Financial Performance - The company's operating revenue for the first half of 2021 was CNY 19.29 billion, an increase of 13.92% compared to CNY 16.93 billion in the same period last year[20]. - The net profit attributable to shareholders decreased by 34.44% to CNY 1.58 billion from CNY 2.41 billion year-on-year[20]. - The net cash flow from operating activities dropped significantly by 95.03% to CNY 292.50 million, down from CNY 5.89 billion in the previous year[20]. - The total assets increased by 12.01% to CNY 36.35 billion compared to CNY 32.45 billion at the end of the previous year[20]. - The weighted average return on equity decreased by 9.96 percentage points to 10.29% from 20.25% in the same period last year[21]. - The basic earnings per share fell by 34.44% to CNY 0.6144 from CNY 0.9371 year-on-year[21]. - The company reported a total of CNY 119.08 million in non-recurring gains and losses for the period[22]. - The company’s operating revenue for the reporting period was CNY 19,287,520,870.54, representing a 13.92% increase compared to CNY 16,930,072,692.15 in the same period last year[58]. - Operating costs increased by 29.65% to CNY 15,456,094,964.16 from CNY 11,921,342,670.23[58]. - Research and development expenses rose by 9.97% to CNY 732,270,624.46, up from CNY 665,896,041.12[58]. - The company reported a net profit of ¥253,603,213.21 from Zhuhai Wantong Chemical Co., Ltd., contributing significantly to overall profitability[72]. Market and Business Operations - The main business of the company includes the research, production, and sales of six categories of chemical new materials, such as modified plastics and biodegradable plastics, widely applied in various industries including automotive and healthcare[25]. - The company is one of the largest modified plastic producers in the Asia-Pacific region, with its product technology and quality in biodegradable plastics and carbon fiber reaching international advanced levels[25]. - The modified plastics segment achieved a sales volume of 845,300 tons, a year-on-year increase of 25.20%, and revenue of 12.028 billion yuan, up 23.85%[42]. - Sales of automotive materials reached 286,000 tons, growing by 57.14% year-on-year, driven by increased demand in the domestic passenger car market, which saw a 28.90% increase[42]. - The household appliance materials segment recorded sales of 151,000 tons, a year-on-year increase of 17.00%, with the overall household appliance industry retail sales reaching 356.5 billion yuan, up 12%[43]. - The sales volume of environmentally friendly high-performance recycled plastics was 80,800 tons, a year-on-year increase of 44.30%[44]. - The company aims to expand its market presence by leveraging its advanced polymer materials and focusing on high-value-added products[32]. - The company is positioned to benefit from the growing demand for green and low-carbon materials as part of China's strategic goals for carbon neutrality[32]. Research and Development - The company has established a "13551" R&D system, which includes 1 central research institute and 3 international R&D centers, enhancing its innovation capabilities[35]. - As of the report period, the company has applied for a total of 3,918 patents, including 2,819 invention patents, demonstrating its commitment to intellectual property management[36]. - The company is focusing on R&D investments in new technologies, particularly in high-performance, environmentally friendly materials, to meet the growing market demand[44]. Environmental Compliance - The company has been proactive in environmental management, ensuring that emissions of key pollutants such as chemical oxygen demand and total phosphorus are within regulatory limits[87]. - The company has not reported any instances of exceeding pollution discharge standards during the reporting period[87]. - The company has established 10 sets of waste gas treatment facilities and one wastewater treatment facility with a capacity of 1,500 tons/day, all operating effectively and meeting discharge standards[91]. - The company has received environmental impact assessment approvals for new projects, ensuring compliance with environmental regulations[93]. - The company has implemented a comprehensive pollution prevention strategy, including the construction of various pollution control facilities[91]. Financial Stability and Risks - The company faces macroeconomic risks due to fluctuations in demand and prices for chemical new materials, which could impact operational performance[75]. - Rising raw material prices and supply risks are a concern, with global commodity prices increasing, affecting production costs[75]. - The company has a significant exposure to exchange rate risks, which may affect import and export operations[76]. - The total amount of guarantees provided by the company, including those to subsidiaries, is 3,121,654,450.35 RMB, which accounts for 21.01% of the company's net assets[121]. - The company provided guarantees totaling 3,259,719,950.31 RMB to subsidiaries during the reporting period[121]. Shareholder Information - The total number of ordinary shareholders at the end of the reporting period is 255,039[126]. - The top shareholder, Yuan Zhimin, holds 510,380,393 shares, representing 19.83% of the total shares[127]. - The second largest shareholder, Xiong Haitao, holds 216,241,359 shares, accounting for 8.40%[127]. - The company did not distribute any dividends or bonus shares for the half-year period, with a proposed profit distribution plan indicating no allocation[83]. Management and Governance - The company completed the election of the board of directors and supervisory board, with several new appointments including Wu Di and Chen Pingxu as executive directors[82]. - The company has made strategic changes in its management team, with several independent directors and supervisors stepping down and new ones being elected[81]. - The employee stock ownership plan saw a reduction of 50,314,114 shares during the reporting period, leaving 20,452,322 shares held, which represents 0.79% of the total share capital[84]. Subsidiary Performance - The Indian subsidiary achieved a production volume of 33,400 tons in modified plastics, marking a year-on-year increase of 66.85%[55]. - The American subsidiary reported a production volume of 6,977.34 tons in modified plastics, reflecting a year-on-year growth of 195.37%[56]. - The European subsidiary's modified plastics business achieved a production volume of 7,559.77 tons, with a year-on-year increase of 310.64%[56]. - The Malaysian subsidiary's modified plastics business recorded a production volume of 7,422.76 tons, representing a year-on-year growth of 117.30%[57].

Financial Performance - Net profit attributable to shareholders rose by 438.79% to CNY 764.53 million year-on-year[4] - Operating revenue surged by 63.60% to CNY 9.06 billion compared to the same period last year[4] - Basic earnings per share increased by 439.20% to CNY 0.2971[4] - The company reported a significant increase in net profit excluding non-recurring items, which rose by 718.10% to CNY 713.13 million[4] - Operating profit for Q1 2021 was ¥906,021,100.48, compared to ¥202,788,033.99 in Q1 2020, reflecting a substantial growth[28] - Net profit for Q1 2021 amounted to ¥767,550,819.35, up from ¥142,952,800.99 in the same period last year, indicating a year-over-year increase of 436.5%[28] - Total revenue for Q1 2021 reached ¥9,057,347,670.83, a significant increase of 63.5% compared to ¥5,536,313,856.36 in Q1 2020[26] Assets and Liabilities - Total assets increased by 9.99% to CNY 35.70 billion compared to the end of the previous year[4] - Total assets increased to ¥35,696,625,334.75, up from ¥32,454,896,472.95, representing a growth of approximately 6.8% year-over-year[22] - Current assets totaled ¥17,197,382,670.58, compared to ¥14,665,825,806.11, reflecting an increase of about 10.4%[21] - Total liabilities reached ¥19,924,106,652.31, compared to ¥17,438,528,555.09, showing an increase of approximately 14.2%[21] - Long-term borrowings surged to ¥8,277,132,020.98, up from ¥6,213,218,446.34, representing a significant increase of about 33.2%[21] - Total liabilities rose to ¥14,645,878,897.67 in Q1 2021, compared to ¥12,128,287,123.98 in Q1 2020, marking an increase of 20.7%[25] Cash Flow - Net cash flow from operating activities decreased by 133.39% to -CNY 223.21 million[4] - The net cash flow from operating activities was negative at -¥223,206,112.76, a decline of 133.39% compared to ¥668,571,283.86 in the previous year[15] - Cash flow from operating activities showed a net outflow of approximately ¥223.21 million, a decrease from a net inflow of ¥668.57 million in Q1 2020[33] - Cash inflow from financing activities was 2,554,647,201.45 RMB, an increase from 2,166,210,107.72 RMB in the previous year, marking a growth of approximately 17.9%[34] - The net cash flow from financing activities improved significantly to 1,101,390,138.13 RMB, compared to -517,311,397.63 RMB in Q1 2020[34] Shareholder Information - The total number of shareholders reached 207,065 by the end of the reporting period[7] - The top two shareholders, Yuan Zhimin and Xiong Haitao, hold 19.83% and 8.40% of shares respectively[7] Research and Development - R&D expenses increased by 40.65% to ¥340,585,139.43, up from ¥242,146,664.66, reflecting a focus on innovation[12] - Research and development expenses for Q1 2021 were ¥340,585,139.43, up from ¥242,146,664.66 in Q1 2020, reflecting a growth of 40.6%[26] - Research and development expenses increased to approximately ¥129.77 million, up from ¥72.09 million in the same period last year, reflecting an increase of 79.9%[30] Other Financial Metrics - The weighted average return on equity improved by 3.68 percentage points to 5.02%[4] - The company's retained earnings rose to ¥9,386,752,219.35 from ¥8,622,223,421.54, reflecting an increase of approximately 8.9%[22] - The total equity attributable to shareholders increased to ¥15,595,338,056.21 from ¥14,841,977,473.93, indicating a growth of about 5.1%[22] - The company's other comprehensive income showed a decrease in foreign currency translation differences, with a loss of -¥28,634,009.58 compared to -¥17,068,600.80 last year[11]

Financial Performance - The company's operating revenue for 2020 was RMB 35,061,170,904.88, representing a 19.72% increase from RMB 29,285,923,753.07 in 2019[14] - The net profit attributable to shareholders for 2020 was RMB 4,587,696,510.29, a significant increase of 268.64% compared to RMB 1,244,503,121.33 in 2019[14] - The net cash flow from operating activities reached RMB 6,216,986,372.12, up 127.03% from RMB 2,738,343,438.68 in the previous year[14] - The total assets of the company at the end of 2020 were RMB 32,454,896,472.95, an increase of 11.26% from RMB 29,169,654,922.14 at the end of 2019[14] - The net assets attributable to shareholders increased by 40.82% to RMB 14,841,977,473.93 from RMB 10,539,525,443.93 in 2019[14] - Basic earnings per share for 2020 were RMB 1.7826, a 276.08% increase from RMB 0.4740 in 2019[15] - The weighted average return on net assets for 2020 was 36.21%, an increase of 24.09 percentage points from 12.12% in 2019[15] - The company achieved total revenue of 35.061 billion yuan, a year-on-year increase of 19.72%, and a net profit attributable to shareholders of 4.588 billion yuan, up 268.64%[42] Cash Flow and Investments - The net cash flow from operating activities was 6.217 billion yuan, with total assets of 32.455 billion yuan and total liabilities of 17.439 billion yuan[42] - The net cash flow from investment activities improved by 41.80%, totaling CNY -2.80 billion[43] - The net cash flow from financing activities decreased significantly by 173.97%, totaling -¥2,414,054,166.63, mainly due to a reduction in bank loans[57] - The company's cash and cash equivalents increased by 33.69% to ¥3,870,960,602.37, reflecting higher cash receipts from sales[59] - The construction in progress increased by 120.79% to ¥1,259,297,814.63, driven by investments in new projects[60] Market and Product Development - The company aims to upgrade its product structure towards high-end and high value-added products, reflecting a shift from single modified plastics to a diversified range of chemical new materials[21] - The market for chemical new materials in China is expected to grow significantly due to domestic consumption upgrades and the transformation of manufacturing[26] - The company has established strategic partnerships with numerous well-known domestic and international enterprises, enhancing its market position in the chemical new materials industry[21] - The company achieved a sales volume of 1.5466 million tons for modified plastics, representing a year-on-year increase of 12.82%, with revenue reaching 20.408 billion yuan, up 17.09%[33] - The sales volume of environmentally friendly high-performance recycled plastics increased by 29.91% to 138,700 tons, driven by a surge in market demand for recycled plastics[34] Research and Development - The company has applied for a total of 3,763 patents, including 2,775 invention patents, demonstrating a strong commitment to innovation and intellectual property management[29] - The company has invested 4% of its revenue in R&D, forming a comprehensive R&D system with 1 central research institute and 3 international R&D centers[28] - The total number of R&D personnel is 1,432, accounting for 13.96% of the company's total workforce[54] - The company has established a Sustainable Development Technology Research Institute to focus on common technologies in the high-performance recycled plastics industry[75] - The company’s research and development efforts in 5G communication materials have led to significant progress, introducing high-dielectric low-loss materials and other advanced solutions[75] Environmental and Social Responsibility - The company has implemented an ISO 14001 environmental management system and promotes clean production practices[168] - The company has established a wastewater treatment facility with a capacity of 400 tons per day to independently handle industrial wastewater[169] - The company achieved a zero discharge of production wastewater and has implemented advanced technologies to reduce dust emissions[168] - The company donated CNY 11.2 million for poverty alleviation efforts in 2020, specifically targeting underprivileged villages in Guizhou Province[161] - The company actively transitioned to produce epidemic prevention materials, donating over CNY 2 million in protective supplies domestically and internationally[161] Risks and Challenges - The company has outlined potential risks in its annual report, advising investors to be cautious[6] - The company faces risks related to raw material prices and supply, as fluctuations in international crude oil prices can impact short-term profitability and production stability[137] - The company acknowledges macroeconomic risks, including the impact of the COVID-19 pandemic on product demand and pricing[136] - The company has a high annual R&D investment ratio, but there are risks associated with product development failures and market acceptance[137] Shareholder and Corporate Governance - The company has not reported any major accounting errors or changes that would impact its financial statements significantly[146] - The company has not engaged in any significant related party transactions that would affect its operational integrity during the reporting period[154] - The company has established measures to avoid competition with its controlling shareholders, ensuring compliance with regulations[144] - The company does not have a controlling shareholder or actual controller, indicating a diversified ownership structure[199] - Major shareholder Yuan Zhimin holds 510,380,393 shares, representing 19.83% of total shares, with 255,190,197 shares pledged[194]

[Important Notes](index=3&type=section&id=I.%20Important%20Notes) The board of directors guarantees the authenticity and completeness of this unaudited quarterly report - The company's Board of Directors, Supervisory Committee, and all directors, supervisors, and senior management guarantee the truthfulness, accuracy, and completeness of this quarterly report and assume corresponding legal responsibilities[4](index=4&type=chunk) - All company directors attended the board meeting to review this quarterly report[4](index=4&type=chunk) - The company's third-quarter report for 2020 is unaudited[4](index=4&type=chunk) [Company Profile and Financial Summary](index=3&type=section&id=II.%20Company%20Profile) The company achieved explosive performance growth in the first three quarters of 2020, with significant increases in revenue, net profit, and operating cash flow [Core Financial Data Summary](index=3&type=section&id=2.1%20Key%20Financial%20Data) The company experienced explosive growth in the first three quarters of 2020, driven by substantial increases in revenue, net profit, and operating cash flow Key Financial Data for the First Three Quarters of 2020 | Indicator | Jan-Sep 2020 (RMB) | Jan-Sep 2019 (RMB) | YoY Change (%) | | :--- | :--- | :--- | :--- | | **Operating Revenue** | 26,199,862,922.02 | 20,376,130,654.30 | 28.58% | | **Net Profit Attributable to Shareholders** | 3,794,203,086.82 | 944,403,397.65 | 301.76% | | **Net Profit Attributable to Shareholders (Excluding Non-recurring Items)** | 3,761,459,967.85 | 777,006,745.84 | 384.10% | | **Net Cash Flow from Operating Activities** | 6,044,225,788.17 | 1,872,438,224.72 | 222.80% | | **Basic Earnings Per Share (RMB/Share)** | 1.4743 | 0.3573 | 312.62% | | **Weighted Average Return on Equity** | 30.74% | 9.14% | Increased by 21.60 percentage points | Non-recurring Gains and Losses for the First Three Quarters of 2020 | Item | Amount for Jan-Sep (RMB) | Notes | | :--- | :--- | :--- | | Gains/Losses on Disposal of Non-current Assets | -10,453,015.49 | Mainly losses from disposal of fixed assets | | Government Grants Included in Current Profit/Loss | 80,419,619.32 | Mainly government grants recognized in the current period | | Gains/Losses from Fair Value Changes of Financial Instruments | -6,897,950.69 | - | | Other Non-operating Income and Expenses | -24,108,239.20 | - | | **Total** | **32,743,118.97** | - | [Shareholder Structure Analysis](index=5&type=section&id=2.2%20Shareholder%20Structure) As of the reporting period end, the company had 115,253 shareholders, with a relatively concentrated and stable ownership structure led by the founder - As of the reporting period end, the total number of common shareholders was **115,253**[11](index=11&type=chunk) Top 10 Shareholders | Shareholder Name | Number of Shares Held (shares) | Shareholding Ratio (%) | Share Status | | :--- | :--- | :--- | :--- | | Yuan Zhimin | 510,380,393 | 19.83 | Pledged 255,190,197 | | Xiong Haitao | 216,241,359 | 8.40 | None | | Li Nanjing | 90,769,754 | 3.53 | None | | Song Ziming | 70,928,880 | 2.76 | Pledged 20,300,000 | | 2016 Employee Stock Ownership Plan | 70,766,436 | 2.75 | None | | China Securities Finance Corporation Limited | 68,880,813 | 2.68 | None | | Central Huijin Asset Management Ltd. | 56,573,900 | 2.20 | None | | Xia Shiyong | 55,601,209 | 2.16 | None | | HKSCC NOMINEES LIMITED | 54,377,538 | 2.11 | None | | Xiong Lingyao | 45,000,200 | 1.75 | None | [Analysis of Significant Events](index=6&type=section&id=III.%20Significant%20Events) This section details significant changes in key financial statement items and analyzes their underlying causes [Analysis of Significant Changes in Key Financial Items](index=6&type=section&id=3.1%20Analysis%20of%20Significant%20Changes%20in%20Key%20Financial%20Items) The company reported significant fluctuations across its financial statements, including major changes in assets, liabilities, expenses, and cash flows Significant Changes in Balance Sheet Items | Item | Change (%) | Reason for Change | | :--- | :--- | :--- | | Construction in Progress | 73.83% | Construction of parent company's pilot plant and Zhuhai Wantong's 30,000-ton PLA project | | Other Non-current Assets | 99.88% | Increase in prepayments for construction and equipment | | Short-term Borrowings | -62.04% | Company reduced short-term loans | | Notes Payable | 257.23% | Increased use of notes for payment of goods | | Taxes Payable | 162.46% | Increase in corporate income tax payable | Significant Changes in Income Statement Items | Item | Change (%) | Reason for Change | | :--- | :--- | :--- | | Taxes and Surcharges | 52.80% | Driven by an increase in value-added tax | | Selling Expenses | 66.31% | Increase in sales bonuses and commissions | | General & Administrative Expenses | 37.92% | Increase in employee compensation | | Research & Development Expenses | 33.17% | Increase in product R&D investment | | Non-operating Expenses | 671.06% | Increase in donation expenses | | Income Tax Expense | 414.26% | Increase in corporate income tax | Significant Changes in Cash Flow Statement Items | Item | Change (%) | Reason for Change | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 222.80% | Increase in cash receipts from sales and advances from customers | | Net Cash Flow from Investing Activities | 55.02% | Resulted from external equity transactions in the same period last year | | Net Cash Flow from Financing Activities | -196.34% | Decrease in bank loans | [Appendix: Financial Statements](index=10&type=section&id=IV.%20Appendix) This appendix presents the unaudited consolidated and parent company financial statements for the period ended September 30, 2020 [Financial Statements](index=10&type=section&id=4.1%20Financial%20Statements) This appendix provides the unaudited consolidated and parent company financial statements of Kingfa Sci & Tech Co, Ltd as of September 30, 2020 - The appendix includes the company's unaudited consolidated and parent company balance sheets, income statements, and cash flow statements for Q3 2020[20](index=20&type=chunk)[27](index=27&type=chunk)[33](index=33&type=chunk) [Consolidated Balance Sheet](index=10&type=section&id=Consolidated%20Balance%20Sheet) As of September 30, 2020, total assets grew to RMB 30.27 billion, while total liabilities decreased, optimizing the company's capital structure Key Items from Consolidated Balance Sheet (Unit: RMB billion) | Item | September 30, 2020 | December 31, 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 30.27 | 29.17 | 3.78% | | Total Liabilities | 15.48 | 18.46 | -16.15% | | Equity Attributable to Parent Company | 14.06 | 10.54 | 33.43% | [Parent Company Balance Sheet](index=12&type=section&id=Parent%20Company%20Balance%20Sheet) The parent company's total assets remained stable at RMB 20.77 billion, while owner's equity grew by 20.99%, indicating solid profitability Key Items from Parent Company Balance Sheet (Unit: RMB billion) | Item | September 30, 2020 | December 31, 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 20.77 | 20.66 | 0.49% | | Total Liabilities | 12.16 | 13.55 | -10.26% | | Owner's Equity | 8.60 | 7.11 | 20.99% | [Consolidated Income Statement](index=15&type=section&id=Consolidated%20Income%20Statement) For the first three quarters of 2020, the company's total revenue grew by 28.58% and net profit attributable to shareholders surged by 301.76% Key Items from Consolidated Income Statement (Unit: RMB billion) | Item | Jan-Sep 2020 | Jan-Sep 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 26.20 | 20.38 | 28.58% | | Operating Profit | 4.54 | 1.07 | 323.31% | | Net Profit Attributable to Parent Company Shareholders | 3.79 | 0.94 | 301.76% | | Basic Earnings Per Share (RMB/Share) | 1.4743 | 0.3573 | 312.62% | [Parent Company Income Statement](index=18&type=section&id=Parent%20Company%20Income%20Statement) The parent company's net profit grew by 598.45% in the first three quarters of 2020, significantly outpacing the consolidated growth rate Key Items from Parent Company Income Statement (Unit: RMB billion) | Item | Jan-Sep 2020 | Jan-Sep 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 10.67 | 8.39 | 27.09% | | Operating Profit | 1.96 | 0.28 | 604.67% | | Net Profit | 1.75 | 0.25 | 598.45% | [Consolidated Cash Flow Statement](index=20&type=section&id=Consolidated%20Cash%20Flow%20Statement) Net cash flow from operating activities increased by 222.80% in the first three quarters of 2020, while financing activities resulted in a net cash outflow Key Items from Consolidated Cash Flow Statement (Unit: RMB billion) | Item | Jan-Sep 2020 | Jan-Sep 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 6.04 | 1.87 | 222.80% | | Net Cash Flow from Investing Activities | -1.92 | -4.27 | 55.02% | | Net Cash Flow from Financing Activities | -3.50 | 3.63 | -196.34% | | Net Increase in Cash and Cash Equivalents | 0.60 | 1.25 | -52.43% | [Parent Company Cash Flow Statement](index=21&type=section&id=Parent%20Company%20Cash%20Flow%20Statement) The parent company generated strong operating cash flow of RMB 4.37 billion, a 124.45% increase, while actively reducing debt Key Items from Parent Company Cash Flow Statement (Unit: RMB billion) | Item | Jan-Sep 2020 | Jan-Sep 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 4.37 | 1.95 | 124.45% | | Net Cash Flow from Investing Activities | 0.11 | -3.97 | N/A | | Net Cash Flow from Financing Activities | -3.97 | 2.82 | -240.79% | | Net Increase in Cash and Cash Equivalents | 0.50 | 0.81 | -38.87% |

Financial Performance - The company's operating revenue for the first half of 2020 reached ¥16,930,072,692.15, representing a 37.17% increase compared to ¥12,342,134,336.36 in the same period last year[15]. - Net profit attributable to shareholders was ¥2,411,717,883.34, a significant increase of 373.27% from ¥509,584,573.50 in the previous year[15]. - The net cash flow from operating activities was ¥5,887,147,581.07, up 466.50% from ¥1,039,210,178.03 in the same period last year[15]. - Basic earnings per share increased to ¥0.9371, a 389.60% rise from ¥0.1914 in the previous year[16]. - The weighted average return on net assets rose to 20.25%, an increase of 15.26 percentage points compared to 4.99% in the previous year[16]. - The company reported a net profit excluding non-recurring gains and losses of ¥2,385,362,252.30, which is a 536.33% increase from ¥374,865,135.08 in the previous year[15]. - The company's overall revenue for the reporting period was 16.93 billion RMB, representing a year-on-year growth of 37.17%[53]. - The net profit attributable to shareholders reached 2.41 billion RMB, a significant increase of 373.27% year-on-year[53]. - The company’s cash flow from operating activities was 5.89 billion RMB, reflecting a substantial increase of 466.50% compared to the previous year[54]. Market and Industry Insights - The main business includes the research, production, and sales of new chemical materials, with seven major product categories including modified plastics and biodegradable plastics, widely used in various industries[19]. - The modified plastics market in China has seen rapid growth, with the modification rate increasing from 8% in 2004 to over 20% in 2019, indicating significant development potential[24]. - The demand for high-performance modified plastics is expected to rise due to trends in automotive lightweighting and 5G communications, driving innovation in the industry[24]. - The company is one of the largest modified plastic producers in the Asia-Pacific region, with products meeting international advanced standards in biodegradable plastics and carbon fiber[19]. - The company emphasizes strategic partnerships with leading suppliers to stabilize raw material supply and reduce costs through various procurement models[20]. - The competitive landscape in the modified plastics industry is intensifying, with a need for domestic companies to enhance their technological capabilities to compete with international firms[25]. - The company is committed to developing environmentally friendly products, responding to increasing consumer demand for low-carbon and sustainable materials[25]. - In the first half of 2020, the domestic market for fully biodegradable plastics is expected to reach a market scale of 1 million tons by the end of 2025, driven by national policies restricting single-use plastics[26]. Production and Capacity - The company adopts a "sales-driven production" model, organizing production based on customer requirements and market conditions[21]. - The company is focusing on upgrading its product structure towards high-end and high-value-added materials, expanding its market presence[19]. - The company has established a complete process for the development and industrial production of fully biodegradable plastics, with a production capacity of 60,000 tons[43]. - The company is actively developing new biodegradable plastics and expanding production capacity, with a new 60,000-ton PBAT production line expected to be operational in 2021[43]. - The company completed over 990 new product development projects in the automotive sector, with more than 70 material approvals from major automotive manufacturers[40]. Environmental and Social Responsibility - The company is committed to avoiding related party transactions and competition with its controlling shareholders[79]. - The company donated RMB 11.2 million for poverty alleviation efforts, including RMB 10 million specifically for aiding impoverished villages in Guizhou Province[92]. - The company aims to continue its poverty alleviation efforts, focusing on sustainable development and social responsibility[94]. - The company generated and properly disposed of 150 tons of hazardous waste in the first half of 2020[96]. - The total emissions of sulfur dioxide (SO2) for the first half of 2020 were 42.82 tons, well below the annual emission permit of 127.184 tons[101]. - The company has established a comprehensive pollution control system, including a 10,000 m³ vertical rubber mold sealing dry gas cabinet and multiple gas recovery systems[103]. - The company has received environmental impact assessment approvals for new projects, with the latest approval dated June 8, 2020[104]. - The company has implemented a risk assessment report and emergency response plan for environmental incidents, filed with environmental authorities[105]. Financial Position and Investments - The company's total assets amounted to 29.81 billion RMB, with a debt-to-asset ratio of 55.12%[53]. - The company's long-term prepaid expenses increased to ¥119.31 million, up 36.07% from ¥87.69 million in the previous period[59]. - The company's tax payable increased by 236.50% to ¥686.61 million, reflecting growth in profits and higher corporate income tax obligations[59]. - The company's contract liabilities reached ¥1.80 billion, reflecting a transition to new revenue accounting standards and an increase in advance payments[59]. - Long-term equity investments increased by 1.21% to ¥1.61 billion, mainly due to higher returns from external equity investments[61]. - The company has a diverse portfolio of subsidiaries and joint ventures across different regions, enhancing its market presence and operational capabilities[152]. Risks and Challenges - The company is facing risks from a global economic downturn, with the IMF predicting a global GDP growth rate of -3% for 2020, the worst since the Great Depression[74]. - The company is also exposed to risks from fluctuations in international oil prices, which could impact its operations[74]. - The company has acknowledged potential bad debt risks due to the global economic downturn affecting the recovery of accounts receivable[75]. - Jinfat Technology's overseas subsidiaries in India, the USA, Europe, and Malaysia are facing operational risks due to local political and economic instability[75]. Corporate Governance - The total number of ordinary shareholders reached 83,003 by the end of the reporting period[118]. - The largest shareholder, Yuan Zhimin, holds 510,380,393 shares, accounting for 19.83% of the total shares, with 255,190,197 shares pledged[119]. - There were no changes in the controlling shareholder or actual controller during the reporting period, ensuring stability in governance[121]. - The company has not disclosed any significant accounting errors or changes in accounting policies during the reporting period[115]. Research and Development - Research and development expenses amounted to ¥665,896,041.12, up from ¥477,989,920.36 in the previous year, reflecting a year-over-year increase of approximately 39%[133]. - The company has integrated innovation resources to enhance its R&D capabilities, focusing on high-performance materials and sustainable solutions[41].

Financial Performance - The company's operating revenue for 2019 was RMB 29,285,923,753.07, representing a 15.68% increase compared to RMB 25,316,620,559.18 in 2018[15]. - The net profit attributable to shareholders of the listed company reached RMB 1,244,503,121.33, a significant increase of 99.43% from RMB 624,044,121.75 in the previous year[15]. - The net profit attributable to shareholders after deducting non-recurring gains and losses was RMB 1,019,092,181.81, up 208.05% from RMB 330,815,988.37 in 2018[15]. - The net cash flow from operating activities was RMB 2,738,343,438.68, showing a remarkable increase of 601.53% compared to RMB 390,337,855.61 in 2018[15]. - As of the end of 2019, the net assets attributable to shareholders amounted to RMB 10,539,525,443.93, a 2.99% increase from RMB 10,233,399,235.23 at the end of 2018[15]. - The total assets of the company reached RMB 29,169,654,922.14, reflecting a 29.87% increase from RMB 22,460,490,613.02 in 2018[15]. - Basic earnings per share increased by 106.36% to CNY 0.4740 in 2019 from CNY 0.2297 in 2018[16]. - The weighted average return on equity rose by 5.93 percentage points to 12.12% in 2019 compared to 6.19% in 2018[16]. - The net profit attributable to shareholders for Q4 2019 was CNY 300,099,723.68, with a total annual revenue of CNY 29,285,926,752.07[18]. - The company reported a net cash flow from operating activities of CNY 865,905,213.96 in Q4 2019[18]. Dividends and Capital Management - The company proposed a cash dividend of RMB 1 per 10 shares to shareholders participating in the profit distribution[3]. - The company does not plan to increase capital reserves or issue bonus shares for the year[3]. Market Position and Industry Trends - The company is a leading player in the chemical new materials industry, focusing on modified plastics and biodegradable plastics, with a strong market presence in Asia-Pacific[24]. - The production model is based on "sales-driven production," aligning production with customer requirements and market conditions[26]. - The company aims to upgrade its product structure towards high-end and high-value-added materials[24]. - The competition in the modified plastics industry is intensifying, leading to an inevitable reshuffling of the market as companies lacking core technologies face elimination[30]. - The fully biodegradable plastic market is expanding globally, with significant growth in regions like Southeast Asia and South America, driven by environmental regulations[30]. - The domestic demand for high-performance modified engineering plastics is expected to rise significantly due to the booming automotive, electronics, and communication industries[29]. Research and Development - The company developed over 100 advanced new material products, including fully biodegradable plastics and high-performance carbon fiber composites, and applied for 2,983 patents[42]. - The company has a research team comprising 15 academicians, over 100 senior experts, and 132 PhDs, enhancing its innovation capabilities[42]. - The company has established a research and development system with a strategic significance known as "13551," integrating forward-looking, basic, and applied research[44]. - The company is focusing on developing high-value new products for various sectors, including daily chemicals, automotive, and construction materials[55]. - The company is committed to sustainable development and has implemented clean production practices to reduce energy consumption and emissions[80]. Environmental and Social Responsibility - The company has implemented an ISO14001 environmental management system to promote clean production[189]. - The company achieved a total wastewater discharge of 3.727 tons with a COD concentration of 79 mg/L, well below the standard of 500 mg/L[191]. - The company has been recognized as a key pollutant discharge unit by local environmental authorities[190]. - The company has actively participated in social responsibility initiatives, focusing on education and community support[182]. - The company donated a total of RMB 610,000 for poverty alleviation projects during the Guangdong Poverty Alleviation Day[183]. Financial Risks and Governance - The company has faced significant risks due to macroeconomic fluctuations, particularly from the global economic slowdown and the impact of COVID-19 on raw material procurement and sales[156]. - The company has committed to a high level of R&D investment, which poses risks of product development failures or lack of market acceptance[156]. - The company has engaged in related party transactions strictly according to its articles of association, ensuring compliance with regulations[164]. - The company has not faced any risks of suspension or termination of its listing status[168]. - The company has made adjustments to its financial reporting in accordance with new regulatory requirements issued by the Ministry of Finance[166]. Acquisitions and Investments - The acquisition of Ningbo Jinfan New Materials Co., Ltd. was completed on May 24, 2019, with an asset book value of approximately 5.51 billion yuan[39]. - The company acquired a 51% stake in Ningbo Haiyue New Materials for CNY 69,870.00 million, completing the transaction in June 2019[130]. - The company has invested 73.11 million RMB in the new Pune facility in India, which began production in September 2019[56]. Production and Sales - In 2019, the company achieved a total finished product sales volume of 2.1678 million tons, a year-on-year increase of 45.39%[44]. - The modified plastics segment reported a finished product sales volume of 1.264 million tons, a decrease of 6.10% year-on-year[45]. - The company processed 1,258,600 tons of raw materials in 2019, with total product output reaching 1,155,400 tons, including 602,500 tons of propylene and 417,300 tons of isooctane[52]. - The company has established a logistics system with a dedicated chemical terminal, achieving a throughput of 2.29 million tons in 2019, which has reduced logistics costs and improved economic efficiency[89]. Future Outlook - The company anticipates a substantial growth in the modified plastics market, driven by the demand for lightweight materials in automotive and electronics sectors, with an expected increase in domestic supply chain completeness to over 80% during the 14th Five-Year Plan[140]. - The company plans to enhance its research and development efforts in green and environmentally friendly plastic products to align with national environmental policies[140]. - The company aims to establish a global first-class R&D, marketing, manufacturing, and information platform by 2025, focusing on high-performance new materials[153].

[Important Notice](index=3&type=section&id=%E4%B8%80%E3%80%81%20%E9%87%8D%E8%A6%81%E6%8F%90%E7%A4%BA) The company's board, supervisory board, and senior management guarantee the accuracy and completeness of this quarterly report - The company's board of directors, supervisory board, and all directors, supervisors, and senior management guarantee the truthfulness, accuracy, and completeness of this quarterly report, with no false records, misleading statements, or material omissions[3](index=3&type=chunk) - This company's Q1 2020 report is unaudited[3](index=3&type=chunk) [Company Overview](index=3&type=section&id=%E4%BA%8C%E3%80%81%20%E5%85%AC%E5%8F%B8%E5%9F%BA%E6%9C%AC%E6%83%85%E5%86%B5) This section provides an overview of the company's key financial performance and shareholder structure [Key Financial Data](index=3&type=section&id=2.1%20%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E6%95%B0%E6%8D%AE) In Q1 2020, the company experienced a performance decline, with revenue down **6.15%** and net profit attributable to shareholders down **36.91%** Key Financial Indicators for Q1 2020 | Indicator | Current Period | Prior Year Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue (yuan) | 5,536,313,856.36 | 5,899,249,649.13 | -6.15% | | Net Profit Attributable to Shareholders (yuan) | 141,897,609.26 | 224,897,510.35 | -36.91% | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) (yuan) | 87,168,745.46 | 180,044,516.05 | -51.58% | | Net Cash Flow from Operating Activities (yuan) | 668,571,283.86 | 812,860,013.29 | -17.75% | | Basic Earnings Per Share (yuan/share) | 0.0551 | 0.0840 | -34.40% | | Weighted Average Return on Net Assets (%) | 1.34% | 2.22% | Decreased by 0.88 percentage points | - During the reporting period, non-recurring gains and losses totaled **54.73 million yuan**, primarily from government subsidies (**42.90 million yuan**) and fair value changes of financial assets (**23.81 million yuan**)[5](index=5&type=chunk) [Shareholder Information](index=5&type=section&id=2.2%20%E8%82%A1%E4%B8%9C%E6%83%85%E5%86%B5) As of the reporting period end, the company had **127,913 shareholders**, with the largest shareholder's significant stake largely pledged - As of the end of the reporting period, the company had **127,913 shareholders**[6](index=6&type=chunk) Top Five Shareholders' Holdings | Shareholder Name | Number of Shares Held (shares) | Shareholding Ratio (%) | Share Status | | :--- | :--- | :--- | :--- | | Yuan Zhimin | 510,380,393 | 19.83 | Pledged 382,785,200 | | Xiong Haitao | 216,241,359 | 8.40 | None | | Song Ziming | 94,170,000 | 3.66 | Pledged 26,900,000 | | Li Nanjing | 90,769,754 | 3.53 | None | | Kingfa Sci. & Tech. Co., Ltd. - 2016 Employee Stock Ownership Plan | 70,766,436 | 2.75 | None | [Significant Events](index=6&type=section&id=%E4%B8%89%E3%80%81%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9) This section details significant changes in key financial statement items and indicators, along with their underlying reasons [Analysis of Significant Changes in Key Financial Items](index=6&type=section&id=3.1%20%E5%85%AC%E5%8F%B8%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%8A%A5%E8%A1%A8%E9%A1%B9%E7%9B%AE%E3%80%81%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87%E9%87%8D%E5%A4%A7%E5%8F%98%E5%8A%A8%E7%9A%84%E6%83%85%E5%86%B5%E5%8F%8A%E5%8E%9F%E5%9B%A0) Key financial items saw significant changes, including a **79.37%** increase in trading financial assets, reclassification of advances from customers, and a **12-fold** increase in investment income Major Balance Sheet Item Changes | Item | Change (%) | Reason for Change | | :--- | :--- | :--- | | Trading Financial Assets | 79.37% | Increase in fair value change gains from futures and forward foreign exchange contracts | | Advances from Customers | -100.00% | Adjusted to "Contract Liabilities" due to adoption of new revenue recognition standard | | Contract Liabilities | 100.00% | Adoption of new revenue recognition standard and increase in advances from customers this period | | Employee Compensation Payable | -67.70% | 2019 employee year-end bonuses expensed in this period | | Non-current Liabilities Due Within One Year | -82.65% | Payment of 1 billion yuan medium-term notes upon maturity | Major Income Statement Item Changes | Item | Change (%) | Reason for Change | | :--- | :--- | :--- | | Financial Expenses | 120.99% | Increase in company loan interest during the reporting period | | Investment Income | 1213.02% | Increase in income from investee companies during the reporting period | | Fair Value Change Gains | 100.00% | Increase in fair value change gains from futures trading during the reporting period | | Credit Impairment Losses | 261.63% | Company reversed bad debt provisions for receivables during the reporting period | | Non-operating Expenses | 645.64% | Increase in company's external poverty alleviation donations during the reporting period | - Net cash flow from financing activities increased by **122.88%** year-on-year, primarily due to cash payments for share repurchases in the prior year period[11](index=11&type=chunk) [Appendix](index=8&type=section&id=%E5%9B%9B%E3%80%81%20%E9%99%84%E5%BD%95) This section includes the unaudited financial statements for Q1 2020 and details on accounting standard changes [Financial Statements](index=8&type=section&id=4.1%20%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section provides the company's unaudited consolidated and parent company financial statements for Q1 2020 [Consolidated Balance Sheet](index=8&type=section&id=%E5%90%88%E5%B9%B6%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of March 31, 2020, total assets were **29.32 billion yuan**, with total liabilities at **18.48 billion yuan** and parent company equity at **10.68 billion yuan** Key Consolidated Balance Sheet Data (March 31, 2020) | Item | Amount (yuan) | | :--- | :--- | | Total Assets | 29,318,213,394.28 | | Total Liabilities | 18,479,906,432.05 | | Total Owners' Equity Attributable to Parent Company | 10,674,854,267.02 | [Consolidated Income Statement](index=13&type=section&id=%E5%90%88%E5%B9%B6%E5%88%A9%E6%B6%A6%E8%A1%A8) In Q1 2020, total operating revenue was **5.54 billion yuan**, down **6.15%**, resulting in a **36.91%** decrease in net profit attributable to parent company shareholders Key Consolidated Income Statement Data (Q1 2020) | Item | Amount (yuan) | Compared to Prior Year Period | | :--- | :--- | :--- | | Total Operating Revenue | 5,536,313,856.36 | 5,899,249,649.13 | | Operating Profit | 202,788,033.99 | 261,690,881.79 | | Total Profit | 200,552,941.11 | 263,927,205.18 | | Net Profit Attributable to Parent Company Shareholders | 141,897,609.26 | 224,897,510.35 | [Consolidated Cash Flow Statement](index=16&type=section&id=%E5%90%88%E5%B9%B6%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In Q1 2020, net cash flow from operating activities was **669 million yuan**, down **17.75%**, while financing activities turned positive to **321 million yuan** due to prior year share repurchases Key Consolidated Cash Flow Statement Data (Q1 2020) | Item | Amount (yuan) | Compared to Prior Year Period | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 668,571,283.86 | 812,860,013.29 | | Net Cash Flow from Investing Activities | -415,459,285.26 | -453,702,077.42 | | Net Cash Flow from Financing Activities | 321,329,226.94 | 144,172,798.97 | [Accounting Standard Change Adjustments](index=19&type=section&id=4.2%202020%20%E5%B9%B4%E8%B5%B7%E9%A6%96%E6%AC%A1%E6%89%A7%E8%A1%8C%E6%96%B0%E6%94%B6%E5%85%A5%E5%87%86%E5%88%99%E8%B0%83%E6%95%B4%E9%A6%96%E6%AC%A1%E6%89%A7%E8%A1%8C%E5%BD%93%E5%B9%B4%E5%B9%B4%E5%88%9D%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E7%9B%B8%E5%85%B3%E6%83%85%E5%86%B5) The company adopted the new revenue standard from January 1, 2020, reclassifying 'advances from customers' to 'contract liabilities' in the opening balance sheet - The company adopted the new revenue standard from January 1, 2020, adjusting relevant items in the opening financial statements[32](index=32&type=chunk)[36](index=36&type=chunk) - The main adjustment involved reclassifying **275.99 million yuan** of 'advances from customers' to 'contract liabilities' in the consolidated opening balance sheet[31](index=31&type=chunk) - This accounting standard change only adjusted the opening financial statements of the first year of adoption, without retrospective adjustment to prior year-end figures[32](index=32&type=chunk)[36](index=36&type=chunk)

Financial Performance - Net profit attributable to shareholders rose by 44.34% to CNY 944.40 million year-to-date[5] - Operating revenue for the first nine months reached CNY 20.38 billion, a 9.85% increase year-on-year[5] - Basic earnings per share increased by 48.38% to CNY 0.3573[5] - The weighted average return on net assets improved by 2.70 percentage points to 9.14%[5] - Operating income decreased by 40.17% to CNY 12,852,797.75 from CNY 21,481,263.86, primarily due to reduced compensation received in the previous year[16] - The company reported a net profit margin improvement, with net profit for the first three quarters of 2019 reaching ¥20,376,130,654.30, up from ¥18,549,310,279.17 in the same period last year[27] - The company reported a total comprehensive income of approximately ¥437.91 million for Q3 2019, compared to ¥316.96 million in Q3 2018, an increase of 38.0%[30] - The company’s total profit for Q3 2019 was approximately ¥485.77 million, an increase of 36.5% from ¥355.52 million in Q3 2018[31] Cash Flow - Net cash flow from operating activities surged by 415.12% to CNY 1.87 billion year-to-date[5] - The net cash flow from operating activities increased to ¥1,872,438,224.72, a 415.12% increase compared to ¥363,495,008.28 in the same period last year[17] - The net cash flow from investing activities decreased to -¥4,267,819,426.52, a decline of 192.11% from -¥1,461,033,623.18 year-on-year, primarily due to the acquisition of Ningbo Haiyue[17] - The net cash flow from financing activities rose to ¥3,634,093,652.53, reflecting a 154.64% increase from ¥1,427,175,924.96, mainly due to increased bank loans for the acquisition of Ningbo Haiyue[17] - Cash flow from financing activities generated a net amount of CNY 3,634,093,652.53, compared to CNY 1,427,175,924.96 in the same period of 2018, indicating an increase of approximately 154.1%[36] Assets and Liabilities - Total assets increased by 26.65% to CNY 28.45 billion compared to the end of the previous year[5] - Cash and cash equivalents increased by 92.50% to CNY 2,941,956,848.98 from CNY 1,528,250,664.37 due to increased discounting and sales receipts[14] - Accounts receivable increased by 70.69% to CNY 1,727,629,047.81 from CNY 1,012,167,124.00, primarily due to increased bill settlement receipts[14] - Fixed assets rose by 62.98% to CNY 10,521,322,807.44 from CNY 6,455,460,507.93, mainly due to the consolidation of Ningbo Jinfa[14] - Total liabilities due within one year surged by 635.86% to CNY 2,189,561,113.34 from CNY 297,549,437.12, primarily due to the maturity of CNY 1 billion medium-term notes in March 2020[15] - The company's total liabilities rose to ¥18,375,910,819.78, compared to ¥15,107,442,323.66 at the end of 2018[22] - Total liabilities amounted to ¥12,107,442,323.66, with total equity at ¥10,353,048,289.36, resulting in total assets of ¥22,460,490,613.02[43] Shareholder Information - The total number of shareholders reached 80,633 by the end of the reporting period[9] - Major shareholder Yuan Zhimin holds 18.79% of the shares, with 55.66 million shares pledged[9] Investment and R&D - R&D expenses in Q3 2019 amounted to ¥302,939,106.01, a rise of 23.7% from ¥244,854,685.81 in Q3 2018[27] - Research and development expenses for Q3 2019 totaled approximately ¥126.75 million, an increase of 9.5% from ¥116.19 million in Q3 2018[31] Changes in Accounting Standards - The company adopted new financial instrument standards starting January 1, 2019, leading to a reclassification of certain equity investments[46] - Investments previously classified as "available-for-sale financial assets" are now categorized as "financial assets measured at fair value with changes recognized in profit or loss"[46] - The reclassification affects investments without control, joint control, or significant influence, and lacking reliable fair value measurement in active markets[46] - The report does not include retrospective adjustments for prior comparative data under the new financial instrument and lease standards[46]