Financial Performance - Operating revenue for the first half of 2019 was CNY 6,386,368,645.53, an increase of 3.78% compared to CNY 6,153,963,127.41 in the same period last year[9]. - Net profit attributable to shareholders was CNY 294,019,254.38, representing a growth of 15.02% from CNY 255,633,815.10 year-on-year[9]. - Net profit after deducting non-recurring gains and losses was CNY 291,305,138.94, up 12.73% from CNY 258,421,050.42 in the previous year[9]. - Basic earnings per share increased to CNY 0.654, a rise of 14.94% compared to CNY 0.569 in the same period last year[9]. - The company achieved operating revenue of 638,637 million yuan and operating costs of 563,623 million yuan, representing year-on-year increases of 3.78% and 5.82% respectively[18]. - The net profit reached 29,402 million yuan, marking a year-on-year increase of 15.02%[18]. - The company reported a significant decrease in cash and cash equivalents, with a net decrease of CNY 357,370,023.16, down 178.87% from the previous year[19]. - The company anticipates a significant change in cumulative net profit from the beginning of the year to the next reporting period, potentially resulting in a loss compared to the same period last year[29]. Cash Flow and Assets - The net cash flow from operating activities decreased significantly by 67.05% to CNY 120,077,161.81 from CNY 364,432,042.02 in the previous year[9]. - Total assets at the end of the reporting period were CNY 7,768,932,333.03, reflecting a 1.19% increase from CNY 7,677,904,574.84 at the end of the previous year[9]. - The company’s cash and cash equivalents decreased by 18% compared to the beginning of the year, primarily due to reduced cash returns from steel sales[15]. - The total assets at the end of the reporting period amounted to CNY 7,775,000,000, with cash and cash equivalents accounting for 20.35% of total assets[22]. - The company reported a significant decrease in cash and cash equivalents, with a net decrease of CNY 357,370,023.16, down 178.87% from the previous year[19]. Investments and R&D - The company invested 735 million yuan in the construction of a high-quality mold steel production line, enhancing its market competitiveness[17]. - Research and development expenses decreased by 15.76% to CNY 240,474,832.91 from CNY 285,472,564.49 in the same period last year[19]. - The company received 33 patents during the reporting period, including 5 invention patents, further strengthening its core competitiveness[17]. - The company is currently working on a high-quality mold steel production line project, with an investment of CNY 22,729,000 in the reporting period[25]. Market and Sales - The production of steel was 636,500 tons, up 9.51% year-on-year, while steel sales reached 1,206,400 tons, an increase of 8.28%[18]. - The company’s export steel volume was 235,400 tons, reflecting a year-on-year growth of 15%[18]. - The company plans to enhance market research and adjust product structure to increase market share in high-end steel products, aiming for improved sales of premium products[31]. - The company is developing new markets in Canada and Mexico, focusing on long-term development in energy, marine wind power, and automotive steel[31]. Shareholder and Equity Information - The company plans not to distribute cash dividends or issue bonus shares for this period[3]. - The total number of ordinary shareholders at the end of the reporting period was 21,385, with 10 shareholders holding more than 5% of shares[53]. - Hubei Xinye Steel Co., Ltd. holds 29.95% of shares, totaling 134,620,000 ordinary shares[53]. - CITIC Pacific (China) Investment Co., Ltd. holds 28.18% of shares, totaling 126,618,480 ordinary shares[53]. - The total number of shares before the change was 449,408,480, which remains unchanged after the adjustment[51]. Environmental and Compliance - The company is classified as a key pollutant discharge unit by the environmental protection department[42]. - Total emissions of particulate matter reached 234.5 tons, with a discharge concentration of 6-9 mg/m³, complying with the standards for ironmaking[42]. - The company has established a comprehensive pollution prevention and control system, including over ten dust removal systems and advanced dust collection devices[43]. - Wastewater treatment systems are in place, achieving compliance with national standards, with all treated water being reused and no external discharge[43]. - The company has not reported any environmental pollution incidents or government penalties during the reporting period[46]. Financial Reporting and Compliance - The company’s half-year financial report has not been audited[34]. - The financial report reflects the company's financial position as of June 30, 2019, and its operational results and cash flows for the year 2018[82]. - The financial statements are prepared based on the "Enterprise Accounting Standards" and relevant regulations, ensuring compliance and accuracy[80]. - The company has adopted new financial instrument standards effective January 1, 2019, with retrospective adjustments made for prior periods where applicable[114]. Liabilities and Provisions - The total liabilities increased to CNY 3,425,022,233.10 from CNY 3,274,247,207.82, reflecting a growth of 4.60%[66]. - The company has a provision for bad debts based on the aging of accounts receivable, with a 3% provision for amounts due within one year and a 100% provision for amounts due over five years[94]. - Provisions for liabilities are recognized when there is a present obligation likely to result in an outflow of economic benefits, and are measured at the best estimate of the expenditure required to settle the obligation[108].

[Important Notes](index=2&type=section&id=%E7%AC%AC%E4%B8%80%E8%8A%82%20%E9%87%8D%E8%A6%81%E6%8F%90%E7%A4%BA) The Board of Directors, Supervisory Committee, and senior management guarantee the report's authenticity and accuracy - All directors, supervisors, and senior executives guarantee the report's content is **true, accurate, and complete**[3](index=3&type=chunk) [Company Basic Information](index=3&type=section&id=%E7%AC%AC%E4%BA%8C%E8%8A%82%20%E5%85%AC%E5%8F%B8%E5%9F%BA%E6%9C%AC%E6%83%85%E5%86%B5) This section outlines the company's core financial performance and shareholder structure for Q1 2019 [Key Accounting Data and Financial Indicators](index=3&type=section&id=%E4%B8%80%E3%80%81%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%92%8C%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) Q1 2019 revenue slightly increased while net profit declined, with improved operating cash flow Key Financial Indicators | Indicator | Current Period | Prior Year Period | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue (RMB) | 3,029,674,995.01 | 3,008,454,643.68 | 0.71% | | Net Profit Attributable to Shareholders (RMB) | 86,003,181.97 | 90,557,855.44 | -5.03% | | Net Cash Flow from Operating Activities (RMB) | -69,143,748.01 | -114,347,593.05 | 39.53% | | Basic Earnings Per Share (RMB/Share) | 0.191 | 0.202 | -5.45% | | | **End of Current Period** | **End of Prior Year** | **Change vs Prior Year-End** | | Total Assets (RMB) | 7,338,972,792.12 | 7,677,904,574.84 | -4.41% | | Net Assets Attributable to Shareholders (RMB) | 4,489,660,548.99 | 4,403,657,367.02 | 1.95% | - Non-recurring gains and losses totaled **RMB 795,300**, primarily from government subsidies and compensation income[5](index=5&type=chunk) [Shareholder Information](index=4&type=section&id=%E4%BA%8C%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E6%9C%AB%E8%82%A1%E4%B8%9C%E6%80%BB%E6%95%B0%E5%8F%8A%E5%89%8D%E5%8D%81%E5%90%8D%E8%82%A1%E4%B8%9C%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5%E8%A1%A8) The company had 22,768 common shareholders, with a highly concentrated ownership structure - The total number of common shareholders was **22,768** at the end of the reporting period[7](index=7&type=chunk) - The top two shareholders, Hubei Xinyegang Co, Ltd (29.95%) and CITIC Pacific (China) Investment Co, Ltd (28.18%), are subsidiaries of CITIC Pacific Limited, forming a **related party and acting-in-concert relationship**[7](index=7&type=chunk)[8](index=8&type=chunk) [Significant Events](index=6&type=section&id=%E7%AC%AC%E4%B8%89%E8%8A%82%20%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9) This section details key developments, including a major asset restructuring and financial metric changes [Analysis of Major Financial Data Changes](index=6&type=section&id=%E4%B8%80%E3%80%81%E6%8A%A5%E5%91%8A%E6%9C%9F%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E6%95%B0%E6%8D%AE%E3%80%81%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87%E5%8F%91%E7%94%9F%E5%8F%98%E5%8A%A8%E7%9A%84%E6%83%85%E5%86%B5%E5%8F%8A%E5%8E%9F%E5%9B%A0) Significant changes occurred in construction in progress, notes payable, and cash flow items Analysis of Financial Statement Changes | Item | Change | Primary Reason | | :--- | :--- | :--- | | Construction in Progress | 35.01% | Increased investment in technical renovation projects | | Notes Payable | 49.55% | Increase in payables for raw materials | | Financial Expenses | -44.70% | Increase in interest income during the period | | Net Cash Flow from Operating Activities | 39.53% | Increase in cash received from sales of goods and services | | Net Cash Flow from Investing Activities | -104.55% | Decrease in cash received from other investment-related activities | | Net Cash Flow from Financing Activities | -101.83% | Cash paid for debt repayment | [Progress of Major Asset Restructuring](index=6&type=section&id=%E4%BA%8C%E3%80%81%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9%E8%BF%9B%E5%B1%95%E6%83%85%E5%86%B5%E5%8F%8A%E5%85%B6%E5%BD%B1%E5%93%8D%E5%92%8C%E8%A7%A3%E5%86%B3%E6%96%B9%E6%A1%88%E7%9A%84%E5%88%86%E6%9E%90%E8%AF%B4%E6%98%8E) The company is advancing a major asset restructuring to acquire Xingcheng Special Steel - The company plans to acquire an **86.50% stake** in Jiangyin Xingcheng Special Steel Co, Ltd by issuing shares, with a transaction value of approximately **RMB 23.179 billion**[12](index=12&type=chunk)[13](index=13&type=chunk) - This restructuring is part of CITIC Group's plan for the overall listing of its steel segment and **will not change the ultimate controller**[12](index=12&type=chunk) - The restructuring plan was approved at the 2018 Annual General Meeting on April 19, 2019, and awaits approval from the **China Securities Regulatory Commission (CSRC)**[12](index=12&type=chunk) [Other Compliance Matters](index=7&type=section&id=%E4%B8%89%E3%80%81%E5%85%AC%E5%8F%B8%E5%AE%9E%E9%99%85%E6%8E%A7%E5%88%B6%E4%BA%BA%E3%80%81%E8%82%A1%E4%B8%9C%E3%80%81%E5%85%B3%E8%81%94%E6%96%B9%E3%80%81%E6%94%B6%E8%B4%AD%E4%BA%BA%E4%BB%A5%E5%8F%8A%E5%85%AC%E5%8F%B8%E7%AD%89%E6%89%BF%E8%AF%BA%E7%9B%B8%E5%85%B3%E6%96%B9%E5%9C%A8%E6%8A%A5%E5%91%8A%E6%9C%9F%E5%86%85%E8%B6%85%E6%9C%9F%E6%9C%AA%E5%B1%A5%E8%A1%8C%E5%AE%8C%E6%AF%95%E7%9A%84%E6%89%BF%E8%AF%BA%E4%BA%8B%E9%A1%B9) The company reported no overdue commitments, irregular guarantees, or other compliance issues - During the reporting period, the company had **no overdue commitments, irregular external guarantees, or non-operating fund occupation** by the controlling shareholder[13](index=13&type=chunk)[17](index=17&type=chunk) - The company did not issue a performance forecast for H1 2019 and had **no securities or derivatives investments**[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk) [Financial Statements](index=9&type=section&id=%E7%AC%AC%E5%9B%9B%E8%8A%82%20%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section presents the unaudited Q1 2019 financial statements, including key balance sheet and income statement data [Balance Sheet](index=9&type=section&id=1%E3%80%81%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) Total assets decreased to RMB 7.34 billion, while net assets attributable to shareholders grew to RMB 4.49 billion Condensed Balance Sheet | Item | March 31, 2019 (RMB) | December 31, 2018 (RMB) | | :--- | :--- | :--- | | **Total Assets** | **7,338,972,792.12** | **7,677,904,574.84** | | **Total Liabilities** | **2,849,312,243.13** | **3,274,247,207.82** | | **Total Equity Attributable to Parent Company Owners** | **4,489,660,548.99** | **4,403,657,367.02** | [Income Statement](index=12&type=section&id=2%E3%80%81%E5%88%A9%E6%B6%A6%E8%A1%A8) Q1 2019 operating revenue was RMB 3.03 billion, yielding a net profit of RMB 86.00 million Condensed Income Statement | Item | Current Period (RMB) | Prior Year Period (RMB) | | :--- | :--- | :--- | | **I. Total Operating Revenue** | **3,029,674,995.01** | **3,008,454,643.68** | | **II. Total Operating Costs** | **2,929,430,428.23** | **2,900,486,732.10** | | **III. Operating Profit** | **100,427,863.68** | **108,067,911.58** | | **V. Net Profit** | **86,003,181.97** | **90,557,855.44** | [Cash Flow Statement](index=14&type=section&id=3%E3%80%81%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) Q1 2019 saw negative net cash flows from operating, investing, and financing activities Condensed Cash Flow Statement | Item | Current Period (RMB) | Prior Year Period (RMB) | | :--- | :--- | :--- | | **Net Cash Flow from Operating Activities** | **-69,143,748.01** | **-114,347,593.05** | | **Net Cash Flow from Investing Activities** | **-1,673,492.41** | **36,795,548.44** | | **Net Cash Flow from Financing Activities** | **-3,627,555.55** | **197,692,291.67** | | **Net Increase in Cash and Cash Equivalents** | **-82,329,105.63** | **117,741,413.39** | [Audit Information](index=16&type=section&id=%E4%B8%89%E3%80%81%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A) The company's first quarter 2019 report is unaudited - The first quarter report is **unaudited**[29](index=29&type=chunk)

```markdown [Part I. Important Notice, Table of Contents, and Definitions](index=2&type=section&id=Part%20I.%20Important%20Notice%2C%20Table%20of%20Contents%2C%20and%20Definitions) This section provides important disclaimers, the table of contents, and definitions for the report [Important Notice](index=2&type=section&id=Important%20Notice) The company's management guarantees the annual report's accuracy and completeness, with a 2018 cash dividend of CNY 8.00 per 10 shares proposed - Company management ensures the annual report's truthfulness, accuracy, and completeness, assuming corresponding legal responsibilities[2](index=2&type=chunk) - The company's 2018 profit distribution plan proposes a cash dividend of **CNY 8.00** (tax inclusive) per 10 shares based on **449,408,480 shares**, with no bonus shares or capital reserve conversions[3](index=3&type=chunk) [Part II. Company Profile and Key Financial Indicators](index=5&type=section&id=Part%20II.%20Company%20Profile%20and%20Key%20Financial%20Indicators) This section provides an overview of the company's basic information and key financial performance metrics [Company Basic Information](index=5&type=section&id=Company%20Basic%20Information) Daye Special Steel Co., Ltd. (000708) is a Shenzhen-listed company, with Yu Yapeng as its legal representative Stock Abbreviation and Code | Item | Content | | :--- | :--- | | **Stock Abbreviation** | Daye Special Steel | | **Stock Code** | 000708 | | **Listing Exchange** | Shenzhen Stock Exchange | | **Company Name** | Daye Special Steel Co., Ltd. | | **Legal Representative** | Yu Yapeng | [Key Accounting Data and Financial Indicators](index=6&type=section&id=Key%20Accounting%20Data%20and%20Financial%20Indicators) In 2018, the company achieved significant growth, with revenue up 22.94% to CNY 12.57 billion and net profit up 29.19% 2018 Key Financial Indicators | Indicator | 2018 | 2017 | YoY Change | | :--- | :--- | :--- | :--- | | **Operating Revenue (CNY Billion)** | 12.57 | 10.23 | 22.94% | | **Net Profit Attributable to Parent (CNY Million)** | 510.18 | 394.90 | 29.19% | | **Net Profit Attributable to Parent (Excl. Non-recurring Items) (CNY Million)** | 519.58 | 433.77 | 19.78% | | **Net Cash Flow from Operating Activities (CNY Million)** | 732.32 | 355.30 | 106.11% | | **Basic EPS (CNY/share)** | 1.135 | 0.879 | 29.12% | | **Weighted Average ROE** | 12.17% | 10.23% | +1.94pp | | **Total Assets (CNY Billion)** | 7.68 | 6.58 | 16.71% | | **Net Assets Attributable to Parent (CNY Billion)** | 4.40 | 4.03 | 9.32% | [Non-recurring Gains and Losses](index=7&type=section&id=Non-recurring%20Gains%20and%20Losses) In 2018, non-recurring losses totaled CNY 9.41 million, primarily due to fixed asset disposal losses of CNY 26.22 million - In 2018, non-recurring losses were **CNY 9.41 million**, mainly from **CNY 26.22 million** in fixed asset disposal losses, partially offset by non-current asset disposal gains (**CNY 6.64 million**) and government grants (**CNY 4.33 million**)[17](index=17&type=chunk) [Part III. Business Overview](index=9&type=section&id=Part%20III.%20Business%20Overview) This section outlines the company's primary business activities, significant asset changes, and core competitive advantages [Principal Business Activities During the Reporting Period](index=9&type=section&id=Principal%20Business%20Activities%20During%20the%20Reporting%20Period) The company's main business involves special steel smelting and processing, achieving record operating metrics in 2018 despite high raw material costs and trade friction - The company is a special steel industry enterprise, producing over **1,800** specifications of special steel products like gear steel, bearing steel, and spring steel, used in critical sectors such as aerospace, automotive, and energy[20](index=20&type=chunk) - In 2018, the steel industry benefited from supply-side reform, improving supply-demand dynamics and maintaining high steel prices, though the special steel sector faced challenges from high raw material costs and slower price increases compared to general steel[20](index=20&type=chunk) [Significant Changes in Major Assets](index=9&type=section&id=Significant%20Changes%20in%20Major%20Assets) Several assets changed significantly, with construction in progress up 100% due to technical upgrades and cash up 64% from increased sales collections Major Assets Significant Changes Explanation | Major Asset | YoY Change | Main Reason | | :--- | :--- | :--- | | **Construction in Progress** | +100% | Increased investment in technical upgrade projects | | **Cash and Cash Equivalents** | +64% | Increased cash received from sales of goods | | **Accounts Receivable** | +44% | Increased accounts receivable for steel products | | **Other Receivables** | +1381% | Increased accounts receivable for export tax refunds | | **Deferred Tax Assets** | +65% | Increased deductible temporary differences | | **Other Non-current Assets** | +62% | Increased prepaid engineering costs | [Analysis of Core Competencies](index=10&type=section&id=Analysis%20of%20Core%20Competencies) The company's core competence lies in its technological and brand advantages as a national high-tech enterprise, with products used in critical national projects - The company is one of China's most comprehensively equipped and largest special steel producers, with products used in major national projects like lunar exploration, large aircraft, high-speed rail, and nuclear power[23](index=23&type=chunk) - In 2018, the company achieved significant progress in product certification and new client development, with automotive steel certified by Volkswagen and Honda, and large wind power bearing roller material achieving domestic substitution for imports[23](index=23&type=chunk) - The company's R&D achievements are significant, with **13 patents** granted in 2018, multiple scientific and technological achievements recognized as internationally advanced, and national and provincial science and technology progress awards received[23](index=23&type=chunk) - The company continues equipment upgrades, investing **CNY 750 million** in 2018 to construct a high-quality mold steel production line project to meet high-end market demand[23](index=23&type=chunk) [Part IV. Management Discussion and Analysis](index=11&type=section&id=Part%20IV.%20Management%20Discussion%20and%20Analysis) This section provides a comprehensive discussion and analysis of the company's operational performance, financial condition, and future outlook [Overview](index=11&type=section&id=Overview) In 2018, the company capitalized on supply-side reform opportunities, achieving high-quality, high-speed, and high-efficiency growth, with revenue reaching CNY 12.57 billion 2018 Operating Performance Highlights | Indicator | 2018 | YoY Growth | | :--- | :--- | :--- | | **Operating Revenue** | 12.57 CNY Billion | 22.94% | | **Net Profit** | 510.18 CNY Million | 29.19% | | **Steel Production** | 2.29 Million Tons | 11.86% | | **Steel Sales** | 2.28 Million Tons | 10.13% | | **Steel Exports** | 0.43 Million Tons | 18.12% | | **Export Foreign Exchange Earned** | - | 44.00% | - High-end product market expansion yielded significant results, with automotive steel increasing by **13.4%**, bearing steel by **9.7%**, high-temperature alloy sales doubling, and tool and die steel and double-vacuum product sales growing over **30%**[24](index=24&type=chunk) - R&D innovation achievements are prominent, with over **300 thousand tons** of new products developed annually, **4** national and provincial science and technology progress awards received, and **5** national standards led or participated in revision[24](index=24&type=chunk) [Analysis of Principal Business](index=12&type=section&id=Analysis%20of%20Principal%20Business) The company's principal business revenue and costs grew steadily, with boiler and machinery manufacturing revenue increasing fastest at 28.89%, and foreign market revenue surging by 42.21% [Revenue and Cost Analysis](index=12&type=section&id=Revenue%20and%20Cost%20Analysis) In 2018, operating revenue reached CNY 12.57 billion, up 22.94%, with spring alloy and structural steel as the main revenue source 2018 Operating Revenue Composition (by Product) | Product Category | Revenue (CNY Billion) | % of Total Revenue | YoY Growth | | :--- | :--- | :--- | :--- | | **Spring Alloy and Structural Steel** | 8.00 | 63.66% | 27.41% | | **Bearing Steel** | 2.64 | 20.96% | 19.11% | | **Carbon Structural and Carbon Tool Steel** | 1.07 | 8.53% | 14.33% | | **Punching Die Stainless Steel** | 0.36 | 2.83% | 16.60% | 2018 Operating Revenue Composition (by Region) | Region | Revenue (CNY Billion) | YoY Growth | Gross Margin | Gross Margin YoY Change (pp) | | :--- | :--- | :--- | :--- | :--- | | **Central-South** | 4.62 | 24.20% | 13.71% | +0.02% | | **East China** | 3.21 | 15.44% | 12.68% | +0.03% | | **Foreign** | 2.26 | 42.21% | 13.59% | +6.78% | | **North China** | 1.64 | 20.55% | 10.09% | +0.01% | 2018 Operating Cost Composition | Cost Item | Amount (CNY Billion) | % of Operating Cost | YoY Growth | | :--- | :--- | :--- | :--- | | **Raw Materials** | 6.54 | 62.19% | 13.51% | | **Fuel and Power** | 2.01 | 19.08% | 52.57% | | **Staff Remuneration** | 0.37 | 3.48% | 9.27% | | **Depreciation** | 0.16 | 1.50% | -14.86% | [Expense Analysis](index=16&type=section&id=Expense%20Analysis) In 2018, period expense control was effective, with sales and R&D expenses increasing, while financial expenses significantly decreased by 416.01% 2018 Period Expense Changes | Expense Item | 2018 Amount (CNY Million) | YoY Change | Key Change Explanation | | :--- | :--- | :--- | :--- | | **Selling Expenses** | 192.64 | 52.93% | Due to increased operating expenses | | **Administrative Expenses** | 70.47 | 28.55% | Due to increased salaries and remuneration | | **Financial Expenses** | -48.06 | -416.01% | Due to increased interest income and exchange gains | | **R&D Expenses** | 562.93 | 57.47% | Due to increased direct investment in research and development | [R&D Investment](index=17&type=section&id=R%26D%20Investment) The company continuously increased R&D investment, with CNY 563 million invested in 2018, boosting R&D intensity to 4.48% and driving new product development 2018 R&D Investment Overview | Indicator | 2018 | 2017 | Change | | :--- | :--- | :--- | :--- | | **R&D Investment Amount (CNY Million)** | 562.93 | 357.49 | +57.47% | | **R&D Investment as % of Revenue** | 4.48% | 3.50% | +0.98pp | | **Number of R&D Personnel (persons)** | 459 | 454 | +1.10% | - High R&D investment promoted product premiumization, with over **300 thousand tons** of new products developed and **960 thousand tons** of high-grade varieties, filling domestic gaps and serving major national projects[38](index=38&type=chunk) [Cash Flow Analysis](index=17&type=section&id=Cash%20Flow%20Analysis) In 2018, cash flow significantly improved, with net cash from operating activities increasing by 106.11% to CNY 732.32 million 2018 Cash Flow Statement Summary | Item | 2018 (CNY Million) | 2017 (CNY Million) | YoY Change | | :--- | :--- | :--- | :--- | | **Net Cash Flow from Operating Activities** | 732.32 | 355.30 | 106.11% | | **Net Cash Flow from Investing Activities** | -38.03 | -49.06 | 22.47% | | **Net Cash Flow from Financing Activities** | 60.25 | -305.14 | 119.74% | | **Net Increase in Cash and Cash Equivalents** | 759.82 | -7.02 | 10930.73% | [Assets and Liabilities](index=18&type=section&id=Assets%20and%20Liabilities) As of year-end 2018, total assets were CNY 7.678 billion, up 16.71%, with increased liquidity and a rise in the asset-liability ratio to 42.65% Key Assets and Liabilities as of Year-End 2018 | Item | Year-End 2018 (CNY Billion) | % of Total Assets | Change from Year-Start | | :--- | :--- | :--- | :--- | | **Cash and Cash Equivalents** | 1.94 | 25.24% | +7.33pp | | **Accounts Receivable** | 0.50 | 6.48% | +1.21pp | | **Inventories** | 0.90 | 11.75% | -3.85pp | | **Fixed Assets** | 2.18 | 28.38% | -8.92pp | | **Short-term Borrowings** | 0.50 | 6.51% | +6.51pp | - As of the end of the reporting period, the company had no restricted assets[45](index=45&type=chunk) [Investment Status](index=19&type=section&id=Investment%20Status) During the reporting period, investments focused on major non-equity projects, notably the 'High-Quality Mold Steel Production Line,' with CNY 325 million invested - The company is undertaking multiple significant non-equity investments to upgrade production equipment and enhance product quality[46](index=46&type=chunk) Major Projects Under Construction (CNY Million) | Project Name | Investment in Current Period (CNY Million) | Cumulative Investment (CNY Million) | Project Progress | Estimated Return | | :--- | :--- | :--- | :--- | :--- | | **High-Quality Mold Steel Production Line Project** | 325.49 | 325.49 | 29.62% | IRR (after tax)14.0% | | **Special Smelting Plant 20-ton ESR Furnace Project** | 12.29 | 28.36 | Completed | 5.00 CNY Million/year | | **Small Bar Mill Supporting Facilities Renovation Project** | 6.35 | 22.94 | Completed | 8.47 CNY Million/year | [Outlook for Future Development](index=21&type=section&id=Outlook%20for%20Future%20Development) Looking ahead, the company sees both opportunities and challenges in the special steel industry, planning to produce 2.37 million tons of steel and achieve CNY 12.3 billion in sales revenue in 2019 - Opportunities for the company include: national high-quality development strategies, robust demand from downstream industries (infrastructure, automotive, energy), and the company's comprehensive product portfolio[50](index=50&type=chunk)[51](index=51&type=chunk) - Risks faced by the company include: market operating risks (price volatility, intensified competition), raw material price fluctuation risks, and foreign trade risks due to international trade friction[55](index=55&type=chunk) 2019 Operating Plan Targets | Indicator | Target | | :--- | :--- | | **Steel Production (Million Tons)** | 1.27 | | **Steel Product Production (Million Tons)** | 2.37 | | **Total Steel Product Sales (Million Tons)** | 2.37 | | **Sales Revenue (CNY Billion)** | 12.30 | - 2019 strategic priorities include implementing 'quality enhancement projects' to develop high-end products, increasing R&D to expand market share in emerging sectors, focusing on 'cost reduction and efficiency improvement,' and advancing the 'High-Quality Mold Steel Production Line' project[52](index=52&type=chunk)[53](index=53&type=chunk) [Part V. Significant Matters](index=25&type=section&id=Part%20V.%20Significant%20Matters) This section details significant corporate events, including profit distribution, related party transactions, and major asset restructuring [Profit Distribution of Ordinary Shares and Capital Reserve Conversion to Share Capital](index=25&type=section&id=Profit%20Distribution%20of%20Ordinary%20Shares%20and%20Capital%20Reserve%20Conversion%20to%20Share%20Capital) The company prioritizes investor returns, proposing a 2018 cash dividend of CNY 8.00 per 10 shares, representing a high 70.47% payout ratio Cash Dividend History for the Past Three Years | Dividend Year | Dividend per 10 Shares (CNY) | Cash Dividend Amount (CNY Million) | Payout Ratio to Net Profit Attributable to Parent | | :--- | :--- | :--- | :--- | | **2018** | 8.00 | 359.53 | 70.47% | | **2017** | 3.00 | 134.82 | 34.14% | | **2016** | 2.00 | 89.88 | 30.71% | [Significant Related Party Transactions](index=28&type=section&id=Significant%20Related%20Party%20Transactions) In 2018, the company engaged in significant related party transactions totaling CNY 6.886 billion, primarily for operational needs - Total related party transactions for daily operations amounted to **CNY 6.886 billion**, with pricing based on market principles and execution within approved estimates[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) Major Related Party Purchases (CNY Million) | Related Party | Transaction Content | Transaction Amount (CNY Million) | | :--- | :--- | :--- | | **Hubei Zhongte Xinhuaneng Technology Co., Ltd.** | Purchase of coke, sintered ore, power, etc | 1,719.59 | | **Hubei Xinye Steel Special Steel Pipe Co., Ltd.** | Purchase of steel billets, molten iron, scrap steel, etc | 1,612.04 | | **Hubei Xinye Steel Co., Ltd.** | Purchase of coke, steel billets, raw materials, etc | 689.77 | Major Related Party Sales (CNY Million) | Related Party | Transaction Content | Transaction Amount (CNY Million) | | :--- | :--- | :--- | | **Hubei Xinye Steel Co., Ltd.** | Sale of continuous casting billets, steel products, provision of labor, etc | 816.81 | | **Hubei Xinye Steel Special Materials Co., Ltd.** | Sale of raw materials, continuous casting billets, power, etc | 515.08 | | **Hubei Xinye Steel Special Steel Pipe Co., Ltd.** | Sale of pipe billets, steel products, provision of labor, etc | 276.23 | [Explanation of Other Significant Matters](index=36&type=section&id=Explanation%20of%20Other%20Significant%20Matters) On December 25, 2018, the company initiated a major asset restructuring to acquire 86.50% of Xingcheng Special Steel for an estimated CNY 23.182 billion - The company plans to acquire **86.50%** equity in Xingcheng Special Steel via share issuance, with an estimated value of **CNY 23.182 billion** and an issue price of **CNY 10.00/share**[84](index=84&type=chunk) - This restructuring is part of CITIC Group's overall steel segment listing plan, which will not result in a change of control for the listed company, with CITIC Group remaining the ultimate controller[84](index=84&type=chunk) [Social Responsibility](index=33&type=section&id=Social%20Responsibility) The company actively fulfills its social responsibilities, with 2018 pollutant emissions below national standards and no environmental incidents - As a key polluting entity, the company has established comprehensive pollution control facilities, including sintering desulfurization, multi-stage dust removal, and wastewater recycling systems, ensuring no external discharge[80](index=80&type=chunk) - In 2018, the company's total emissions of major pollutants like particulate matter and sulfur dioxide were within approved limits, with no instances of exceeding standards[79](index=79&type=chunk)[80](index=80&type=chunk) [Part VI. Share Changes and Shareholder Information](index=37&type=section&id=Part%20VI.%20Share%20Changes%20and%20Shareholder%20Information) This section details changes in the company's share capital and provides an overview of its shareholders and ultimate controller [Share Capital Changes](index=37&type=section&id=Share%20Capital%20Changes) During the reporting period, the company's total share capital remained unchanged at 449,408,480 shares - As of year-end 2018, the company's total share capital was **449,408,480 shares**, with no changes during the reporting period[87](index=87&type=chunk) [Shareholders and Ultimate Controller](index=38&type=section&id=Shareholders%20and%20Ultimate%20Controller) As of year-end 2018, the company had 23,426 shareholders, with the top two controlled by CITIC Group Top Two Shareholders' Holdings | Shareholder Name | Shareholder Type | Shareholding % | Number of Shares Held | | :--- | :--- | :--- | :--- | | **Hubei Xinye Steel Co., Ltd.** | Domestic Non-State-Owned Legal Person | 29.95% | 134,620,000 | | **CITIC Pacific (China) Investment Co., Ltd.** | Domestic Non-State-Owned Legal Person | 28.18% | 126,618,480 | - The controlling shareholder is Hubei Xinye Steel Co., Ltd., and the ultimate controller is CITIC Group Corporation[95](index=95&type=chunk)[96](index=96&type=chunk) - The top two shareholders, Hubei Xinye Steel Co., Ltd. and CITIC Pacific (China) Investment Co., Ltd., are both subsidiaries of CITIC Pacific Ltd., forming a concerted action relationship[92](index=92&type=chunk) [Part VIII. Directors, Supervisors, Senior Management, and Employees](index=44&type=section&id=Part%20VIII.%20Directors%2C%20Supervisors%2C%20Senior%20Management%2C%20and%20Employees) This section provides information on the compensation of directors, supervisors, and senior management, as well as details on the company's employee structure [Compensation of Directors, Supervisors, and Senior Management](index=47&type=section&id=Compensation%20of%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) Compensation for directors, supervisors, and senior management is performance-based, totaling CNY 3.9225 million pre-tax in 2018 - In 2018, the total pre-tax remuneration paid to directors, supervisors, and senior management was **CNY 3.9225 million**[111](index=111&type=chunk) Compensation of Selected Senior Executives (CNY Million) | Name | Position | Total Pre-tax Remuneration (CNY Million) | Remuneration from Related Parties | | :--- | :--- | :--- | :--- | | **Jiang Qiao** | Director, General Manager | 1.08 | No | | **Feng Yuanqing** | Chief Accountant | 0.95 | No | | **Guo Peifeng** | Director, Board Secretary | 0.69 | No | | **Yu Yapeng** | Chairman | - | Yes | | **Qian Gang** | Director | - | Yes | [Employee Information](index=48&type=section&id=Employee%20Information) As of year-end 2018, the company had 3,736 employees, with production personnel at 78.96% and over 38% holding college degrees or higher Employee Composition | Category | Number (persons) | % | | :--- | :--- | :--- | | **Professional Composition** | | | | Production Personnel | 2,950 | 78.96% | | Technical Personnel | 385 | 10.31% | | Administrative Personnel | 260 | 6.96% | | **Education Level** | | | | Master's or Above | 52 | 1.39% | | University | 604 | 16.17% | | College | 801 | 21.44% | | **Total Employees** | **3,736** | **100%** | - The company's compensation policy is 'salary based on position, adjusted with position changes,' linked to economic performance indicators, with employee salary standards adjusted in 2018 based on profitability[113](index=113&type=chunk) [Part IX. Corporate Governance](index=50&type=section&id=Part%20IX.%20Corporate%20Governance) This section outlines the company's corporate governance structure, its independence from the controlling shareholder, and internal control effectiveness [Overview of Corporate Governance](index=50&type=section&id=Overview%20of%20Corporate%20Governance) The company has established a standardized governance structure in strict accordance with laws and regulations, with no significant discrepancies from CSRC requirements - The company's corporate governance structure is sound and operates in compliance with relevant laws and regulations, with no significant discrepancies found compared to regulatory documents[116](index=116&type=chunk)[117](index=117&type=chunk) [Company Independence from Controlling Shareholder in Business, Personnel, Assets, Organization, and Finance](index=50&type=section&id=Company%20Independence%20from%20Controlling%20Shareholder%20in%20Business%2C%20Personnel%2C%20Assets%2C%20Organization%2C%20and%20Finance) The company maintains complete independence from its controlling shareholder in business, personnel, assets, organization, and finance, possessing an independent and complete business system - The company maintains independence in business, personnel, assets, organization, and finance, possessing autonomous operational capabilities[118](index=118&type=chunk) [Internal Control Status](index=53&type=section&id=Internal%20Control%20Status) The company maintained effective internal controls over financial reporting, with PwC Zhongtian issuing an unqualified internal control audit opinion - The company's board self-assessed that as of December 31, 2018, its internal controls were effective, with no material weaknesses in financial or non-financial reporting[128](index=128&type=chunk)[129](index=129&type=chunk) - PwC Zhongtian, the accounting firm, issued an unqualified audit opinion on the effectiveness of the company's internal controls over financial reporting as of December 31, 2018[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) [Part XI. Financial Report](index=57&type=section&id=Part%20XI.%20Financial%20Report) This section presents the company's audited financial statements, including the auditor's report, key financial data, and significant accounting policies [Audit Report](index=57&type=section&id=Audit%20Report) PwC Zhongtian issued an unqualified audit opinion on the company's 2018 financial statements, confirming fair presentation and identifying 'fixed asset impairment' as a key audit matter - The auditing firm, PwC Zhongtian, issued a standard unqualified audit opinion[134](index=134&type=chunk)[135](index=135&type=chunk) - A key audit matter was 'fixed asset impairment,' where management recognized approximately **CNY 80.34 million** in impairment provisions due to low capacity utilization and idle equipment, which auditors reviewed and accepted[138](index=138&type=chunk)[139](index=139&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) [Financial Statement Summary](index=60&type=section&id=Financial%20Statement%20Summary) In 2018, the company demonstrated a healthy financial position and strong performance growth, with total assets reaching CNY 7.678 billion 2018 Core Financial Statement Data (CNY Billion) | Item | 2018 | 2017 | | :--- | :--- | :--- | | **Balance Sheet** | | | | Total Assets | 7.68 | 6.58 | | Total Liabilities | 3.27 | 2.55 | | Equity Attributable to Parent | 4.40 | 4.03 | | **Income Statement** | | | | Operating Revenue | 12.57 | 10.23 | | Total Profit | 0.60 | 0.46 | | Net Profit | 0.51 | 0.40 | | **Cash Flow Statement** | | | | Net Cash Flow from Operating Activities | 0.73 | 0.36 | | Net Cash Flow from Investing Activities | -0.04 | -0.05 | | Net Cash Flow from Financing Activities | 0.06 | -0.31 | [Significant Accounting Policies and Estimates](index=72&type=section&id=Significant%20Accounting%20Policies%20and%20Estimates) The company's financial statements are prepared under the going concern basis, with format revisions in 2018 for combined receivables/payables and separate R&D expense presentation - The company implemented Ministry of Finance Document [2018] No. 15, changing financial statement formats to combine notes and accounts receivable/payable and separately present R&D expenses, with 2017 data retrospectively adjusted[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Allowance for doubtful accounts on accounts receivable is calculated on a portfolio basis, with domestic trade receivables provisioned by aging analysis (**3% for within 1 year**), while foreign trade receivables and bank acceptance bills are deemed to have extremely low credit risk and are not provisioned[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk) - As a high-tech enterprise, the company enjoyed a preferential corporate income tax rate of **15%** in 2018[200](index=200&type=chunk) [Part XII. Documents Available for Inspection](index=117&type=section&id=Part%20XII.%20Documents%20Available%20for%20Inspection) This section lists all documents available for inspection, including audited financial statements and public announcements [Documents Available for Inspection](index=117&type=section&id=Documents%20Available%20for%20Inspection) Documents available for inspection include financial statements signed by senior management, original audit reports, and all official disclosure documents - Documents available for inspection include audited financial statements, original audit reports, and all disclosed announcement documents[337](index=337&type=chunk) ```

Financial Performance - Operating revenue for the reporting period reached CNY 3,254,354,018.60, a 27.70% increase year-on-year [8]. - Net profit attributable to shareholders increased by 40.00% to CNY 124,862,280.31 for the reporting period [8]. - The net profit attributable to shareholders after deducting non-recurring gains and losses rose by 54.74% to CNY 138,685,679.57 [8]. - The basic earnings per share for the reporting period was CNY 0.278, reflecting a 40.40% increase [8]. - The weighted average return on net assets was 2.93%, up 27.95% from the previous year [8]. Assets and Liabilities - Total assets increased by 11.27% to CNY 7,320,231,364.16 compared to the end of the previous year [8]. - Cash and cash equivalents increased by 239.64% to ¥504,873,963.62, primarily due to increased cash received from sales [15]. - Accounts receivable rose by 79.10% to ¥621,071,705.26, mainly due to an increase in receivables from steel sales [15]. - Short-term borrowings reached ¥500,000,000.00, marking a 100.00% increase due to new bank loans [15]. - Deferred income increased by 85.33% to ¥132,684,500.00, primarily due to an increase in project subsidy receipts [15]. - The company reported a 517.30% increase in asset impairment losses, totaling ¥47,761,921.90, mainly due to increased provisions for fixed asset impairments [15]. Cash Flow - The net cash flow from operating activities for the year-to-date reached CNY 457,310,787.68, a significant increase of 308.41% [8]. - Net cash flow from operating activities improved by 308.41% to ¥457,310,787.68, driven by higher cash receipts from sales [15]. Expenses - Research and development expenses increased by 72.04% to ¥415,560,643.33, reflecting a greater investment in product development and process innovation [15]. - Sales expenses rose by 41.94% to ¥150,290,465.76, primarily due to increased salaries and operating costs [15]. - The company experienced a 66.16% increase in management expenses, amounting to ¥476,904,702.21, largely due to higher research and development costs [15]. Shareholder Information - The total number of shareholders at the end of the reporting period was 23,507 [11]. - The largest shareholder, Hubei Xinye Steel Co., Ltd., held 29.95% of the shares [11]. Non-Recurring Items - The company reported no significant non-recurring gains or losses that would affect the classification of regular earnings [9]. - The company has no overdue commitments or non-operating fund occupation by controlling shareholders or related parties during the reporting period [16].

Financial Performance - The company's operating revenue for the first half of 2018 was ¥6,153,963,127.41, representing a 27.19% increase compared to ¥4,838,518,766.12 in the same period last year[18]. - The net profit attributable to shareholders was ¥255,633,815.10, up 35.02% from ¥189,328,369.62 year-on-year[18]. - The net cash flow from operating activities improved significantly to ¥364,432,042.02, a 153.50% increase from a negative cash flow of -¥681,197,968.86 in the previous year[18]. - The company's total assets increased by 12.16% to ¥7,378,524,781.35 from ¥6,578,740,103.44 at the end of the previous year[18]. - The net assets attributable to shareholders rose by 3.00% to ¥4,149,112,688.16 compared to ¥4,028,301,417.06 at the end of the previous year[18]. - The company's operating costs were CNY 5,326.30 million, up 24.15% year-on-year, primarily due to increased sales volume and costs of steel products[40]. - The sales profit margin increased to 4.96%, up 0.40 percentage points year-on-year, indicating improved profitability[34]. - The company reported a gross profit margin of approximately 5.0% for the first half of 2018, compared to 10.0% in the previous year[124]. - The company’s earnings per share (EPS) increased to CNY 0.569 from CNY 0.421 in the previous year, reflecting a growth of 35.2%[126]. Cash Flow and Liquidity - Cash and cash equivalents increased by 38% compared to the beginning of the year, primarily due to increased cash sales of steel products[28]. - The net cash flow from operating activities increased to ¥364,432,042.02, a 153.50% increase compared to the previous period, primarily due to increased cash received from sales of goods and services[41]. - The total cash and cash equivalents increased to ¥453,097,095.73, a 156.00% rise, attributed to the increase in net cash flow from operating activities[41]. - The ending balance of cash and cash equivalents increased to CNY 1,631,502,268.75, compared to CNY 376,281,995.44 at the end of the previous year[130]. - The company reported a significant increase in cash inflows from operating activities, indicating improved operational efficiency and financial health[129]. Investment and R&D - Research and development expenses rose by 82.66% to CNY 285.47 million, reflecting the company's commitment to enhancing its R&D capabilities[40]. - The company received three invention patents during the reporting period, with several R&D projects achieving international advanced technology levels[37]. - The company plans to focus on product structure adjustment and leverage its existing product varieties and R&D capabilities to capture market opportunities[27]. - The company is focusing on technological innovation and product quality improvement to enhance brand strength and risk resilience[56]. Market and Competition - The company continues to face challenges from overcapacity in the domestic steel industry and intense competition, but it has achieved good economic results by optimizing its operations[27]. - The company faces significant market risks due to fluctuations in steel prices and intense competition within the steel industry, which may impact production and profitability[55]. - The company plans to develop new users in Europe and the Middle East, particularly in automotive steel, to mitigate risks from trade tensions[57]. Environmental and Regulatory Compliance - The company is classified as a key pollutant discharge unit by environmental protection authorities[85]. - The total emissions of particulate matter were reported at 248.562 tons, with no exceedance of discharge standards[86]. - The company has established a two-tier wastewater recycling system, ensuring that all treated wastewater meets the standards for direct discharge and is reused in various processes, with no external discharge[88]. - The company has implemented comprehensive pollution control facilities, operating continuously 24 hours a day, with advanced dust collection systems in place across various production units[87]. - The company has not reported any environmental pollution incidents or received government penalties during the reporting period, reflecting its commitment to environmental protection[94]. Shareholder and Ownership Structure - The total number of unrestricted shares remains at 449,408,480, representing 100% of the company's shares[100]. - The top two shareholders, Hubei Xinye Steel Co., Ltd. and CITIC Pacific (China) Investment Co., Ltd., hold 29.95% and 28.18% of shares respectively, indicating a concentrated ownership structure[104]. - The company did not undergo any changes in its controlling shareholder or actual controller during the reporting period[105]. - The company has not reported any changes in the number of shareholders or significant shareholding changes during the reporting period[102]. Financial Reporting and Audit - The half-year financial report has not been audited, indicating a lack of external validation for the reported figures[63]. - The financial report for the first half of 2018 was not audited[117]. - The financial statements comply with the requirements of the enterprise accounting standards, reflecting the company's financial status as of June 30, 2018[149]. Other Operational Aspects - The company has ongoing projects aimed at enhancing production capabilities, including a project to improve the quality of products with an expected annual return of ¥14.7 million once completed[50]. - The company has not encountered any major litigation or arbitration matters during the reporting period[66]. - There are no significant penalties or rectification situations reported for the company during the period[66]. - The company has not implemented any employee stock ownership plans or incentive measures during the reporting period[67].

Financial Performance - The company's operating revenue for 2017 was CNY 10,227,069,643.11, representing a 59.98% increase compared to CNY 6,392,686,589.84 in 2016[18] - The net profit attributable to shareholders for 2017 was CNY 394,900,713.81, a 34.93% increase from CNY 292,680,656.73 in 2016[18] - The net profit after deducting non-recurring gains and losses was CNY 433,768,787.42, up 48.95% from CNY 291,213,878.40 in 2016[18] - The basic earnings per share for 2017 was CNY 0.879, reflecting a 35.02% increase from CNY 0.651 in 2016[18] - The total assets at the end of 2017 were CNY 6,578,740,103.44, a 12.51% increase from CNY 5,847,133,448.37 at the end of 2016[18] - The net assets attributable to shareholders at the end of 2017 were CNY 4,028,301,417.06, an 8.19% increase from CNY 3,723,282,399.25 at the end of 2016[18] - The net cash flow from operating activities for 2017 was CNY 354,954,015.78, a decrease of 55.09% compared to CNY 790,296,694.76 in 2016[18] - The weighted average return on equity for 2017 was 10.23%, up from 8.13% in 2016[18] Revenue and Sales - The company reported a quarterly revenue of CNY 2,840,135,475.44 in Q4 2017, contributing to a total annual revenue of CNY 10,227,069,643.11[22] - In 2017, the company achieved an operating revenue of 10.227 billion yuan, a year-on-year increase of 59.98%[38] - The company's net profit for 2017 was 395 million yuan, reflecting a year-on-year growth of 34.93%[38] - The production of steel reached 1.1451 million tons, an increase of 1.33% compared to the previous year[38] - The sales of steel amounted to 2.0658 million tons, up 20.15% year-on-year[38] - The company reported a gross profit margin of 4.48% for the year[38] - Sales in the automotive sector increased by 64.90% year-on-year, contributing ¥1.86 billion, which accounted for 18.15% of total revenue[44] - The sales volume of high-end bearing steel grew significantly, with a year-on-year increase of 128.92%, reaching ¥2.21 billion[46] Costs and Expenses - In 2017, the total cost of materials accounted for 67.00% of operating costs, with a year-on-year increase of 71.44%[52] - Employee compensation represented 3.90% of operating costs, increasing by 12.91% year-on-year[52] - The total operating costs amounted to ¥8,597,743,960.63 in 2017, up 67.91% from ¥5,120,479,365.47 in 2016[52] - The company experienced a 42.15% increase in management expenses, primarily due to higher research and development costs[56] - Financial expenses surged by 251.20%, mainly due to increased interest expenses and foreign exchange losses[56] Research and Development - Research and development investment reached ¥35,749,000, accounting for 3.50% of operating revenue[57] - R&D expenditure rose by 50.13% to CNY 357,488,580.90 in 2017, accounting for 3.50% of operating revenue[58] - The company developed over 200 new products annually, enhancing its market competitiveness[57] Shareholder and Dividend Information - The company plans to distribute a cash dividend of CNY 3.00 per 10 shares, totaling CNY 134,822,544.00 based on 449,408,480 shares[4] - The cash dividend payout ratio for 2017 is 100% of the total profit distribution, reflecting the company's commitment to returning value to shareholders[95] - The company achieved a net profit of 394,900,713.81 yuan for the year 2017, with a total distributable profit of 2,867,125,060.67 yuan after accounting for previous distributions[95] Environmental and Social Responsibility - The company maintained a zero environmental accident record throughout the year, emphasizing its commitment to green development and clean production[41] - The company emphasizes its commitment to social responsibility, focusing on sustainable development and community harmony[128] - Environmental protection is a key focus, with the company achieving zero pollution incidents and maintaining compliance with environmental standards[133][134] - The company has implemented a comprehensive pollution control system, operating 24/7, with over ten dust removal systems in place[139] Governance and Compliance - The company has retained PwC as its auditor for three consecutive years, ensuring continuity and reliability in its financial reporting[101] - The company has a clear and independent financial accounting system, ensuring compliance with tax regulations[191] - The company has established a robust governance structure, adhering to relevant laws and regulations, ensuring the protection of shareholder rights[187] Employee and Management Information - The company has a total of 3,766 employees, with 2,956 in production, 127 in sales, and 454 in technical roles[181] - The company plans to conduct 16 training sessions in 2018 to enhance the skills of management and technical personnel[184] - The company has implemented a salary adjustment based on performance in 2017, aligning with its incentive mechanism[183]

Financial Performance - The company's revenue for Q1 2018 was CNY 3,008,454,643.68, representing a 28.56% increase compared to CNY 2,340,179,177.27 in the same period last year[8] - Net profit attributable to shareholders was CNY 90,557,855.44, up 38.72% from CNY 65,281,051.58 year-on-year[8] - The net profit after deducting non-recurring gains and losses was CNY 92,587,491.14, reflecting a 23.41% increase from CNY 75,027,052.95 in the previous year[8] - The basic earnings per share increased by 39.31% to CNY 0.202 from CNY 0.145 in the same period last year[8] - Operating profit for the period was CNY 108,067,911.58, up 22.5% from CNY 88,267,121.12 in Q1 2017[31] - The company reported a total comprehensive income of CNY 90,557,855.44 for the period, compared to CNY 65,281,051.58 in the previous year[32] Assets and Shareholder Information - Total assets at the end of the reporting period were CNY 6,791,504,392.35, a 3.23% increase from CNY 6,578,740,103.44 at the end of the previous year[8] - Net assets attributable to shareholders increased by 2.25% to CNY 4,118,859,272.50 from CNY 4,028,301,417.06 at the end of the previous year[8] - Cash and cash equivalents at the end of the period totaled CNY 1,296,146,586.41, up from CNY 698,967,445.14 at the end of Q1 2017[36] - The total number of shareholders at the end of the reporting period was 25,528[11] - The top two shareholders, Hubei Xinya Steel Co., Ltd. and CITIC Pacific (China) Investment Co., Ltd., held 29.95% and 28.18% of shares, respectively[11] Cash Flow and Operating Activities - The net cash flow from operating activities improved significantly, with a net outflow of CNY -114,347,593.05, a 72.48% improvement from CNY -415,579,916.67 in the previous year[8] - Cash flow from operating activities showed a net outflow of CNY 114,347,593.05, an improvement from a net outflow of CNY 415,579,916.67 in the same period last year[35] - Investment cash flow turned positive at CNY 36,795,548.44, a 164.06% increase due to cash received from project grants[15] - Financing cash flow surged by 6080.03% to CNY 197,692,291.67 due to new borrowings received[15] Expenses and Liabilities - Total operating costs for Q1 2018 were CNY 2,900,486,732.10, a 28.9% increase from CNY 2,251,912,056.15 in Q1 2017[29] - Management expenses increased by 80.63% to CNY 162,929,801.63 primarily due to higher R&D expenses[15] - Sales expenses rose by 65.33% to CNY 55,720,689.40 reflecting increased operational costs[15] - Employee compensation payable increased by 45.08% to CNY 68,827,647.19 reflecting higher salary expenses[15] - Tax payable increased by 43.38% to CNY 52,917,504.63 primarily due to increased VAT payable[15] - Other payables increased by 45.25% to CNY 266,756,238.46 mainly due to higher accrued expenses[15] Return on Equity - The weighted average return on equity rose to 2.22%, up from 1.74% year-on-year, an increase of 0.48%[8]

Financial Performance - The company's operating revenue for 2017 was CNY 10,227,069,643.11, representing a 59.98% increase compared to CNY 6,392,686,589.84 in 2016[18]. - The net profit attributable to shareholders for 2017 was CNY 394,900,713.81, a 34.93% increase from CNY 292,680,656.73 in 2016[18]. - The net profit after deducting non-recurring gains and losses was CNY 433,768,787.42, up 48.95% from CNY 291,213,878.40 in 2016[18]. - The basic earnings per share for 2017 was CNY 0.879, reflecting a 35.02% increase from CNY 0.651 in 2016[18]. - The total assets at the end of 2017 were CNY 6,578,740,103.44, a 12.51% increase from CNY 5,847,133,448.37 at the end of 2016[18]. - The net assets attributable to shareholders at the end of 2017 were CNY 4,028,301,417.06, an 8.19% increase from CNY 3,723,282,399.25 at the end of 2016[18]. - The net cash flow from operating activities for 2017 was CNY 354,954,015.78, a decrease of 55.09% compared to CNY 790,296,694.76 in 2016[18]. - The weighted average return on equity for 2017 was 10.23%, up from 8.13% in 2016[18]. - The company reported quarterly revenues of CNY 2,840,135,475.44 in Q4 2017, with a total annual revenue of CNY 10,227,069,643.11[22]. Production and Sales - The company produced 1.1451 million tons of steel in 2017, an increase of 1.33% year-on-year, and sold 2.0658 million tons of steel, up 20.15% year-on-year[38]. - The company achieved a sales profit margin of 4.48% in 2017[38]. - Sales of automotive steel increased by 64.90% year-on-year, contributing ¥1.86 billion, which accounted for 18.15% of total revenue[44]. - The sales volume of high-end bearing steel grew by 33% year-on-year, indicating strong demand in the market[39]. - The company exported 36,360 tons of steel in 2017, a decrease of 16.74% compared to the previous year, but the total foreign exchange earnings improved year-on-year[40]. - The production of new products totaled 280,000 tons during the reporting period, reflecting the company's focus on high-end and high-value-added products[40]. - The sales of spring steel increased by 59.89% year-on-year, amounting to ¥6.28 billion, which represented 61.43% of total revenue[44]. - The company achieved a significant increase in sales of die-casting mold steel, with a growth rate of 144%[39]. Costs and Expenses - In 2017, the total operating costs amounted to 8,597,743,960.63 CNY, representing a year-on-year increase of 67.91% compared to 5,120,479,365.47 CNY in 2016[52]. - Raw materials accounted for 67.00% of operating costs in 2017, with a year-on-year increase of 71.44%[52]. - The energy costs in 2017 were 1,314,927,742.59 CNY, which represented 15.29% of the total operating costs, showing a year-on-year increase of 62.10%[52]. - The company's sales expenses decreased by 6.71% to 125,966,323.44 CNY, primarily due to reduced transportation costs[56]. - Management expenses increased by 42.15% to 412,305,748.09 CNY, mainly due to higher R&D costs[56]. - Financial expenses surged by 251.20% to 15,208,856.04 CNY, attributed to increased interest expenses and exchange losses[56]. Research and Development - The company's R&D investment in 2017 was 35.749 million CNY, constituting 3.50% of operating revenue, focusing on high-end steel products[57]. - R&D expenditure increased by 50.13% to CNY 357,488,580.90 in 2017, accounting for 3.50% of operating revenue[58]. - The company received 11 patents in 2017, including 3 invention patents, highlighting its strong R&D capabilities[33]. - The company developed over 200 new products annually, enhancing its market competitiveness and service capabilities[57]. Dividend and Profit Distribution - The company plans to distribute a cash dividend of CNY 3.00 per 10 shares, based on a total of 449,408,480 shares[4]. - The company achieved a net profit of 394,900,713.81 CNY for the year 2017, with a distributable profit of 2,867,125,060.67 CNY after accounting for previous distributions[95]. - The cash dividend payout ratio for 2017 is 100% of the total profit distribution[95]. - The company plans to distribute a cash dividend of 3.00 CNY per 10 shares, totaling 134,822,544.00 CNY for the year 2017, which represents 34.14% of the net profit attributable to shareholders[95]. Market Strategy and Future Plans - The company aims to produce 1.14 million tons of steel and 2.18 million tons of steel products in 2018, achieving a sales revenue target of 10.3 billion yuan[79]. - The company plans to enhance product quality through a "Quality Improvement Project," focusing on zero defects and integrating employee training with process management[79]. - The company will adjust its product structure to increase the proportion of high-end products, targeting sectors such as automotive, aerospace, and military[80]. - The company is committed to controlling procurement costs amid rising raw material prices, ensuring reasonable inventory levels and increasing the number of strategic suppliers[82]. - The company will invest in technological upgrades to improve product quality and production capacity, particularly for high-strength steel and special materials[83]. - The company anticipates challenges from market volatility due to overcapacity and intense competition in the steel industry[85]. - The company will focus on expanding its customer base in high-end markets, including automotive and renewable energy sectors, to enhance its brand and risk resilience[85]. Governance and Compliance - The company maintained a stable governance structure, ensuring compliance with national laws and protecting shareholder rights[128]. - The company has established a performance evaluation mechanism for senior management, linking compensation to performance metrics[12]. - The independent directors have actively participated in board meetings, with a 100% attendance rate for key decisions, ensuring oversight and governance compliance[183]. - The audit committee has collaborated with PwC to finalize the audit arrangements for the 2017 annual report, ensuring accurate financial reporting[186]. - The company has maintained a transparent information disclosure process, adhering to the principles of fairness and accuracy in reporting[177]. Environmental Responsibility - The company maintained zero environmental accidents throughout the year, highlighting its commitment to green development and clean production[41]. - The company achieved zero environmental accidents and no pollution complaints throughout the year, maintaining a good environmental image[132]. - The company’s environmental monitoring station conducted 580 pollution detection activities, effectively controlling environmental risks[132]. - The company maintains a 100% operational rate of environmental protection facilities, exceeding national emission standards for major pollutants[133]. - The company focuses on clean production and low-carbon economy, with a commitment to environmental protection and sustainable development[132]. Employee Welfare and Structure - The total number of employees in the company is 3,766, with 2,956 in production, 127 in sales, 454 in technical roles, 24 in finance, and 205 in administration[171]. - The company paid a total of 3.2028 million yuan in remuneration to employees, with independent directors receiving a total of 210,000 yuan in allowances[167]. - The company has established a reasonable salary incentive mechanism, adjusting employee salary standards based on company performance in 2017[173]. - The company has implemented a salary policy that includes basic salary, performance pay, bonuses, and allowances, in compliance with national laws[173]. - The company has a structured approach to salary determination based on job responsibilities and economic performance indicators[173].

Financial Performance - Net profit attributable to shareholders increased by 30.51% to CNY 89,188,384.06 for the reporting period[8] - Operating revenue for the reporting period reached CNY 2,548,415,401.55, reflecting a growth of 42.43% year-on-year[8] - Basic earnings per share rose by 30.26% to CNY 0.198[8] - The weighted average return on net assets improved to 2.31%, up from 0.38% at the end of the previous year[8] Assets and Liabilities - Total assets increased by 7.99% to CNY 6,314,461,137.18 compared to the end of the previous year[8] - Cash and cash equivalents decreased by 195.88% to -¥361,561,205.13, primarily due to a significant reduction in cash flow from operating activities[16] - Accounts receivable rose by 43.37% to ¥409,580,789.48 from ¥285,690,074.13, mainly due to an increase in receivables from steel sales[16] - Inventory increased by 40.97% to ¥1,007,918,326.96, attributed to higher levels of semi-finished products and raw materials[16] - Prepayments surged by 152.92% to ¥40,162,446.58, primarily due to increased advance payments for raw materials[16] - The company’s accounts payable increased by 81.43% to ¥1,015,221,866.71, reflecting higher payments for materials[16] - Deferred tax assets increased by 39.26% to ¥65,128,058.19, mainly due to temporary differences arising from payable maintenance fees and sales rebates[16] Cash Flow - The net cash flow from operating activities showed a significant decline, with a net outflow of CNY 219,428,943.32, a decrease of 137.40%[8] - The company reported a net cash outflow from operating activities of -¥219,428,943.32, a 137.40% decrease compared to the previous year[16] Shareholder Information - The total number of shareholders at the end of the reporting period was 26,783[12] - The largest shareholder, Hubei Xinya Steel Co., Ltd., holds 29.95% of the shares[12] Non-Recurring Items - The company reported a total of CNY 13,599,026.04 in non-recurring losses for the year-to-date period[9] - The company did not engage in any repurchase transactions during the reporting period[13] Operating Costs - Operating costs increased by 46.44% to ¥6,581,994,393.25 from ¥4,494,591,524.11, driven by rising sales volume and costs of steel[16] - Financial expenses rose significantly by 375.98% to ¥15,390,964.34, mainly due to increased interest expenses and foreign exchange losses[16] Revenue Growth - Total revenue for the first nine months of 2017 reached ¥7,386,934,167.67, a 45.51% increase compared to ¥5,076,424,057.77 in the same period of 2016, primarily due to higher sales volume and prices of steel products[16]

Financial Performance - The company's operating revenue for the first half of 2017 was ¥4,838,518,766.12, representing a 47.19% increase compared to ¥3,287,167,078.33 in the same period last year[17]. - The net profit attributable to shareholders was ¥189,328,369.62, up 30.00% from ¥145,637,207.40 year-on-year[17]. - The net profit after deducting non-recurring gains and losses was ¥202,489,945.50, an increase of 46.27% compared to ¥138,433,764.57 in the previous year[17]. - The company's total assets at the end of the reporting period were ¥6,164,855,153.29, a 5.43% increase from ¥5,847,133,448.37 at the end of the previous year[17]. - The weighted average return on equity was 5.00%, up from 4.10% in the previous year, reflecting improved profitability[17]. - The company's operating revenue reached 4,838,518,766.12 CNY, a year-on-year increase of 47.19%, primarily due to higher sales volume and prices of steel products[37]. - The net profit for the period was 18,933,000 CNY, reflecting a year-on-year increase of 30.00%[31]. - The total profit amounted to CNY 220,753,726.99, compared to CNY 169,919,865.13, marking an increase of approximately 29.9%[115]. - The basic and diluted earnings per share increased to CNY 0.421 from CNY 0.324, representing a rise of 30%[116]. Cash Flow and Financial Position - Cash flow from operating activities showed a significant decline, with a net outflow of ¥681,197,968.86 compared to a net outflow of ¥9,163,161.70 in the same period last year, indicating increased cash outflows[17]. - The company's cash and cash equivalents decreased to ¥392,027,285.44 from ¥1,185,420,590.66, a decline of 66.9%[109]. - The total operating cash outflow was CNY 4,684,238,883.40, compared to CNY 2,777,366,703.21 in the prior year[119]. - The total liabilities increased to ¥2,342,126,080.42 from ¥2,123,851,049.12, marking a rise of 10.3%[111]. - The company's equity attributable to shareholders reached ¥3,822,729,072.87, up from ¥3,723,282,399.25, an increase of 2.7%[112]. - The company reported a total cash balance of ¥392,027,285.44 at the end of the period, a significant decrease from ¥1,185,420,590.66 at the beginning of the period[180]. Production and Sales - In the first half of 2017, the company produced 581,300 tons of steel, an increase of 1.57% year-on-year, and sold 1,019,500 tons of steel, up 5.04% year-on-year[31]. - The company exported 186,400 tons of steel, with total foreign exchange earnings slightly higher than the previous year, indicating successful market expansion[32]. - The company achieved a historical high direct supply ratio of 84.43% to high-end users, an increase of 10.6 percentage points year-on-year[32]. - The company developed 14,000 tons of new products in the first half of the year, with significant growth in high-end product sales[33]. Research and Development - The company increased its R&D investment to 156,285,096.31 CNY, a rise of 46.97% compared to the previous year, indicating a focus on technological advancement[37]. Challenges and Risks - The company continues to face challenges such as overcapacity in the steel industry and rising raw material costs, but has achieved good economic results through product structure adjustments and leveraging existing capabilities[25]. - The company faces risks from market fluctuations and rising raw material prices, which could impact operational costs and profitability[54]. Shareholder Information - The company reported a total of 449,408,480 shares, with 100% being unrestricted shares[90]. - The largest shareholder, Hubei Xinye Steel Co., Ltd., holds 29.95% of the shares, totaling 134,620,000 shares[93]. - The second largest shareholder, CITIC Pacific (China) Investment Co., Ltd., holds 28.18% of the shares, totaling 126,618,480 shares[93]. - The total number of ordinary shareholders at the end of the reporting period was 24,527[92]. Related Party Transactions - The company engaged in related party transactions, including purchasing goods from Hubei Xinye Steel Co., Ltd., totaling 4,184.24 million yuan for coke and related products[68]. - The company also purchased raw materials and waste steel from Hubei Xinye Steel Co., Ltd., amounting to 20,784.42 million yuan[68]. - The company reported a related party transaction with Hubei Zhongte New Chemical Technology Co., Ltd., totaling 54,966.81 million yuan for purchasing goods[68]. Inventory and Receivables - The company's inventory increased to approximately CNY 901.75 million, accounting for 14.63% of total assets, up from 12.14% in the previous year[44]. - Accounts receivable increased significantly to ¥1,592,649,113.27, up 105.5% from ¥773,852,293.23[109]. - The total accounts receivable at the end of the period amounted to RMB 304,120,282.90, with a bad debt provision of RMB 14,895,061.95, resulting in a provision ratio of 4.90%[188]. Corporate Governance - The company held its annual general meeting on April 21, 2017, with an investor participation rate of 60.87%[58]. - There were no major litigation or arbitration matters during the reporting period[64]. - The company did not implement any stock incentive plans or employee shareholding plans during the reporting period[65]. - The financial report for the first half of 2017 was not audited[107]. Accounting Policies - The company uses the weighted average method for inventory cost calculation[153]. - The company assesses bad debt provisions based on the present value of expected future cash flows for receivables exceeding 8 million RMB[149]. - The company recognizes expected liabilities when there is a present obligation that is likely to result in an outflow of economic benefits and can be reliably measured[166].