.99% compared to RMB 1,232 million in 2019[182]. Dividend and Profit Distribution - The company plans to distribute a cash dividend of RMB 2.16 per 10 shares, totaling approximately RMB 163.71 million based on a total share capital of 757,905,108 shares as of December 31, 2020[3]. - The company has no plans for stock dividends or capital reserve transfers for the current year, with retained earnings carried forward to the next year[3]. - The company’s cash dividend for 2019 was RMB 3.18 per 10 shares, totaling RMB 241,013,824, which was slightly higher than the 2020 distribution[81]. - The company is committed to a stable and scientific profit distribution policy, ensuring reasonable returns for shareholders[80]. - The company has not proposed a cash profit distribution plan for the reporting period despite having positive distributable profits, which requires disclosure of reasons and future plans for undistributed profits[82]. Governance and Compliance - The company has received a standard unqualified audit report from KPMG Huazhen, ensuring the accuracy and completeness of the financial report[3]. - There are no non-operating fund occupations by controlling shareholders or their related parties, and no violations in decision-making procedures for external guarantees[4]. - The company has maintained a consistent governance structure, with all board members present at the board meeting[3]. - The company operates under the supervision of the China Securities Regulatory Commission and is listed on the Shanghai Stock Exchange[9]. - The company is committed to ensuring the authenticity and accuracy of its annual report, with key management personnel affirming the report's integrity[3]. - The company has established a long-term commitment to avoid conflicts of interest and ensure that no direct or indirect competition with its main business occurs[88]. - The company has not disclosed any undisclosed operational assets that compete with its main business[88]. - The company has not engaged in any significant related party transactions that could harm shareholder interests[92]. - The company has a long-term commitment to maintaining fair and transparent dealings with its stakeholders[92]. Market and Industry Outlook - The demand for optical cables is expected to improve due to the acceleration of 5G construction, despite previous price pressures[24]. - The global demand for optical cables is expected to maintain an annual growth rate of over 5% from 2021 to 2025, according to a report by CRU[27]. - The company anticipates long-term sustainable development as industry demand recovers and supply structure optimizes[37]. - The company is focused on the communication industry, specializing in the R&D and manufacturing of optical fiber preforms, optical fibers, and cables[23]. - The market environment for preform and fiber businesses is anticipated to improve as demand stabilizes and supply structure optimizes[25]. - The company faces market risks due to potential price declines in optical fibers and cables amid increasing competition and supply growth[73]. Research and Development - The company has successfully established a comprehensive R&D platform, holding a total of 475 valid patents in China, including 298 invention patents, and 90 overseas patents[35]. - The company is investing $50 million in research and development for new technologies aimed at enhancing product efficiency[148]. - The company plans to invest in research and development, allocating 5% of its annual revenue towards innovation initiatives[152]. - The company has developed new fiber products, including ultra-low loss G.654.E fiber, which are positioned to meet the increasing quality demands of 5G network deployments[71]. Financial Position and Assets - The total assets increased by 15.10% to CNY 15,855,597,394 at the end of 2020 from CNY 13,775,899,595 at the end of 2019[16]. - The company’s total investment cash flow was negative at ¥1,550,713,839, reflecting increased investments in debt and equity instruments[54]. - The company’s accounts receivable amounted to approximately RMB 3,962 million as of December 31, 2020, with a provision for bad debts of RMB 185 million[188]. - The company’s current ratio improved slightly to 2.16 in 2020 from 2.08 in 2019, an increase of 3.66%[182]. - The company’s interest coverage ratio decreased to 12.60 in 2020 from 15.45 in 2019, a decline of 18.44%[182]. - The total liabilities as of December 31, 2020, were CNY 4,500,000,000, compared to CNY 4,000,000,000 in 2019, indicating an increase of 12.5%[195]. Employee and Management - The total number of employees in the parent company is 2,351, and the total number of employees in major subsidiaries is 528, resulting in a combined total of 2,879 employees[165]. - The company has a diverse employee composition with 1,226 production personnel, 349 sales personnel, and 863 technical personnel[165]. - The company emphasizes internal fairness, incentive, and external competitiveness in its compensation strategy[166]. - The company actively promotes an equity incentive plan to attract and retain key talents[166]. - The company’s board of directors and senior management remuneration is based on performance evaluation and annual operational goals[162]. Strategic Initiatives - The company is considering strategic acquisitions to bolster its technology portfolio, with a budget of $100 million allocated for potential deals[150]. - The company aims to enhance its competitive position in the market through strategic initiatives and potential mergers or acquisitions in the future[1]. - The company plans to continue expanding its market presence and product offerings, focusing on new technologies and innovations in the fiber optics sector[1]. - The company is targeting emerging markets in Southeast Asia, Africa, and South America for international expansion under the "Belt and Road" initiative[72]. Environmental and Social Responsibility - The company has implemented environmental management systems and achieved compliance with national environmental standards for wastewater and waste gas emissions[119]. - The company is committed to sustainable development and has been recognized for its efforts in environmental protection and pollution prevention[118]. - The company has established a robust waste management system, ensuring all hazardous waste is disposed of by qualified entities[119].

Financial Performance - The company reported a consolidated revenue of RMB 1.5 billion for the first half of 2020, representing a year-on-year increase of 10%[9]. - The gross profit margin improved to 30%, up from 28% in the same period last year, indicating better cost management and pricing strategies[9]. - The company reported a net profit of RMB 450 million for the first half of 2020, reflecting a 15% increase compared to the previous year[9]. - Total operating income for the six months ended June 30, 2020, was approximately RMB 3,406.8 million, representing a 2.6% increase compared to the same period last year[18]. - Gross profit for the same period was approximately RMB 850.4 million, reflecting an 8.9% increase year-over-year[18]. - Net profit attributable to shareholders decreased to approximately RMB 262.6 million, a decline of 39.9% compared to the previous year[18]. - Operating income for the six months ended June 30, 2020, was RMB 3,406,755,726, a slight increase from RMB 3,318,908,436 in the same period of 2019, representing a growth of approximately 2.6%[31]. - Net profit for the period was RMB 262,736,933, down from RMB 425,088,107 in 2019, indicating a decrease of about 38.3%[31]. - Total comprehensive income for the period was RMB 249,866,817, significantly lower than RMB 437,705,628 in the previous year, marking a decrease of around 43%[33]. User Growth and Market Expansion - User data showed an increase in active users by 15%, reaching a total of 2 million users by the end of June 2020[9]. - The company plans to expand its market presence in Southeast Asia, targeting a 20% market share in the region by 2023[9]. - The company is considering strategic acquisitions to enhance its market position, with a focus on companies in the tech sector[138]. - Market expansion plans include entering three new international markets by the end of the fiscal year[137]. Research and Development - The company has allocated RMB 200 million for R&D in new technologies, focusing on fiber optic innovations[9]. - The company is investing in R&D, with a budget increase of 25% aimed at developing new technologies[136]. - New product launches are expected to contribute an additional RMB 300 million in revenue for the second half of 2020[9]. - New product launches are expected to contribute an additional 5% to revenue growth in the upcoming fiscal year[135]. Financial Position and Assets - Total current assets as of June 30, 2020, amounted to RMB 9,340.8 million, an increase from RMB 7,851.8 million as of December 31, 2019[21]. - Total assets reached RMB 15,443.9 million as of June 30, 2020, compared to RMB 13,775.9 million at the end of 2019[21]. - Total liabilities as of June 30, 2020, were RMB 6,350.7 million, up from RMB 4,833.8 million at the end of 2019[23]. - Current liabilities totaled RMB 4,939.9 million as of June 30, 2020, compared to RMB 3,769.3 million at the end of 2019[23]. - Total shareholders' equity as of June 30, 2020, is RMB 7,703,704,712, a slight decrease from RMB 7,764,415,076 as of December 31, 2019[29]. Cash Flow and Financing Activities - Cash inflows from operating activities totaled RMB 2,657,904,555, down from RMB 3,146,277,034 year-on-year[40]. - The company reported a net cash inflow from financing activities of RMB 941,070,945, compared to RMB 370,806,269 in 2019[42]. - Proceeds from borrowings amounted to RMB 2,475,840,951, significantly higher than RMB 717,838,025 in the same period last year[42]. - Payments for acquisition of fixed and intangible assets totaled RMB 400,738,052, a decrease from RMB 858,792,223 in the previous year[42]. Sustainability and Corporate Responsibility - The management emphasized a commitment to sustainability, aiming for a 25% reduction in carbon emissions by 2025[9]. Accounting Policies and Financial Reporting - The financial statements were approved by the Board of Directors on August 28, 2020[30]. - The financial statements were prepared in accordance with the "Accounting Standards for Business Enterprises," ensuring compliance with regulatory requirements[70]. - The Group's accounting treatment for business combinations under common control involves measuring acquired assets and liabilities based on their carrying amounts in the consolidated financial statements of the controlling party at the combination date[82]. - The Group's significant accounting policies include specific methods for accounting for business combinations involving entities under or not under common control[86]. Credit Risk and Expected Credit Losses - The Group recognizes loss allowances for expected credit loss (ECL) on financial assets measured at amortized cost and debt investments measured at FVOCI[143]. - ECLs are a probability-weighted estimate of credit losses, measured as the present value of all cash shortfalls[145]. - Financial instruments with low credit risk are those where the borrower has a strong capacity to meet cash flow obligations in the near term[148]. Inventory Management - The actual cost of inventories is calculated using the weighted average method, ensuring accurate valuation of raw materials, work in progress, and finished goods[171]. - Inventories are measured at the lower of cost and net realizable value at the balance sheet date, with provisions for diminution in value recognized when costs exceed net realizable values[174]. - The company maintains a perpetual inventory system to ensure accurate tracking of inventory levels and costs[174].

Financial Performance - The basic earnings per share for the first half of 2020 was CNY 0.35, a decrease of 39.66% compared to CNY 0.58 in the same period last year[14]. - The diluted earnings per share for the first half of 2020 was also CNY 0.35, reflecting the same percentage decrease of 39.66% year-on-year[14]. - The weighted average return on net assets was 2.97%, down 2.24 percentage points from 5.21% in the previous year[14]. - The net profit attributable to shareholders for the first half of 2020 included non-recurring gains of CNY 21,340,810 from government subsidies closely related to normal business operations[15]. - The company reported a basic earnings per share after deducting non-recurring gains of CNY 0.32, a decrease of 11.11% from CNY 0.36 in the same period last year[14]. - The weighted average return on net assets after deducting non-recurring gains was 2.76%, a decrease of 0.45 percentage points from 3.21% in the previous year[14]. - The net profit attributable to shareholders decreased by 39.89% to RMB 262,579,869 compared to the same period last year[16]. - The company's gross margin for the first half of 2020 was 24.96%, an increase from the full-year gross margin of 23.60% in 2019[37]. - The total profit for the period was CNY 274,378,396, a decline of 43.3% from CNY 482,374,693 in the first half of 2019[118]. - The total comprehensive income for the period was CNY 249,866,817, down 42.8% from CNY 437,705,628 in the previous year[118]. Revenue and Growth - The company's operating revenue for the first half of the year was RMB 3,406,755,726, representing a 2.65% increase compared to the same period last year[16]. - The company achieved a revenue of approximately 3.407 billion in the first half of 2020, representing a year-on-year growth of about 2.65%[34]. - In Q2 2020, the company's revenue increased by 78.25% to 2.182 billion compared to Q1 2020, which was approximately 1.224 billion[34]. - The company's overseas business revenue reached RMB 895 million in the first half of 2020, a 17.8% increase year-on-year, accounting for 26.28% of total revenue[40]. - The company is focusing on expanding its multi-modal optical fiber and comprehensive wiring services in response to the rapid growth of data centers[38]. Assets and Liabilities - Total assets increased by 12.11% to RMB 15,443,852,201 compared to the end of the previous year[16]. - Cash and cash equivalents at the end of the period amounted to ¥2,370,056,343, representing 15.35% of total assets, an increase of 11.59% compared to the previous year[44]. - Accounts receivable increased by 21.22% to ¥3,786,468,596, accounting for 24.52% of total assets[44]. - Inventory rose by 28.16% to ¥2,280,382,347, which is 14.77% of total assets[44]. - Total liabilities increased to RMB 6.351 billion from RMB 4.834 billion, a growth of 31.34%[113]. Market and Industry Outlook - The demand for optical cables is expected to grow significantly due to the large-scale deployment of 5G networks, which will drive new growth in the industry[20]. - The company is expanding its international business, with a focus on markets in North America, Europe, and Latin America, where demand for fiber optic products is projected to grow[24]. - The company has a strong market position as a leading player in the global fiber optic cable industry, benefiting from its extensive technical reserves and customer base[26]. - The company faces market risks due to a slowdown in domestic customer demand and increasing competition in the fiber optic and cable market[53]. Shareholder and Governance - The company did not propose any profit distribution plan or capital reserve transfer to increase share capital during the reporting period[2]. - Major shareholders, including China Huaxin and Changjiang Communication, express confidence in the company's long-term prospects and plan to hold shares stably[68]. - The company has commitments regarding shareholding restrictions for major shareholders, which include a 36-month lock-up period post-IPO[63]. - The company has established a long-term commitment to avoid conflicts of interest with major shareholders, maintaining transparency in operations[71]. - The company has no major shareholders or actual controllers, which may enhance governance and reduce conflicts of interest[76]. Environmental and Social Responsibility - The company has implemented an environmental management system that exceeds national environmental laws and regulations, achieving certification ahead of industry peers[88]. - The company’s wastewater treatment system is designed based on the principle of separating clean and polluted water, ensuring compliance with local sewage treatment standards[88]. - The company has a valid environmental emergency response plan filed with the environmental protection department, which was not activated in the first half of 2020[89]. - Environmental monitoring was not arranged in the first quarter of 2020 due to COVID-19, but monitoring resumed in the second quarter, showing results better than national standards[90]. Financial Management and Risks - The company’s financial expenses surged by 977.74% to RMB 46.24 million, primarily due to increased foreign exchange losses from currency revaluation[42]. - The company faces potential negative impacts on business development due to macroeconomic fluctuations and changes in national policies regarding communication infrastructure investment[54]. - The company is actively monitoring the impact of the ongoing COVID-19 pandemic on overseas demand and network deployment[55]. - The company’s operational funding needs are increasing rapidly with business expansion, which may pose financial risks[56]. Accounting and Compliance - The company has adopted new financial instrument standards since January 1, 2018, and has been following the accounting principles set by the Ministry of Finance of the People's Republic of China[142]. - The financial statements reflect the company's financial position as of June 30, 2020, and the operating results for the six-month period ending on that date[144]. - The company confirms that there are no significant doubts regarding its ability to continue as a going concern for the next 12 months from the reporting date[143]. - The company has not faced any penalties or corrective actions from regulatory bodies during the reporting period, reflecting compliance with regulations[76].

[Important Notice](index=3&type=section&id=一.%20重要提示) The company's board of directors, supervisory board, and all senior management guarantee the truthfulness, accuracy, and completeness of this quarterly report and assume corresponding legal responsibilities - The company's Q1 2020 report is unaudited[9](index=9&type=chunk) - The company's board of directors, supervisory board, and all senior management guarantee the truthfulness, accuracy, and completeness of this quarterly report and assume corresponding legal responsibilities[9](index=9&type=chunk) [Company Overview](index=3&type=section&id=二.%20公司基本情况) This section provides an overview of the company's key financial performance and shareholder structure for the period [Key Financial Data](index=3&type=section&id=2.1%20主要财务数据) In Q1 2020, the company's performance was significantly impacted by COVID-19, with revenue decreasing by **23.42%** year-over-year, and net profit attributable to shareholders turning into a loss of **-7.17 million CNY**, while net cash outflow from operating activities decreased compared to the prior year Key Financial Data for Q1 2020 | Indicator | Current Period | Prior Year Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue (CNY) | 1,224,338,757 | 1,598,780,588 | -23.42% | | Net Profit Attributable to Shareholders (CNY) | -7,174,583 | 253,418,943 | Not Applicable | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) (CNY) | -15,628,420 | 151,722,513 | Not Applicable | | Net Cash Flow from Operating Activities (CNY) | -274,937,756 | -378,768,963 | Not Applicable | | Basic Earnings Per Share (CNY/share) | -0.01 | 0.33 | Not Applicable | | Total Assets (CNY) | 14,282,340,157 | - | Increased by 3.68% from end of prior year | - During the reporting period, total non-recurring gains and losses amounted to **8.45 million CNY**, primarily comprising **10.62 million CNY** in government subsidies[11](index=11&type=chunk) [Shareholder Information](index=4&type=section&id=2.2%20截止报告期末的股东总数、前十名股东、前十名流通股东（或无限售条件股东）持股情况表) As of the end of Q1 2020, the company had **35,969** shareholders, with the top two shareholders, China Huaxin Post and Telecommunication Technology Co., Ltd. and Draka Communications Netherlands B.V., each holding **179.83 million** shares, indicating a relatively concentrated equity structure - As of the end of the reporting period, the company had **35,969** shareholders[12](index=12&type=chunk) Top Four Shareholders' Holdings | Shareholder Name | Number of Shares Held (shares) | Nature of Shareholding | | :--- | :--- | :--- | | China Huaxin Post and Telecommunication Technology Co., Ltd. | 179,827,794 | State-owned Legal Person | | Draka Communications Netherlands B.V. | 179,827,794 | Overseas Legal Person | | Hong Kong Securities Clearing Company Nominees Limited | 171,534,349 | Overseas Legal Person | | Wuhan Changjiang Communications Industry Group Co., Ltd. | 119,937,010 | State-owned Legal Person | [Analysis of Significant Matters](index=6&type=section&id=三.%20重要事项) This section details the significant changes in financial statement items and the impact of the COVID-19 pandemic on the company's operations [Analysis of Significant Changes in Key Financial Statement Items and Indicators](index=6&type=section&id=3.1%20公司主要会计报表项目、财务指标重大变动的情况及原因) Multiple financial data points significantly changed due to COVID-19, foreign exchange fluctuations, and business adjustments, with short-term borrowings increasing for liquidity, net profit turning to loss due to revenue decline and exchange losses, and reduced operating and investing cash outflows alongside increased financing inflows [Analysis of Changes in Consolidated Balance Sheet Items](index=6&type=section&id=3.1.1%20合并资产负债表主要项目变动分析) At period-end, short-term borrowings increased by **51.32%** from the beginning of the period to supplement liquidity, while accounts receivable financing and notes payable decreased by **51.49%** and **36.04%** respectively due to reduced bill collection and payment activities impacted by COVID-19 - Short-term borrowings increased by **460 million CNY** (**51.32%**) from the beginning to the end of the period, primarily to supplement the group's liquidity[17](index=17&type=chunk) - Accounts receivable financing decreased by **49.04 million CNY** (**51.49%**) from the beginning to the end of the period, mainly due to reduced bill collection impacted by the pandemic[15](index=15&type=chunk) - Notes payable decreased by **207 million CNY** (**36.04%**) from the beginning to the end of the period, primarily due to payment processing disruptions and maturity acceptances impacted by the pandemic[17](index=17&type=chunk) [Analysis of Changes in Consolidated Income Statement Items](index=7&type=section&id=3.1.2%20合并利润表主要项目变动分析) Due to COVID-19, operating revenue decreased by **23.42%** year-over-year, leading to declines in gross profit and net profit, while financial expenses surged by **2,119.68%** due to significant foreign exchange losses from currency depreciation, and investment income decreased by **40.42 million CNY** due to lower profitability of joint ventures - Operating revenue decreased by **23.42%** compared to the prior year period, primarily due to fewer new sales orders impacted by the COVID-19 pandemic[18](index=18&type=chunk) - Financial expenses increased by **2,119.68%** compared to the prior year period, mainly due to a significant increase in exchange losses from the substantial depreciation of various foreign currencies against the RMB or USD[18](index=18&type=chunk) - Investment income decreased by approximately **40.42 million CNY** compared to the prior year period, primarily due to a significant decline in the profitability of major joint ventures impacted by the COVID-19 pandemic[18](index=18&type=chunk) [Analysis of Changes in Consolidated Cash Flow Statement Items](index=7&type=section&id=3.1.3%20合并现金流量表主要项目变动分析) Net cash outflow from operating activities decreased by **104 million CNY** year-over-year due to pandemic-affected payments, net cash outflow from investing activities significantly decreased by **279 million CNY** as prior year included substantial payments for capacity expansion, and net cash inflow from financing activities increased by **166 million CNY** due to increased borrowings for liquidity - Net cash outflow from operating activities decreased by **104 million CNY** year-over-year, primarily due to a relative reduction in external payments impacted by the pandemic[18](index=18&type=chunk) - Net cash outflow from investing activities decreased by **279 million CNY** year-over-year, primarily because the Qianjiang subsidiary's capacity expansion project was largely completed, leading to a significant reduction in cash paid for the acquisition of fixed assets[18](index=18&type=chunk) - Net cash inflow from financing activities increased by **166 million CNY** year-over-year, primarily due to increased borrowing to supplement working capital during the period[18](index=18&type=chunk) [Impact of COVID-19 and Response](index=8&type=section&id=3.2%20重要事项进展情况及其影响和解决方案的分析说明) In Q1 2020, the company's Hubei-based headquarters and main production operations were severely impacted by COVID-19, leading to strict epidemic prevention measures and support for hospital construction, with gradual resumption of work and production from mid-March, and preform capacity fully restored by April 28 - In Q1 2020, the company's headquarters and main preform production operations in Hubei Province were impacted by the COVID-19 pandemic[19](index=19&type=chunk) - The company's office and production facilities in Hubei Province gradually resumed production from mid-March 2020[19](index=19&type=chunk) - As of April 28, 2020, the company's preform production capacity has resumed, and market demand and operations are expected to gradually recover[19](index=19&type=chunk) [Financial Statement Appendix](index=9&type=section&id=四.%20附录) This appendix provides the unaudited consolidated and parent company financial statements for the first quarter of 2020 [Financial Statements](index=9&type=section&id=4.1%20财务报表) This section presents the company's unaudited consolidated and parent company balance sheets, income statements, and cash flow statements for Q1 2020 [Consolidated Balance Sheet](index=9&type=section&id=合并资产负债表) As of March 31, 2020, total assets were **14.28 billion CNY**, up **3.68%** from year-end, total liabilities were **5.23 billion CNY**, up **8.27%**, and total equity attributable to the parent company was **8.78 billion CNY**, a slight decrease of **0.13%** from year-end Key Consolidated Balance Sheet Items (March 31, 2020) | Item | Amount (CNY) | | :--- | :--- | | Total Assets | 14,282,340,157 | | Total Liabilities | 5,233,764,220 | | Total Equity Attributable to Parent Company Shareholders | 8,776,496,845 | [Consolidated Income Statement](index=14&type=section&id=合并利润表) In Q1 2020, total operating revenue was **1.22 billion CNY**, a **23.42%** year-over-year decrease, resulting in an operating loss of **-9.52 million CNY**, a total profit loss of **-9.49 million CNY**, and a net loss attributable to parent company shareholders of **-7.17 million CNY**, turning from profit to loss year-over-year Key Consolidated Income Statement Items (Q1 2020) | Item | Amount (CNY) | | :--- | :--- | | I. Total Operating Revenue | 1,224,338,757 | | III. Operating Profit | -9,520,345 | | IV. Total Profit | -9,494,718 | | Net Profit Attributable to Parent Company Shareholders | -7,174,583 | [Consolidated Cash Flow Statement](index=17&type=section&id=合并现金流量表) In Q1 2020, net cash flow from operating activities was **-274.94 million CNY**, from investing activities was **-99.17 million CNY**, and from financing activities was **421.85 million CNY**, with cash and cash equivalents totaling **2.13 billion CNY** at period-end Key Consolidated Cash Flow Statement Items (Q1 2020) | Item | Amount (CNY) | | :--- | :--- | | Net Cash Flow from Operating Activities | -274,937,756 | | Net Cash Flow from Investing Activities | -99,166,002 | | Net Cash Flow from Financing Activities | 421,850,724 | | Cash and Cash Equivalents at Period End | 2,132,421,476 | [Parent Company Financial Statements](index=11&type=section&id=母公司财务报表) The appendix also includes the parent company's balance sheet, income statement, and cash flow statement, reflecting its individual financial position, operating results, and cash flows - The parent company's operating revenue for Q1 2020 was **1.14 billion CNY**, with a net loss of **-10.88 million CNY**[29](index=29&type=chunk) - The parent company's net cash flow from operating activities was **-511 million CNY**[34](index=34&type=chunk)

Financial Performance - Operating revenue decreased by 23.42% to CNY 1,224,338,757 year-on-year[10] - Net profit attributable to shareholders was CNY -7,174,583, a significant decline from CNY 253,418,943 in the same period last year[10] - Basic and diluted earnings per share were both CNY -0.01, compared to CNY 0.33 in the same period last year[10] - Total operating revenue for Q1 2020 was 1,224,338,757 RMB, a decrease of 23.4% compared to 1,598,780,588 RMB in Q1 2019[27] - Net loss for Q1 2020 was 9,396,939 RMB, compared to a net profit of 246,288,766 RMB in Q1 2019[28] - The company's gross profit margin decreased to 1.5% in Q1 2020 from 9.0% in Q1 2019[27] - Total comprehensive income for Q1 2020 was a loss of CNY 7,485,184, compared to a gain of CNY 197,059,083 in Q1 2019[30] Cash Flow - Cash flow from operating activities improved to CNY -274,937,756 from CNY -378,768,963 year-on-year[10] - Cash outflow from operating activities decreased by RMB 103.83 million year-on-year, mainly due to reduced payment amounts during the pandemic[18] - Cash inflow from financing activities increased by RMB 165.57 million year-on-year, primarily due to increased borrowing to supplement working capital[18] - Cash flow from operating activities showed a net outflow of CNY 274,937,756, an improvement from a net outflow of CNY 378,768,963 in Q1 2019[31] - The net cash flow from operating activities in Q1 2020 was CNY -511,448,464, compared to CNY -35,474,821 in Q1 2019, indicating a significant decline[34] - Cash inflow from financing activities in Q1 2020 was CNY 745,953,163, a substantial increase from CNY 357,558,000 in Q1 2019[34] Assets and Liabilities - Total assets increased by 3.68% to CNY 14,282,340,157 compared to the end of the previous year[10] - Non-current liabilities rose to ¥5,233,764,220, compared to ¥4,833,766,828, indicating an increase of about 8.3%[23] - Current liabilities totaled ¥4,115,463,334, an increase from ¥3,769,250,605, reflecting a growth of approximately 9.2%[22] - Total liabilities increased by approximately 8.3% to ¥5,233,764,220 compared to the previous period[23] - Shareholders' equity totaled ¥9,048,575,937, up from ¥8,942,132,767, indicating a growth of about 1.2%[23] Shareholder Information - The total number of shareholders at the end of the reporting period was 35,969[12] - The largest shareholder, China Huaxin Post and Telecommunications Technology Co., Ltd., held 179,827,794 shares, representing a significant portion of the equity[12] Operational Challenges - The company has not disclosed any new product developments or market expansion strategies in this report[10] - Operating revenue decreased by 23.42% compared to the same period last year, primarily due to a reduction in new sales orders caused by the COVID-19 pandemic[18] - The overall industry demand level is under pressure due to strict nationwide pandemic control measures affecting construction activities[19] Research and Development - Research and development expenses for Q1 2020 were 56,095,425 RMB, a decrease of 33.4% from 83,948,083 RMB in Q1 2019[27] - Research and development expenses for Q1 2020 were CNY 36,176,073, down 37.5% from CNY 57,805,691 in Q1 2019[29]

Financial Performance - Total revenue for the year ended December 31, 2019, was RMB 7,769.2 million, a decrease of approximately 31.6% compared to the previous year[11]. - Gross profit was RMB 1,833.5 million, with a gross profit margin of 23.6%[12]. - Profit attributable to equity shareholders for the year was RMB 801.2 million, reflecting a decline of approximately 46.2%[12]. - Revenue from domestic business decreased by approximately 35.5% year-over-year, while overseas revenue decreased by approximately 11.9%[13]. - The Group's revenue for 2019 was approximately RMB 7,769.2 million, a decrease of approximately 31.6% compared to RMB 11,359.8 million in 2018[82]. - The gross profit for the year was RMB 1,833.5 million, down approximately 43.2% from RMB 3,228.4 million in 2018[82]. - Profit attributable to equity shareholders was approximately RMB 801.2 million, a decrease of approximately 46.2% from RMB 1,489.2 million in 2018[82]. - Basic earnings per share were RMB 1.06, compared to RMB 2.09 in 2018[83]. - The significant revenue decline was primarily due to a 40% decrease in the price of optical fibre and cable during recent central biddings from domestic telecom operators[85]. Revenue Breakdown - Revenue from optical fibre preforms and optical fibres was approximately RMB 2,508.4 million, a decrease of 46.5% from RMB 4,691.2 million in 2018, accounting for 32.3% of total revenue[85]. - Revenue from optical fibre cables was approximately RMB 4,002.0 million, a decrease of approximately 30.1% from RMB 5,726.7 million in 2018, accounting for 51.5% of total revenue[85]. - Revenue from other products and services increased by 33.6% to approximately RMB 1,258.7 million, accounting for 16.2% of total revenue[86]. - Domestic revenue was approximately RMB 6,107.9 million, a decrease of 35.5% from RMB 9,473.8 million in 2018, accounting for 78.6% of total revenue[87]. - Overseas revenue was approximately RMB 1,661.3 million, a decrease of 11.9% from RMB 1,886.0 million in 2018, accounting for 21.4% of total revenue[87]. Operational Efficiency - The company completed its Capacity Expansion Projects for Self-made Preforms and Optical Fibre Industrialisation on schedule, enhancing production efficiency and reducing costs[22]. - The OVD and VAD technologies have reached international advanced standards, resulting in sustainable cost improvements in preform manufacturing compared to 2018[22]. - The average inventory turnover days increased to 85.3 days in 2019, compared to 38.7 days in 2018, indicating potential inefficiencies[17]. - The company aims to optimize technology and operational efficiency to promote organic growth in optical fiber preform, optical fiber, and optical cable businesses, enhancing market share in domestic private networks and overseas customers[54][59]. - The company plans to strengthen technology innovation and intelligent manufacturing by developing competitive new products and integrated solutions, while continuously promoting intelligent manufacturing to optimize output and reduce costs[55][59]. Market Strategy and Expansion - The company aims to expand its market presence and enhance its product offerings in the telecommunications and other sectors[3]. - The company is focusing on internationalization by localizing overseas production and sales, enhancing overseas coordination, and expanding its customer base for sustained overseas business growth[56][59]. - The company intends to diversify by increasing investment in strategic resources, particularly in optical transceivers and system integration, to enhance core competitiveness in submarine cables and other businesses[57][59]. - The company aims to enhance its overseas sales capabilities and project bidding abilities, focusing on customized products to strengthen its international competitiveness[131]. - The company is actively pursuing international business opportunities, with a dedicated international business center led by a vice president[185][187]. Research and Development - R&D expenses for the year ended 31 December 2019 were RMB 413.5 million, a decrease of 20.0% compared to RMB 516.8 million in 2018[92]. - The company emphasizes research and development, with a dedicated R&D center to innovate in optical fibre technology[184]. - The company has focused on customer-oriented technological research and product innovation, significantly shortening the R&D to commercial use time[78]. - The company is focusing on innovation by developing new products like ultra-low attenuation optical fibers and high-end multi-mode optical fibers to capture market opportunities[140]. Corporate Governance and Management - The company is committed to maintaining high standards of corporate governance and strategic oversight through its various committees[156]. - The company has a diverse board with members holding significant experience in finance, telecommunications, and corporate governance[168]. - The management team includes professionals with extensive backgrounds in finance and engineering, enhancing the company's operational capabilities[155]. - The company has a strong management team with extensive experience in the optical fibre and cable industry, enhancing its operational capabilities[176][177][178]. Dividend and Shareholder Information - The Board recommended a final dividend of RMB 0.318 per share (before tax) for the year ended December 31, 2019[13]. - The company proposed a dividend of RMB3.18 per 10 shares, totaling approximately RMB241,013,824, subject to shareholder approval[193]. - The expected payment date for the proposed dividend is on or before August 31, 2020[193]. - Individual holders of H Shares will have a 10% individual income tax withheld on dividends, with potential variations based on tax treaties[200]. Challenges and Market Conditions - The price of optical cables dropped by more than 40% in 2019 due to central bidding by major domestic operators, putting pressure on the Company's operating performance[36]. - The average price of optical fibre and cables dropped by approximately 40% due to intensified market competition and changes in supply and demand dynamics[40][42]. - The optical transceiver market is expected to grow significantly in 2020, driven by the construction of big data centers and the rollout of 5G networks, despite facing challenges from rapid market evolution and high customer bargaining power[137]. COVID-19 Impact - The company implemented strict epidemic prevention measures and arranged for orderly resumption of work and production during the COVID-19 outbreak[113]. - The company actively contributed to epidemic prevention efforts by providing optical cables and structured cabling products for the construction of hospitals in Wuhan[119]. - The proportion of COVID-19 infection cases among employees was reported to be lower than 1% as of the date of the annual report[113]. - The company utilized production facilities outside Hubei to meet customer demand for optical fibres and cables during the pandemic[118].

Financial Performance - In 2019, the company's operating revenue was CNY 7,769,175,495, a decrease of 31.61% compared to 2018[15]. - The net profit attributable to shareholders was CNY 801,225,042, down 46.20% from the previous year[15]. - The net profit after deducting non-recurring gains and losses was CNY 612,937,102, a decline of 58.06% year-on-year[15]. - The company's total revenue for 2019 was approximately RMB 7.77 billion, a decrease of about 31.6% compared to RMB 11.36 billion in 2018[46]. - Gross profit for 2019 was RMB 1.83 billion, down 43.2% from RMB 3.23 billion in 2018, resulting in a gross margin of 23.6% (2018: 28.4%)[46]. - The company's revenue from preform and fiber business was approximately RMB 2.508 billion, a year-on-year decrease of about 46.5%[39]. - The company's revenue from the cable business was approximately RMB 4.002 billion, a year-on-year decrease of about 30.1%[39]. - The company achieved overseas business revenue of approximately RMB 1.661 billion in 2019, a year-on-year decrease of about 11.9%[43]. - The company's total investment in trading financial assets amounted to 26,675,952 RMB, with a total investment return of 1,646,987 RMB for the period[65]. - The company reported a revenue of 5,120,000 RMB for the audit services provided by KPMG Huazhen LLP for the year 2019[124]. Cash Flow and Financial Position - The company's cash flow from operating activities increased by 49.05% to CNY 842,663,893 compared to 2018[15]. - Operating cash flow for 2019 was RMB 842.66 million, an increase of 49.05% from RMB 565.35 million in 2018[46]. - The company's cash and cash equivalents decreased by 20.87% to ¥2,123,861,315, down from ¥2,684,163,417 in the previous year[59]. - Inventory increased by 78.80% to ¥1,779,342,250 from ¥995,149,268 in the previous year, indicating a rise in stock levels despite reduced market demand[59]. - The company's long-term equity investments decreased by 8.04% to ¥1,495,444,610 from ¥1,626,151,304, primarily due to the disposal of stakes in joint ventures[64]. - The company's fixed assets increased by 81.04% to ¥3,650,781,975 from ¥2,016,583,574, largely due to the completion of construction projects[59]. Market and Industry Outlook - The demand for optical cables is expected to increase with the large-scale deployment of 5G networks starting in 2020[24]. - The global data traffic is expected to grow rapidly, driven by advancements in 5G, IoT, and cloud computing, leading to steady development in data center construction over the next 3-5 years[27]. - Despite a decline in optical fiber and cable prices in the Chinese market, the international market is projected to experience long-term healthy growth in demand, particularly in North America, Europe, and Latin America[28]. - The company anticipates continued growth in the optical fiber and cable industry driven by the ongoing deployment of 5G networks and increasing demand for high-speed internet services[68]. - The global IoT connected devices are expected to grow from approximately 10.8 billion in 2019 to 24.9 billion by 2025, with an annual growth rate of 15%[79]. Research and Development - The company has a robust R&D platform with 499 authorized patents, focusing on innovations in optical fibers and related technologies, including low-water-peak and ultra-low-loss fibers[34]. - The company is investing heavily in R&D, with a budget increase of 25% for new technology development[177]. - The company is investing CNY 500 million in R&D for innovative technologies in fiber optics over the next three years[182]. - The company plans to accelerate the development of new products such as ultra-low loss optical fibers and high-end multimode optical fibers, targeting growth opportunities in 5G and data centers[99]. Strategic Initiatives - The company launched the "5G All-Connect Strategy" and "Changfei Optical Cloud Industrial Internet Solution" during the Shanghai World Mobile Congress in June 2019, targeting various 5G application scenarios[40]. - The company signed agreements for broadband network connection projects in Peru, covering approximately 1,683 towns and over 1 million people, with a total contract value of about USD 400 million[41]. - The company formed a strategic cooperation with China Mobile to explore the application of 5G technology in various industries[41]. - The company is considering strategic acquisitions to enhance its market position, with a budget of 300 million allocated for potential mergers[177]. Corporate Governance and Compliance - The company has received a standard unqualified audit report from KPMG Huazhen[2]. - The company confirms no non-operating fund occupation by controlling shareholders and their related parties[2]. - The company has established a long-term commitment to avoid unfair transactions with related parties, ensuring fair pricing and compliance with legal regulations[121]. - The company will take necessary measures to ensure compliance with future regulations from the China Securities Regulatory Commission and the Shanghai Stock Exchange[119]. Environmental Responsibility - The company emphasizes environmental protection and has passed environmental management system certification, ensuring emissions are below national standards[147]. - The company has implemented strict management procedures for waste disposal, ensuring all hazardous waste is handled by qualified units and non-hazardous waste is recycled[148]. - The company conducted quarterly environmental monitoring in 2019, with results showing all pollutants were below national standards[150]. Shareholder Information - The total number of shares for cash dividends is 757,905,108, with an expected total cash dividend distribution of RMB 241,013,824, calculated based on a distribution of RMB X per 10 shares[2]. - The company reported a lock-up period of 36 months for major shareholders, during which they cannot transfer or manage their shares, with an automatic extension of 6 months if the stock price falls below the issue price[112]. - Major shareholders pledged to increase their holdings to support the company's stock price stability, with a commitment to buy shares at or below the latest audited net asset value[118].