Financial Performance - The company reported a significant year-on-year increase in operating performance, driven by a recovery in downstream market demand [8]. - The company's operating revenue for 2021 was CNY 1,860,537,490.88, representing a 92.48% increase compared to CNY 966,632,204.49 in 2020 [37]. - The net profit attributable to shareholders for 2021 was CNY 282,895,244.91, a 133.49% increase from CNY 121,160,648.66 in 2020 [37]. - The net profit after deducting non-recurring gains and losses was CNY 296,397,494.18, which is a 235.00% increase from CNY 88,477,107.61 in 2020 [37]. - The total assets at the end of 2021 were CNY 7,616,661,050.64, a 33.12% increase from CNY 5,721,471,617.88 at the end of 2020 [37]. - The net assets attributable to shareholders at the end of 2021 were CNY 4,266,760,577.56, reflecting a 44.52% increase from CNY 2,952,278,865.15 at the end of 2020 [37]. - The basic earnings per share for 2021 was CNY 0.39, an increase of 44.44% compared to CNY 0.27 in 2020 [37]. - The diluted earnings per share for 2021 was also CNY 0.39, marking a 44.44% increase from CNY 0.27 in 2020 [37]. - The weighted average return on equity for 2021 was 8.42%, up from 4.32% in 2020 [37]. - The total profit reached 291 million yuan, reflecting a growth of 108.38% compared to the previous year [83]. Market Position and Strategy - The company is focusing on expanding its mid-to-high-end market presence to mitigate risks associated with intensified competition in the low-end market [5]. - Major clients include renowned battery manufacturers such as LG Chem, CATL, BYD, and Samsung SDI, indicating a high customer concentration risk [7]. - The company is exploring strategic partnerships and potential acquisitions to strengthen its market position and drive growth [30]. - The company is actively expanding its production capacity and increasing efforts to explore overseas markets [51]. - The company is actively pursuing international market expansion, particularly in Europe, to capitalize on the growing demand for lithium-ion battery separators [143]. - The company has established long-term partnerships with major domestic lithium-ion battery manufacturers, including CATL, BYD, and Guoxuan High-Tech, which is expected to drive significant business opportunities as the demand for separators in the lithium-ion battery industry grows [144]. Research and Development - The company is actively developing new products and technologies, including functional membranes, to diversify its product offerings and enhance profitability [12][16]. - The company is focused on R&D for new materials and technologies to enhance battery performance and safety [30]. - The company employs a project-based R&D model, ensuring a structured process from market demand collection to product development [60]. - The company has established a comprehensive engineering technology development industrial chain, enhancing its R&D capabilities and market competitiveness [70]. - The company is committed to continuous innovation in polymer materials and key technologies related to lithium-ion battery separators to ensure its leading position in the industry [145]. - The company is investing 200 million RMB in R&D for new technologies over the next three years [155]. Production and Capacity - The company plans to build a project in Nantong, Jiangsu, with an annual production capacity of 2 billion square meters of high-performance lithium-ion battery wet separators and coated separators [51]. - The company has established a project with an annual production capacity of 36 million square meters of lithium-ion battery wet separators, which has commenced bulk supply to customers [84]. - A new "super coating factory" project is underway, expected to achieve an annual production capacity of 40 million square meters for dry separators and 60 million square meters for coated separators [84]. - The company has successfully scaled up production of separators using dry and wet processes, achieving mass supply to both domestic and international markets [80]. - The company is expanding its production capacity for dry, wet, and coated separators, with ongoing projects in Jiangsu and Europe, which will enhance its ability to meet market demand and strengthen its competitive position [144]. Financial Management and Investments - The profit distribution plan approved by the board is to distribute a cash dividend of 0.50 CNY per 10 shares, totaling approximately 38.42 million CNY based on 768,408,503 shares [21]. - The company plans to increase its capital reserve by converting 5 shares for every 10 shares held, enhancing shareholder value [21]. - The company plans to raise up to 6 billion yuan for the construction of high-performance lithium-ion battery wet separators and coated separators, which will enhance production capacity significantly [87]. - The company has allocated RMB 67,099.83 million of the remaining raised funds to the construction of the "High-Performance Lithium-Ion Battery Wet Separator and Coating Membrane (Phase I and II) Project" in Nantong, Jiangsu Province [127]. - The company issued convertible bonds in 2021, raising a total of RMB 1,000,000,000, with a net amount of RMB 990,976,763.14 after deducting related expenses [126]. Risk Management - The company faces risks from exchange rate fluctuations due to its reliance on imported raw materials and increasing overseas sales [15]. - The company acknowledges the risk of performance decline due to macroeconomic factors, industry policies, and market competition, and is taking steps to address these challenges [8]. - The company is exploring new commercial applications for its membranes to reduce the impact of potential changes in terminal market policies [19]. - The company is committed to maintaining strong relationships with key clients to enhance market competitiveness and reduce the risk of performance decline [9]. - The company has implemented measures to prevent core technology leakage and retain key technical personnel through incentive policies and confidentiality agreements [18]. Corporate Governance and Social Responsibility - The report outlines the governance structure and compliance with regulatory requirements, reinforcing investor confidence [24]. - The company is committed to environmental and social responsibility, aligning with global sustainability trends [25]. - The company has a robust R&D team and advanced project management mechanisms, enabling it to quickly meet customized product demands from clients [78]. - The company has been awarded multiple national and provincial honors, including the "China Patent Excellence Award" and "Guangdong Province Quality Award," reflecting its strong innovation and quality standards [79]. Employee and Management - The total number of employees at the end of the reporting period is 1,824, with 517 in the parent company and 1,307 in major subsidiaries [198]. - The company implements a performance-based compensation system to encourage employees to create greater economic benefits [199]. - The training program includes a multi-level talent development model and various training initiatives such as online and offline learning [200]. - The management team is continuously optimized through internal training and external recruitment to enhance decision-making efficiency and operational capabilities [82].

[Important Notice, Table of Contents, and Definitions](index=2&type=section&id=Section%20I%20Important%20Notice%2C%20Table%20of%20Contents%2C%20and%20Definitions) This semi-annual report for Shenzhen Senior Technology Material Co., Ltd. covers H1 2020, with management assuring its accuracy and completeness - This report is the 2020 semi-annual report of Shenzhen Senior Technology Material Co., Ltd., covering January 1 to June 30, 2020, with management assuring its truthfulness, accuracy, and completeness[2](index=2&type=chunk)[6](index=6&type=chunk) [Company Profile and Key Financial Indicators](index=6&type=section&id=Section%20II%20Company%20Profile%20and%20Key%20Financial%20Indicators) This section provides an overview of the company's basic information, key financial performance indicators, and details on non-recurring gains and losses for the reporting period [Company Profile](index=6&type=section&id=I.%20Company%20Profile) Shenzhen Senior Technology Material Co., Ltd. (stock code: 300568) is a company listed on the Shenzhen Stock Exchange, with Chen Xiufeng as its legal representative Company Basic Information | Item | Content | | :--- | :--- | | Stock Abbreviation | Senior Material | | Stock Code | 300568 | | Listing Exchange | Shenzhen Stock Exchange | | Chinese Name | 深圳市星源材质科技股份有限公司 | | Legal Representative | 陈秀峰 | [Key Accounting Data and Financial Indicators](index=7&type=section&id=IV.%20Key%20Accounting%20Data%20and%20Financial%20Indicators) During the reporting period, the company's operating revenue decreased by 3.39% year-on-year, and net profit attributable to shareholders significantly declined by 58.44%, though net cash flow from operating activities increased by 159.25%, indicating strong cash recovery Key Financial Indicators for H1 2020 | Indicator | Current Period | Prior Period | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue (RMB) | RMB 340.91 million | RMB 352.87 million | -3.39% | | Net Profit Attributable to Shareholders (RMB) | RMB 71.36 million | RMB 171.70 million | -58.44% | | Non-recurring Net Profit Attributable to Shareholders (RMB) | RMB 53.94 million | RMB 90.35 million | -40.30% | | Net Cash Flow from Operating Activities (RMB) | RMB 259.21 million | RMB 99.98 million | 159.25% | | Basic Earnings Per Share (RMB/share) | 0.17 RMB/share | 0.89 RMB/share | -80.90% | | Weighted Average Return on Net Assets | 2.61% | 10.64% | -8.03% | | Total Assets (RMB) | RMB 5.43 billion | RMB 5.33 billion | 1.87% (Period-end vs. Prior Year-end) | | Net Assets Attributable to Shareholders (RMB) | RMB 2.88 billion | RMB 2.47 billion | 16.54% (Period-end vs. Prior Year-end) | [Non-recurring Gains and Losses](index=8&type=section&id=VI.%20Non-recurring%20Gains%20and%20Losses) During the reporting period, the company's total non-recurring gains and losses amounted to RMB 17.42 million, primarily from government grants and reversal of impairment provisions for receivables Details of Non-recurring Gains and Losses for H1 2020 | Item | Amount (RMB) | | :--- | :--- | | Government Grants Recognized in Current Profit/Loss | RMB 12.73 million | | Reversal of Impairment Provisions for Receivables Subject to Separate Impairment Testing | RMB 8.15 million | | Gains/Losses on Disposal of Non-current Assets | RMB 41330.55 | | Other Non-operating Income and Expenses | RMB 76201.82 | | Less: Income Tax Impact | RMB 2.89 million | | Less: Impact on Minority Interests (After Tax) | RMB 685168.56 | | **Total** | **RMB 17.42 million** | [Company Business Overview](index=9&type=section&id=Section%20III%20Company%20Business%20Overview) This section outlines the company's principal business, significant asset changes, and core competitive advantages in the lithium-ion battery separator industry [Principal Business](index=9&type=section&id=I.%20Principal%20Business) The company is a national high-tech enterprise specializing in R&D, production, and sales of lithium-ion battery separators, offering dry, wet, and coated membranes for new energy vehicles and energy storage, operating on a build-to-order and direct sales model - The company is the lead drafter of national standards for lithium-ion battery separators, with products including dry, wet, and coated membranes used in new energy vehicles, energy storage, and power tools[18](index=18&type=chunk) - The company's core operating model is 'build-to-order', employing a five-step R&D approach, primarily using direct sales, and providing customized production for strategic clients like LG Chem[18](index=18&type=chunk)[19](index=19&type=chunk) - Globally, lithium battery separator market share is shifting towards Chinese enterprises; the domestic market faces overcapacity in low-end products and insufficient supply in mid-to-high-end, favoring leading companies with technological advantages[19](index=19&type=chunk)[20](index=20&type=chunk) [Significant Changes in Major Assets](index=10&type=section&id=II.%20Significant%20Changes%20in%20Major%20Assets) During the reporting period, several balance sheet items saw significant changes, including a substantial 889.10% increase in prepayments due to raw material purchases, a 139.62% rise in notes payable from increased bill settlements, and a 100% decrease in bonds payable due to the full redemption of 'Senior Convertible Bonds' Balance Sheet Major Item Significant Changes | Item | YoY Change | Main Reason | | :--- | :--- | :--- | | Prepayments | +889.10% | Increase in prepayments for raw material purchases | | Advances from Customers | +3,764.20% | Increase in customer payments received for goods | | Taxes Payable | +523.30% | Increase in unpaid corporate income tax and VAT | | Other Payables | +182.71% | Increase in restricted stock repurchase obligations | | Notes Payable | +139.62% | Increase in bill settlement business | | Bonds Payable | -100% | Full redemption of "Senior Convertible Bonds" | | Accounts Payable | -30.02% | Decrease in equipment and engineering payments owed by subsidiaries | [Analysis of Core Competencies](index=11&type=section&id=III.%20Analysis%20of%20Core%20Competencies) The company's core competencies include leading R&D, strong market position, comprehensive solution capabilities, product leadership, brand reputation, and efficient management, reinforced by global R&D, deep client partnerships, and extensive technical services - **R&D Advantage**: The company has established multiple R&D platforms, including a National and Local Joint Engineering Research Center, and set up research institutes in the US and Japan, achieving a global R&D layout. As of the end of the reporting period, the company and its controlled subsidiaries had applied for 319 patents, with 129 authorized[24](index=24&type=chunk)[25](index=25&type=chunk) - **Market Advantage**: The company boasts an excellent client base, covering numerous renowned domestic battery manufacturers like CATL, BYD, and Gotion High-tech; internationally, it supplies in bulk to LG Chem (Korea), Samsung SDI, and Murata (Japan)[27](index=27&type=chunk) - **Overall Solution Advantage**: The company possesses capabilities ranging from raw material formula screening, microporous preparation technology, independent design of complete sets of equipment, to rapid response to customized client needs and full technical service[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - **Brand and Management Advantage**: The company has established a leading brand position with "SENIOR Senior Material" and possesses an experienced management team, having obtained multiple management system certifications including ISO9001 and IATF16949[33](index=33&type=chunk)[34](index=34&type=chunk) [Management Discussion and Analysis](index=14&type=section&id=Section%20IV%20Management%20Discussion%20and%20Analysis) This section discusses the company's operating performance, financial condition, investment activities, and key risks with corresponding countermeasures [Overview](index=14&type=section&id=I.%20Overview) In H1 2020, influenced by the COVID-19 pandemic and market conditions, the company's operating performance declined, with total operating revenue down 3.39% to RMB 341 million and net profit attributable to parent down 58.44% to RMB 71.36 million, yet lithium-ion battery separator sales grew 45.28% to 222 million square meters, and key projects progressed, gradually releasing capacity 2020 H1 Performance Overview | Indicator | Amount (RMB million) | YoY Change | | :--- | :--- | :--- | | Total Operating Revenue | 340.91 | -3.39% | | Operating Profit | 81.74 | -24.84% | | Net Profit Attributable to Parent | 71.36 | -58.44% | | Non-recurring Net Profit Attributable to Parent | 53.94 | -40.30% | - During the reporting period, the company's lithium-ion battery separator sales reached **221.79 million square meters**, a **45.28%** year-on-year increase[35](index=35&type=chunk) - The company's 'Annual Production of **360 million Sqm** Wet Process Separator Project' in Changzhou, Jiangsu, is largely complete and supplying clients like CATL and Murata; the 'Super Coating Plant' project is progressing well, supplying EVE Energy and BYD[35](index=35&type=chunk)[36](index=36&type=chunk) [Analysis of Principal Business](index=15&type=section&id=II.%20Analysis%20of%20Principal%20Business) During the reporting period, the company's principal business revenue slightly decreased by 3.39%, while operating costs rose 11.28%, leading to a gross margin decline; domestic revenue grew 24.84%, but overseas revenue fell 13.82%, with overseas gross margin dropping 17.77 percentage points, as R&D investment increased by 73.07% Major Financial Data YoY Change | Item | Current Period (RMB) | YoY Change | Main Reason for Change | | :--- | :--- | :--- | :--- | | Operating Revenue | RMB 340.91 million | -3.39% | - | | Operating Cost | RMB 187.50 million | 11.28% | - | | Financial Expenses | RMB 10.36 million | -48.54% | Decrease in interest expenses | | R&D Investment | RMB 20.68 million | 73.07% | Increased R&D in wet and coated processes | | Net Cash Flow from Operating Activities | RMB 259.21 million | 159.25% | Increase in cash received from sales of goods | Regional Business Performance | Region | Operating Revenue (RMB) | YoY Change in Operating Revenue | Gross Margin | YoY Change in Gross Margin | | :--- | :--- | :--- | :--- | :--- | | Overseas | RMB 111.01 million | -13.82% | 44.35% | -17.77% | | Domestic | RMB 229.07 million | 24.84% | 45.24% | 8.30% | - During the reporting period, the company's lithium-ion battery separator new energy material capacity utilization rate was **75.35%**, with a production volume of **275.02 million square meters**[42](index=42&type=chunk) [Analysis of Non-principal Business](index=16&type=section&id=III.%20Analysis%20of%20Non-principal%20Business) During the reporting period, non-principal business positively impacted total profit, with government grants under "Other Income" amounting to RMB 12.73 million, representing 15.56% of total profit, making it a significant influencing factor Non-principal Business Profit/Loss | Item | Amount (RMB) | Proportion of Total Profit | Reason for Formation | | :--- | :--- | :--- | :--- | | Other Income | RMB 12.73 million | 15.56% | Primarily government grants related to ordinary business activities | | Gains/Losses from Fair Value Changes | RMB 1.89 million | 2.30% | Primarily fair value changes of financial assets held for trading | | Non-operating Income | RMB 645421.18 | 0.79% | Primarily compensation income | [Analysis of Assets and Liabilities](index=17&type=section&id=IV.%20Analysis%20of%20Assets%20and%20Liabilities) As of the period-end, the company's total assets were RMB 5.43 billion, with fixed assets and construction in progress accounting for 34.98% and 28.38% respectively, indicating an ongoing capacity expansion phase; RMB 380 million of assets were restricted, primarily for loan collateral Period-end Major Asset Composition | Asset Item | Period-end Amount (RMB) | Proportion of Total Assets | | :--- | :--- | :--- | | Fixed Assets | RMB 1.90 billion | 34.98% | | Construction in Progress | RMB 1.54 billion | 28.38% | | Cash and Cash Equivalents | RMB 400.62 million | 7.38% | | Accounts Receivable | RMB 378.65 million | 6.97% | - As of the period-end, the company had **RMB 380 million** in restricted assets, including **RMB 47.98 million** in deposits, and **RMB 244 million** in fixed assets and **RMB 88.97 million** in intangible assets pledged for loans[48](index=48&type=chunk) [Analysis of Investment Status](index=18&type=section&id=V.%20Analysis%20of%20Investment%20Status) During the reporting period, the company primarily undertook significant non-equity investments, focusing on the "Annual Production of 360 Million Sqm Wet Process Separator Project" and "Super Coating Plant Project," with a combined investment of RMB 206 million in the current period; concurrently, the company actively utilized idle raised funds and its own funds for entrusted wealth management, totaling RMB 660 million Major Non-equity Investment Project Progress | Project Name | Amount Invested in Current Period (RMB) | Cumulative Investment as of Period-end (RMB) | Project Progress | Cumulative Income as of Period-end (RMB) | | :--- | :--- | :--- | :--- | :--- | | Annual Production of 360 Million Sqm Lithium-ion Battery Wet Process Separator Project | RMB 93.08 million | RMB 2.01 billion | 84.70% | RMB 12.97 million | | Super Coating Plant Project | RMB 112.91 million | RMB 890.62 million | 25.46% | RMB 0.00 | - The company's 2019 non-public stock offering raised a total of **RMB 859 million**, with **RMB 136 million** invested in the current period, and a cumulative investment of **RMB 716 million**, primarily for the 'Annual Production of **1 billion Sqm** Lithium-ion Battery Coated Separator Project'[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) - During the reporting period, the company used idle raised funds and its own funds for entrusted wealth management, with amounts of **RMB 350 million** and **RMB 310 million**, respectively[58](index=58&type=chunk) [Risks and Countermeasures](index=24&type=section&id=IX.%20Risks%20and%20Countermeasures) The company faces risks from intensified market competition, policy changes, customer dependence, exchange rate fluctuations, new capacity digestion challenges, and single business structure, which it plans to mitigate by expanding into mid-to-high-end markets, developing new applications, acquiring new clients, utilizing financial instruments, and diversifying products - **Market and Client Risks**: market competition intensification may lead to price declines; new energy vehicle subsidy policy changes may impact downstream demand; high dependence on major clients like LG Chem and CATL[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) - **Operating and Financial Risks**: new capacity (e.g., Changzhou wet process separator and super coating plant projects) may not be timely absorbed; relatively singular principal business and product structure; rising raw material (PP, PE) costs and exchange rate fluctuations may impact profitability[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) - **Technology and Management Risks**: technological advancements and product substitution in the lithium battery industry; business scale growth may lead to accounts receivable bad debt risk; core technology leakage and loss of key technical personnel[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) [Significant Events](index=27&type=section&id=Section%20V%20Significant%20Events) This section details significant events including ongoing litigation, the equity incentive plan, major contracts, and other important corporate developments [Litigation Matters](index=28&type=section&id=VIII.%20Litigation%20Matters) During the reporting period, the company was involved in multiple lawsuits with Celgard, primarily concerning patent infringement, trade secrets, and unfair competition; some cases have been adjudicated, with Celgard's lawsuit against the company dismissed, while the company's lawsuits against Celgard are ongoing Major Litigation Matters | Basic Litigation Information | Amount Involved (RMB million) | Litigation Progress | Trial Outcome and Impact | | :--- | :--- | :--- | :--- | | Celgard sues company for patent infringement, etc | RMB 0.00 | Adjudicated | Celgard's lawsuit against the company was dismissed | | Company sues Celgard and others for unfair competition | RMB 5.50 million | Ongoing litigation | None yet | | Company sues Celgard and others for patent infringement | RMB 50.00 million | Adjudicated | Seizure and freezing of respondent's assets, limited to RMB 20 million | | Celgard sues company for alleged trade secret infringement, etc | RMB 0.00 | Ongoing litigation | None yet | [Equity Incentive Plan](index=29&type=section&id=XII.%20Equity%20Incentive%20Plan) The company implemented a restricted stock incentive plan in 2020; after adjustments, 3.253 million restricted shares were granted to 128 incentive recipients on May 27, 2020, with the shares listed on June 8, 2020 - The company implemented the 2020 restricted stock incentive plan, with **128** incentive recipients initially granted **3.253 million shares**[87](index=87&type=chunk) - The grant date for this incentive plan was **May 27, 2020**, and the listing date for the granted restricted shares was **June 8, 2020**[87](index=87&type=chunk) [Significant Contracts and Their Performance](index=30&type=section&id=XIV.%20Significant%20Contracts%20and%20Their%20Performance) During the reporting period, the company provided significant guarantees to subsidiaries; as of the period-end, the total approved guarantee limit for subsidiaries was RMB 7.9 billion, with an actual guarantee balance of RMB 959 million, accounting for 33.33% of the company's net assets Summary of Guarantees to Subsidiaries | Item | Amount (RMB million) | | :--- | :--- | | Total Approved Guarantee Limit for Subsidiaries within Reporting Period | 200.00 | | Total Approved Guarantee Limit for Subsidiaries as of Period-end | 7900.00 | | Total Actual Guarantee Balance for Subsidiaries as of Period-end | 958.90 | | Proportion of Total Actual Guarantees to Company's Net Assets | 33.33% | [Other Significant Matters](index=40&type=section&id=XVI.%20Other%20Significant%20Matters) During the reporting period, significant matters included signing a strategic cooperation agreement with Northvolt and initiating a plan to issue up to RMB 1 billion in convertible corporate bonds to unspecified investors, with the application accepted by SZSE on July 27 - The company signed a strategic cooperation agreement with European battery manufacturer **Northvolt**[105](index=105&type=chunk) - The company plans to issue convertible corporate bonds to unspecified investors, with a total fundraising amount not exceeding **RMB 1 billion**, and the application was accepted by the Shenzhen Stock Exchange on **July 27, 2020**, and remains under review as of the report disclosure date[105](index=105&type=chunk) [Share Changes and Shareholder Information](index=41&type=section&id=Section%20VI%20Share%20Changes%20and%20Shareholder%20Information) This section presents the company's share capital changes and provides detailed information on its shareholder structure and major shareholders [Share Capital Changes](index=41&type=section&id=I.%20Share%20Capital%20Changes) During the reporting period, the company's total share capital significantly increased from 230 million shares to 449 million shares, primarily due to 17.005 million shares from convertible bond conversions, 3.253 million shares from restricted stock issuance, and 198 million shares from capital reserve capitalization Share Capital Changes | Item | Before This Change | Increase/Decrease in This Change | After This Change | | :--- | :--- | :--- | :--- | | Restricted Shares | 85,206,495 shares | +73,139,560 shares | 158,346,055 shares | | Unrestricted Shares | 145,200,686 shares | +145,048,302 shares | 290,248,988 shares | | **Total Shares** | **230,407,181 shares** | **+218,187,862 shares** | **448,595,043 shares** | - The primary reasons for the increase in total shares were: - Convertible bond conversion: **+17.005 million shares** - Restricted share issuance: **+3.253 million shares** - Capital reserve capitalization: **+197.93 million shares**[108](index=108&type=chunk) [Shareholder Numbers and Shareholding](index=44&type=section&id=III.%20Shareholder%20Numbers%20and%20Shareholding) As of the period-end, the company had 22,352 common shareholders, with controlling shareholder Chen Xiufeng as the largest at 20.33% ownership; the top ten shareholders include various investment funds and state-owned legal entities, in addition to the controlling shareholder's brother Top Five Shareholders' Shareholding | Shareholder Name | Shareholder Type | Shareholding Percentage | Number of Shares Held | | :--- | :--- | :--- | :--- | | Chen Xiufeng | Domestic Natural Person | 20.33% | 91,210,351 shares | | Shenzhen Yuanzhi Fuhai M&A Equity Investment Fund Partnership | Other | 3.48% | 15,600,802 shares | | Jiangsu Qiequan Yida Rongjing Equity M&A Investment Fund | Domestic Non-state-owned Legal Person | 3.23% | 14,480,145 shares | | Changzhou Dongfang Industrial Guidance Venture Capital Co., Ltd. | State-owned Legal Person | 3.16% | 14,160,141 shares | | Guangdong Hengkuo Investment Management Co., Ltd. | State-owned Legal Person | 3.14% | 14,080,140 shares | - Controlling shareholder Chen Xiufeng and sixth-largest shareholder Chen Liang are brothers; Shenzhen Suyuan Holding Group Co., Ltd. is the executive partner of Shenzhen Suyuan Investment Enterprise (Limited Partnership)[117](index=117&type=chunk) [Convertible Corporate Bonds](index=48&type=section&id=Section%20VIII%20Convertible%20Corporate%20Bonds) This section details the redemption and delisting of the company's convertible bonds, including conversion amounts and their impact on share capital [Convertible Bond Redemption and Delisting](index=48&type=section&id=I.%20Historical%20Adjustments%20to%20Conversion%20Price) During the reporting period, the company's 'Senior Convertible Bonds' were fully redeemed and delisted from the SZSE on March 30, 2020, after the share price triggered the conditional redemption clause, leading the company to exercise its redemption right - The company's stock price triggered the 'Senior Convertible Bonds' conditional redemption clause (closing price at or above **130%** of the current conversion price for at least **15 of 30** consecutive trading days)[122](index=122&type=chunk) - The company decided to early redeem all outstanding 'Senior Convertible Bonds', which were delisted from the SZSE on **March 30, 2020**[122](index=122&type=chunk) - Prior to delisting, 'Senior Convertible Bonds' had accumulated conversions of **RMB 453 million**, totaling **17.012 million shares**, representing **8.86%** of the company's total share capital before conversion began[123](index=123&type=chunk) [Directors, Supervisors, and Senior Management](index=50&type=section&id=Section%20IX%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) This section provides an overview of the shareholding changes and personnel movements among the company's directors, supervisors, and senior management [Shareholding and Personnel Changes of Directors, Supervisors, and Senior Management](index=50&type=section&id=I.%20Shareholding%20and%20Personnel%20Changes%20of%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) During the reporting period, shareholdings of directors, supervisors, and senior management increased due to capital reserve capitalization, alongside several personnel changes including the resignation of a supervisor, a deputy general manager, and a deputy general manager concurrently serving as board secretary - Chairman Chen Xiufeng's period-end shareholding increased to **91,210,351 shares**, and Vice Chairman and General Manager Chen Liang's to **13,883,105 shares**, primarily due to the 2019 equity distribution implementation[127](index=127&type=chunk) Major Personnel Changes | Name | Position Held | Type | Date | Reason | | :--- | :--- | :--- | :--- | :--- | | Wang Dahong | Supervisor | Resignation | 2020年01月02日 | Personal reasons | | Zhang Sheng | Deputy General Manager | Resignation | 2020年01月16日 | Work adjustment reasons | | Zhou Guoxing | Deputy General Manager, Board Secretary | Resignation | 2020年02月10日 | Personal reasons | [Financial Report](index=52&type=section&id=Section%20XI%20Financial%20Report) This section presents the company's comprehensive financial statements, detailed notes, related party transactions, share-based payments, and post-balance sheet events [Financial Statements](index=52&type=section&id=II.%20Financial%20Statements) This section provides the company's consolidated and parent company financial statements for H1 2020, showing total assets of RMB 5.43 billion, total liabilities of RMB 2.55 billion, operating revenue of RMB 341 million, and net profit of RMB 65.46 million as of June 30, 2020 Consolidated Balance Sheet Summary (2020-06-30) | Item | Amount (RMB) | | :--- | :--- | | **Total Assets** | **RMB 5.43 billion** | | Total Current Assets | RMB 1.65 billion | | Total Non-current Assets | RMB 3.78 billion | | **Total Liabilities** | **RMB 2.55 billion** | | **Total Owners' Equity** | **RMB 2.88 billion** | Consolidated Income Statement Summary (H1 2020) | Item | Amount (RMB) | | :--- | :--- | | Total Operating Revenue | RMB 340.91 million | | Total Operating Costs | RMB 273.27 million | | Total Profit | RMB 81.82 million | | Net Profit | RMB 65.46 million | | Net Profit Attributable to Owners of the Parent Company | RMB 71.36 million | [Notes to Consolidated Financial Statements](index=97&type=section&id=VII.%20Notes%20to%20Consolidated%20Financial%20Statements) This section details key consolidated financial statement items, including RMB 401 million in cash and cash equivalents (RMB 47.98 million restricted), RMB 379 million in accounts receivable (RMB 32.05 million bad debt provision), RMB 1.541 billion in construction in progress for major projects, and share capital increasing from 230 million to 449 million shares due to conversions, issuance, and capitalization - Accounts receivable period-end balance was **RMB 411 million**, with bad debt provisions of **RMB 32.05 million**, resulting in a book value of **RMB 379 million**; accounts receivable within **1 year** accounted for approximately **75%**[250](index=250&type=chunk)[251](index=251&type=chunk)[256](index=256&type=chunk) - Construction in progress period-end book value was **RMB 1.541 billion**, primarily comprising the 'Annual Production of **360 million Sqm** Wet Process Separator Project' (**RMB 957 million**) and the 'Annual Production of **1 billion Sqm** Coated Separator Project' (**RMB 515 million**)[280](index=280&type=chunk) - During the reporting period, the company's share capital increased from **230.41 million shares** to **448.60 million shares**, primarily due to convertible bond conversions, restricted share issuance, and capital reserve capitalization[322](index=322&type=chunk) [Related Parties and Related Party Transactions](index=138&type=section&id=XII.%20Related%20Parties%20and%20Related%20Party%20Transactions) The company's joint controlling shareholders are brothers Chen Xiufeng and Chen Liang; a significant related party transaction involved Chen Xiufeng providing a RMB 300 million loan guarantee to the company, which has been fulfilled, and total key management remuneration was RMB 2.95 million - The company's joint controlling shareholders are brothers Chen Xiufeng (**20.33%** shareholding) and Chen Liang (**3.09%** shareholding)[379](index=379&type=chunk) - Total remuneration for key management personnel in the current period was **RMB 2.95 million**, an increase from **RMB 2.19 million** in the prior year[383](index=383&type=chunk) [Share-based Payments](index=139&type=section&id=XIII.%20Share-based%20Payments) The company implemented an equity-settled share-based payment plan during the reporting period, granting 3.253 million restricted shares, with a total expense of RMB 3.27 million recognized and correspondingly recorded in capital reserves - The total equity instruments granted by the company in the current period amounted to **3.253 million shares**[385](index=385&type=chunk) - Total equity-settled share-based payment expense recognized in the current period was **RMB 3.27 million**, with the cumulative amount recognized in capital reserves also being **RMB 3.27 million**[386](index=386&type=chunk)[387](index=387&type=chunk) [Events After the Balance Sheet Date](index=141&type=section&id=XV.%20Events%20After%20the%20Balance%20Sheet%20Date) After the balance sheet date, the company advanced a significant financing plan, with its application to issue up to RMB 1 billion in convertible corporate bonds to unspecified investors accepted by SZSE on July 27, 2020, and currently under review - The company plans to issue convertible corporate bonds to unspecified investors, with a total fundraising amount not exceeding **RMB 1 billion**[391](index=391&type=chunk) - The issuance application was accepted by the Shenzhen Stock Exchange on **July 27, 2020**, and remains under review as of the report disclosure date[391](index=391&type=chunk) [Documents for Reference](index=149&type=section&id=Section%20XII%20Documents%20for%20Reference) This section lists all documents available for reference, including the signed semi-annual report, financial statements, and publicly disclosed announcements - Documents for reference include the semi-annual report signed by the chairman, financial statements bearing the signatures and seals of the company's head and chief accountant, and original copies of all publicly disclosed documents during the reporting period[417](index=417&type=chunk)

Financial Performance - Operating revenue for the reporting period was ¥162,488,130.26, representing a year-on-year increase of 53.61%[4] - Net profit attributable to shareholders of the listed company was ¥23,881,292.17, a decrease of 7.57% compared to the same period last year[4] - Net profit attributable to shareholders after deducting non-recurring gains and losses was ¥18,677,201.66, a significant increase of 995.90% year-on-year[4] - The basic earnings per share for the reporting period was ¥0.11, down 15.38% from the previous year[4] - The weighted average return on net assets was 1.07%, a decrease of 0.73% compared to the same period last year[4] - The company reported a net cash outflow from operating activities of ¥48,290,797.86, a decrease of 77.19% compared to the previous year, primarily due to increased employee compensation and tax payments[16] - The company's operating revenue for the current period reached ¥513,010,133.18, an increase of 19.3% compared to ¥429,995,970.06 in the previous period[45] - The net profit for the current period was ¥117,796,893.09, reflecting a growth of 4.3% from ¥112,834,636.73 in the previous period[46] - Basic earnings per share decreased to ¥0.85 from ¥0.93, representing a decline of 8.6%[44] Assets and Liabilities - Total assets at the end of the reporting period reached ¥5,345,894,209.89, an increase of 49.80% compared to the end of the previous year[4] - Net assets attributable to shareholders of the listed company amounted to ¥2,529,159,953.38, reflecting a growth of 65.59% year-on-year[4] - The company reported a significant increase in cash and cash equivalents, reaching ¥1,047,749,482.03, a growth of 149.85% compared to the beginning of the year[14] - Accounts receivable increased to ¥467,613,523.94, reflecting a 39.21% rise due to higher product sales during the reporting period[14] - The company’s inventory rose to ¥161,417,491.56, marking a 48.58% increase as a result of increased production reserves[14] - The total amount of short-term loans increased by 94.84%, reaching ¥814,899,880.76, primarily due to additional bank loans[14] - The company’s fixed assets reached ¥1,121,552,259.97, a 41.21% increase as some assets from the Changzhou production base became operational[14] - The company’s total liabilities increased significantly, with accounts payable rising by 86.50% to ¥167,376,936.46, reflecting ongoing equipment purchases for new production bases[14] - Total liabilities amounted to CNY 2.81 billion, an increase from CNY 2.03 billion, which is a rise of about 38.4%[30] Financing Activities - The company plans to raise funds through the issuance of convertible bonds totaling RMB 480 million, with a maturity of 6 years and a coupon rate starting at 0.30%[18] - The net proceeds of RMB 472,683,450 from the bond issuance will be used for the production project of lithium-ion battery separators, with an annual capacity of 36 million square meters[18] - The company issued 38,400,000 shares in a private placement, with the shares expected to be tradable starting August 20, 2020[12] - The capital reserve increased by 109.62% to ¥1,537,976,842.04, mainly due to funds raised from the private placement[14] - The company plans to raise up to 2 billion RMB through a private placement of A-shares, with a total of no more than 38.4 million shares to be issued, aimed at funding the "Super Coating Factory" project[21] - Total cash inflow from financing activities reached 1,889,064,855.60 CNY, a substantial increase from 908,900,881.20 CNY in the prior period[54] Research and Development - Research and development expenses for Q3 2019 were CNY 8,787,426.37, down from CNY 11,287,338.28 in Q3 2018, a decrease of approximately 22.2%[36] - Research and development expenses for Q3 2019 were CNY 6,100,396.53, down 37.5% from CNY 9,826,557.96 in the previous year[40] - Research and development expenses were ¥17,104,855.10, down 20.9% from ¥21,459,040.07 in the previous period[46] Market and Sales - The company signed a supply agreement with Funeng Technology for a minimum supply of 40 million square meters of lithium battery diaphragms in 2019, with an estimated contract value of approximately 102 million RMB[24] - The company expects to supply 120 million square meters of diaphragms to BAK Battery in 2019, with specific quantities and prices to be confirmed by orders[24] - The total sales revenue from lithium-ion battery diaphragms to the mentioned customers in the first three quarters of 2019 amounted to approximately 98.35 million RMB, accounting for 19.08% of the company's revenue for the same period[24] Cash Flow - The cash flow from operating activities generated a net amount of ¥48,290,797.86, a significant decrease of 77.2% from ¥211,691,603.37 in the previous period[49] - The company's financial expenses increased to ¥35,252,682.66, up from ¥11,009,154.11, indicating a rise of 220.5%[46] - The total cash outflow from investing activities was 768,805,000.26 CNY, compared to 733,853,845.25 CNY in the previous period, reflecting increased investment expenditures[51] - The company raised 843,545,856.00 CNY from new investments, a significant increase compared to 14,388,410.00 CNY in the previous period[54]