Financial Performance - The company's operating revenue for 2021 was CNY 10,022,657,463.70, an increase of 28.18% compared to CNY 7,819,069,765.83 in 2020[16]. - The net profit attributable to shareholders for 2021 was CNY 1,062,555,476.55, reflecting a growth of 27.69% from CNY 832,143,263.76 in 2020[16]. - The net cash flow from operating activities for 2021 was CNY 911,840,233.10, up 26.72% from CNY 719,589,775.50 in 2020[16]. - The total assets at the end of 2021 amounted to CNY 13,666,323,515.10, representing a 26.04% increase from CNY 10,842,946,543.08 in 2020[16]. - The company's net assets attributable to shareholders increased by 18.45% to CNY 6,547,568,288.03 at the end of 2021, compared to CNY 5,527,482,768.27 at the end of 2020[16]. - Basic earnings per share for 2021 were CNY 1.43, a 27.68% increase from CNY 1.12 in 2020[17]. - The company reported a quarterly operating revenue of CNY 2,458,213,199.95 in Q4 2021, with a net profit attributable to shareholders of CNY 241,721,732.94[19]. - The company achieved a revenue of CNY 10,022,657,463.70 in 2021, representing a year-on-year growth of 28.18%[54]. - The net profit attributable to shareholders was CNY 1,062,555,500, an increase of 27.69% compared to the previous year[54]. Dividend and Share Capital - The company plans to distribute a cash dividend of 4.29 RMB per 10 shares, totaling 319,502,705.81 RMB, based on a total share capital of 744,761,552 shares as of December 31, 2021[2]. - The company intends to increase its share capital by 4 shares for every 10 shares held, resulting in an additional 297,904,621 shares, raising total share capital to 1,042,666,173 shares[2]. - The cash dividend policy stipulates that at least 10% of the distributable profits will be distributed in cash, with a proposed cash dividend of 4.29 yuan per 10 shares, totaling approximately 319.5 million yuan[100]. - The company plans to increase its share capital by 297.9 million shares through a capital reserve transfer, raising total shares from 744.8 million to 1.04 billion[100]. Audit and Compliance - The company has received a standard unqualified audit report from Da Hua Certified Public Accountants[2]. - The company has ensured that all board members can guarantee the authenticity, accuracy, and completeness of the annual report[2]. - The company maintained a robust internal control system, ensuring effective execution and compliance with regulations[100]. - The internal control audit report received a standard unqualified opinion, indicating no significant deficiencies in internal controls[135]. - The company has confirmed that its controlling shareholders have maintained good credit status without any major debts due[179]. Risk Management - The company has disclosed potential risks in its future development strategies, which are detailed in the management discussion and analysis section[2]. - The company faces risks from macroeconomic fluctuations, trade tensions, and raw material price volatility that could adversely affect its operating performance[83][84][85]. - The company has implemented a comprehensive foreign exchange management system to mitigate risks associated with currency fluctuations affecting its overseas business[87]. - Risks associated with the convertible bond issuance include interest and principal repayment obligations, which may pressure cash flow if performance does not meet expectations[89]. Technological Development and Innovation - The company invested over 1 billion RMB in technological transformation, marking the highest investment in automation production lines in its history[27]. - The company applied for 376 domestic patents, including 118 inventions, representing a year-on-year increase of 9.26%, and 25 international patents, a growth of 38.89%[28]. - The company’s automated production lines contributed to a significant increase in product quality, with key defect rates dropping to 1.9 PPM[26]. - The high-voltage direct current relay and signal relay product lines saw significant improvements in quality and production efficiency due to technological upgrades[27]. Market Position and Growth - The company's global market share in the relay sector increased by nearly 3 percentage points compared to 2020, solidifying its position as the industry leader[24]. - The company aims to achieve a revenue scale of 20 billion RMB by the mid-term of the 15th Five-Year Plan[24]. - The company has established partnerships with major global electric vehicle manufacturers, achieving a 36% market share in high-voltage direct current products[27]. - The company holds the largest market share in the global electromagnetic relay market, ranking first according to the 2021 report by Zhiduoxing Consulting[45]. Governance and Management - The company actively communicated with stakeholders, enhancing investor relations and addressing inquiries thoroughly[99]. - The company’s governance structure complies with relevant laws and regulations, ensuring the protection of shareholder rights[99]. - The company has a structured governance framework with a clear delineation of roles among its directors and executives[107]. - The management team includes individuals with backgrounds in finance, sales, and engineering, enhancing the company's operational capabilities[107]. Environmental Responsibility - The company has committed to avoiding any form of corruption and bribery in its business activities, adhering strictly to legal and ethical standards[152]. - The company has implemented a green design approach, with 4 products meeting the "Green Design Product Evaluation Technical Specification" standards[151]. - The company utilized a total of 8.085 million kWh of solar energy across its industrial parks in Xiamen and Zhangzhou in 2021[151]. - The company has established emergency response plans for environmental incidents in compliance with national regulations[143]. Employee and Community Engagement - The company provided over 15,000 job opportunities and deepened "school-enterprise cooperation" with several universities, offering scholarships and prioritized employment opportunities[154]. - The company organized a vaccination campaign with a participation rate exceeding 96% among employees[155]. - As of December 31, 2021, the company hired 395 fresh graduates, 152 interns, and 5 disabled individuals, promoting local employment and economic development[150]. Related Party Transactions - The company has disclosed related party transactions involving loans to subsidiaries, which were approved by the board and shareholders[137]. - The company reported actual related party transactions of 21,665,000 RMB for purchases from Zhangzhou Hongxing Tai Electronics Co., Ltd., compared to an estimated 26,936,000 RMB for 2021[181]. - The company sold products to related parties, generating 6,586,000 RMB in revenue from Zhangzhou Hongxing Tai Electronics Co., Ltd., against an estimated 8,498,000 RMB[181].

Financial Performance - The company's operating revenue for Q3 2021 was ¥2,616,976,230.42, representing a year-on-year increase of 31.09%[4] - The net profit attributable to shareholders for the same period was ¥300,525,693.84, reflecting a growth of 25.28% compared to the previous year[4] - The net profit attributable to shareholders after deducting non-recurring gains and losses was ¥274,200,498.70, an increase of 28.48% year-on-year[4] - Total operating revenue for the first three quarters of 2021 reached ¥7,564,444,263.75, a significant increase from ¥5,437,361,108.68 in the same period of 2020, representing a growth of approximately 39.1%[16] - Total revenue for Q3 2021 reached 1,302,412,820.48 CNY, an increase from 978,779,110.64 CNY in Q3 2020, representing a growth of approximately 33.0%[18] - Net profit for Q3 2021 was 1,125,439,546.04 CNY, compared to 814,634,884.12 CNY in Q3 2020, reflecting a year-over-year increase of about 38.2%[19] - The company reported a net profit increase, with retained earnings rising to ¥4,157,935,855.70 from ¥3,590,321,039.77, reflecting an increase of approximately 15.8%[15] Assets and Liabilities - The total assets at the end of the reporting period amounted to ¥12,445,586,450.83, which is a 14.78% increase from the end of the previous year[5] - As of September 30, 2021, total assets amounted to ¥12,445,586,450.83, up from ¥10,842,946,543.08 at the end of 2020, indicating an increase of about 14.8%[15] - Current assets totaled ¥7,364,678,547.75, compared to ¥6,158,355,846.00 at the end of 2020, reflecting a growth of approximately 19.5%[13] - Total liabilities as of September 30, 2021, were ¥4,249,894,603.08, up from ¥3,442,799,425.47 at the end of 2020, representing an increase of about 23.5%[15] - The company's equity attributable to shareholders reached ¥6,079,427,997.32, compared to ¥5,527,482,768.27 at the end of 2020, indicating a growth of approximately 9.9%[15] Cash Flow - The cash flow from operating activities for the year-to-date period was ¥924,016,870.95, showing a growth of 43.16% year-on-year[4] - Operating cash inflow for the first three quarters of 2021 was 7,254,053,217.18 CNY, compared to 5,917,016,231.45 CNY in the same period of 2020, showing an increase of approximately 22.6%[21] - Net cash flow from operating activities was $924.02 million, up from $645.46 million year-over-year[22] - Cash and cash equivalents at the end of the period were $882.64 million, down from $1.59 billion at the end of the previous year[22] Shareholder Information - The top shareholder, Youge Investment Co., Ltd., held 203,681,781 shares, representing 27.35% of the total shares[9] Expenses and Investments - Research and development expenses in Q3 2021 totaled 338,817,388.17 CNY, an increase from 252,003,782.90 CNY in Q3 2020, marking a rise of about 34.5%[18] - Sales expenses for Q3 2021 were 268,772,538.33 CNY, slightly down from 279,578,130.13 CNY in Q3 2020, indicating a decrease of about 3.0%[18] - The total operating costs for Q3 2021 were 6,364,640,773.87 CNY, up from 4,521,219,881.83 CNY in Q3 2020, representing an increase of about 40.7%[18] - The company reported investment income of 72,777,923.74 CNY in Q3 2021, a significant recovery from a loss of 14,639,478.00 CNY in Q3 2020[18] Future Outlook - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[12]

[Important Notice](index=1&type=section&id=重要内容提示) Hongfa Technology Co., Ltd.'s Q3 2021 report is guaranteed by management, though the financial statements remain unaudited - Hongfa Technology Co., Ltd.'s Q3 2021 report has been guaranteed for accuracy, completeness, and truthfulness by the Board of Directors, Supervisory Board, and senior management, but the quarterly financial statements are unaudited[2](index=2&type=chunk)[3](index=3&type=chunk) [Key Financial Data](index=1&type=section&id=一、%20主要财务数据) This section details Hongfa's robust financial performance in Q3 and YTD 2021, highlighting significant growth in revenue, net profit, and cash flow, alongside changes in key financial indicators [Key Accounting Data and Financial Indicators](index=1&type=section&id=%28一%29主要会计数据和财务指标) Hongfa's Q3 and YTD 2021 financial performance shows strong growth in revenue, net profit attributable to shareholders, and operating cash flow, alongside robust asset and equity expansion Key Financial Indicators for Q3 2021 and Year-to-Date | Item | Current Period (Q3 2021) (RMB) | YoY Change (%) | Year-to-Date (YTD 2021) (RMB) | Period-end vs. Prior Year-end Change (%) | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 2,616,976,230.42 | 31.09 | 7,564,444,263.75 | 39.12 | | Net Profit Attributable to Shareholders | 300,525,693.84 | 25.28 | 820,833,743.61 | 37.44 | | Net Profit Attributable to Shareholders (Excluding Non-Recurring Items) | 274,200,498.70 | 28.48 | 731,910,566.59 | 29.70 | | Net Cash Flow from Operating Activities | Not Applicable | Not Applicable | 924,016,870.95 | 43.16 | | Basic Earnings Per Share (RMB/share) | 0.4035 | 25.27 | 1.1021 | 37.44 | | Diluted Earnings Per Share (RMB/share) | 0.4035 | 25.27 | 1.1021 | 37.44 | | Weighted Average Return on Net Assets (%) | 5.07 | Increased by 0.45 percentage points | 14.32 | Increased by 3.19 percentage points | | **Period-end Indicators** | **Current Period-end (Sep 30, 2021) (RMB)** | **Prior Year-end (Dec 31, 2020) (RMB)** | | **Current Period-end vs. Prior Year-end Change (%)** | | Total Assets | 12,445,586,450.83 | 10,842,946,543.08 | | 14.78 | | Equity Attributable to Shareholders of Listed Company | 6,079,427,997.32 | 5,527,482,768.27 | | 9.99 | [Non-Recurring Gains and Losses and Amounts](index=2&type=section&id=%28二%29非经常性损益项目和金额) During the reporting period, non-recurring gains and losses, primarily government subsidies and fair value changes of financial assets, positively impacted net profit, totaling RMB 88.92 million year-to-date Non-Recurring Gains and Losses for Q3 2021 and Year-to-Date | Item | Amount for Current Period (Q3 2021) (RMB) | Amount Year-to-Date (YTD 2021) (RMB) | Notes | | :--- | :--- | :--- | :--- | | Disposal Gains/Losses of Non-Current Assets | -84,142.33 | -31,444.00 | | | Government Subsidies Included in Current Profit/Loss | 24,319,202.30 | 74,918,395.99 | | | Fair Value Change Gains/Losses and Investment Income | 14,691,819.57 | 56,358,274.42 | | | Other Non-Operating Income and Expenses | -1,746,077.84 | -2,568,508.43 | | | Less: Income Tax Impact | 2,698,589.76 | 11,703,060.23 | | | Minority Interest Impact (After Tax) | 8,157,016.80 | 28,050,480.73 | | | Total | 26,325,195.14 | 88,923,177.02 | | [Changes and Reasons for Key Accounting Data and Financial Indicators](index=2&type=section&id=%28三%29主要会计数据、财务指标发生变动的情况、原因) The company experienced significant growth in total operating revenue, net profit attributable to parent, operating cash flow, and EPS, driven by increased product sales, improved collections, tax refunds, and non-recurring gains - Total operating revenue increased by **39.12%** year-on-year, primarily due to increased sales of general, automotive, and new energy relays during the reporting period[8](index=8&type=chunk) - Net profit attributable to parent company shareholders increased by **37.44%** year-on-year, mainly due to expanded sales scale and increased non-recurring gains and losses[8](index=8&type=chunk) - Net cash flow from operating activities increased by **43.16%** year-on-year, primarily due to increased sales collections and tax refunds during the reporting period[8](index=8&type=chunk) [Shareholder Information](index=3&type=section&id=二、%20股东信息) This section provides an overview of the company's shareholder structure, including the total number of common shareholders and the detailed holdings of the top ten shareholders [Total Number of Common Shareholders, Preferred Shareholders with Restored Voting Rights, and Top Ten Shareholders' Holdings](index=3&type=section&id=%28一%29普通股股东总数和表决权恢复的优先股股东数量及前十名股东持股情况表) As of the end of the reporting period, the company had 16,779 common shareholders, with Youge Investment Co., Ltd. as the largest shareholder holding 27.35%, with some shares pledged - The total number of common shareholders at the end of the reporting period was **16,779**[9](index=9&type=chunk) Top Ten Shareholders' Holdings at Period-end | Shareholder Name | Shareholder Nature | Number of Shares Held (shares) | Shareholding Ratio (%) | Number of Restricted Shares Held (shares) | Share Status | Pledged, Marked, or Frozen Shares (shares) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Youge Investment Co., Ltd. | Domestic Non-State-Owned Legal Person | 203,681,781 | 27.35 | 0 | Pledged | 33,910,000 | | Hong Kong Securities Clearing Company Limited | Other | 123,837,650 | 16.63 | 0 | None | 0 | | Lianfa Group Co., Ltd. | Domestic Non-State-Owned Legal Person | 49,969,014 | 6.71 | 0 | Pledged | 9,800,000 | | National Council for Social Security Fund 112 Portfolio | Domestic Non-State-Owned Legal Person | 17,052,956 | 2.29 | 0 | None | 0 | | Agricultural Bank of China Co., Ltd. - Guotai Smart Auto Stock Investment Fund | Domestic Non-State-Owned Legal Person | 11,894,179 | 1.60 | 0 | None | 0 | | China Merchants Bank Co., Ltd. - Xingquan Hetai Mixed Securities Investment Fund | Domestic Non-State-Owned Legal Person | 11,302,895 | 1.52 | 0 | None | 0 | | Norges Bank - Own Funds | Overseas Legal Person | 9,344,695 | 1.25 | 0 | None | 0 | | National Council for Social Security Fund 102 Portfolio | Domestic Non-State-Owned Legal Person | 8,361,325 | 1.12 | 0 | None | 0 | | National Council for Social Security Fund 406 Portfolio | Domestic Non-State-Owned Legal Person | 6,942,478 | 0.93 | 0 | None | 0 | | China Life Insurance Co., Ltd. - Traditional - Ordinary Insurance Product - 005L - CT001 Shanghai | Domestic Non-State-Owned Legal Person | 6,399,074 | 0.86 | 0 | None | 0 | - There are no related party relationships between the company's largest shareholder, Youge Investment Co., Ltd., and other shareholders[10](index=10&type=chunk) [Other Reminders](index=4&type=section&id=三、%20其他提醒事项) No other significant information regarding the company's operating performance requires special investor attention - There is no other significant information regarding the company's operating performance during the reporting period that requires special attention from investors[10](index=10&type=chunk) [Quarterly Financial Statements](index=4&type=section&id=四、%20季度财务报表) This section presents the company's unaudited quarterly financial statements, including the balance sheet, income statement, and cash flow statement, along with a note on audit status and new lease standard adoption [Type of Audit Opinion](index=4&type=section&id=%28一%29审计意见类型) The quarterly financial statements are unaudited - The quarterly financial statements are unaudited[3](index=3&type=chunk)[10](index=10&type=chunk) [Financial Statements](index=4&type=section&id=%28二%29财务报表) This section presents Hongfa Technology Co., Ltd.'s unaudited Q3 2021 consolidated balance sheet, income statement, and cash flow statement, providing a comprehensive overview of the company's financial position, operating results, and cash flows [Consolidated Balance Sheet](index=4&type=section&id=合并资产负债表) As of September 30, 2021, total assets reached RMB 12.45 billion, a 14.78% increase from year-end 2020; equity attributable to shareholders was RMB 6.08 billion, up 9.99%, with notable increases in accounts receivable and inventory Consolidated Balance Sheet Key Data (As of September 30, 2021) | Item | Sep 30, 2021 (RMB) | Dec 31, 2020 (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Total Current Assets | 7,364,678,547.75 | 6,158,355,846.00 | 19.59 | | Total Non-Current Assets | 5,080,907,903.08 | 4,684,590,697.08 | 8.46 | | **Total Assets** | **12,445,586,450.83** | **10,842,946,543.08** | **14.78** | | **Liabilities** | | | | | Total Current Liabilities | 3,133,402,672.37 | 2,408,056,005.93 | 30.12 | | Total Non-Current Liabilities | 1,116,491,930.71 | 1,034,743,419.54 | 7.90 | | **Total Liabilities** | **4,249,894,603.08** | **3,442,799,425.47** | **23.44** | | **Shareholders' Equity** | | | | | Total Equity Attributable to Parent Company Shareholders | 6,079,427,997.32 | 5,527,482,768.27 | 9.99 | | Minority Interests | 2,116,263,850.43 | 1,872,664,349.34 | 13.01 | | **Total Shareholders' Equity** | **8,195,691,847.75** | **7,400,147,117.61** | **10.75** | - As of September 30, 2021, the company's total assets were **RMB 12.45 billion**, an increase of **14.78%** compared to year-end 2020[5](index=5&type=chunk)[12](index=12&type=chunk) - Equity attributable to shareholders of the listed company was **RMB 6.08 billion**, an increase of **9.99%** compared to year-end 2020[5](index=5&type=chunk)[13](index=13&type=chunk) [Consolidated Income Statement](index=7&type=section&id=合并利润表) For the first three quarters of 2021, total operating revenue reached RMB 7.56 billion, up 39.12%; net profit attributable to parent company shareholders was RMB 821 million, up 37.44%, with increased costs and R&D expenses Consolidated Income Statement Key Data (First Three Quarters of 2021) | Item | First Three Quarters of 2021 (Jan-Sep) (RMB) | First Three Quarters of 2020 (Jan-Sep) (RMB) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 7,564,444,263.75 | 5,437,361,108.68 | 39.12 | | Total Operating Costs | 6,364,640,773.87 | 4,521,219,881.83 | 40.78 | | Including: Operating Costs | 4,903,952,158.60 | 3,332,669,751.64 | 47.16 | | Selling Expenses | 268,772,538.33 | 279,578,130.13 | -3.86 | | Administrative Expenses | 734,626,485.09 | 568,915,460.97 | 29.13 | | Research and Development Expenses | 338,817,388.17 | 252,003,782.90 | 34.45 | | Financial Expenses | 59,749,711.82 | 40,300,816.89 | 48.26 | | Operating Profit | 1,302,412,820.48 | 978,779,110.64 | 33.06 | | Total Profit | 1,299,844,312.05 | 977,309,870.73 | 33.00 | | Net Profit | 1,125,439,546.04 | 814,634,884.12 | 38.16 | | Net Profit Attributable to Parent Company Shareholders | 820,833,743.61 | 597,236,131.99 | 37.44 | | Minority Interest Income | 304,605,802.43 | 217,398,752.13 | 40.12 | | Basic Earnings Per Share (RMB/share) | 1.1021 | 0.8019 | 37.44 | | Diluted Earnings Per Share (RMB/share) | 1.1021 | 0.8019 | 37.44 | - Total operating revenue for the first three quarters of 2021 was **RMB 7.56 billion**, a year-on-year increase of **39.12%**[4](index=4&type=chunk)[14](index=14&type=chunk) - Net profit attributable to parent company shareholders for the first three quarters of 2021 was **RMB 821 million**, a year-on-year increase of **37.44%**[4](index=4&type=chunk)[17](index=17&type=chunk) [Consolidated Cash Flow Statement](index=10&type=section&id=合并现金流量表) In the first three quarters of 2021, net cash flow from operating activities was RMB 924 million, up 43.16%, driven by increased sales collections and tax refunds, while investing and financing activities resulted in negative net cash flows Consolidated Cash Flow Statement Key Data (First Three Quarters of 2021) | Item | First Three Quarters of 2021 (Jan-Sep) (RMB) | First Three Quarters of 2020 (Jan-Sep) (RMB) | | :--- | :--- | :--- | | Subtotal of Cash Inflows from Operating Activities | 7,254,053,217.18 | 5,917,016,231.45 | | Subtotal of Cash Outflows from Operating Activities | 6,330,036,346.23 | 5,271,555,390.57 | | **Net Cash Flow from Operating Activities** | **924,016,870.95** | **645,460,840.88** | | Subtotal of Cash Inflows from Investing Activities | 135,144,769.72 | 51,582,314.03 | | Subtotal of Cash Outflows from Investing Activities | 681,655,455.16 | 552,717,566.91 | | **Net Cash Flow from Investing Activities** | **-546,510,685.44** | **-501,135,252.88** | | Subtotal of Cash Inflows from Financing Activities | 395,545,333.40 | 1,719,911,152.45 | | Subtotal of Cash Outflows from Financing Activities | 775,673,736.22 | 1,658,896,985.55 | | **Net Cash Flow from Financing Activities** | **-380,128,402.82** | **61,014,166.90** | | Effect of Exchange Rate Changes on Cash and Cash Equivalents | -12,909,157.85 | -1,650,854.59 | | Net Increase in Cash and Cash Equivalents | -15,531,375.16 | 203,688,900.31 | | Cash and Cash Equivalents at End of Period | 882,636,392.67 | 1,588,312,211.07 | - Net cash flow from operating activities for the first three quarters of 2021 was **RMB 924 million**, a year-on-year increase of **43.16%**[4](index=4&type=chunk)[19](index=19&type=chunk) - Net cash flow from investing activities was **RMB -547 million**, and net cash flow from financing activities was **RMB -380 million**[20](index=20&type=chunk) [Adjustments to Beginning-of-Year Financial Statements upon First Adoption of New Lease Standards in 2021](index=11&type=section&id=%28三%292021%20年起首次执行新租赁准则调整首次执行当年年初财务报表相关情况) The company did not adjust its beginning-of-year 2021 financial statements due to the first adoption of new lease standards - The company did not adjust its beginning-of-year 2021 financial statements due to the first adoption of new lease standards[20](index=20&type=chunk)

Financial Performance - The company achieved an operating revenue of ¥7,819,069,765.83, representing a 10.42% increase compared to ¥7,081,493,747.65 in 2019[22] - The net profit attributable to shareholders reached ¥832,143,263.76, an 18.19% increase from ¥704,054,276.33 in the previous year[22] - The net profit after deducting non-operating income was ¥693,721,595.51, which is a 3.91% increase from ¥667,603,833.11 in 2019[22] - Cash flow from operating activities decreased by 57.19% to ¥719,589,775.50 from ¥1,680,947,680.53 in 2019[22] - The total assets of the company increased by 6.33% to ¥10,842,946,543.08 from ¥10,197,338,802.18 in 2019[23] - The net assets attributable to shareholders rose by 12.27% to ¥5,527,482,768.27 from ¥4,923,536,772.33 in the previous year[23] - Basic earnings per share increased by 17.89% to CNY 1.12 in 2020 compared to CNY 0.95 in 2019[24] - The company's net profit attributable to shareholders for Q4 2020 was CNY 234,907,131.77, showing a consistent performance across the quarters[25] - The weighted average return on equity rose to 15.96% in 2020, an increase of 0.75 percentage points from 2019[24] - The gross profit margin for the relay products was 39.37%, reflecting a year-on-year increase of 1.16 percentage points[72] - Domestic revenue increased by 15.21% year-on-year, while international revenue saw a slight decrease of 2.79%[72] Dividend Policy - The company proposed a cash dividend of ¥3.4 per 10 shares, totaling ¥253,218,927.68 to be distributed to shareholders[5] - The company plans to allocate 10% of distributable profits, amounting to ¥27,701,123.34, to statutory surplus reserves[5] - The company reported a cash dividend distribution policy, stating that it will distribute no less than 10% of the annual distributable profit in cash, and the cumulative cash distribution over the last three years should not be less than 40% of the average annual distributable profit during that period[102] - In 2020, the company distributed a cash dividend of approximately 253.22 million RMB, representing 30.43% of the net profit attributable to ordinary shareholders[105] Research and Development - The company operates three major R&D and production bases, enhancing its innovation capabilities in the relay industry[33] - The company’s technology center is a national-level enterprise technology center, underscoring its commitment to R&D and industry standards[33] - Research and development expenses rose to CNY 381,167,894.88, an increase of 8.77% from the previous year[68] - The company plans to invest 200 million in R&D over the next three years to drive innovation[167] - New product development includes the launch of a next-generation relay technology, expected to enhance performance by 30%[167] Market and Production Capacity - The company has over 40,000 specifications of relay products, with an annual shipment exceeding 2 billion units, highlighting its extensive production capacity[32] - The company produced over 2 billion various products, with a global market share of over 14% in relay products[92] - The company achieved a product output of 22.37 million units, a 13.55% increase from 2019, and met its production plan with a completion rate of 100.49%[50] - The company reported a total production of 217,160 units, an increase of 13.53% compared to the previous year[74] Financial Management and Control - The company implemented financial management improvements, optimizing 69 detailed review points across 7 major processes[59] - The internal control self-assessment report indicates no significant deficiencies in financial reporting internal controls during the reporting period[185] - The audit report confirmed that the financial statements fairly reflect its financial position and operating results for the year ended December 31, 2020[189] - The company conducted a thorough review of revenue recognition processes, identifying it as a key audit matter due to its significance as a financial indicator[193] Corporate Governance and Shareholder Relations - The company will ensure that minority shareholders have a clear channel to express their opinions during the annual general meeting[182] - The company’s independent directors provided prior approval for the profit distribution proposal, ensuring compliance with legal regulations and company bylaws[182] - The company has a diverse board with independent directors contributing to governance[164] - The company has engaged in various investment activities, including real estate development and management[160] Environmental and Social Responsibility - The company has established a comprehensive pollution prevention facility and maintains effective environmental risk management systems, ensuring compliance with environmental regulations[135] - The company has developed emergency response plans for environmental incidents, which have been filed with local environmental authorities[138] - The company donated 1,059,613.04 RMB in cash for COVID-19 relief efforts and provided 920,000 RMB in scholarships to students[130] - The company focuses on education support as a key area for social welfare activities, enhancing technical strength and innovation through partnerships with educational institutions[131] Risks and Challenges - The company faced risks related to market environment due to the global impact of the COVID-19 pandemic, which affected the electronic components industry and overseas order deliveries[104] - The company is subject to risks from changes in national trade policies that could affect its export activities and overseas expansion[104] - The company faces risks related to high-end relay market competition and potential talent loss[98] Employee and Talent Management - The company has a workforce that includes 14 PhDs and 69 senior engineers, showcasing its commitment to cultivating high-level talent[46] - The employee composition includes 7,986 production personnel, 482 sales personnel, and 2,585 technical personnel[173] - A training system has been established to align employee growth with company needs, focusing on both internal and external training[175] Related Party Transactions - The company reported a total of 23,869,000 RMB in actual related party transactions for 2020, exceeding the estimated 18,686,000 RMB[119] - The company has committed to avoid any related party transactions that could harm its interests, ensuring fair market pricing in all dealings[110] - The company will ensure that any future debts not disclosed during the restructuring will be settled by Li Nuo Glass, with liability for any losses incurred by the listed company[108]

Important Notice [Board Statement and Report Audit Status](index=3&type=section&id=1.1-1.4%20Board%20Statement%20and%20Report%20Audit%20Status) The company's management affirms the report's accuracy and completeness, noting that this third-quarter report is unaudited - Company management confirmed the truthfulness, accuracy, and completeness of the quarterly report content[4](index=4&type=chunk) - This company's 2020 third-quarter report is unaudited[4](index=4&type=chunk) Company Basic Information [Key Financial Data](index=3&type=section&id=2.1%20Key%20Financial%20Data) As of September 30, 2020, total assets grew 9.51% to 11.17 billion yuan, while Q3 revenue increased 5.62% to 5.44 billion yuan, and net profit rose 7.45% to 597 million yuan, despite a 58.43% decline in operating cash flow 2020 First Three Quarters Key Financial Data | Item | First Three Quarters 2020 | First Three Quarters 2019 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue (Yuan) | 5,437,361,108.68 | 5,147,872,784.55 | 5.62% | | Net Profit Attributable to Shareholders (Yuan) | 597,236,131.99 | 555,822,408.62 | 7.45% | | Net Profit Attributable to Shareholders Excluding Non-recurring Gains/Losses (Yuan) | 564,330,653.91 | 526,299,479.04 | 7.23% | | Net Cash Flow from Operating Activities (Yuan) | 645,460,840.88 | 1,552,539,485.20 | -58.43% | | Basic Earnings Per Share (Yuan/Share) | 0.8019 | 0.7463 | 7.45% | | Weighted Average Return on Net Assets (%) | 11.13% | 11.45% | Decrease of 0.32 percentage points | - In the first three quarters of 2020, the company's total non-recurring gains and losses amounted to **32.905 million yuan**, primarily from government subsidies and fair value changes in financial assets[7](index=7&type=chunk)[8](index=8&type=chunk) [Shareholder Information](index=6&type=section&id=2.2%20Total%20Number%20of%20Shareholders%2C%20Top%20Ten%20Shareholders%2C%20and%20Top%20Ten%20Circulating%20Shareholders%20(or%20Unrestricted%20Shareholders)%20as%20of%20the%20End%20of%20the%20Reporting%20Period) As of the reporting period end, the company had 17,069 shareholders, with Youge Investment Co., Ltd. as the largest shareholder at 28.65%, alongside various institutional investors in the top ten - As of the end of the reporting period, the company had a total of **17,069 shareholders**[9](index=9&type=chunk) Top Ten Shareholders' Shareholding | Shareholder Name | Number of Shares Held | Proportion (%) | | :--- | :--- | :--- | | Youge Investment Co., Ltd. | 213,377,011 | 28.65 | | Hong Kong Securities Clearing Company Limited | 97,781,924 | 13.13 | | Lianfa Group Co., Ltd. | 71,934,814 | 9.66 | | Central Huijin Asset Management Co., Ltd. | 13,552,980 | 1.82 | | Shanghai Gaoyi Asset Management Partnership (Limited Partnership) - Gaoyi Xiaofeng No. 2 Zhixin Fund | 11,781,234 | 1.58 | | Norges Bank - Own Funds | 10,339,261 | 1.39 | | CITIC Trust Co., Ltd. - CITIC Trust Ruijin 43rd Gaoyi Xiaofeng Investment Collective Fund Trust Plan | 8,825,500 | 1.19 | | Agricultural Bank of China Co., Ltd. - Guotai Smart Car Stock Investment Fund | 8,294,360 | 1.11 | | Bank of China Co., Ltd. - ChinaAMC CSI New Energy Vehicle ETF | 6,953,466 | 0.93 | | National Council for Social Security Fund 406 Portfolio | 6,942,478 | 0.93 | Significant Events [Analysis of Significant Changes in Key Accounting Statement Items and Financial Indicators](index=7&type=section&id=3.1%20Analysis%20of%20Significant%20Changes%20in%20Key%20Accounting%20Statement%20Items%20and%20Financial%20Indicators%20and%20Reasons) During the reporting period, significant financial changes included a 27.23% rise in accounts receivable, a 1598.21% surge in long-term borrowings, increased financial expenses and investment losses due to exchange rate fluctuations, substantial fair value gains, and a 58.43% drop in operating cash flow Financial Indicators with Significant Changes | Item | Change (%) | Primary Reason | | :--- | :--- | :--- | | Other Receivables | 53.88% | Due to increase in other receivables | | Taxes Payable | 56.05% | Due to increase in income tax and VAT payable | | Long-term Borrowings | 1598.21% | Due to increase in bank borrowings | | Other Comprehensive Income | -44.53% | Due to exchange rate fluctuations | | Financial Expenses | 227.39% | Due to exchange rate fluctuations, increased exchange losses | | Gains from Fair Value Changes | 171.76% | Due to exchange rate fluctuations, month-end valuation gains from forward foreign exchange settlements | | Investment Income | -470.01% | Due to exchange rate fluctuations, actual settlement losses from forward foreign exchange settlements | | Net Cash Flow from Operating Activities | -58.43% | Due to maturing notes payable and increased cash payments during the reporting period | | Net Cash Flow from Financing Activities | 236.50% | Due to increased bank borrowings obtained during the reporting period | Appendix [Financial Statements](index=9&type=section&id=4.1%20Financial%20Statements) This section presents the company's unaudited consolidated and parent financial statements, including the balance sheet, income statement, and cash flow statement, for the period ending September 30, 2020 [Consolidated Balance Sheet](index=9&type=section&id=Consolidated%20Balance%20Sheet) As of September 30, 2020, total assets reached 11.17 billion yuan (+9.51%), total liabilities 4.03 billion yuan (+11.68%) driven by long-term borrowings, and equity attributable to parent company owners 5.30 billion yuan (+7.54%) Consolidated Balance Sheet Key Items (Unit: Billion Yuan) | Item | September 30, 2020 | December 31, 2019 | Change Rate | | :--- | :--- | :--- | :--- | | Total Assets | 11.17 | 10.20 | +9.51% | | Total Liabilities | 4.03 | 3.61 | +11.68% | | Equity Attributable to Parent Company Owners | 5.30 | 4.92 | +7.54% | [Consolidated Income Statement](index=13&type=section&id=Consolidated%20Income%20Statement) For the first three quarters of 2020, total operating revenue grew 5.62% to 5.44 billion yuan, total operating costs increased 6.74% to 4.52 billion yuan, and net profit attributable to parent company shareholders rose 7.45% to 597 million yuan Consolidated Income Statement Key Items (Unit: Billion Yuan) | Item | First Three Quarters 2020 | First Three Quarters 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 5.44 | 5.15 | +5.62% | | Total Operating Costs | 4.52 | 4.24 | +6.74% | | Operating Profit | 9.79 | 8.97 | +9.07% | | Net Profit | 8.15 | 7.59 | +7.37% | | Net Profit Attributable to Parent Company Shareholders | 5.97 | 5.56 | +7.45% | [Consolidated Cash Flow Statement](index=19&type=section&id=Consolidated%20Cash%20Flow%20Statement) For the first three quarters of 2020, net cash flow from operating activities significantly decreased by 58.43% to 645 million yuan, while net cash outflow from investing activities narrowed to 501 million yuan, and net cash flow from financing activities turned positive at 61 million yuan due to increased borrowings Consolidated Cash Flow Statement Overview (Unit: Billion Yuan) | Item | First Three Quarters 2020 | First Three Quarters 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 0.65 | 1.55 | -58.43% | | Net Cash Flow from Investing Activities | -0.50 | -0.77 | N/A | | Net Cash Flow from Financing Activities | 0.06 | -0.05 | N/A | | Net Increase in Cash and Cash Equivalents | 0.20 | 0.77 | -73.33% |