[Important Notice](index=2&type=section&id=Item%201.%20Important%20Notice) The Board of Directors, Supervisory Board, and senior management collectively guarantee the accuracy and completeness of the quarterly report, assuming full legal responsibility - Company's Board of Directors, Supervisory Board, and directors, supervisors, and senior management guarantee the truthfulness, accuracy, and completeness of the quarterly report content, with no false records, misleading statements, or major omissions, and bear individual and joint legal liabilities[4](index=4&type=chunk) - Company's responsible person Chen Fuquan, chief accountant Yu Mei, and head of accounting department Yu Mei declare: they guarantee the truthfulness, accuracy, and completeness of the financial statements in the quarterly report[5](index=5&type=chunk) [Key Financial Data and Shareholder Changes](index=3&type=section&id=Item%202.%20Key%20Financial%20Data%20and%20Shareholder%20Changes) This section details the company's primary financial performance indicators and the shareholding structure, including the top ten shareholders at the end of the reporting period [Key Accounting Data and Financial Indicators](index=3&type=section&id=I.%20Key%20Accounting%20Data%20and%20Financial%20Indicators) The company's Q1 2014 revenue and net profit attributable to shareholders significantly increased, while net cash flow from operating activities decreased; non-recurring gains and losses positively impacted current net profit Financial Performance Indicators | Indicator | Current Period (RMB) | Prior Year Same Period (RMB) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 518,711,129.48 | 340,685,822.19 | 52.25% | | Net Profit Attributable to Shareholders of Listed Company | 65,324,444.06 | 52,216,641.28 | 25.1% | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-Recurring Gains/Losses) | 61,753,761.05 | 45,576,268.82 | 35.5% | | Net Cash Flow from Operating Activities | 38,231,392.63 | 73,602,459.24 | -48.06% | | Basic Earnings Per Share (RMB/share) | 0.2094 | 0.1674 | 25.09% | | Diluted Earnings Per Share (RMB/share) | 0.2094 | 0.1674 | 25.09% | | Weighted Average Return on Net Assets (%) | 3.01% | 2.79% | 0.22% | | **Period-End Indicators** | **Current Period End (RMB)** | **Prior Year End (RMB)** | **Period-End vs Prior Year-End Change (%)** | | Total Assets | 3,446,063,537.00 | 3,339,647,735.82 | 3.19% | | Net Assets Attributable to Shareholders of Listed Company | 2,199,719,414.21 | 2,134,394,970.15 | 3.06% | Non-Recurring Gains and Losses | Item | Amount from Year Start to Period End (RMB) | Explanation | | :--- | :--- | :--- | | Gains/Losses from Disposal of Non-Current Assets | -106,889.47 | | | Government Grants Recognized in Current Profit/Loss | 4,729,748.98 | | | Other Non-Operating Income and Expenses | 491,414.96 | | | Less: Income Tax Impact | 729,745.55 | | | Impact on Minority Interests (After Tax) | 813,845.91 | | | Total | 3,570,683.01 | -- | [Total Number of Shareholders and Top Ten Shareholders' Holdings at Period End](index=4&type=section&id=II.%20Total%20Number%20of%20Shareholders%20and%20Top%20Ten%20Shareholders'%20Holdings%20at%20Period%20End) As of the end of the reporting period, the company had 15,888 shareholders, with controlling shareholder Chen Fucheng holding over 50% and significant restricted shares, and institutional investors among the top ten - Total number of shareholders at the end of the reporting period was **15,888** households[12](index=12&type=chunk) Top Ten Shareholders' Holdings | Shareholder Name | Shareholder Nature | Shareholding Percentage (%) | Number of Shares Held | Number of Restricted Shares Held | Pledge or Freeze Status | | :--- | :--- | :--- | :--- | :--- | :--- | | Chen Fucheng | Overseas Natural Person | 51.31% | 160,089,965 | 126,757,339 | None | | Agricultural Bank of China - BOCOM Schroders Select Stock Securities Investment Fund | Other | 2.53% | 7,908,884 | 0 | None | | Beijing Bus Media Co., Ltd. | State-owned Legal Person | 2.25% | 7,020,000 | 0 | None | | Shanghai Dazhong Public Utilities (Group) Co., Ltd. | Domestic Non-State-owned Legal Person | 2.25% | 7,020,000 | 0 | None | | Nanjing Zhongbei (Group) Co., Ltd. | Domestic Non-State-owned Legal Person | 1.8% | 5,616,900 | 0 | None | | Industrial and Commercial Bank of China - BOC Sustainable Growth Stock Securities Investment Fund | Other | 1.71% | 5,348,121 | 0 | None | | Bank of Communications - Penghua China 50 Open-ended Securities Investment Fund | Other | 1.31% | 4,099,884 | 0 | None | | Jingfu Securities Investment Fund | Other | 1.12% | 3,505,617 | 0 | None | | National Social Security Fund 411 Portfolio | Other | 1.01% | 3,140,019 | 0 | None | | Bank of Communications - ABC-CA Industry Growth Stock Securities Investment Fund | Other | 0.98% | 3,059,117 | 0 | None | - Unknown if there are associated relationships or concerted actions among the top 10 unrestricted shareholders and between them and the top 10 shareholders[13](index=13&type=chunk) [Significant Events](index=6&type=section&id=Item%203.%20Significant%20Events) This section outlines major changes in financial statement items, the progress of significant corporate events, and ongoing commitments from the company and its major shareholders [Significant Changes in Key Financial Statement Items, Financial Indicators and Reasons](index=6&type=section&id=I.%20Significant%20Changes%20in%20Key%20Financial%20Statement%20Items%2C%20Financial%20Indicators%20and%20Reasons%20during%20the%20Reporting%20Period) During the reporting period, several financial statement items and indicators changed significantly due to factors like subsidiary consolidation, increased production, investment activities, and reduced government subsidies, with other receivables and construction in progress showing substantial growth Major Changes in Financial Statement Items | Item | March 31, 2014 (RMB) | December 31, 2013 (RMB) | Change Percentage | Reason | | :--- | :--- | :--- | :--- | :--- | | Prepayments | 16,207,736.22 | 38,871,110.68 | -58.30% | Primarily due to reduced prepayments for goods received in the current period, which were prepaid last year | | Other Receivables | 69,033,385.75 | 4,444,860.29 | 1453.11% | Primarily due to prepayments for Shandong Tongsheng investment in the current period | | Inventories | 445,370,635.37 | 338,445,454.54 | 31.59% | Primarily due to increased production in the current period | | Construction in Progress | 23,894,173.39 | 9,703,460.09 | 146.24% | Primarily due to increased investment in the parent company's Zhuanxing Road project in the current period | | Long-Term Deferred Expenses | 983,869.94 | 510,959.67 | 92.55% | Primarily due to increased decoration expenses for subsidiary Bosilang in the current period | | Advances from Customers | 18,039,912.04 | 4,300,412.09 | 319.49% | Primarily due to increased advances from customers in the current period | | Operating Revenue | 518,711,129.48 | 340,685,822.19 | 52.25% | Primarily due to the consolidation of sales revenue from Jianghuai Songzhi, a subsidiary added in H2 2013 | | Operating Cost | 350,504,137.40 | 228,900,165.51 | 53.13% | Primarily due to the consolidation of sales costs from Jianghuai Songzhi, a subsidiary added in H2 2013 | | Business Taxes and Surcharges | 2,228,963.05 | 1,016,847.58 | 119.20% | Primarily due to increased surtaxes for the parent company in the current period | | Selling Expenses | 31,685,994.73 | 23,853,733.96 | 32.83% | Primarily due to increased transportation costs with higher sales volume in the current period | | Financial Expenses | -598,505.70 | -2,023,712.74 | -70.43% | Primarily due to decreased interest income in the current period compared to the prior year, following a reduction in bank deposits | | Asset Impairment Losses | 5,098,274.16 | 812,736.55 | 527.30% | Primarily due to increased receivables and corresponding increase in bad debt provisions | | Investment Income | 2,812,003.72 | 5,352,604.34 | -47.46% | Primarily because "Jianghuai Songzhi" was accounted for using the equity method in the prior year, but is now a consolidated subsidiary accounted for by the cost method, thus no investment income is recognized | | Non-Operating Income | 5,257,584.08 | 8,793,666.16 | -40.21% | Primarily due to reduced government subsidies in the current period | | Non-Operating Expenses | 143,309.61 | 41,022.53 | 249.34% | Primarily due to increased losses from disposal of non-current assets in the current period | | Income Tax Expense | 16,581,398.40 | 8,593,793.83 | 92.95% | Primarily due to increased corporate income tax provision in line with higher profits in the current period | [Progress of Significant Events](index=6&type=section&id=II.%20Progress%20of%20Significant%20Events%2C%20Their%20Impact%2C%20and%20Analysis%20of%20Solutions) The registration process for the joint venture Shandong Tongsheng Refrigeration Equipment Co., Ltd. with Zhongtong Bus Holdings Co., Ltd. is still ongoing - The registration process for Shandong Tongsheng Refrigeration Equipment Co., Ltd., a joint venture with Zhongtong Bus Holdings Co., Ltd. announced on December 25, 2013, is still ongoing as of the end of this reporting period[17](index=17&type=chunk)[18](index=18&type=chunk) [Commitments](index=6&type=section&id=III.%20Commitments%20Made%20by%20the%20Company%20or%20Shareholders%20Holding%205%25%20or%20More%20Shares%20During%20or%20Prior%20to%20the%20Reporting%20Period%20and%20Continuing%20Therein) The controlling shareholder Chen Fucheng and related parties, along with senior management, have strictly adhered to share lock-up and non-compete commitments made during the initial public offering - Controlling shareholder Chen Fucheng committed not to transfer shares for **36 months** from the listing date, and during his tenure, not to transfer more than **25%** of his total holdings annually, with a **six-month restriction** post-resignation[20](index=20&type=chunk) - Controlling shareholder Chen Fucheng committed to avoid **competing businesses** until he ceases to be the controlling shareholder and actual controller of the listed company[20](index=20&type=chunk)[21](index=21&type=chunk) - Yuan Kai Investment, Yi Xing Investment, and senior management/key personnel indirectly holding shares through Yi Xing Investment have all made **share lock-up commitments**, which have been strictly observed and fulfilled[20](index=20&type=chunk)[21](index=21&type=chunk) [Forecast of Operating Performance for January-June 2014](index=8&type=section&id=IV.%20Forecast%20of%20Operating%20Performance%20for%20January-June%202014) The company expects net profit attributable to shareholders for H1 2014 to increase by 20% to 50%, driven by increased demand for new energy bus air conditioners and growth in passenger vehicle air conditioning sales H1 2014 Performance Forecast | Indicator | Forecast Value | | :--- | :--- | | Change in Net Profit Attributable to Shareholders of Listed Company for Jan-Jun 2014 (%) | 20% to 50% | | Net Profit Attributable to Shareholders of Listed Company for Jan-Jun 2014 Range (RMB 10,000) | 14,018.10 to 17,522.63 | | Net Profit Attributable to Shareholders of Listed Company for Jan-Jun 2013 (RMB 10,000) | 11,681.75 | - Performance change primarily due to increased market demand for **new energy bus air conditioners**, with orders to be shipped and recognized in Q2, and **passenger vehicle air conditioning business** sales revenue growing with new model launches and new customer supply[22](index=22&type=chunk)

Financial Performance - The company's operating revenue for Q1 2014 was ¥518,711,129.48, representing a 52.25% increase compared to ¥340,685,822.19 in the same period last year[8] - Net profit attributable to shareholders was ¥65,324,444.06, up 25.1% from ¥52,216,641.28 year-on-year[8] - The net profit after deducting non-recurring gains and losses was ¥61,753,761.05, reflecting a 35.5% increase from ¥45,576,268.82 in the previous year[8] - The company’s basic earnings per share for Q1 2014 were ¥0.2094, up 25.09% from ¥0.1674 in the same period last year[8] - The weighted average return on equity increased to 3.01%, compared to 2.79% in the previous year[8] Cash Flow and Assets - The net cash flow from operating activities decreased by 48.06% to ¥38,231,392.63, down from ¥73,602,459.24 in the same period last year[8] - Total assets at the end of the reporting period were ¥3,446,063,537.00, a 3.19% increase from ¥3,339,647,735.82 at the end of the previous year[8] Inventory and Receivables - The company's inventory increased by 31.59% to ¥445,370,635.37, primarily due to increased production[16] - The company reported a significant increase in other receivables, which rose by 1453.11% to ¥69,033,385.75, mainly due to prepayments made to Shandong Tongsheng Investment[16] - The company’s pre-receipts increased by 319.49% to ¥18,039,912.04, indicating a rise in customer advance payments[16] Future Outlook - The estimated net profit attributable to shareholders for the first half of 2014 is expected to increase by 20% to 50%, ranging from approximately ¥140.18 million to ¥175.23 million[22] - The net profit for the first half of 2013 attributable to shareholders was approximately ¥116.82 million[22] - Increased demand in the new energy bus air conditioning market is expected to contribute to revenue recognition in the second quarter from previously secured orders[22] - Sales revenue from passenger car air conditioning is anticipated to grow year-on-year due to the launch of new models and supply to newly developed customers[22] Joint Ventures - The joint venture company Shandong Tongsheng Refrigeration Equipment Co., Ltd. is still in the registration process as of the report date[17]

Financial Performance - The company's operating revenue for 2013 was CNY 1,968,161,412.72, representing a 29.95% increase compared to CNY 1,514,524,537.55 in 2012[20] - The net profit attributable to shareholders for 2013 was CNY 239,518,409.99, a significant increase of 64.05% from CNY 146,003,777.97 in the previous year[20] - The net profit after deducting non-recurring gains and losses was CNY 175,516,517.81, up 30.41% from CNY 134,588,520.97 in 2012[20] - The net cash flow from operating activities reached CNY 131,725,641.97, an increase of 27.13% compared to CNY 103,611,631.09 in 2012[20] - Basic and diluted earnings per share for 2013 were both CNY 0.77, reflecting a 63.83% increase from CNY 0.47 in 2012[20] - The total assets at the end of 2013 were CNY 3,339,647,735.82, which is a 22.1% increase from CNY 2,735,101,759.73 at the end of 2012[21] - The net assets attributable to shareholders increased by 12.64% to CNY 2,134,394,970.15 from CNY 1,894,876,560.16 in 2012[21] - The weighted average return on equity for 2013 was 8.67%, an increase from 7.81% in 2012[20] - The total non-recurring gains and losses for 2013 amounted to CNY 64,001,892.18, compared to CNY 11,415,257.00 in 2012, showing a substantial increase[29] Market Expansion and Strategic Initiatives - The company achieved progress in its bus air conditioning, passenger car air conditioning, rail vehicle air conditioning, and refrigerated vehicle air conditioning segments, contributing to significant performance growth compared to 2012[33] - The company has made advancements in market expansion and acquisitions, which are reflected in its improved financial performance[33] - The company plans to enter the urban rail and high-speed rail markets, aiming to develop 16 new customers in these sectors[81] - The company expanded its market presence in Kuwait, Saudi Arabia, and Southeast Asia, achieving significant progress in overseas market development[38] - The company has approved the acquisition of minority equity in Jianghuai Songzhi, demonstrating its commitment to strategic investments[36] - The company completed the acquisition of minority equity in Jianghuai Songzhi, achieving absolute control and consolidation of its financials[40] Research and Development - Research and development expenses increased to ¥82.99 million, up from ¥80.46 million in the previous year, focusing on new energy vehicle air conditioning and rail vehicle projects[53] - The company is building the most advanced refrigeration environment simulation laboratory in China, enhancing its R&D capabilities[63] Governance and Compliance - The company has established a robust governance structure in compliance with relevant laws and regulations, enhancing its operational efficiency[34] - The board of directors has approved multiple financial reports and strategic initiatives throughout the year, reflecting active governance and oversight[35] - The company has maintained compliance with all commitments made to minority shareholders[116] - The company strictly adheres to information disclosure regulations, ensuring timely and accurate information dissemination to investors[156] - The company has established an independent financial department with a dedicated accounting system and has opened a separate bank account for financial operations[171] Employee and Management Structure - The company employed a total of 1,825 staff, with 64.71% in production roles[149] - The management team consists of experienced professionals, with the CEO being 41 years old and having been in position since March 2012[137] - The company has a diverse board with members holding various positions in other companies, enhancing its strategic oversight[138] - The company has established a fair and transparent performance evaluation and incentive mechanism for directors, supervisors, and senior management, continuously improving it[155] Financial Position and Assets - Current assets rose to CNY 2,647,081,048.81, up from CNY 2,360,556,419.24, indicating an increase of about 12%[196] - Cash and cash equivalents decreased significantly to CNY 264,234,640.26 from CNY 664,324,861.89, a decline of approximately 60%[196] - Accounts receivable increased to CNY 723,336,298.08 from CNY 567,399,979.08, reflecting a growth of around 27%[196] - Inventory increased to CNY 338,445,454.54 from CNY 280,848,509.81, showing a rise of about 21%[196] - Total liabilities increased to CNY 1,060,301,107.08 from CNY 741,323,953.82, representing a growth of about 43%[198] - Shareholders' equity rose to CNY 2,279,346,628.74 from CNY 1,993,777,805.91, indicating an increase of approximately 14%[198] Dividend Distribution - The company plans to distribute a cash dividend of CNY 3 per 10 shares, totaling CNY 93,600,000.00, based on the total share capital of 312,000,000 shares[4] - The total cash dividend for 2013 was CNY 93.6 million, which accounted for a significant portion of the distributable profits[89] - In 2013, the cash dividend amount (including tax) was CNY 93.6 million, representing 39.08% of the net profit attributable to shareholders in the consolidated financial statements[89] Risk Management - The company has identified risks related to rising labor costs and market demand fluctuations, which investors should be aware of[11] Shareholder Information - The largest shareholder, Chen Fucheng, holds 54.17% of the shares, totaling 169,009,700 shares[129] - The shareholder count increased from 15,128 to 22,644 over the reporting period[129] - The company has no plans for share buyback transactions during the reporting period[131] - The company does not have any changes in its controlling shareholder during the reporting period[132]