Group 1: Industry Outlook and Market Trends - The overall market outlook for 2021 is positive, driven by the effectiveness of vaccines in the US and Europe, with expectations of economic recovery in the second half of the year [2] - The demand for 5G communications and laptops is strong in the first half of the year, while the second half will see increased demand in automotive, consumer electronics, and home appliances [2] - Raw material prices have surged due to supply-demand imbalances, particularly in copper foil and glass cloth, with no signs of easing in the near term [2][3] Group 2: Company Strategy and Development Plans - The company's strategic shift from "expanding and strengthening" to "strengthening and expanding" aims to enhance gross margins and technology while targeting a 30% increase in production capacity over the next five years [3][4] - The company is focusing on high-end materials and product upgrades to mitigate industry cycle risks, with plans to develop packaging substrates in stages [3][4] - A diversified supply chain is being established to ensure reliable sourcing of high-end materials, which are predominantly controlled by suppliers in the US, Japan, and Taiwan [4] Group 3: Cost Management and Pricing Strategy - The company has identified early signs of rising material costs and has attempted to lock in prices, but limited supplier inventory has constrained procurement [4][5] - The processing fee for copper foil has increased from $2.5 per kg to $5.8-6 per kg, significantly impacting overall costs [4] - The company is balancing short-term and long-term cost pressures by communicating with customers to manage expectations regarding price increases [4][5] Group 4: Product Development and Market Positioning - The company is committed to high-end product development, particularly in flexible printed circuit boards (FPCs), despite current profitability challenges due to oversupply in the market [5][6] - Progress has been made in obtaining certifications for high-speed materials used in network communications and servers, with significant advancements in the server product line [5][6] - The company is actively pursuing opportunities in automotive electronics, with a focus on high-reliability products for electric vehicles and advanced driver-assistance systems [6][7] Group 5: Research and Development Initiatives - R&D reforms initiated in 2018 have focused on project funding, evaluation, and internal sharing of results, leading to improved outcomes [7][8] - The company is expanding its capabilities in HDI (High-Density Interconnect) products and is actively pursuing certifications for new platforms [8][9] - Future growth is anticipated as the company transitions from a focus on volume to a focus on high-margin, high-tech products [9][10]

[Definitions](index=4&type=section&id=Section%201.%20Definitions) This section provides definitions of key terms used throughout the report [Company Profile and Key Financial Indicators](index=4&type=section&id=Section%202.%20Company%20Profile%20and%20Key%20Financial%20Indicators) This section provides an overview of the company's basic information and a summary of its key financial performance over the past three years [Company Information and Contact Details](index=4&type=section&id=I.%20Company%20Information) This chapter provides the company's basic business registration information, including its Chinese and English names, legal representative, registered and office addresses, website, and contact details for the Board Secretary - The company's full name is Guangdong Shengyi Technology Co., Ltd. (SHENGYI TECHNOLOGY CO.,LTD.), stock code is **600183**, listed on the Shanghai Stock Exchange[9](index=9&type=chunk)[14](index=14&type=chunk) [Key Accounting Data and Financial Indicators for the Past Three Years](index=5&type=section&id=VII.%20Key%20Accounting%20Data%20and%20Financial%20Indicators%20for%20the%20Past%20Three%20Years) The company achieved steady growth in 2020, with operating revenue increasing by **10.92%** and net profit attributable to shareholders by **16.00%**, while total assets expanded to **18.36 billion yuan** Key Accounting Data for the Past Three Years (Unit: Yuan) | Indicator | 2020 | 2019 | YoY Change (%) | 2018 | | :--- | :--- | :--- | :--- | :--- | | **Operating Revenue** | 14,687,341,460.15 | 13,241,085,241.08 | 10.92 | 11,981,081,734.45 | | **Net Profit Attributable to Parent Company Shareholders** | 1,680,510,160.48 | 1,448,767,198.85 | 16.00 | 1,000,468,630.58 | | **Net Profit Attributable to Parent Company Shareholders (Excluding Non-recurring Items)** | 1,605,771,350.27 | 1,393,661,498.51 | 15.22 | 924,798,068.77 | | **Net Cash Flow from Operating Activities** | 1,757,967,491.81 | 1,692,374,380.93 | 3.88 | 1,337,205,019.46 | | **Net Assets Attributable to Parent Company Shareholders (Year-end)** | 9,889,074,607.01 | 8,833,910,412.23 | 11.94 | 6,402,503,408.72 | | **Total Assets (Year-end)** | 18,357,445,724.02 | 15,534,907,870.03 | 18.17 | 12,885,924,860.59 | Key Financial Indicators for the Past Three Years | Indicator | 2020 | 2019 | YoY Change (%) | 2018 | | :--- | :--- | :--- | :--- | :--- | | **Basic Earnings Per Share (Yuan/Share)** | 0.74 | 0.66 | 12.12 | 0.47 | | **Diluted Earnings Per Share (Yuan/Share)** | 0.72 | 0.66 | 9.09 | 0.47 | | **Weighted Average Return on Net Assets (%)** | 18.28 | 19.67 | Decrease by 1.39 percentage points | 16.39 | [Key Quarterly Financial Data for 2020](index=7&type=section&id=IX.%20Key%20Quarterly%20Financial%20Data%20for%202020) The company's operations showed a quarter-over-quarter improvement in 2020, with operating revenue increasing from **3.07 billion yuan** in Q1 to **3.99 billion yuan** in Q4 2020 Quarterly Financial Data (Unit: Yuan) | Indicator | Q1 | Q2 | Q3 | Q4 | | :--- | :--- | :--- | :--- | :--- | | **Operating Revenue** | 3,071,837,888.45 | 3,806,893,561.83 | 3,811,269,742.04 | 3,997,340,267.83 | | **Net Profit Attributable to Parent Company Shareholders** | 339,269,165.27 | 486,582,007.33 | 476,969,946.76 | 377,689,041.12 | | **Net Profit Attributable to Parent Company Shareholders (Excluding Non-recurring Items)** | 342,748,701.29 | 481,980,089.53 | 405,704,037.59 | 375,338,521.86 | | **Net Cash Flow from Operating Activities** | 572,569,553.19 | 333,118,633.84 | 232,890,254.85 | 619,389,049.93 | [Non-recurring Gains and Losses](index=7&type=section&id=X.%20Non-recurring%20Gains%20and%20Losses%20and%20Amounts) In 2020, the company's non-recurring gains and losses totaled **74.74 million yuan**, primarily from government subsidies and gains from subsidiary acquisitions 2020 Key Non-recurring Gains and Losses (Unit: Yuan) | Item | 2020 Amount | | :--- | :--- | | Government Subsidies Included in Current Profit and Loss | 61,119,243.01 | | Gains from Business Combinations | 40,646,900.71 | | Gains and Losses from Disposal of Non-current Assets | -16,839,382.47 | | Net Other Non-operating Income and Expenses | -11,133,907.54 | | **Total** | **74,738,810.21** | [Business Overview](index=8&type=section&id=Section%203.%20Business%20Overview) This section outlines the company's core business, operating model, and competitive advantages in the industry [Main Business and Operating Model](index=8&type=section&id=I.%20Description%20of%20Main%20Business%2C%20Operating%20Model%2C%20and%20Industry%20Situation%20During%20the%20Reporting%20Period) The company's main business involves designing, producing, and selling copper clad laminates (CCL), prepregs, and printed circuit boards (PCB), widely used in various electronic products - The company's core products are **copper clad laminates** and **printed circuit boards**, applied in high-growth areas such as **5G antennas**, **communication base stations**, **servers**, **automotive electronics**, and **mobile terminals**, gaining high recognition from leading manufacturers in various industries[23](index=23&type=chunk) - The company emphasizes establishing **'win-win' strategic partnerships** with upstream and downstream partners, fostering collaborative growth and value transfer across the supply chain through technical exchange and joint development[23](index=23&type=chunk)[24](index=24&type=chunk) [Core Competitiveness Analysis](index=9&type=section&id=III.%20Analysis%20of%20Core%20Competitiveness%20During%20the%20Reporting%20Period) The company's core competitiveness stems from its strong brand, experienced management, and continuous technological innovation, particularly in high-value-added products - **Brand Advantage**: The company has obtained multiple international safety certifications, including US UL, UK BSI, and German VDE, and holds industry influence as a convener of the IEC working group and a core member of several domestic industry associations[26](index=26&type=chunk) - **Technological Advantage**: The company's 'National Engineering Research Center for Electronic Circuit Substrates' has passed acceptance, focusing on engineering research and development of key common technologies in the industry, continuously launching high-value-added new products[26](index=26&type=chunk) [Management Discussion and Analysis](index=9&type=section&id=Section%204.%20Management%20Discussion%20and%20Analysis) This section provides a detailed review of the company's operational performance, financial position, and future outlook [Operational Review](index=9&type=section&id=I.%20Management%20Discussion%20and%20Analysis) In 2020, the company successfully navigated the pandemic and trade disputes, capitalizing on **5G**, consumer electronics, and automotive electronics demand, while achieving technological breakthroughs and strengthening group synergy - The company successfully navigated the impact of the pandemic and trade disputes, seizing market opportunities in **5G base stations**, **consumer electronics**, and **automotive electronics**, achieving both order and price increases[28](index=28&type=chunk) - Significant technological breakthroughs were achieved: **high-speed materials** gained recognition from renowned end customers, and **automotive millimeter-wave 77GHz radar-related technologies** made breakthroughs, expanding future market reserve space[28](index=28&type=chunk) - **2020 marked the 'first year' of group-wide operations**, with the effective functioning of seven major business management centers, including marketing, operations, quality control, and R&D, preparing the group for leapfrog development[29](index=29&type=chunk) [Key Operating Data](index=11&type=section&id=II.%20Key%20Operating%20Performance%20During%20the%20Reporting%20Period) In 2020, the company's main products saw increased production and sales, with operating revenue growing by **10.92%** to **14.69 billion yuan**, driven by strong performance from subsidiaries 2020 Key Product Production and Sales | Main Product | Unit | Production Volume | Sales Volume | Production Volume YoY Change (%) | Sales Volume YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Copper Clad Laminate | 10,000 sq. meters | 10,382.84 | 10,253.58 | 12.99 | 10.01 | | Prepreg | 10,000 meters | 14,010.31 | 13,829.70 | 13.12 | 11.72 | | Printed Circuit Board | 10,000 sq. meters | 82.20 | 81.12 | 1.88 | 4.01 | - Selling expenses decreased by **37.68%** year-on-year, primarily due to the adoption of new revenue recognition standards, reclassifying transportation costs as contract fulfillment costs to operating costs[31](index=31&type=chunk) - Investment income increased by **199.68%** year-on-year, mainly due to the acquisition of Guangdong Lusheng Environmental Protection Co., Ltd. and its inclusion in the consolidated scope, with the difference between the fair value and book value of the originally held equity recognized as investment income[31](index=31&type=chunk) [Revenue and Cost Analysis](index=12&type=section&id=2.%20Revenue%20and%20Cost%20Analysis) In 2020, main business revenue grew by **10.45%** to **14.41 billion yuan**, with CCL and prepreg showing improved gross margin, while PCB gross margin declined despite higher revenue growth Main Business by Industry Segment | Industry Segment | Operating Revenue (Yuan) | Gross Margin (%) | Operating Revenue YoY Change (%) | Gross Margin YoY Change | | :--- | :--- | :--- | :--- | :--- | | Copper Clad Laminate and Prepreg | 10,848,914,471.21 | 25.54 | 8.46 | Increase by 0.78 percentage points | | Printed Circuit Board | 3,558,356,290.28 | 26.05 | 16.99 | Decrease by 2.87 percentage points | Main Business by Region | Region | Operating Revenue (Yuan) | Gross Margin (%) | Operating Revenue YoY Change (%) | Gross Margin YoY Change | | :--- | :--- | :--- | :--- | :--- | | Domestic Sales | 12,591,214,302.87 | 26.34 | 16.98 | Increase by 0.35 percentage points | | Export Sales | 1,816,056,458.62 | 21.00 | -20.37 | Decrease by 3.51 percentage points | [R&D Investment](index=13&type=section&id=4.%20R%26D%20Investment) In 2020, R&D investment totaled **710.77 million yuan**, accounting for **4.84%** of revenue, with a focus on next-generation high-speed communication materials and automotive radar technologies 2020 R&D Investment Overview | Indicator | Value | | :--- | :--- | | Total R&D Investment (Yuan) | 710,765,835.44 | | R&D Investment as % of Operating Revenue (%) | 4.84 | | Number of R&D Personnel (Persons) | 1,394 | | R&D Personnel as % of Total Employees (%) | 12.89 | - R&D direction closely follows market trends, primarily investing in key technological areas such as **next-generation high-speed communication**, **smart mobile terminals**, **high-density packaging**, **data centers**, and **intelligent automotive radar**, to translate technological accumulation into market competitive advantages[42](index=42&type=chunk) [Analysis of Assets and Liabilities](index=15&type=section&id=%28III%29%20Analysis%20of%20Assets%20and%20Liabilities) As of year-end 2020, total assets reached **18.36 billion yuan**, with significant increases in accounts receivable financing (**+63.76%**) and short-term borrowings (**+41.97%**), while accounts payable surged by **2246.47%** due to subsidiary operations Key Balance Sheet Changes (Unit: Yuan) | Item Name | Current Period End Balance | Prior Period End Balance | Change (%) | Main Reason | | :--- | :--- | :--- | :--- | :--- | | Accounts Receivable Financing | 1,117,900,970.17 | 682,643,071.88 | 63.76 | Bank acceptance bills received exceeded endorsements and matured amounts | | Goodwill | 97,430,929.04 | 0.00 | N/A | Acquisition of Guangdong Lusheng Environmental Protection and inclusion in consolidated scope | | Short-term Borrowings | 2,157,170,932.62 | 1,519,481,480.54 | 41.97 | Increased due to daily operating needs | | Notes Payable | 136,780,774.18 | 5,829,207.16 | 2,246.47 | Increase in notes issued by subsidiary Shengyi Electronics for goods payment | | Other Payables | 224,049,176.94 | 92,034,483.39 | 143.44 | Consolidation of Guangdong Lusheng acquisition and payment of remaining equity transaction balance | | Minority Interests | 754,245,938.12 | 519,706,646.60 | 45.13 | Consolidation of Guangdong Lusheng acquisition, recognizing minority interests | [Industry Operating Information Analysis](index=18&type=section&id=%28IV%29%20Industry%20Operating%20Information%20Analysis) The company's core business, copper clad laminate manufacturing, accounts for **73.87%** of total revenue, with the company ranking **second globally** in rigid CCL sales in 2019 - The company holds a **strong market position** in its core business, ranking **second globally** in rigid copper clad laminate sales in 2019[48](index=48&type=chunk) [Investment Status Analysis](index=19&type=section&id=%28V%29%20Investment%20Status%20Analysis) During the reporting period, the company's most significant equity investment was the acquisition of a **27%** stake in Guangdong Lusheng Environmental Protection, making it the largest shareholder and consolidating it - The company, through its subsidiary Shengyi Capital, acquired a **27% equity stake** in Guangdong Lusheng Environmental Protection for **143 million yuan** in cash, achieving control and consolidation, reflecting the company's strategy to seek stable income outside its main business[50](index=50&type=chunk) [Analysis of Major Holding and Participating Companies](index=20&type=section&id=%28VII%29%20Analysis%20of%20Major%20Holding%20and%20Participating%20Companies) The company's key subsidiaries, including Suzhou Shengyi, Shaanxi Shengyi, and Shengyi Electronics, are major contributors to production and revenue, while new bases are in investment phase 2020 Key Subsidiary Financial Data (Unit: Yuan) | Company Name | Total Assets | Net Assets | Operating Revenue | Net Profit | | :--- | :--- | :--- | :--- | :--- | | Suzhou Shengyi | 2,004,445,077.29 | 1,366,498,926.67 | 2,444,611,288.84 | 191,907,635.92 | | Shaanxi Shengyi | 2,455,090,193.14 | 1,660,733,880.20 | 1,996,602,891.39 | 130,906,809.19 | | Shengyi Electronics | 4,546,351,529.85 | 1,916,737,000.86 | 3,633,501,932.99 | 442,319,120.75 | | Jiangsu Shengyi | 692,055,914.99 | 428,031,442.08 | 154,671,546.43 | -34,816,605.36 | | Jiangxi Shengyi | 1,352,711,254.07 | 981,413,651.63 | 802,692,199.88 | -13,913,374.26 | [Company's Future Development, Strategy, and Risks](index=23&type=section&id=III.%20Discussion%20and%20Analysis%20of%20the%20Company%27s%20Future%20Development) The company anticipates future PCB market growth from **5G** and automotive electronics, maintaining a strategy focused on core CCL business while diversifying income through investments, but faces raw material price and competition risks - Future Growth Drivers: **5G** and its resulting **IoT**, **AI applications**, and the increased technical requirements and PCB usage driven by **new energy vehicles**[56](index=56&type=chunk) - Company Development Strategy: Focus on the core **copper clad laminate business** to become the global manufacturer with the most comprehensive competitive advantages; avoid vertical integration of the industrial chain; diversify income through investments[57](index=57&type=chunk) - Key Risk Warnings: **Price fluctuations and supply-demand imbalances of raw materials** (copper, resin, glass fiber cloth); **intensified industry competition**, especially in technology, scale, and cost[60](index=60&type=chunk) [Significant Matters](index=24&type=section&id=Section%205.%20Significant%20Matters) This section details the company's profit distribution plan, equity incentive schemes, related party transactions, and social responsibility initiatives [Profit Distribution Plan](index=24&type=section&id=I.%20Ordinary%20Share%20Profit%20Distribution%20or%20Capital%20Reserve%20to%20Share%20Capital%20Plan) The company has a consistent cash dividend policy, with the 2020 plan proposing a cash dividend of **4.00 yuan per 10 shares**, totaling approximately **916.33 million yuan** Dividend Distribution Plans for the Past Three Years | Dividend Year | Dividend Per 10 Shares (Yuan) (Tax Incl.) | Cash Dividend Amount (Yuan) (Tax Incl.) | Ratio to Net Profit Attributable to Parent Company Shareholders (%) | | :--- | :--- | :--- | :--- | | 2020 | 4.0 | 916,328,036.00 | 54.53 | | 2019 | 4.0 | 910,476,536.00 | 62.84 | | 2018 | 3.5 | 742,293,190.80 | 74.19 | [Equity Incentive Plan](index=29&type=section&id=XIII.%20Company%20Equity%20Incentive%20Plan) During the reporting period, the company continued to implement its 2019 stock option incentive plan, completing the grant registration of reserved options and the first exercise period of initially granted options - In 2020, the company implemented the **first exercise period** of the **2019 stock option incentive plan's initial grant** and completed the grant registration of reserved stock options[75](index=75&type=chunk) [Significant Related Party Transactions](index=30&type=section&id=XIV.%20Significant%20Related%20Party%20Transactions) The company's significant related party transactions in the reporting period primarily involved raw material procurement from Jiangsu Lianrui New Material and the acquisition of Guangdong Lusheng Environmental Protection shares - Routine Related Party Transactions: Primarily the procurement of raw materials from associate company Jiangsu Lianrui New Material Co., Ltd., amounting to **68.89 million yuan**[77](index=77&type=chunk) - Significant Equity Acquisition Related Party Transaction: The company acquired a portion of Guangdong Lusheng Environmental Protection Co., Ltd.'s equity, which constituted a related party transaction and has been disclosed in announcements[80](index=80&type=chunk) [Social Responsibility and Environmental Information](index=36&type=section&id=XVII.%20Work%20on%20Actively%20Fulfilling%20Social%20Responsibilities) The company actively fulfills social responsibilities, participating in public welfare, and transparently discloses detailed environmental information, including pollutant discharge, prevention facilities, and emergency plans for its key production bases - The company disclosed detailed environmental information for multiple key pollutant-discharging units, including types, standards, concentrations, and total amounts of wastewater, exhaust gas, and hazardous waste emissions, as well as investment and operation of pollution prevention facilities, demonstrating a **high level of environmental management**[90](index=90&type=chunk)[112](index=112&type=chunk)[121](index=121&type=chunk) - The company and its major subsidiaries have all prepared and filed **emergency response plans for environmental incidents** and formulated **self-monitoring environmental plans**, regularly disclosing monitoring information[124](index=124&type=chunk)[125](index=125&type=chunk) [Changes in Ordinary Shares and Shareholder Information](index=57&type=section&id=Section%206.%20Changes%20in%20Ordinary%20Shares%20and%20Shareholder%20Information) This section details changes in the company's ordinary share capital and provides an overview of its shareholder structure and top shareholders [Changes in Ordinary Share Capital](index=57&type=section&id=I.%20Changes%20in%20Ordinary%20Share%20Capital) During the reporting period, the company's total share capital increased by **14,628,750 shares** due to the exercise of stock options under the 2019 incentive plan - In 2020, the company's total share capital increased by **14,628,750 shares** due to the exercise of stock options under the incentive plan[149](index=149&type=chunk)[150](index=150&type=chunk) [Shareholders and Actual Controller Information](index=58&type=section&id=III.%20Shareholders%20and%20Actual%20Controller%20Information) As of year-end 2020, the company had **133,419 shareholders**, with the top three being Guangdong Guangxin Holdings (**22.11%**), Dongguan Guohong Investment (**15.02%**), and Weihua Electronics (**14.24%**), and no single controlling shareholder or actual controller Top Three Shareholders' Shareholding | Shareholder Name | Shareholding Ratio (%) | | :--- | :--- | | Guangdong Guangxin Holdings Group Co., Ltd. | 22.11 | | Dongguan Guohong Investment Co., Ltd. | 15.02 | | Weihua Electronics Co., Ltd. | 14.24 | - The company's equity structure is **dispersed**, with no single shareholder holding **30% or more**, thus there is **no controlling shareholder or actual controller**[157](index=157&type=chunk)[159](index=159&type=chunk)[161](index=161&type=chunk) [Preferred Shares Information](index=63&type=section&id=Section%207.%20Preferred%20Shares%20Information) This section confirms that the company has no preferred shares during the reporting period [Preferred Shares Information](index=63&type=section&id=Preferred%20Shares%20Information) During the reporting period, the company had no preferred shares - The company has **no preferred shares**[163](index=163&type=chunk) [Directors, Supervisors, Senior Management, and Employees](index=64&type=section&id=Section%208.%20Directors%2C%20Supervisors%2C%20Senior%20Management%2C%20and%20Employees) This section provides details on the shareholding changes and compensation of directors, supervisors, and senior management, as well as an overview of the company's employee structure and training [Changes in Shareholding and Remuneration of Directors, Supervisors, and Senior Management](index=64&type=section&id=I.%20Shareholding%20Changes%20and%20Remuneration) During the reporting period, several directors, supervisors, and senior management increased their shareholdings due to stock option exercises, with total pre-tax remuneration for the group reaching **50.47 million yuan** Shareholding Changes and Remuneration of Selected Directors, Supervisors, and Senior Management | Name | Position | Year-end Shareholding | Change in Shares | Total Remuneration (10,000 Yuan) | | :--- | :--- | :--- | :--- | :--- | | Liu Shufeng | Chairman | 3,690,740 | 504,204 | 1,297.45 | | Chen Renxi | Director, General Manager | 1,521,250 | 375,000 | 1,301.29 | | Dong Xiaojun | Deputy General Manager | 801,539 | 140,000 | 452.31 | | Tang Fuyun | Board Secretary | 120,000 | 120,000 | 406.68 | | He Ziqiang | Chief Accountant | 1,447,165 | 300,000 | 464.20 | | Zeng Yaode | Chief Engineer | 624,858 | 300,000 | 494.61 | [Employee Information](index=73&type=section&id=VI.%20Employee%20Information%20of%20Parent%20Company%20and%20Major%20Subsidiaries) As of the reporting period end, the company had **10,818 employees**, with production personnel at **64.4%** and technical personnel at **22.3%**, and **46.96%** holding college degrees or higher, supported by performance-linked compensation and training Employee Professional Composition | Professional Category | Number of Persons | Proportion (%) | | :--- | :--- | :--- | | Production Personnel | 6,966 | 64.4 | | Technical Personnel | 2,411 | 22.3 | | Sales Personnel | 171 | 1.6 | | Administrative Personnel | 504 | 4.7 | | Other | 766 | 7.0 | | **Total** | **10,818** | **100.0** | - The company's compensation policy reflects **'first-class talent, first-class performance, first-class remuneration,'** tilting compensation resources towards **'value contributors'** and **'strugglers'**[180](index=180&type=chunk) [Corporate Governance](index=74&type=section&id=Section%209.%20Corporate%20Governance) This section describes the company's corporate governance structure, including the roles of its various bodies and the results of its internal control audit [Overview of Corporate Governance](index=74&type=section&id=I.%20Explanation%20of%20Corporate%20Governance%20Related%20Matters) During the reporting period, the company continuously improved its corporate governance structure in strict compliance with laws and regulations, ensuring standardized operations of its shareholder general meeting, board of directors, supervisory board, and management - The company's corporate governance structure is **sound**, with the shareholder general meeting, board of directors, supervisory board, and management operating in a **standardized manner**, complying with relevant laws and regulations[184](index=184&type=chunk)[185](index=185&type=chunk) [Internal Control Audit Report](index=77&type=section&id=IX.%20Explanation%20of%20Internal%20Control%20Audit%20Report%20Related%20Matters) The company disclosed its internal control self-assessment report and internal control audit report, with the accounting firm issuing a **standard unqualified opinion** on the company's 2020 internal controls - The company's internal control audit report received a **standard unqualified opinion**, indicating that the company's internal controls were **effective in all material respects**[194](index=194&type=chunk) [Corporate Bonds Information](index=77&type=section&id=Section%2010.%20Corporate%20Bonds%20Information) This section confirms that the company has no corporate bonds during the reporting period [Corporate Bonds Information](index=77&type=section&id=Corporate%20Bonds%20Information) During the reporting period, the company had no corporate bonds - The company has **no outstanding corporate bonds**[194](index=194&type=chunk) [Financial Report](index=78&type=section&id=Section%2011.%20Financial%20Report) This section presents the company's audited financial statements, including the auditor's opinion, key financial data, and significant accounting policy changes [Audit Report](index=78&type=section&id=I.%20Audit%20Report) Huaxing Certified Public Accountants (Special General Partnership) issued a **standard unqualified audit opinion** on the company's 2020 financial statements, affirming their fair presentation - The audit opinion is a **standard unqualified opinion**, indicating that the financial statements are **true and fair**[196](index=196&type=chunk) - Key Audit Matters (KAMs) include **impairment provisions for accounts receivable** and **inventory**, reflecting the significance and complexity of these accounting estimates on the financial statements[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) [Financial Statement Summary](index=82&type=section&id=II.%20Financial%20Statements) The financial statements show strong performance in 2020, with total assets growing to **18.36 billion yuan**, operating revenue increasing by **10.92%** to **14.69 billion yuan**, and net profit attributable to parent company shareholders rising by **16.00%** to **1.68 billion yuan** Consolidated Income Statement Summary (Unit: Yuan) | Item | 2020 Annual | 2019 Annual | | :--- | :--- | :--- | | Total Operating Revenue | 14,687,341,460.15 | 13,241,085,241.08 | | Operating Profit | 2,090,078,816.81 | 1,804,902,923.07 | | Total Profit | 2,082,831,709.27 | 1,805,073,237.46 | | Net Profit | 1,800,202,825.79 | 1,563,393,933.92 | | Net Profit Attributable to Parent Company Shareholders | 1,680,510,160.48 | 1,448,767,198.85 | Consolidated Cash Flow Statement Summary (Unit: Yuan) | Item | 2020 Annual | 2019 Annual | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 1,757,967,491.81 | 1,692,374,380.93 | | Net Cash Flow from Investing Activities | -1,832,894,439.73 | -1,566,424,225.68 | | Net Cash Flow from Financing Activities | -215,433,625.61 | -173,114,952.42 | | Net Increase in Cash and Cash Equivalents | -232,422,621.58 | -50,289,327.74 | [Significant Accounting Policy Changes](index=134&type=section&id=44.%20Changes%20in%20Significant%20Accounting%20Policies%20and%20Accounting%20Estimates) Effective January 1, 2020, the company adopted the revised 'Revenue' accounting standard, primarily impacting financial statement presentation through reclassification of certain items without significant effect on financial position or operating results - The company adopted the **new revenue standard** effective January 1, 2020, adjusting relevant items in the opening financial statements, primarily for **reclassification of accounts**[313](index=313&type=chunk) Impact of New Revenue Standard on Opening Consolidated Balance Sheet (Unit: Yuan) | Item | Before Adjustment (2019-12-31) | After Adjustment (2020-01-01) | Change Amount | | :--- | :--- | :--- | :--- | | Advances from Customers | 5,448,063.35 | 0.00 | -5,448,063.35 | | Contract Liabilities | 0.00 | 4,821,295.00 | 4,821,295.00 | | Other Current Liabilities | 0.00 | 626,768.35 | 626,768.35 | [Changes in Consolidation Scope](index=200&type=section&id=VIII.%20Changes%20in%20Consolidation%20Scope) During the reporting period, the company's consolidation scope changed due to the acquisition of a **43.65%** stake in Guangdong Lusheng Environmental Protection, gaining control and recognizing **97.43 million yuan** in goodwill, and the establishment of a new wholly-owned subsidiary - The company acquired a **27% equity stake** in Guangdong Lusheng Environmental Protection for **143 million yuan** in cash, achieving control and consolidation when combined with its original equity holding, with a total consolidation cost of **231 million yuan**, resulting in goodwill of **97.43 million yuan**[489](index=489&type=chunk)[490](index=490&type=chunk)[491](index=491&type=chunk) - The company established a new wholly-owned subsidiary, Jiujiang Hongjie Real Estate Development Co., Ltd., with a registered capital of **60 million yuan**, included in the consolidated scope from its establishment[495](index=495&type=chunk) [Reference Documents](index=235&type=section&id=Section%2012.%20Reference%20Documents) This section lists the documents available for reference, supporting the information presented in the report

Financial Performance - The company's operating revenue for the first half of 2020 was CNY 6,878,731,450.28, representing a 15.16% increase compared to CNY 5,972,960,053.46 in the same period last year[13]. - The net profit attributable to shareholders of the listed company was CNY 825,851,172.60, up 31.33% from CNY 628,851,216.28 year-on-year[13]. - The net profit after deducting non-recurring gains and losses was CNY 824,728,790.82, reflecting a 39.32% increase from CNY 591,948,985.94 in the previous year[13]. - The basic earnings per share increased to CNY 0.36, a rise of 20.00% compared to CNY 0.30 in the same period last year[14]. - Total revenue for the period reached CNY 6,786,122,536.33, representing a year-on-year increase of 15.12%[25]. - The company reported a significant increase in other income, which rose by 195.86% to CNY 27,524,582.36 due to increased government subsidies[23]. - The company experienced a 54.00% decline in investment income, totaling CNY 5,784,638.12, primarily due to losses from subsidiaries[23]. - The company reported a net profit for the first half of 2020 of ¥901,282,240.17, representing a significant increase of 33.1% from ¥676,787,097.68 in the previous year[121]. - The company reported a total comprehensive income of ¥958,563,581.54 for the first half of 2020, compared to ¥527,097,646.65 in the previous year, marking a significant increase[124]. Assets and Liabilities - The total assets at the end of the reporting period were CNY 16,792,026,177.40, an 8.09% increase from CNY 15,534,907,870.03 at the end of the previous year[13]. - The company's net assets attributable to shareholders at the end of the reporting period were CNY 8,939,719,504.89, a 1.20% increase from CNY 8,833,910,412.23 at the end of the previous year[13]. - The company's total liabilities included contract liabilities resulting from the reclassification of advance receipts under the new revenue standards[32]. - The company's total liabilities increased to ¥7,315,825,075.30 as of June 30, 2020, from ¥6,181,290,811.20 at the end of 2019, reflecting a growth of approximately 18.38%[116]. - The company's long-term borrowings were primarily reclassified to current liabilities due to the maturity within one year[31]. Cash Flow - The net cash flow from operating activities was CNY 905,688,187.03, down 16.05% from CNY 1,078,792,522.59 in the same period last year[13]. - Cash flow from financing activities improved by 79.36%, resulting in a net cash outflow of CNY -65,694,340.65[24]. - The cash inflow from operating activities totaled ¥6,079,343,214.86, an increase from ¥5,568,329,108.64 in the first half of 2019, indicating robust operational performance[126]. - Cash outflow from investing activities totaled CNY 439,018,699.70, compared to CNY 212,700,186.18 in the previous year, indicating increased investment activity[129]. - The company distributed dividends and interest payments totaling CNY 933,319,619.67, compared to CNY 759,493,211.92 in the previous year, indicating a commitment to shareholder returns[129]. Production and Sales - The company produced 48.18 million square meters of copper-clad laminates in the first half of 2020, an increase of 10.42% year-on-year[20]. - The production of semi-cured sheets reached 62.58 million meters, up 7.90% compared to the same period last year[20]. - The sales of printed circuit boards increased by 16.21% year-on-year, totaling 392,300 square meters[20]. - The company’s revenue from the production of printed circuit boards increased by 48.59% year-on-year, reaching 1.91 billion yuan[20]. Research and Development - Research and development expenses amounted to CNY 343,580,499.27, accounting for 5.0% of total revenue[27]. - Research and development expenses for the first half of 2020 were ¥343,580,499.27, up from ¥277,030,140.91, reflecting a growth of 24.0%[120]. - The company has established a national engineering technology research center for electronic circuit substrates, focusing on key technological issues in the industry[19]. Environmental Compliance - The company reported a total sulfur dioxide emissions of 2.73 tons per year, with a concentration of 550 mg/m³, adhering to the atmospheric pollutant discharge standards (GB16297-1996)[55]. - The company successfully maintained wastewater discharge within the permitted limits, with BOD5 at 17.2 mg/L against a standard of 300 mg/L[57]. - The company has implemented measures to ensure that all emissions are directed to high-altitude discharge points, minimizing ground-level pollution[55]. - The company has reported no exceedances in the emission standards for various pollutants, including particulate matter and non-methane total hydrocarbons[57]. - The company has established emergency response plans for environmental incidents at its Wanjiang, Songshan Lake, Dongcheng, and Suzhou factories[80]. Shareholder Information - The total number of ordinary shareholders reached 120,966 by the end of the reporting period[104]. - The top ten shareholders hold a total of 1,336,186,078 shares, representing 59.83% of the total shares outstanding[106]. - Guangdong Guangxin Holdings Group Co., Ltd. is the largest shareholder with 506,602,699 shares, accounting for 22.18%[106]. - The report indicates a decrease of 160,000 shares for executive Dong Xiaojun due to secondary market sales[109]. Corporate Governance - The company has decided to change its auditing firm from Guangdong Zhengzhong Zhujiang CPA to Huaxing CPA for the 2020 fiscal year to ensure audit independence[42]. - There are no significant litigation or arbitration matters affecting the company during the reporting period[43]. - The company has not disclosed any major related party transactions during its daily operations[46]. Market and Competition - The company faces risks related to raw material price fluctuations, particularly for copper, resin, and fiberglass, which can significantly impact production costs and operations[38]. - Market competition is intensifying as companies from Japan, the US, and Taiwan expand their production capabilities in copper-clad laminates, posing a threat to the company's market position[38]. - The company is exposed to foreign exchange risks due to substantial foreign currency transactions, which could adversely affect operating performance if the RMB experiences significant fluctuations[38].

Financial Performance - Net profit attributable to shareholders rose by 36.09% to CNY 339.27 million year-on-year[4] - Operating revenue grew by 12.30% to CNY 3.07 billion compared to the same period last year[4] - Basic earnings per share increased by 25.00% to CNY 0.15 compared to the previous year[4] - The company reported a significant increase in minority shareholders' profit by 59.61% to ¥27,229,291.67, reflecting improved performance of subsidiaries[11] - Net profit for Q1 2020 was ¥366,498,456.94, representing a 37.5% increase from ¥266,356,540.52 in Q1 2019[20] - The total profit for Q1 2020 was ¥428,288,043.08, an increase from ¥317,122,809.75 in Q1 2019, reflecting a growth of 35.1%[19] - The company reported a total comprehensive income of approximately 517.13 million RMB for Q1 2020, up from 147.42 million RMB in Q1 2019, reflecting a significant increase of about 251.5%[22] Assets and Liabilities - Total assets increased by 3.94% to CNY 16.15 billion compared to the end of the previous year[4] - Total liabilities increased to ¥6,462,460,626.95 from ¥6,181,290,811.20, representing a growth of approximately 4.55% year-over-year[16] - Total equity rose to ¥9,685,128,535.00 compared to ¥9,353,617,058.83, marking an increase of about 3.55%[16] - Current assets totaled ¥4,425,033,539.61, up from ¥4,128,415,789.08, reflecting a growth of approximately 7.19%[17] - Total non-current assets reached ¥6,885,565,360.64, up from ¥6,530,796,353.55, indicating an increase of about 5.42%[17] - Total liabilities and equity amounted to ¥11,310,598,900.25, compared to ¥10,659,212,142.63, reflecting a growth of approximately 6.11%[18] Cash Flow - Cash flow from operating activities increased by 19.66% to CNY 572.57 million year-on-year[4] - Cash flow from investing activities decreased by 33.47% to -¥388,613,275.64, attributed to increased cash payments for fixed assets and long-term assets[12] - Net cash flow from operating activities for Q1 2020 was approximately 572.57 million RMB, compared to 478.51 million RMB in Q1 2019, indicating an increase of around 19.7%[24] - Investment activities resulted in a net cash outflow of approximately 388.61 million RMB in Q1 2020, compared to a net outflow of 291.16 million RMB in Q1 2019, indicating a worsening of about 33.5%[24] - The net increase in cash and cash equivalents for Q1 2020 was approximately 511.70 million RMB, down from 607.96 million RMB in Q1 2019, reflecting a decrease of about 15.8%[25] Expenses - Management expenses increased by 30.83% to ¥158,383,410.40 due to stock option expenses, consulting fees, and increased bonuses[10] - Financial expenses decreased by 36.39% to ¥29,656,604.73 primarily due to last year's convertible bond interest accrual[10] - R&D expenses in Q1 2020 amounted to ¥154,046,063.63, compared to ¥134,791,634.86 in Q1 2019, marking a growth of 14.2%[19] - The company’s sales expenses increased to ¥66,029,546.92 in Q1 2020 from ¥61,936,970.40 in Q1 2019, reflecting an increase of 16.7%[19] Shareholder Information - The number of shareholders reached 99,452, with the top ten shareholders holding a combined 78.99% of shares[6] - Unallocated profits increased to ¥2,702,679,580.66 from ¥2,183,963,577.53, representing a significant rise of about 23.73%[18] Other Financial Metrics - Other income surged by 334.19% to ¥16,571,648.61, mainly from increased government subsidies recognized as current profits[10] - Impairment losses on assets increased by 258.51% to -¥11,308,185.71, primarily due to increased inventory write-downs[10] - Cash and cash equivalents at the end of Q1 2020 totaled approximately 1.56 billion RMB, compared to 1.71 billion RMB at the end of Q1 2019, showing a decrease of about 8.5%[25] - The company raised approximately 868.67 million RMB through financing activities in Q1 2020, compared to 766.45 million RMB in Q1 2019, representing an increase of about 13.4%[24]