[Company Overview and Financial Summary](index=4&type=section&id=Company%20Overview%20and%20Financial%20Summary) [Company Profile and Key Financial Indicators](index=4&type=section&id=Company%20Profile%20and%20Key%20Financial%20Indicators) Meihua Biological Technology Group Co., Ltd. (stock code: 600873) is a biotechnology company focused on bio-fermentation, achieving **RMB 12.65 billion** in revenue in 2018, a **13.62% increase**, while net profit attributable to shareholders decreased by **14.66%** to **RMB 1.00 billion**, though core business profitability improved with a **7.09%** increase in non-recurring net profit and a **58.39%** surge in operating cash flow Key Accounting Data for the Past Three Years | Key Accounting Data | 2018 (RMB) | 2017 (RMB) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 12,648,045,803.79 | 11,132,161,082.33 | 13.62 | | Net Profit Attributable to Shareholders of the Listed Company | 1,001,546,287.48 | 1,173,606,820.66 | -14.66 | | Net Profit Attributable to Shareholders of the Listed Company (Excluding Non-recurring Gains/Losses) | 892,081,966.83 | 833,054,738.13 | 7.09 | | Net Cash Flow from Operating Activities | 2,449,646,802.57 | 1,546,552,616.39 | 58.39 | | Total Assets | 19,065,029,237.53 | 17,101,915,003.75 | 11.48 | Key Financial Indicators for the Past Three Years | Key Financial Indicators | 2018 | 2017 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | 0.32 | 0.38 | -15.79 | | Weighted Average Return on Net Assets (%) | 11.06 | 13.14 | Decrease of 2.08 percentage points | | Weighted Average Return on Net Assets (Excluding Non-recurring Gains/Losses) (%) | 9.85 | 9.32 | Increase of 0.53 percentage points | - The company's 2018 profit distribution plan proposes a cash dividend of **RMB 3.30 per 10 shares (tax inclusive)**, totaling approximately **RMB 1.025 billion** in cash dividends[3](index=3&type=chunk) [Company Business Overview](index=8&type=section&id=Company%20Business%20Overview) [Main Business and Operating Model](index=8&type=section&id=Main%20Business%20and%20Operating%20Model) The company's main business involves R&D, production, and sales of amino acid products and colloidal polysaccharides using bio-fermentation technology with corn as raw material, operating an integrated R&D, production, and sales model across three major bases to achieve efficient resource utilization and a circular economy - The company is a biotechnology firm specializing in the R&D, production, and sales of food flavor enhancers, animal nutrition amino acids, human medical amino acids, and colloidal polysaccharides using bio-fermentation technology[21](index=21&type=chunk) - The company's main product lines include **food flavor enhancers**, **animal nutrition amino acids**, **human medical amino acids**, and **other products** like xanthan gum and pharmaceutical capsules[21](index=21&type=chunk) - The company operates an integrated R&D, procurement, production, and sales model with three major production bases in Tongliao, Wujiaqu, and Baicheng, establishing cost-optimized, resource-saving, integrated circular utilization production lines[22](index=22&type=chunk)[23](index=23&type=chunk) [Core Competencies](index=9&type=section&id=Core%20Competencies) The company's core competencies include leading cost advantages from strategic location and circular economy, strong environmental management ensuring stable production, diversified product development providing anti-cyclical resilience and sales synergy, and an efficient management team with market-oriented incentive mechanisms - **Cost Advantage**: The company's three production bases are strategically located in major corn and coal producing areas, reducing raw material costs which account for over **60%** of total costs, while integrated resource utilization lines further lower production costs through energy cascading and waste valorization[25](index=25&type=chunk)[26](index=26&type=chunk) - **Environmental Management Advantage**: The company's significant investment in environmental protection and management, including successfully passing central environmental inspections, has transformed environmental compliance into a core competitive advantage, ensuring normal operations amidst industry-wide production restrictions[27](index=27&type=chunk)[28](index=28&type=chunk) - **Balanced Multi-Product Development**: The company boasts the most comprehensive amino acid product portfolio, with a business structure centered on advantageous products like flavor enhancers, feed-grade amino acids, and xanthan gum, effectively mitigating operational risks from single-product price fluctuations[28](index=28&type=chunk) - **Management and Incentives**: The company has established an efficient management team and market-oriented incentive mechanisms, implementing a restricted stock incentive plan in June 2018 to align the interests of shareholders, the company, and the core team[28](index=28&type=chunk)[29](index=29&type=chunk) [Management Discussion and Analysis](index=11&type=section&id=Management%20Discussion%20and%20Analysis) [Macroeconomic and Industry Conditions](index=11&type=section&id=Macroeconomic%20and%20Industry%20Conditions) In 2018, China's economic slowdown and stricter environmental policies led to rising raw material costs, pressuring industry profitability; MSG prices surged **10%** year-on-year, and I+G prices rose over **40%**, while lysine and threonine prices remained at historical lows due to overcapacity, though US-China trade tensions may boost demand for feed amino acids - Domestic corn prices steadily increased, with Jinzhou Port prices rising from approximately **RMB 1,800/ton** to **RMB 2,000/ton** by year-end, while thermal coal prices continued their upward trend at high levels[33](index=33&type=chunk) - Monosodium glutamate (MSG) prices significantly increased after environmental inspections, with the full-year average price growing by approximately **10%** year-on-year[35](index=35&type=chunk) - Disodium 5'-ribonucleotides (I+G) prices consistently rose, with the full-year average price increasing by over **40%** year-on-year, indicating strong profitability[35](index=35&type=chunk) - Lysine and threonine markets faced intense competition and declining prices due to continuous capacity expansion, reaching historical lows, though the US-China trade war may increase demand for feed-grade amino acids, laying a foundation for future price increases[37](index=37&type=chunk)[38](index=38&type=chunk) [Analysis of Key Operating Performance](index=15&type=section&id=Analysis%20of%20Key%20Operating%20Performance) In 2018, the company achieved **RMB 12.65 billion** in revenue, up **13.62%**, but net profit attributable to shareholders decreased **14.66%** to **RMB 1.00 billion** due to reduced government subsidies, while non-recurring net profit grew **7.09%** to **RMB 892 million**, indicating stronger core business profitability, supported by new lysine capacity, environmental compliance, and diversified product growth - The first phase of the Baicheng base's **400,000-ton annual lysine project** commenced trial production at the end of 2018, increasing the company's total lysine capacity to **700,000 tons** and further solidifying its industry-leading position[43](index=43&type=chunk)[44](index=44&type=chunk) - Despite declining prices for key products like lysine and threonine, the company's long-cultivated products such as nucleotides, xanthan gum, and specialty amino acids saw increases in both volume and price, effectively supplementing profits and ensuring overall stable profitability[42](index=42&type=chunk)[46](index=46&type=chunk) - The company implemented a restricted stock incentive plan, setting performance targets for revenue or net profit from 2018 to 2020, providing clear direction for future development[47](index=47&type=chunk) [Main Business Analysis](index=17&type=section&id=Main%20Business%20Analysis) During the reporting period, animal nutrition amino acids saw a **6.12 percentage point** decrease in gross margin due to lower prices and higher raw material costs, while human medical amino acids and food flavor enhancers increased gross margins by **7.71** and **3 percentage points** respectively due to volume and price increases, with sales expenses rising **14.14%** from increased freight costs Main Business by Product Category | Product Category | Revenue (RMB) | YoY Revenue Change (%) | Gross Margin (%) | Gross Margin YoY Change | | :--- | :--- | :--- | :--- | :--- | | Animal Nutrition Amino Acids | 5,254,769,165.26 | 3.44 | 23.41 | Decrease of 6.12 percentage points | | Human Medical Amino Acids | 575,234,439.89 | 50.04 | 36.98 | Increase of 7.71 percentage points | | Food Flavor Enhancers | 5,158,412,279.63 | 16.52 | 23.11 | Increase of 3 percentage points | | Other | 1,518,224,436.14 | 28.84 | 33.63 | Increase of 4.61 percentage points | Production and Sales Volume of Main Products (Tons) | Main Product | Production Volume | Sales Volume | YoY Production Volume Change (%) | YoY Sales Volume Change (%) | | :--- | :--- | :--- | :--- | :--- | | Animal Nutrition Amino Acids | 1,323,787 | 1,318,263 | 8.36 | 9.22 | | Human Medical Amino Acids | 10,017 | 9,825 | 57.19 | 39.73 | | Food Flavor Enhancers | 693,024 | 703,420 | 0.15 | 4.27 | - Raw materials constitute **63.28%** of the company's cost structure, with energy accounting for **12.82%**[56](index=56&type=chunk) - Sales expenses increased by **14.14%** year-on-year, primarily due to a **16.05%** rise in transportation costs driven by increased product sales volume[59](index=59&type=chunk) - Net cash flow from investing activities was **-RMB 1.995 billion**, a **274.35%** decrease year-on-year, mainly due to increased project investments for the construction of the Baicheng base[62](index=62&type=chunk) [Analysis of Assets and Liabilities](index=21&type=section&id=Analysis%20of%20Assets%20and%20Liabilities) Total assets reached **RMB 19.065 billion** at period-end, up **11.48%**, primarily driven by a **612%** surge in construction in progress for the Jilin Meihua project; liabilities saw a **119%** increase in notes and accounts payable due to construction costs and a significant reclassification of non-current liabilities due within one year, with **RMB 1.306 billion** in restricted assets mainly for loan collateral Key Balance Sheet Item Changes | Item Name | Period-end (RMB) | Period-start (RMB) | Change (%) | Main Reason | | :--- | :--- | :--- | :--- | :--- | | Construction in Progress | 2,020,696,516.14 | 283,808,946.15 | 611.99 | Increased investment in Jilin Meihua project by subsidiary | | Intangible Assets | 1,224,107,750.89 | 823,873,279.30 | 48.58 | New land use rights acquired by subsidiary Jilin Meihua | | Notes and Accounts Payable | 1,490,454,255.01 | 679,122,790.43 | 119.47 | Increase in construction payments | | Non-current Liabilities Due Within One Year | 1,899,741,980.25 | 0 | 100.00 | Reclassification of corporate bonds, long-term borrowings, etc. due within one year | | Long-term Borrowings | 1,186,385,000.00 | 300,000,000.00 | 295.46 | New long-term bank financing | - As of the end of the reporting period, the company's total restricted assets amounted to **RMB 1.306 billion**, comprising **RMB 418 million** in monetary funds, **RMB 847 million** in fixed assets, and **RMB 41 million** in intangible assets, primarily used as collateral for borrowings[66](index=66&type=chunk) [Investment Analysis](index=24&type=section&id=Investment%20Analysis) The company's external equity investments primarily target financial institutions and supply chain-related enterprises; during the period, Xinjiang Meihua Agricultural Development Co., Ltd. established three new joint ventures to upgrade its raw material supply chain, and the company engaged in forward foreign exchange hedging to mitigate USD exchange rate risk, with **$240 million** outstanding at period-end - To facilitate the transformation and upgrading of its raw material supply chain, subsidiary Xinjiang Meihua Agricultural Development Co., Ltd. invested a total of **RMB 18 million** to establish three joint ventures[76](index=76&type=chunk) - The company engaged in forward foreign exchange hedging to mitigate currency risk, with **$239.7 million** in principal outstanding at the end of the reporting period, resulting in a fair value gain of **RMB 34.33 million**[77](index=77&type=chunk) [Future Development Discussion and Analysis](index=26&type=section&id=Future%20Development%20Discussion%20and%20Analysis) The company anticipates stricter environmental policies and potential raw material price declines in 2019, with amino acid market competition intensifying but prices expected to rebound from current lows; the strategy focuses on core business expansion, cost advantage enhancement, increased environmental investment, and international opportunities, while the 2019 plan emphasizes quality, safety, environmental compliance, standardized management, and ensuring full operation of the Baicheng project - **Industry Trends**: Environmental regulations are expected to tighten in 2019, raising industry barriers, while raw material (corn, coal) prices are projected to decline; amino acid market competition will intensify, but prices, currently at low levels, are anticipated to rebound[80](index=80&type=chunk) - **Company Strategy**: - Focus on core business, expand scale, and increase market share to achieve industry consolidation - Leverage the Baicheng base's late-mover advantage for full production and efficiency - Increase R&D investment, optimize production processes, and enhance cost leadership - Continue to invest in environmental protection and safety production - Seek overseas plant opportunities to increase international market share[81](index=81&type=chunk)[82](index=82&type=chunk) - **2019 Operating Plan**: - Uphold "quality, safety, and environmental protection" as management red lines - Deeply implement standardization concepts to drive efficiency - Improve human resource management systems for talent reserves - Ensure the Baicheng new project achieves full production and efficiency[83](index=83&type=chunk)[84](index=84&type=chunk) [Potential Risks](index=27&type=section&id=Potential%20Risks) The company faces risks from rising environmental standards increasing costs, changes in food and feed product quality standards, safety production issues, potential underutilization and lower-than-expected returns from new Jilin Baicheng capacity, price volatility of key raw materials like corn and coal, foreign currency exchange rate fluctuations, and adjustments to tax preferential policies such as the Western Development program - The company faces compliance and operational risks related to environmental protection, product quality, and production safety[85](index=85&type=chunk)[86](index=86&type=chunk) - The new **400,000-ton amino acid project** in Baicheng faces industry oversupply and intensified competition, posing a risk of lower-than-expected returns after new capacity comes online[86](index=86&type=chunk) - Corn and coal account for over **60%** of production costs, and their price fluctuations could impact the company's profitability[87](index=87&type=chunk) - The company and some subsidiaries benefit from a **15%** corporate income tax preferential rate under the Western Development policy, and any policy adjustments would affect the company's performance[89](index=89&type=chunk) [Significant Matters](index=29&type=section&id=Significant%20Matters) [Profit Distribution and Dividends](index=29&type=section&id=Profit%20Distribution%20and%20Dividends) The company maintains a clear cash dividend policy and consistently implements active profit distribution, with the 2018 plan proposing a **RMB 3.30 cash dividend per 10 shares (tax inclusive)**, totaling approximately **RMB 1.025 billion**, representing **102.41%** of net profit attributable to shareholders, demonstrating a strong commitment to shareholder returns with a dividend payout ratio above **87%** for the past three years Ordinary Share Dividend Distribution Plan for the Past Three Years | Dividend Year | Dividend per 10 Shares (RMB, tax inclusive) | Cash Dividend Amount (RMB, tax inclusive) | Ratio of Net Profit Attributable to Ordinary Shareholders in Consolidated Statements (%) | | :--- | :--- | :--- | :--- | | 2018 | 3.3 | 1,025,697,762.54 | 102.41 | | 2017 | 3.3 | 1,025,697,762.54 | 87.40 | | 2016 | 3.0 | 932,467,980.90 | 89.51 | [Significant Litigation and Arbitration Matters](index=33&type=section&id=Significant%20Litigation%20and%20Arbitration%20Matters) During the reporting period, the company was involved in three unresolved lawsuits related to its former wholly-owned subsidiary, Dalian Hanxin Bio-pharmaceutical Co., Ltd., concerning contingent liabilities incurred before the equity transfer, with responsibility and losses to be borne by the original transferors (Tibet Yiyuan Industrial Co., Ltd. and Zhuang Enda) as per the equity transfer agreement, and the company will pursue legal action against relevant parties - The company is involved in three lawsuits related to its former subsidiary Dalian Hanxin, primarily concerning loan disputes and subrogation claims, with a total principal amount of approximately **RMB 56.64 million**[100](index=100&type=chunk)[102](index=102&type=chunk) - According to the "Equity Transfer Agreement," any litigation matters or contingent liabilities related to Dalian Hanxin occurring before the transfer date are to be borne by the original transferors, who must fully compensate the company for any resulting losses[103](index=103&type=chunk) [Equity Incentive and Employee Stock Ownership Plans](index=35&type=section&id=Equity%20Incentive%20and%20Employee%20Stock%20Ownership%20Plans) To establish a long-term incentive mechanism, the company implemented a restricted stock incentive plan in June 2018, granting **34.4833 million shares** to 109 core management and technical personnel, while its 2017 first-phase employee stock ownership plan, which acquired **29.007 million shares** by January 2017, completed its lock-up period in February 2018 and remains unsold - The 2018 restricted stock incentive plan granted **34.4833 million shares** to 109 incentive recipients, representing **1.1094%** of the total share capital before the grant, at an exercise price of **RMB 2.46 per share**[107](index=107&type=chunk) - The 2017 first-phase employee stock ownership plan acquired **29,007,028 shares** through the secondary market at an average transaction price of approximately **RMB 6.895 per share**, accounting for **0.93%** of the then-total share capital, with the lock-up period expired but shares remaining unsold as of the reporting period end[108](index=108&type=chunk) [Social Responsibility and Environmental Information](index=41&type=section&id=Social%20Responsibility%20and%20Environmental%20Information) The company actively fulfills its social responsibilities, participating in targeted poverty alleviation through various initiatives like establishing a public welfare foundation, providing financial aid, and industrial support, with total related investments of **RMB 2.619 million** during the reporting period; as a key polluting entity, it continuously invests in environmental upgrades, ensuring stable operation of facilities and passing central environmental inspections, thereby maintaining production continuity - The company actively participated in targeted poverty alleviation, investing **RMB 739,000** in funds and **RMB 1.88 million** in in-kind contributions during the reporting period, allocated for industrial development, education-based poverty reduction, and social welfare initiatives[121](index=121&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - As a key polluting entity, the company has established internal emission standards stricter than national requirements and continuously invests in environmental facilities, including over **RMB 30 million** for a new reclaimed water reuse project and **RMB 60 million** for in-depth odor treatment[128](index=128&type=chunk)[129](index=129&type=chunk) - All company production bases have developed environmental pollution accident emergency response plans and conducted drills as required, with no major environmental accidents occurring during the reporting period[132](index=132&type=chunk) [Changes in Ordinary Shares and Shareholder Information](index=46&type=section&id=Changes%20in%20Ordinary%20Shares%20and%20Shareholder%20Information) [Share Capital Changes](index=46&type=section&id=Share%20Capital%20Changes) During the reporting period, the company's total share capital slightly decreased from **3,108,226,603 shares** to **3,108,175,038 shares** due to the implementation of a restricted stock incentive plan (granting **34.4833 million shares**) and the cancellation of **51,565 shares** forfeited by some incentive recipients, while restricted shares increased from zero to **34,483,300 shares**, representing **1.11%** of total share capital Share Capital Change Table (Shares) | Share Type | Before Change | Change (Increase/Decrease) | After Change | Ratio After Change (%) | | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 0 | +34,483,300 | 34,483,300 | 1.11 | | II. Unrestricted Tradable Shares | 3,108,226,603 | -34,534,865 | 3,073,691,738 | 98.89 | | III. Total Ordinary Shares | 3,108,226,603 | -51,565 | 3,108,175,038 | 100 | [Shareholder Information](index=48&type=section&id=Shareholder%20Information) As of the reporting period end, the company had **153,188** ordinary shareholders, with the top three being Meng Qingshan (**27.48%**), Hu Jijun (**6.00%**), and China Securities Finance Corporation Limited (**4.87%**); Meng Qingshan is the controlling shareholder, and the actual controllers are Meng Qingshan, Wang Aijun, and He Jun, acting in concert Top Ten Shareholders' Shareholding | Shareholder Name | Shares Held at Period-end (Shares) | Percentage (%) | | :--- | :--- | :--- | | Meng Qingshan | 854,103,033 | 27.48 | | Hu Jijun | 186,469,341 | 6.00 | | China Securities Finance Corporation Limited | 151,485,962 | 4.87 | | Yang Weiyong | 78,810,526 | 2.54 | | Wang Aijun | 71,316,274 | 2.29 | | Beijing Longhui Investment Co., Ltd. - Longhui Huichen Strategic Investment Private Securities Investment Fund | 62,000,000 | 1.99 | | Liang Yubo | 54,868,518 | 1.77 | | Shanghai Gaoyi Asset Management Partnership (Limited Partnership) - Gaoyi Linshan No. 1 Yuanwang Fund | 43,000,000 | 1.38 | | Meihua Biological Technology Group Co., Ltd. - 2017 First Phase Employee Stock Ownership Plan | 29,007,028 | 0.93 | | He Jun | 23,449,758 | 0.75 | - Mr. Meng Qingshan is the controlling shareholder of the company, and the actual controllers are Meng Qingshan, Wang Aijun, and He Jun, who are parties acting in concert[144](index=144&type=chunk)[150](index=150&type=chunk) [Directors, Supervisors, Senior Management, and Employee Information](index=53&type=section&id=Directors,%20Supervisors,%20Senior%20Management,%20and%20Employee%20Information) [Changes in Shareholding and Remuneration of Directors, Supervisors, and Senior Management](index=53&type=section&id=Changes%20in%20Shareholding%20and%20Remuneration%20of%20Directors,%20Supervisors,%20and%20Senior%20Management) During the reporting period, the total pre-tax remuneration for current and former directors, supervisors, and senior management was **RMB 15.42 million**, with Chairman Wang Aijun receiving **RMB 2.01 million** and Director and General Manager He Jun receiving **RMB 2.08 million**, and some executives' year-end shareholdings increased due to the 2018 equity incentive plan Remuneration and Shareholding Changes of Selected Directors, Supervisors, and Senior Management | Name | Position | Total Pre-tax Remuneration for the Reporting Period (RMB 10,000) | Shares Held at Year-end (Shares) | Change in Shares During the Year (Shares) | | :--- | :--- | :--- | :--- | :--- | | Wang Aijun | Chairman | 201 | 71,316,274 | 0 | | He Jun | Director, General Manager | 208 | 23,449,758 | 0 | | Liang Yubo | Director, Deputy General Manager | 308 | 54,868,518 | 1,200,000 | | Wang You | Deputy General Manager | 241 | 714,000 | 714,000 | | Wang Wei | Chief Financial Officer | 152 | 200,000 | 200,000 | | Liu Xianfang | Board Secretary | 30 | 300,000 | 300,000 | [Employee Information](index=56&type=section&id=Employee%20Information) As of the reporting period end, the company had **10,984** employees, with production personnel comprising the largest group at **9,148** (approximately **83%**), and the majority holding college degrees or lower; the company implements a compensation policy combining position-based and competency-based pay, maintains a comprehensive training system, and utilizes labor outsourcing for some staffing needs Employee Professional Composition | Professional Category | Number of Employees | | :--- | :--- | | Production Personnel | 9,148 | | Sales Personnel | 155 | | Technical Personnel | 289 | | Financial Personnel | 249 | | Administrative Personnel | 40 | | Management Personnel | 1,103 | | **Total** | **10,984** | - The company implements both position-based and competency-based compensation models, along with an annual salary adjustment mechanism that includes overall, position-specific, and standard adjustments[161](index=161&type=chunk) [Corporate Governance](index=57&type=section&id=Corporate%20Governance) [Corporate Governance and Internal Control](index=57&type=section&id=Corporate%20Governance%20and%20Internal%20Control) During the reporting period, the company operated in strict compliance with laws and regulations, with its corporate governance meeting regulatory requirements; an effective internal control system is in place, receiving a standard unqualified audit opinion from Dahua Certified Public Accountants, and while 13 general internal control deficiencies were identified in 2018 self-checks, primarily in finance, sales, and procurement, the company has implemented corrective measures with no material weaknesses found - The company's actual corporate governance status complies with the normative documents on listed company governance issued by the China Securities Regulatory Commission[164](index=164&type=chunk) - The 2018 internal control audit identified **13** general internal control deficiencies, mainly in cash activities, sales and receivables, procurement, inventory management, and construction projects, for which the company has assigned clear responsibilities and completed rectification[165](index=165&type=chunk) - Dahua Certified Public Accountants issued a standard unqualified audit opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2018[174](index=174&type=chunk) [Corporate Bonds Information](index=61&type=section&id=Corporate%20Bonds%20Information) [Corporate Bonds Overview and Use of Proceeds](index=61&type=section&id=Corporate%20Bonds%20Overview%20and%20Use%20of%20Proceeds) During the reporting period, the company had two publicly issued corporate bonds; "15 Meihua 01" was fully repurchased and delisted in July 2018, while "15 Meihua 02" has an outstanding balance of **RMB 1.5 billion** maturing in October 2019, with the combined net proceeds of **RMB 2.982 billion** from both bonds fully utilized for repaying bank loans and short-term/super short-term financing bills as planned Corporate Bonds Basic Information | Bond Abbreviation | Code | Issue Date | Maturity Date | Bond Balance (RMB) | Interest Rate (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | 15 Meihua 01 | 122422 | 2015-7-31 | 2018-7-31 | 0 | 4.47 | | 15 Meihua 02 | 136012 | 2015-10-30 | 2019-10-30 | 1,500,000,000 | 4.27 | - The "15 Meihua 01" corporate bond was fully redeemed with principal and interest by the end of July 2018 and delisted from the Shanghai Stock Exchange due to investors exercising their put option[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) - The net proceeds of **RMB 2.982 billion** from both corporate bond issues have been entirely used for debt repayment[180](index=180&type=chunk) [Credit Rating and Solvency](index=62&type=section&id=Credit%20Rating%20and%20Solvency) China Chengxin Securities Rating Co., Ltd. maintained the company's corporate credit rating at **AA+** with a stable outlook; at period-end, the asset-liability ratio increased to **50.84%**, while current and quick ratios significantly decreased due to increased non-current liabilities due within one year, but the cash interest coverage ratio improved from **7.32** to **10.18**, indicating stronger operating cash flow coverage for interest, with **RMB 57.414 billion** of **RMB 110.72 billion** in bank credit lines remaining unused, ensuring ample liquidity - In May 2018, China Chengxin Securities Rating Co., Ltd. maintained the company's corporate credit rating at **AA+** with a stable outlook[182](index=182&type=chunk) Key Solvency Indicators for the Past 2 Years | Key Indicator | 2018 | 2017 | Reason for Change | | :--- | :--- | :--- | :--- | | Current Ratio | 0.64 | 1.12 | Primarily due to an increase in current liabilities resulting from non-current liabilities due within one year | | Quick Ratio | 0.39 | 0.75 | Primarily due to an increase in inventory and current liabilities | | Asset-Liability Ratio (%) | 50.84 | 45.27 | - | | Interest Coverage Ratio | 5.29 | 6.61 | - | | Cash Interest Coverage Ratio | 10.18 | 7.32 | Primarily due to an increase in operating cash flow during the current period | - As of the end of the reporting period, the company had secured total credit lines of **RMB 110.72 billion** from various financial institutions, with **RMB 53.306 billion** utilized and **RMB 57.414 billion** remaining unused[187](index=187&type=chunk)[188](index=188&type=chunk) [Financial Report](index=66&type=section&id=Financial%20Report) [Audit Report](index=66&type=section&id=Audit%20Report) Dahua Certified Public Accountants (Special General Partnership) issued a standard unqualified audit opinion on the company's 2018 financial statements, affirming that they were prepared in all material respects in accordance with enterprise accounting standards and fairly presented the company's financial position and operating results, with key audit matters identified as "recoverability of accounts receivable" and "reasonableness of inventory impairment provision" - The audit firm, Dahua Certified Public Accountants (Special General Partnership), issued a standard unqualified audit report (Dahua Audit [2019] No. 002029)[189](index=189&type=chunk)[190](index=190&type=chunk) - Key audit matters include: - **Recoverability of accounts receivable**: Due to significant accounting estimates and judgments required by management in determining the estimated recoverable amount, and the material amount involved - **Reasonableness of inventory impairment provision**: Due to the high book value of inventory, and the significant impact of policies and market conditions on corn prices, which presents a possibility of inventory impairment[192](index=192&type=chunk)[193](index=193&type=chunk) [Financial Statements](index=68&type=section&id=Financial%20Statements) This section presents the company's 2018 consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in equity, with detailed data reflecting the financial position, operating results, and cash flows for the reporting period Consolidated Income Statement Summary (RMB) | Item | 2018 | 2017 | | :--- | :--- | :--- | | Total Operating Revenue | 12,648,045,803.79 | 11,132,161,082.33 | | Total Operating Costs | 11,554,749,447.87 | 10,084,952,860.18 | | Operating Profit | 1,215,194,326.14 | 1,430,505,300.09 | | Total Profit | 1,214,600,363.10 | 1,422,880,453.48 | | Net Profit | 1,020,070,463.84 | 1,196,036,914.83 | | Net Profit Attributable to Parent Company Shareholders | 1,001,546,287.48 | 1,173,606,820.66 | Consolidated Cash Flow Statement Summary (RMB) | Item | 2018 | 2017 | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 2,449,646,802.57 | 1,546,552,616.39 | | Net Cash Flow from Investing Activities | -1,995,131,313.82 | -532,963,943.12 | | Net Cash Flow from Financing Activities | -1,231,943,154.19 | -1,148,465,387.58 | | Net Increase in Cash and Cash Equivalents | -756,364,339.17 | -151,781,288.63 | [Notes to Financial Statements](index=81&type=section&id=Notes%20to%20Financial%20Statements) This section details the company's general information, basis of financial statement preparation, significant accounting policies and estimates, and provides comprehensive notes on key consolidated financial statement items such as monetary funds, receivables, inventories, fixed assets, borrowings, and revenue costs; the notes also indicate format revisions and retrospective adjustments to comparable period data as per Caihui [2018] No. 15, and disclose tax preferential policies like the Western Development program - In accordance with Ministry of Finance Notice Caihui [2018] No. 15, the company revised its financial statement format, combining "Notes Receivable" and "Accounts Receivable" into "Notes and Accounts Receivable," and "Notes Payable" and "Accounts Payable" into "Notes and Accounts Payable," while separately presenting "Research and Development Expenses" from "Administrative Expenses"[322](index=322&type=chunk)[323](index=323&type=chunk) - The company and several subsidiaries benefit from tax preferential policies, including exemption from local corporate income tax in Tibet, a **15%** tax rate for high-tech enterprises, and a **15%** tax rate under the Western Development program[328](index=328&type=chunk)[329](index=329&type=chunk) - As of period-end, **RMB 418 million** in monetary funds were restricted, primarily for bank acceptance bill deposits, loan guarantees, and time deposits[331](index=331&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk)

2018 年第三季度报告 公司代码：600873 公司简称：梅花生物 梅花生物科技集团股份有限公司 2018 年第三季度报告 1 / 19 | 目录 | | --- | | 一、重要提示 3 | | --- | | 二、公司基本情况 3 | | 三、重要事项 6 | | 四、附录 8 | 2018 年第三季度报告 一、 重要提示 二、 公司基本情况 2.1 主要财务数据 | | | | 单位：元 币种：人民币 | | --- | --- | --- | --- | | | 本报告期末 | 上年度末 | 本报告期末比上年度 | | | | | 末增减(%) | | 总资产 | 18,266,252,123.81 | 17,101,915,003.75 | 6.81 | | 归属于上市公司股东的净资产 | 8,829,092,012.50 | 9,105,157,993.88 | -3.03 | | | 年初至报告期末 | 上年初至上年报告期末 | 比上年同期增减(%) | | | （1-9 月） | （1-9 月） | | | 经营活动产生的现金流量净额 | 2,131,753,036.17 | 1,269,7 ...

Financial Performance - The company's operating revenue for the first half of 2018 was CNY 6,287,703,288.49, representing a 12.16% increase compared to CNY 5,605,794,165.18 in the same period last year[18]. - The net profit attributable to shareholders decreased by 24.31% to CNY 469,640,086.28 from CNY 620,443,055.17 year-on-year[18]. - Basic earnings per share decreased by 25% to CNY 0.15 from CNY 0.20 in the same period last year[19]. - The weighted average return on net assets decreased by 1.66 percentage points to 5.03% from 6.69% year-on-year[19]. - The company achieved a net profit of 470 million yuan, a decrease of 24.31% year-on-year, primarily due to reduced government subsidies[39]. - The company reported a total profit of CNY 43,326,623.78, down from CNY 63,108,768.64, indicating a decrease of 31.51% year-over-year[146]. - The total comprehensive income for the first half of 2018 was CNY 36,486,556.44, down from CNY 64,458,185.10 in the previous year, reflecting a decline of 43.38%[146]. Cash Flow and Investments - The net cash flow from operating activities increased by 36.02% to CNY 1,102,179,537.97 compared to CNY 810,310,002.48 in the previous year[18]. - Financing activities generated a net cash flow of CNY 852.36 million, a 238.91% increase compared to the previous year, due to increased borrowings and employee subscription payments[48]. - Cash inflow from financing activities totaled CNY 2,786,236,418.00, a significant increase from CNY 2,023,670,000.00 in the previous period[149]. - The cash and cash equivalents at the end of the period reached CNY 3,382,547,647.25, up from CNY 2,441,234,267.73 at the end of the previous period[149]. Assets and Liabilities - The total assets of the company at the end of the reporting period were CNY 19,127,618,714.70, an increase of 11.84% from CNY 17,101,915,003.75 at the end of the previous year[18]. - The total liabilities increased to CNY 10,322,960,784.98, compared to CNY 7,741,518,182.19, marking an increase of 33.56%[141]. - The total equity attributable to shareholders decreased to CNY 8,549,100,317.62 from CNY 9,105,157,993.88, a decrease of 6.09%[140]. - The company's long-term equity investments increased by 40.53% to CNY 13.79 million, primarily due to new investments in subsidiaries[49]. Market Position and Operations - The company maintains a leading position in the amino acid production industry, with an annual capacity of nearly 1 million tons for flavor enhancers and over 1 million tons for animal nutrition amino acids, making it one of the largest comprehensive amino acid producers globally[25]. - The company has established a fully integrated operation model encompassing research, production, supply, and sales, with R&D centers located in Langfang and Shanghai, and production bases in Inner Mongolia, Xinjiang, and Jilin[23]. - The diverse product portfolio includes animal nutrition amino acids, human medical amino acids, and food flavor optimization products, which helps mitigate profit fluctuations due to market cycles[31]. - The company has implemented a centralized procurement strategy to analyze market trends and optimize raw material purchasing, focusing on key materials such as corn and coal[24]. Environmental and Social Responsibility - The company has invested over 100 million yuan annually in environmental protection measures, ensuring compliance with national standards and maintaining a higher average operating rate compared to industry peers[27]. - The company emphasizes sustainable development and has integrated environmental management into its operational strategy, positioning itself as a resource-efficient enterprise[27]. - The company donated a total of 223.65 million RMB worth of materials for poverty alleviation during the reporting period[89]. - The company established the "Tibet Meihua Public Welfare Foundation" to support local education and assist impoverished families[88]. Legal and Regulatory Matters - The company is involved in multiple legal disputes, including a ruling requiring repayment of RMB 29,500,000.00 and related interest within ten days[66]. - The company’s major shareholder is under investigation by the China Securities Regulatory Commission for suspected violations of securities laws[71]. - The company is committed to fulfilling its information disclosure obligations regarding ongoing legal matters and shareholder investigations[71]. Shareholder and Equity Information - The company has 161,715 ordinary shareholders as of the end of the reporting period[111]. - The largest shareholder, Meng Qingshan, holds 854,103,033 shares, representing 27.48% of the total shares[112]. - The company distributed a cash dividend of RMB 0.33 per share, totaling RMB 1,025,697,762.54 (including tax) based on the total share capital as of the registration date[103]. - The company completed the grant of 34,483,300 restricted stocks to 109 individuals, representing 1.1094% of the total share capital[116]. Financial Ratios and Credit Information - The current ratio decreased by 25.89% from the previous year, standing at 0.83[130]. - The asset-liability ratio increased by 19.22% from the previous year, reaching 53.97%[130]. - The company's credit rating was upgraded to AA+ in April 2017, with a stable outlook[126]. - The company maintains a 100% loan repayment rate[130].

Financial Performance - Operating revenue for the period reached CNY 3,206,676,054.17, representing a 17.07% increase year-on-year[8] - Net profit attributable to shareholders decreased by 27.39% to CNY 247,924,963.50 compared to the same period last year[8] - Basic earnings per share fell by 27.27% to CNY 0.08 compared to the previous year[8] - The company reported a net profit margin improvement, reflecting better cost management despite rising total costs[26] - The net profit for Q1 2018 was CNY 253,424,447.85, down 27.3% from CNY 348,729,307.14 in Q1 2017[28] - The total profit for Q1 2018 was CNY 300,964,282.02, a decrease of 26.0% from CNY 406,225,054.45 in the previous year[28] - The company's operating profit for Q1 2018 was CNY 301,540,282.00, down 26.2% from CNY 408,736,538.72 in Q1 2017[28] Cash Flow - The net cash flow from operating activities increased by 14.76% to CNY 350,663,734.26 year-on-year[8] - Cash inflows from operating activities amounted to CNY 3,188,093,484.98, an increase of 15.9% compared to CNY 2,750,620,459.28 in the same period last year[32] - The net cash flow from operating activities for Q1 2018 was ¥517,870,982.68, a significant improvement compared to a net outflow of ¥727,609,608.47 in the same period last year[35] - Total cash inflow from operating activities reached ¥3,649,784,125.18, up from ¥3,165,011,212.02, reflecting a growth of approximately 15.2% year-over-year[35] - The net cash flow from investing activities was -¥613,198,076.15, a decline from a positive cash flow of ¥1,008,671,584.01 in the previous year[35] - The net cash flow from financing activities was -¥103,496,685.76, compared to -¥190,067,140.40 in the same quarter last year, showing an improvement[35] Assets and Liabilities - Total assets increased by 3.73% to CNY 17,740,409,743.81 compared to the end of the previous year[8] - Non-current assets totaled CNY 10,284,856,282.60, an increase from CNY 9,946,467,010.84 at the beginning of the year[23] - Total liabilities amounted to CNY 7,701,483,815.15, a decrease from CNY 7,714,076,007.78 at the beginning of the year[24] - Shareholders' equity totaled CNY 6,691,992,923.65, an increase from CNY 6,677,048,402.31 at the start of the year[24] - Cash and cash equivalents decreased to CNY 709,892,004.93 from CNY 934,732,492.98 at the beginning of the year[22] Shareholder Information - The number of shareholders reached 165,371 at the end of the reporting period[12] - The largest shareholder, Meng Qingshan, holds 27.48% of the shares, totaling 854,103,033 shares[12] Operating Costs and Expenses - Total operating costs for Q1 2018 amounted to CNY 2,946,560,976.55, up 22.9% from CNY 2,398,947,800.37 year-over-year[26] - Financial expenses rose by 43.26% to ¥83.71 million primarily due to increased exchange losses and interest expenses[13] - The financial expenses for Q1 2018 were CNY 83,707,688.73, an increase of 43.2% from CNY 58,428,592.48 in Q1 2017[28] - The company's sales expenses for Q1 2018 were CNY 246,678,595.55, up 3.5% from CNY 238,826,069.15 in the previous year[28] - The company's management expenses for Q1 2018 were CNY 120,209,934.34, an increase of 9.4% from CNY 109,737,216.37 in the same period last year[28] Investment and Subsidies - The company recorded a government subsidy income of CNY 1,863,936.66 during the period[8] - Investment income increased by 83.58% to ¥25.44 million due to higher returns from bank wealth management investments[13] - The investment income for Q1 2018 was CNY 25,436,525.99, an increase of 83.5% compared to CNY 13,856,097.95 in Q1 2017[28] Changes in Assets - Prepaid accounts decreased by 30.17% to ¥391.28 million due to a reduction in material payments[13] - Other current assets increased by 142.70% to ¥543.71 million primarily due to new bank wealth management investments[13] - Construction in progress decreased by 57.44% to ¥119.72 million as a result of project transfers[13] - Intangible assets increased by 29.98% to ¥1,070.85 million due to new land use rights acquired[13] - Inventory decreased significantly to CNY 56,740,603.39 from CNY 157,362,533.74 year-over-year[23]

Financial Performance - In 2017, the company's operating income was CNY 11,132,161,082.33, a slight increase of 0.36% compared to CNY 11,092,771,951.51 in 2016[20] - The net profit attributable to shareholders of the listed company for 2017 was CNY 1,173,606,820.66, representing a year-on-year increase of 12.66% from CNY 1,041,689,943.85 in 2016[20] - The net cash flow from operating activities decreased by 49.52% to CNY 1,544,108,816.39 in 2017, down from CNY 3,058,568,973.99 in 2016[20] - The total assets of the company at the end of 2017 were CNY 17,101,915,003.75, reflecting a 0.70% increase from CNY 16,983,012,102.37 at the end of 2016[20] - The net assets attributable to shareholders of the listed company increased by 0.45% to CNY 9,105,157,993.88 at the end of 2017, compared to CNY 9,064,019,058.49 at the end of 2016[20] - The basic earnings per share for 2017 were CNY 0.38, an increase of 11.76% from CNY 0.34 in 2016[21] - The company reported a decrease of 1.15% in net profit after deducting non-recurring gains and losses, totaling CNY 833,054,738.13 in 2017[20] - The company’s asset-liability ratio remained stable at 45.27%, and the weighted average return on equity rose from 11.98% to 13.14%[62] - The company reported a net cash flow from operating activities of 1.544 billion yuan, a significant decrease of 49.52% year-on-year, primarily due to increased prepayments for materials[85] - The company’s R&D expenditure was 342.9 million RMB, down 5.31% from 362.1 million RMB in the previous year[71] Dividends and Profit Distribution - The company plans to distribute a cash dividend of CNY 3.30 per 10 shares, totaling CNY 1,014,318,273.54 to shareholders[5] - The company has a profit distribution policy that emphasizes active cash dividends, with a payout ratio of 86.43% of net profit attributable to ordinary shareholders in 2017[112] - In 2017, the company's cash dividend proposal was to distribute 3.30 RMB per 10 shares, totaling 1,014,318,273.54 RMB (including tax), based on a total share capital of 3,073,691,738 shares[110] Research and Development - The company invested over 300 million yuan in R&D in 2017 and holds nearly 50 innovation patents, with leading core technologies in strain modification and wastewater treatment[43] - The company operates two R&D centers in Langfang and Shanghai, focusing on strain creation and fermentation extraction process optimization[30] - The number of R&D personnel accounted for 0.75% of the total workforce, with 75 employees dedicated to R&D[84] - The company has established long-term stable research collaborations with several prestigious institutions, enhancing its R&D capabilities and innovation[43] Production and Capacity Expansion - The company has established a new production base in Jilin Baicheng, enhancing its production capacity[31] - The company plans to build an annual production capacity of 400,000 tons of animal nutrition amino acids in Jilin Baicheng in 2018, which will make it the world's largest lysine supplier[37] - The company expanded production capacity for threonine and xanthan gum at its Tongliao and Xinjiang bases to meet growing domestic and international demand[68] - The company has nearly 1 million tons of flavoring agent capacity and over 1 million tons of animal nutrition amino acid capacity, making it one of the largest amino acid producers globally[36] Market and Sales - The company's overseas sales revenue accounted for approximately 28% of total revenue, with operations in over 100 countries, including more than 50 "Belt and Road" countries[34] - The company maintained a production capacity utilization rate of around 90%, significantly higher than the industry average, achieving its sales targets for the year[58] - The company’s revenue from direct exports in 2017 was 460 million USD, accounting for nearly 28% of total revenue[104] - The company has established strategic partnerships with leading firms like Ajinomoto to enhance product development and market promotion, further solidifying its international market presence[67] Environmental and Social Responsibility - The company has been recognized as a "demonstration enterprise for energy conservation and environmental protection" by the China Bio-fermentation Industry Association[39] - The company has implemented wastewater reuse projects, achieving a reduction of 5,440 m³/d in water consumption[152] - Investments of approximately RMB 150 million have been made in 14 key environmental protection projects to improve pollution control measures[152] - The company has established an emergency response plan for environmental pollution incidents, including specific plans for hazardous chemical leaks and wastewater treatment[155] - The company donated RMB 1 million to support local employment and education development in Xinjiang, along with additional donations for food safety initiatives[146] - The company plans to establish a charity fund in Tibet to enhance its contributions to local development and poverty alleviation[149] Governance and Management - The management team is experienced and stable, integrating market-oriented talent with modern enterprise management practices to enhance operational efficiency[44] - The company has a structured salary policy that includes fixed and variable compensation components, with performance bonuses based on monthly assessments[183] - The company has implemented an employee stock ownership plan, involving department heads and senior management, to align interests with shareholders[197] - The company has a total of 10,055 employees, with 333 in the parent company and 9,517 in major subsidiaries[182] - The company has established a comprehensive internal control system, identifying 11 general internal control deficiencies during the reporting period[189] Legal Matters - The company has no significant litigation or arbitration matters reported for the current year[120] - The company is actively monitoring the progress of ongoing lawsuits and intends to hold relevant parties accountable for any losses incurred[128] - Dalian Hanxin Biopharmaceutical Co., Ltd. was acquired by Lhasa Meihua Biological Investment Holding Co., Ltd. in 2013, and ongoing litigation pertains to events prior to the acquisition[127] Economic Context - In 2017, China's GDP growth was 6.9%, with key economic themes including "capacity reduction, deleveraging, environmental control, and inventory reduction" driving economic performance[47] - The total feed production in China reached 1.07 billion tons in 2017, representing a year-on-year growth of 2.57%[48]

Financial Performance - Net profit attributable to shareholders rose by 4.63% to CNY 695.33 million year-to-date[7] - Operating revenue for the first nine months was CNY 7.94 billion, a slight increase of 0.16% year-on-year[7] - Basic and diluted earnings per share increased by 4.76% to CNY 0.22 per share[7] - Total operating revenue for Q3 was approximately $2.33 billion, a decrease of 6.9% compared to $2.51 billion in the same period last year[28] - Operating profit for Q3 was approximately $81.26 million, down 66.1% from $240.44 million in the same period last year[28] - Net profit for Q3 was approximately $78.63 million, a decrease of 70.4% compared to $265.29 million in the same period last year[29] - Year-to-date net profit reached approximately $711.29 million, compared to $679.50 million in the same period last year, reflecting a growth of 4.7%[29] - The company reported a significant increase in tax expenses for Q3, totaling approximately $31.56 million, compared to $17.70 million in the same period last year[28] - Investment income for Q3 was approximately $30.30 million, an increase from $10.07 million in the same period last year[28] Assets and Liabilities - Total assets increased by 3.85% to CNY 17.64 billion compared to the end of the previous year[7] - Current assets totaled ¥5,261,018,209.49, compared to ¥4,609,182,988.54, representing an increase of about 14.12%[21] - Total liabilities reached ¥8,561,880,061.10, up from ¥7,686,184,310.37, indicating a growth of around 11.34%[22] - Owner's equity decreased to ¥9,075,649,291.67 from ¥9,296,827,792.00, a decline of about 2.37%[22] - The company’s total liabilities and owner's equity totaled ¥17,637,529,352.77, consistent with total assets, confirming the balance sheet integrity[22] Cash Flow - Net cash flow from operating activities decreased by 46.43% to CNY 1.27 billion compared to the same period last year[7] - The company's cash and cash equivalents increased by 31.99% to ¥317,353,753.06 compared to the previous year, primarily due to increased financing for corn reserve acquisitions and slightly higher sales receipts[13] - Cash flow from operating activities for the first nine months of 2017 was ¥1,269,717,666.73, down from ¥2,370,247,866.04 in the same period last year, a decrease of about 46.3%[33] - The net cash flow from operating activities was -$510,093,986.73, a decrease from $645,542,264.18 in the previous year[37] - Cash outflow from operating activities totaled $8,400,133,491.03, an increase from $7,134,513,358.96[37] Shareholder Information - The total number of shareholders reached 171,980 by the end of the reporting period[11] - The largest shareholder, Meng Qingshan, holds 27.48% of the shares, amounting to 854,103,033 shares[11] - The company has not yet repurchased any shares as of the report date, despite approval from the board and shareholders[14] Investments and Projects - The company has initiated a new project for the annual production of 400,000 tons of feed-grade amino acids, with construction progressing smoothly in Jilin Province[15][16] - The company’s investment income rose by 194.59% to ¥6,036,630.00, attributed to increased financial investment returns[14] - The company’s long-term equity investments increased to ¥966,610.00, reflecting new investments in a subsidiary measured using the equity method[13] Other Financial Metrics - The weighted average return on equity decreased by 0.26 percentage points to 7.53%[7] - Non-recurring gains and losses totaled CNY 42.32 million for the current period[10] - The company reported a significant increase in inventory, which rose to ¥700,995,508.88 from ¥832,885,913.58, reflecting a decrease of approximately 15.8%[21] - Other receivables amounted to ¥195,835,197.49, compared to ¥523,815,364.64, showing a decrease of about 62.66%[21]

Financial Performance - The company's operating revenue for the first half of 2017 was ¥5,605,794,165.18, representing a 3.41% increase compared to ¥5,420,936,308.89 in the same period last year[15]. - The net profit attributable to shareholders of the listed company reached ¥620,443,055.17, a significant increase of 53.54% from ¥404,095,873.72 year-on-year[15]. - Basic earnings per share increased by 53.85% to ¥0.20 from ¥0.13 in the same period last year[16]. - The weighted average return on net assets rose to 6.69%, an increase of 1.93 percentage points compared to 4.76% in the previous year[16]. - The comprehensive gross profit margin increased by 3.25 percentage points, while the net profit margin rose by 3.64 percentage points[38]. - The company achieved operating revenue of 5.606 billion yuan, an increase of 3.41% compared to the same period last year[40]. - The net profit attributable to shareholders reached 620 million yuan, reflecting a significant growth of 53.54% year-on-year[35]. - The company reported a total of CNY 1.388 million in gains from foreign exchange forward contracts as of June 30, 2017[51]. - The company reported a significant increase in short-term borrowings, which rose to CNY 2,323,670,000.00 from CNY 1,555,915,457.87[114]. - The company reported a total capital reserve of CNY 2,208,701,622.94, reflecting a stable capital structure[134]. Cash Flow and Liquidity - The net cash flow from operating activities decreased by 40.13% to ¥810,310,002.48, down from ¥1,353,459,525.76 in the previous year[15]. - As of June 30, 2017, the company's consolidated cash amounted to 2.465 billion yuan, indicating strong liquidity and excellent financial metrics[24]. - The company maintains a 100% loan repayment rate, ensuring timely debt servicing[104]. - The quick ratio decreased by 6.25% to 0.75, indicating a decline in short-term liquidity[104]. - Cash and cash equivalents increased significantly to CNY 1,450,832,974.27 from CNY 1,071,648,834.22, representing a growth of about 35.2%[116]. - Cash inflow from investment activities reached CNY 1,095,887,028.92, significantly up from CNY 502,631,361.83 in the prior period[127]. - Net cash flow from financing activities was negative at CNY -622,375,238.01, worsening from CNY -233,090,836.95 in the previous period[128]. Investments and Expansion - The company signed a strategic cooperation agreement with Ajinomoto Co., Inc. for the production of feed-grade lysine and threonine, enhancing its market position[35]. - A new wholly-owned subsidiary is planned to be established in Jilin Province with an investment of 2.5 to 3.5 billion yuan to produce 400,000 tons of feed-grade amino acids[35]. - The company is actively expanding its production capacity to capture market share in the animal nutrition amino acids and xanthan gum sectors[36]. - The company plans to establish a joint venture, Tongliao Desheng Biotechnology Co., Ltd., with an investment of 10.2 million yuan from Luoyang Desheng, holding 51% of the new company's capital[82]. - The company plans to establish a wholly-owned subsidiary, Jilin Meihua Amino Acid Co., Ltd., with a registered capital of 200 million yuan[83]. - The company plans to focus on market expansion and new product development in the upcoming quarters to drive future growth[120]. Risk Management and Compliance - The report includes a risk statement regarding forward-looking statements, cautioning investors about potential investment risks[2]. - The company has faced risks related to rapid business expansion and environmental compliance, necessitating increased investment in R&D and environmental protection measures[55]. - The company strictly complied with the bond issuance regulations and did not harm the interests of bond investors during the reporting period[109]. - The company has committed to taking effective measures to avoid engaging in any competitive business that may affect its main operations, as stated by the actual controller and shareholders[60]. Environmental and Social Responsibility - The company is committed to environmental protection, investing in advanced facilities to address emissions and improve production management, positioning itself as an industry benchmark for environmental standards[27]. - The company provided RMB 5 million in donations for poverty alleviation efforts, including 200 food vendor carts valued at RMB 5.1836 million and 30 tons of fertilizer valued at RMB 18,000[76]. - The company has completed deep treatment projects for organic fertilizer exhaust, significantly reducing visible emissions and improving environmental compliance[79]. - The Xinjiang base has achieved ultra-low emission standards for smoke, sulfur dioxide, and nitrogen oxides following the successful operation of its desulfurization project[80]. Corporate Governance - The company appointed Wang Aijun as the new chairman and He Jun as the new general manager during the board restructuring[92]. - The company's board of directors and supervisory board underwent a complete restructuring, with several new appointments made[93]. - The financial statements were approved by the board of directors on August 21, 2017[144]. - The company has not experienced any changes in controlling shareholders or actual controllers during the reporting period[90]. Market and Industry Outlook - The macroeconomic environment in 2017 showed a GDP growth of 6.9%, with challenges in the agricultural and food sectors due to supply-side reforms and tightening financial conditions[29]. - The domestic market for threonine is expected to benefit from a 13% export tax rebate policy, leading to an 18% year-on-year increase in exports during the first five months of 2017[32]. - The lysine market is projected to maintain a fluctuating upward trend due to stable supply and high export growth[33]. - The company anticipates intensified competition in the industry due to expansion plans from other firms, which may impact market dynamics[54].

Financial Performance - Net profit attributable to shareholders was CNY 341,433,631.67, representing a significant increase of 53.98% year-on-year[6]. - Operating revenue for the period reached CNY 2,739,108,531.41, reflecting a growth of 3.63% compared to the same period last year[6]. - Basic earnings per share rose to CNY 0.11, an increase of 57.14% from CNY 0.07 in the previous year[6]. - The company's net profit for Q1 2017 was CNY 348.73 million, an increase of 54.44% compared to CNY 225.80 million in the same period last year[10]. - The total profit for the current period was ¥406,225,054.45, up from ¥258,914,743.18 in the previous period, reflecting a growth of 56.93%[23]. - Net profit for the current period was ¥348,729,307.14, representing a 54.31% increase from ¥225,801,961.51 in the previous period[23]. Assets and Liabilities - Total assets at the end of the reporting period were CNY 16,809,158,078.16, a decrease of 1.02% compared to the end of the previous year[6]. - Current liabilities decreased from ¥4,586,789,027.71 to ¥4,063,878,847.41, a reduction of about 11.43%[18]. - Total liabilities decreased from ¥7,686,184,310.37 to ¥7,163,628,299.02, a decline of about 6.8%[18]. - Owner's equity increased from ¥9,296,827,792.00 to ¥9,645,529,779.14, an increase of approximately 3.75%[18]. - Total current assets decreased from ¥5,545,522,597.05 to ¥4,242,366,298.87, a decline of approximately 23.5%[20]. - Total liabilities and owner's equity decreased from ¥14,812,557,123.23 to ¥13,534,726,931.94, a decline of approximately 8.6%[21]. Cash Flow - Net cash flow from operating activities was CNY 305,550,291.38, down 8.10% from CNY 332,471,348.53 in the same period last year[6]. - Cash flow from operating activities amounted to ¥2,691,587,772.04, an increase from ¥2,289,478,547.97 in the previous period[28]. - Total cash inflow from operating activities was ¥2,750,620,459.28, up 15.4% from ¥2,384,009,799.63 year-over-year[29]. - Cash outflow from operating activities increased to ¥2,445,070,167.90, compared to ¥2,051,538,451.10 in the same period last year, reflecting a rise of 19.2%[29]. - The net cash flow from investing activities was -¥96,320,374.03, worsening from -¥20,125,084.85 in the previous year[29]. - The ending cash and cash equivalents balance was ¥2,262,271,757.28, down from ¥778,727,709.09 in the previous year[30]. Shareholder Information - The total number of shareholders at the end of the reporting period was 162,009[9]. - The largest shareholder, Meng Qingshan, holds 27.48% of the shares, with 423,720,000 shares pledged[9]. - The company’s cash dividend distribution for 2016 was CNY 0.30 per share, totaling CNY 932.47 million[12]. Investments and Expenditures - The company completed an investment of CNY 349 million in Liaoning Aimei Biological Vaccine Technology Group, acquiring a 6.3291% stake[12]. - The total amount of prepaid accounts increased by 60.62% to CNY 180.67 million, primarily due to increased payments for raw materials[10]. - The company reported a significant increase in investment income, rising by 513.76% to CNY 13.86 million, attributed to higher financial investment returns[10]. - The company’s construction in progress increased by 43.35% to CNY 186.81 million, mainly due to ongoing technical transformation projects[10]. - The company’s available-for-sale financial assets rose by 118.50% to CNY 643.52 million, due to new equity investments in Aimei[10]. Operating Costs and Expenses - Total operating costs decreased to ¥2,398,947,800.37, down 0.36% from ¥2,407,628,774.09 in the previous period[23]. - The company reported a significant increase in sales expenses, which rose to ¥238,826,069.15 from ¥189,589,780.07, marking a 25.92% increase[23].

Financial Performance - In 2016, the company's operating revenue was CNY 11,092,771,951.51, a decrease of 6.42% compared to CNY 11,853,174,318.23 in 2015[18]. - The net profit attributable to shareholders of the listed company reached CNY 1,041,689,943.85, an increase of 144.84% from CNY 425,456,765.94 in 2015[18]. - The net profit after deducting non-recurring gains and losses was CNY 842,776,942.66, up 224.66% from CNY 259,586,511.55 in 2015[18]. - The net cash flow from operating activities was CNY 3,058,568,973.99, a decrease of 11.19% compared to CNY 3,444,038,776.92 in 2015[18]. - As of the end of 2016, the net assets attributable to shareholders of the listed company were CNY 9,064,019,058.49, an increase of 8.77% from CNY 8,333,151,774.94 at the end of 2015[18]. - Total assets at the end of 2016 were CNY 16,983,012,102.37, a decrease of 6.53% from CNY 18,169,496,736.85 at the end of 2015[18]. - Basic earnings per share increased by 142.86% to CNY 0.34 in 2016 compared to CNY 0.14 in 2015[19]. - Diluted earnings per share also rose by 142.86% to CNY 0.34 in 2016 from CNY 0.14 in 2015[19]. - The weighted average return on equity increased by 6.81 percentage points to 11.98% in 2016 from 5.17% in 2015[19]. - The company achieved a weighted average return on equity of 9.69% after deducting non-recurring gains and losses in 2016, up from 3.16% in 2015[19]. Dividend and Shareholder Information - The company plans to distribute a cash dividend of CNY 3.00 per 10 shares, totaling CNY 932,467,980.90, subject to shareholder approval[2]. - The company has a cash dividend policy that mandates at least 10% of the distributable profit to be distributed as cash dividends if there are no major investment plans or cash expenditure plans within the last twelve months[96]. - The company has a history of actively engaging with shareholders, particularly small and medium shareholders, to gather feedback before finalizing cash dividend proposals[97]. Research and Development - The company invested over 300 million RMB in R&D annually, holding more than 40 innovation patents, and has established long-term research collaborations with several prestigious universities and research institutes[35]. - R&D expenditure was 362.14 million RMB, a decrease of 4.14% compared to the previous year[54]. - R&D expenses totaled 362,142,555.00, representing 3.26% of total revenue[70]. - The company plans to focus on increasing R&D investment to improve the quantity and quality of its intellectual property, optimize production processes, and develop new products[88]. Market Position and Products - The company is a leading domestic and internationally recognized biotechnology firm focused on the research, production, and sales of animal nutrition amino acids, human medical amino acids, and food flavor optimization products, serving nearly 4,000 customers in over 100 countries[26]. - The main product categories include animal nutrition amino acids (lysine, threonine, tryptophan), human medical amino acids (glutamine, proline, leucine, isoleucine, valine), and food flavor optimization products (monosodium glutamate, sodium guanylate, sodium inosinate)[27]. - The company is the largest producer of threonine globally, with a market share of approximately 65% in the domestic market for threonine, 55% for lysine, and 34% for monosodium glutamate, ranking second in the industry for the latter two products[35]. - The company’s amino acids are crucial for protein synthesis and have significant applications in both veterinary and human medicine, enhancing immune function and promoting muscle synthesis[27]. Operational Efficiency and Cost Management - Operating costs decreased by 12.31% to 8.28 billion RMB, reflecting cost-saving measures and lower raw material prices[54]. - Gross profit margin increased to 25.3%, up 5 percentage points from the previous year, attributed to improved production efficiency and strategic procurement management[52]. - The company successfully reduced inventory by 440 million yuan, resulting in an asset-liability ratio of 45.26%[49]. - The company has implemented measures to optimize procurement processes and reduce raw material costs while ensuring supply meets production needs[92]. Environmental and Social Responsibility - The company has been recognized as a "demonstration enterprise for energy conservation and environmental protection" by the China Bio-fermentation Industry Association, highlighting its commitment to sustainable practices[37]. - The company invested CNY 90 million in environmental protection measures, achieving significant results in waste gas, wastewater, and odor treatment[138]. - The company successfully completed a flue gas desulfurization project, achieving a sulfur dioxide emission concentration below 30 mg/m³, meeting national emission standards ahead of schedule[139]. - The company donated 12,000 tons of organic fertilizer valued at CNY 7.27 million and 3,400 tons of liquid organic fertilizer valued at CNY 4.03 million to local farmers, totaling CNY 11.30 million in support[132]. Legal and Compliance Issues - The company has faced significant litigation risks, including a total of RMB 31,854,728.00 in funds being frozen due to legal disputes[107]. - The company has initiated arbitration against Shandong Wuzhou Investment Group for compensation of RMB 28,832,858.04 and interest losses of RMB 601,377 due to previous disputes[106]. - The company has not reported any non-standard audit opinions or significant accounting policy changes for the reporting period[104]. Management and Governance - The company has a stable management team with extensive industry experience, which has successfully navigated various market conditions to ensure steady growth[37]. - The company has established a performance evaluation and incentive system to align the interests of management and employees with those of shareholders, fostering a culture of shared success[38]. - The company has a strong management team with members holding various positions in other organizations, enhancing its strategic capabilities[164]. - The company is committed to maintaining a robust governance structure with independent directors and supervisors[164]. Financial Health and Debt Management - The company’s liquidity ratio showed continuous improvement, reflecting better financial health[51]. - The company fully repaid all loans and interest obligations, maintaining a repayment rate of 100%[199]. - The company issued a total of 10 billion RMB in short-term financing bonds in 2016, with a coupon rate of 3.85%[200]. - The company’s credit rating is AA, as confirmed by Zhongcheng Credit Rating Co., Ltd.[193].

Financial Performance - Net profit attributable to shareholders increased by 73.27% to CNY 664,526,924.41 for the period from January to September[5] - Operating revenue decreased by 10.11% to CNY 7,927,851,633.42 for the same period[5] - Basic and diluted earnings per share increased by 75% to CNY 0.21[5] - The weighted average return on equity increased by 3.13 percentage points to 7.79%[5] - Net profit for the period reached CNY 67,949.72 million, a 69.75% increase compared to CNY 40,030.13 million in the same period last year[12] - The company reported a 73.27% year-on-year increase in net profit attributable to shareholders, reaching CNY 66,452.69 million compared to CNY 38,352.80 million in the previous year[16] - Total profit for the first nine months of 2016 was CNY 760,335,749.02, an increase of 50.9% from CNY 503,255,777.87 in the same period of 2015[26] - The company reported a significant increase in investment income, totaling CNY 20,491,716.71 for the first nine months of 2016, compared to CNY 28,486,278.57 in the previous year[26] Assets and Liabilities - Total assets decreased by 8.51% to CNY 16,623,432,570.75 compared to the end of the previous year[5] - The company’s total assets decreased to CNY 16,623,432,570.75 from CNY 18,169,496,736.85, reflecting a reduction in both current and non-current assets[18] - Total current liabilities amounted to CNY 4,337,153,681.14, a decrease from CNY 4,902,959,685.89 at the beginning of the year, indicating a reduction of about 11.5%[23] - The company's total liabilities were CNY 7,322,828,006.30, a decrease from CNY 7,885,634,557.42 at the beginning of the year, reflecting a reduction of about 7.1%[23] - The total equity attributable to shareholders increased to CNY 5,833,306,591.67 from CNY 6,128,941,497.17, indicating a decrease of approximately 4.8%[23] Cash Flow - Net cash flow from operating activities decreased by 7.51% to CNY 2,370,247,866.04[5] - Cash flow from operating activities for the first nine months was CNY 8,125,805,118.93, down 11.4% from CNY 9,171,508,587.65 in the same period last year[32] - Cash inflow from investment activities totaled CNY 589,023,079.74, compared to CNY 251,949,942.82 in the previous year, marking a significant increase[33] - Cash flow from financing activities showed a net outflow of CNY 1,543,424,523.54, an improvement from a net outflow of CNY 2,680,235,153.56 in the same period last year[33] - The ending balance of cash and cash equivalents was CNY 1,423,577,976.27, compared to CNY 176,532,676.69 at the end of the previous year[33] Shareholder Information - The total number of shareholders reached 206,871 by the end of the reporting period[8] - The largest shareholder, Meng Qingshan, holds 27.48% of the shares, with 854,103,033 shares pledged[9] Government Support and Other Income - The company received government subsidies amounting to CNY 73,622,492.04 during the reporting period[6] - Non-recurring gains and losses totaled CNY 53,471,057.11 for the period from July to September[7] Inventory and Receivables - Cash and cash equivalents increased by 30.15% to CNY 1,423,977,976.27 from CNY 1,094,089,150.34 due to increased cash flow from operating activities and reduced inventory[11] - Accounts receivable rose by 57.69% to CNY 227,363,746.20 from CNY 144,184,866.16, attributed to an increase in accepted payments[11] - Inventory decreased by 37.90% to CNY 792,088,142.97 from CNY 1,275,533,714.47, mainly due to accelerated inventory turnover[11] Future Plans - The company plans to focus on expanding its market presence and enhancing product development in the upcoming quarters[29]