合康新能(300048) - 2024 Q2 - 季度财报

Section I Important Notice, Table of Contents, and Definitions This section provides important disclaimers, outlines the report's structure, lists reference documents, and defines key terms used throughout the report Important Notice The company's board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of the semi-annual report and assume legal responsibility - The company's board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of the semi-annual report[1] - Company head Lu Jianfeng, chief accountant Chen Ziqiang, and head of accounting department Hui Bingjie declare the financial report is true, accurate, and complete[1] - The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital[1] Table of Contents This section lists the overall structure of the report, including ten major chapters such as important notices, company profile, management discussion and analysis, and financial reports Reference Documents This section provides a list of reference documents for the report, including the original report text signed by the legal representative and the financial report, available at the company's securities department - Reference documents include the original report text signed by the legal representative, original financial report text, and original announcements of all company documents disclosed on the designated website[5] - Reference documents are available at the company's securities department[5] Definitions This section defines key terms used in the report, covering company names, related parties, legal regulations, and technical terms in new energy and industrial automation, with the reporting period specified as January-June 2024 - Defines key related parties such as the Company, Midea HVAC, and Midea Group[6] - Explains professional terms including energy storage, residential energy storage, inverters, PCS (Power Conversion System), EMS (Energy Management System), BMS (Battery Management System), EMC (Energy Management Contract), and EPC (Engineering, Procurement, and Construction)[6] - Clarifies the reporting period as January-June 2024, with the prior year's corresponding period being January-June 2023[6] Section II Company Profile and Key Financial Indicators This section provides an overview of the company's basic information, contact details, and a comprehensive analysis of its key accounting data and financial performance for the reporting period I. Company Profile This section provides the company's basic information, including stock abbreviation, stock code, listing exchange, Chinese and English names, and legal representative Company Basic Information | Indicator | Content | | :--- | :--- | | Stock Abbreviation | Hiconics New Energy | | Stock Code | 300048 | | Listing Exchange | Shenzhen Stock Exchange | | Company Chinese Name | Beijing Hiconics New Energy Technology Co., Ltd. | | Company English Abbreviation | Hiconics | | Legal Representative | Lu Jianfeng | II. Contact Persons and Information This section lists the names, contact addresses, phone numbers, faxes, and email addresses of the company's board secretary and securities affairs representative for investor and stakeholder communication Contact Information | Position | Name | Contact Address | Phone | Fax | Email | | :--- | :--- | :--- | :--- | :--- | :--- | | Board Secretary | Liu Chensi | No. 3, Boxing 2nd Road, Beijing Economic-Technological Development Area | 010-59180256 | 010-59180234 | hicon@midea.com | | Securities Affairs Representative | Shao Chi | No. 3, Boxing 2nd Road, Beijing Economic-Technological Development Area | 010-59180256 | 010-59180234 | hicon@midea.com | III. Other Information This section states that the company's contact information, information disclosure, and registration details remained unchanged during the reporting period, referring to the 2023 annual report for specifics - The company's registered address, office address, website, and email address remained unchanged during the reporting period[9] - Information disclosure and reference document locations remained unchanged during the reporting period[10] - The company's registration status remained unchanged during the reporting period[11] IV. Key Accounting Data and Financial Indicators The company's key financial indicators showed strong growth in this reporting period, with revenue increasing by 136.65%, net profit turning positive, net profit attributable to shareholders growing by 471.13%, and net cash flow from operating activities significantly increasing by 786.54%, indicating a substantial improvement in operational quality Key Accounting Data and Financial Indicators (Current Period vs. Prior Year) | Indicator | Current Period (CNY) | Prior Year (CNY) | YoY Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 1,709,473,630.21 | 722,367,705.63 | 136.65% | | Net Profit | 16,331,635.12 | -841,651.88 | 2,040.43% | | Net Profit Attributable to Shareholders | 8,547,185.60 | -2,303,045.63 | 471.13% | | Net Profit Attributable to Shareholders (Excluding Non-Recurring Items) | 6,747,808.88 | -4,830,788.18 | 239.68% | | Net Cash Flow from Operating Activities | 230,337,820.20 | -33,550,729.18 | 786.54% | | Basic Earnings Per Share (CNY/share) | 0.008 | -0.0021 | 480.95% | | Diluted Earnings Per Share (CNY/share) | 0.008 | -0.0021 | 480.95% | | Weighted Average Return on Net Assets | 0.51% | -0.12% | Increased by 0.63 percentage points | | Total Assets (CNY) | 4,035,777,740.97 | 3,166,008,451.03 | 27.47% | | Net Assets Attributable to Shareholders (CNY) | 1,700,155,412.45 | 1,675,587,235.62 | 1.47% | V. Differences in Accounting Data Under Domestic and Overseas Accounting Standards During the reporting period, the company reported no differences in net profit and net assets between financial reports prepared under international or overseas accounting standards and Chinese accounting standards - During the reporting period, the company reported no differences in net profit and net assets between financial reports disclosed under International Accounting Standards and Chinese Accounting Standards[14] - During the reporting period, the company reported no differences in net profit and net assets between financial reports disclosed under overseas accounting standards and Chinese Accounting Standards[15] VI. Non-Recurring Gains and Losses Items and Amounts The company's total non-recurring gains and losses for this reporting period amounted to CNY 1.799 million, primarily comprising government subsidies, non-current asset disposal gains/losses, fair value changes of financial assets/liabilities, and debt restructuring gains/losses Non-Recurring Gains and Losses Items and Amounts | Item | Amount (CNY) | Explanation | | :--- | :--- | :--- | | Non-current asset disposal gains and losses | -159,366.59 | Section X, VII, 70, 73 | | Government subsidies recognized in current profit or loss | 4,364,704.27 | Section X, VII, 67 | | Gains and losses from changes in fair value of financial assets and liabilities, and disposal of financial assets and liabilities, excluding effective hedging activities related to normal business operations | -332,114.69 | Section X, VII, 69 | | Debt restructuring gains and losses | -2,128,589.50 | Section X, VII, 70 | | Other non-operating income and expenses | 79,929.95 | Section X, VII, 74, 75 | | Less: Income tax impact | 33,488.90 | | | Minority interest impact (after tax) | -8,302.18 | | | Total | 1,799,376.72 | | - The company does not classify any non-recurring gains and losses items listed in the 'Interpretive Announcement No. 1 on Information Disclosure by Companies Issuing Securities to the Public – Non-Recurring Gains and Losses' as recurring gains and losses[19] Section III Management Discussion and Analysis This section provides a comprehensive analysis of the company's business operations, core competencies, financial performance, asset and liability status, investment activities, and risk factors during the reporting period I. Principal Businesses During the Reporting Period The company primarily operates in new energy and industrial automation, covering residential energy storage and PV inverter R&D and production, PV EPC, and high-voltage inverter R&D and production, with significant growth in revenue and net profit during the reporting period - The company's principal businesses include residential energy storage and PV inverter R&D and production, PV EPC, and high-voltage inverter R&D and production, committed to providing global customers with smart green energy services and advanced industrial drive solutions[20] - In the first half of 2024, the company achieved operating revenue of CNY 1.709 billion, a year-on-year increase of 137%; net profit of CNY 16.33 million, a year-on-year increase of 2,040%; and net cash flow from operating activities of CNY 230 million, a year-on-year increase of 787%, indicating a significant improvement in operational quality[31] (I) Industry Development Overview The new energy sector, driven by global energy transition, sees high growth in residential energy storage and PV inverter markets, while the inverter industry benefits from industrial intelligence and domestic substitution, anticipating steady growth - The global energy landscape is shifting towards clean and renewable energy, with residential energy storage and related products becoming a key focus for green energy consumption in overseas households[21] - BloombergNEF predicts that by the end of 2030, global cumulative energy storage capacity is expected to reach 1,877 GWh, with a power capacity of 650 GW[21] - In the first half of 2024, China's newly installed PV capacity reached 102.48 GW, a year-on-year increase of 30.7%[22] - As a core drive component in industrial automation, the inverter market size is expected to exceed CNY 90 billion by 2027[23] (II) Principal Businesses and Products The company independently develops and produces integrated residential energy storage and PV inverter products, offers comprehensive PV EPC solutions including 'Midea Villa' green electricity, and maintains a leading position in high-voltage inverters under the 'Hiconics' brand - The residential energy storage and PV inverter business independently builds vertical integrated R&D and production capabilities for inverters, battery packs, EMS, and BMS, developing products such as single-phase and three-phase residential energy storage all-in-one machines[23][24] - The PV EPC business offers integrated energy solutions for prefabricated sunrooms, centralized rural revitalization, small and micro commercial and industrial, and zero-carbon industrial parks, and launched the 'Midea Villa' green electricity solution for villas[25] - The inverter business owns 'Hiconics' brand high-voltage inverters and 'Riye' brand low-voltage inverters, with high-voltage inverters ranking among the top tier domestically, covering power ranges from 315 kW to 21,000 kW[26] (III) R&D Layout and Core Technologies The company maintains R&D bases in Beijing and Suzhou, focusing on product upgrades and new platform development, with an industry-leading testing center and core technologies spanning power electronics, control, BMS, EMS, and high-voltage inverter functionalities - The company has established R&D bases in Beijing and Suzhou for upgrading existing products and developing forward-looking new product platforms[27] - An industry-leading testing center has been established to provide testing and certification services for residential energy storage, PV inverters, high and low-voltage inverters, adhering to standards such as IEC/EN, VDE, UL, and GB/T[27] - In the residential energy storage and PV inverter sectors, the company focuses on core technologies including power electronic devices and topology, control, BMS, cell integration, and EMS energy management[27] - In the high-voltage inverter field, the company masters multiple core technologies such as vector control, synchronous switching, speed tracking startup, neutral point drift fault-tolerant modulation, master-slave control, and high-power water cooling[27] (IV) Business Model The company's residential energy storage and PV inverter businesses operate on an ODM-dominant, OBM-supplemented model for global sales, while PV EPC provides engineering general contracting services, and the inverter business primarily uses a dealership model for industrial applications - Residential energy storage and PV inverter products adopt an independent R&D and production business model, primarily ODM with OBM as a supplement, for global market sales[28] - The PV EPC business provides engineering, procurement, construction, and operation and maintenance services for PV projects, along with related supporting services[29] - The inverter business adopts an independent R&D and production business model, primarily through distribution, serving customers across numerous industries[30] (V) Review and Outlook for the Reporting Period In the first half of the year, the company achieved significant growth in revenue and net profit, with residential energy storage and PV inverter products reaching industry-leading safety, PV EPC business achieving CNY 1.2 billion in revenue, and high-voltage inverter revenue growing over 10% with a 7-percentage-point increase in gross margin, while the second half will focus on R&D, overseas market expansion, and refined management Key Financial Performance in H1 2024 | Indicator | Amount | YoY Change | | :--- | :--- | :--- | | Operating Revenue | CNY 1.709 billion | Growth 137% | | Net Profit | CNY 16.33 million | Turned positive, Growth 2,040% | | Net Cash Flow from Operating Activities | CNY 230 million | Turned positive, Growth 787% | - The residential energy storage and PV inverter testing center has obtained qualifications from globally renowned testing and certification bodies such as TÜV and CSA, with residential energy storage all-in-one machines receiving VDE-AR-E 2510-50 certificates and ISO 13849 assessment reports, achieving industry-leading product safety and reliability[31] - The PV EPC business achieved CNY 1.2 billion in revenue in the first half of the year and received the 'PVBL 2024 Global PV and Storage Industry Fastest Growing Enterprise Award'[32] - High-voltage inverter revenue increased by over 10% year-on-year, with gross margin improving by over 7 percentage points, solidifying its market position as a top-tier domestic high-voltage inverter brand[32] - In the second half of the year, the focus will be on developing new customers in key markets such as Europe, Australia, Latin America, and North America, accelerating the expansion of commercial and industrial PV EPC business, and further strengthening high-voltage inverter product capabilities[33] II. Analysis of Core Competencies The company's core competencies stem from its vertically integrated value chain, continuous R&D investment, strategic synergy with Midea Group, and a long-term, pragmatic corporate culture with an efficient management team - The company heavily invests in core value chain segments such as R&D and manufacturing, building in-house production capabilities for key components and software systems like inverters, battery packs, circuit boards, BMS, and EMS, forming a vertically integrated value chain advantage[34] - The company has established a 'research a generation, reserve a generation, develop a generation' product R&D model, with two R&D bases in Beijing and Suzhou[34] - During the reporting period, the company's R&D expenditure was CNY 144 million, a year-on-year increase of 196%, accumulating 291 patents and 76 software copyrights[34] - Since Midea Group became the controlling shareholder, the company has fully collaborated with Midea Group in R&D, manufacturing, supply chain, and global sales expansion, supporting its continuous growth[37] - The company adheres to a long-term, rational, and pragmatic business philosophy, establishing a corporate governance mechanism with clear responsibilities, rights, and interests, and a performance-oriented evaluation and incentive system[38] III. Analysis of Principal Business During the reporting period, the company's operating revenue increased by 136.65% to CNY 1.709 billion, with net profit turning positive to CNY 16.33 million, driven by rapid growth in PV EPC business and effective cost control, while R&D investment significantly increased and operating cash flow improved Year-on-Year Changes in Key Financial Data | Indicator | Current Period (CNY) | Prior Year (CNY) | YoY Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 1,709,473,630.21 | 722,367,705.63 | 136.65% | Primarily due to increased scale of PV EPC business in the reporting period | | Operating Cost | 1,435,296,586.70 | 578,459,777.71 | 148.12% | Primarily due to increased revenue in the reporting period, leading to increased costs | | Selling Expenses | 63,502,622.84 | 73,020,132.91 | -13.03% | | | Administrative Expenses | 40,420,202.04 | 38,011,297.75 | 6.34% | | | Financial Expenses | -5,835,053.37 | -3,351,863.26 | -74.08% | Primarily due to increased interest income in the reporting period | | Income Tax Expense | 12,308,293.12 | 2,281,241.88 | 439.54% | Primarily due to increased current and deferred income tax in the reporting period | | R&D Investment | 144,281,633.41 | 48,790,089.30 | 195.72% | Primarily due to increased R&D investment in the reporting period | | Net Cash Flow from Operating Activities | 230,337,820.20 | -33,550,729.18 | 786.54% | Primarily due to increased sales scale and operating cash inflow in the reporting period | By Product or Service | Product or Service | Operating Revenue (CNY) | Operating Cost (CNY) | Gross Margin | YoY Change in Operating Revenue | YoY Change in Operating Cost | YoY Change in Gross Margin | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | New Energy | 1,263,200,624.37 | 1,136,483,640.06 | 10.03% | 380.47% | 368.43% | Increased by 2.31 percentage points | | Industrial Automation | 350,694,422.61 | 242,434,892.27 | 30.87% | -0.27% | -10.53% | Increased by 7.93 percentage points | | Residential Energy Storage | 58,473,960.60 | 49,234,981.38 | 15.80% | 57.67% | 39.38% | Increased by 11.05 percentage points | | PV EPC | 1,204,726,663.77 | 1,087,248,658.68 | 9.75% | 433.48% | 424.50% | Increased by 1.54 percentage points | | Inverters | 350,694,422.61 | 242,434,892.27 | 30.87% | -0.27% | -10.53% | Increased by 7.93 percentage points | - Luanping Huitong Photovoltaic Power Generation Co., Ltd., a controlled subsidiary, generated 41.624 million kWh of grid-connected electricity from its Huitong Shikangou PV power station in the first half of the year[43] - During the reporting period, there were numerous distributed PV EPC projects, with the top ten projects all being EPC business models and either under construction or not yet started, totaling 797.9 MW in scale[44] IV. Analysis of Non-Principal Businesses The impact of non-principal businesses on total profit was minor during the reporting period, primarily including negative investment income and fair value changes, which are not sustainable Non-Principal Business Gains and Losses | Item | Amount (CNY) | Share of Total Profit | Reason for Formation | Sustainability | | :--- | :--- | :--- | :--- | :--- | | Investment income | -2,128,589.50 | -7.43% | See Section X, VII, 68, Investment Income | No | | Fair value change gains and losses | -332,114.69 | -1.16% | See Section X, VII, 69, Fair Value Change Gains | No | | Asset impairment | 580,535.08 | 2.03% | See Section X, VII, 72, Asset Impairment Losses | No | | Non-operating income | 155,295.11 | 0.54% | See Section X, VII, 74, Non-Operating Income | No | | Non-operating expenses | 75,365.16 | 0.26% | See Section X, VII, 75, Non-Operating Expenses | No | | Credit impairment losses | -1,900,467.14 | -6.64% | See Section X, VII, 71, Credit Impairment Losses | Partial | V. Analysis of Assets and Liabilities At the end of the reporting period, total assets increased by 27.47% to CNY 4.036 billion, with net assets attributable to shareholders growing by 1.47% to CNY 1.700 billion, driven by increases in monetary funds, accounts receivable, and inventory, particularly from PV EPC projects Significant Changes in Asset Composition (End of Current Period vs. End of Prior Year) | Item | Amount at End of Current Period (CNY) | Share of Total Assets | Amount at End of Prior Year (CNY) | Share of Total Assets | Change in Proportion | Explanation of Significant Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Monetary Funds | 916,209,698.50 | 22.70% | 668,157,247.79 | 21.10% | 1.60% | | | Accounts Receivable | 1,089,807,478.28 | 27.00% | 802,322,476.76 | 25.34% | 1.66% | | | Inventory | 625,915,989.59 | 15.51% | 418,420,499.50 | 13.22% | 2.29% | Primarily due to increased PV EPC project inventory in the reporting period | | Total Assets | 4,035,777,740.97 | | 3,166,008,451.03 | | 27.47% | | - The company had no significant overseas assets during the reporting period[48] Financial Assets Measured at Fair Value (Period-End) | Item | Period-End Amount (CNY) | | :--- | :--- | | Other equity instrument investments | 35,182,276.23 | | Subtotal of financial assets | 35,182,276.23 | Asset Restrictions (Period-End) | Item | Book Balance (CNY) | Book Value (CNY) | Type of Restriction | Restriction Status | | :--- | :--- | :--- | :--- | :--- | | Monetary Funds | 177,005,999.83 | 177,005,999.83 | Bill deposit, letter of guarantee deposit, letter of credit deposit | Restricted | VI. Analysis of Investment Activities During the reporting period, the company had no significant equity or non-equity investments, nor any use of raised funds, with financial assets measured at fair value totaling CNY 36.57 million from self-owned funds, and no outstanding entrusted wealth management products, derivative investments, or entrusted loans - The company had no use of raised funds during the reporting period[51] Financial Assets Measured at Fair Value (Period-End) | Asset Category | Period-End Amount (CNY) | Source of Funds | | :--- | :--- | :--- | | Other | 35,182,276.23 | Self-owned funds | | Stocks | 1,392,055.19 | Self-owned funds | | Total | 36,574,331.42 | -- | Overview of Entrusted Wealth Management | Specific Type | Source of Entrusted Wealth Management Funds | Amount of Entrusted Wealth Management (million CNY) | Outstanding Balance (million CNY) | | :--- | :--- | :--- | :--- | | Bank wealth management products | Self-owned funds | 100 | 0 | - The company had no derivative investments or entrusted loans during the reporting period[52][53] VII. Significant Asset and Equity Disposals The company did not engage in any significant asset or equity disposals during the reporting period - The company did not dispose of any significant assets during the reporting period[54] - The company did not dispose of any significant equity during the reporting period[55] VIII. Analysis of Major Controlled and Invested Companies The company's major controlled subsidiaries include Hefei Midea Hiconics Energy Technology, Beijing Hiconics New Energy Inverter Technology, and Changsha Riye Electric, with Hefei Midea Hiconics Energy Technology showing strong performance in PV EPC business, achieving CNY 1.135 billion in revenue and CNY 37.91 million in net profit Financial Performance of Major Subsidiaries (As of End of Reporting Period) | Company Name | Principal Business | Registered Capital (million CNY) | Total Assets (million CNY) | Net Assets (million CNY) | Operating Revenue (million CNY) | Net Profit (million CNY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Hefei Midea Hiconics Energy Technology Co., Ltd. | PV EPC business | 20.00 | 1,240.80 | 67.65 | 1,135.41 | 37.91 | | Beijing Hiconics New Energy Inverter Technology Co., Ltd. | High-voltage inverters, residential energy storage, etc. | 300.00 | 864.18 | 36.30 | 375.32 | -75.55 | | Changsha Riye Electric Co., Ltd. | Low-voltage inverters, etc. | 40.00 | 205.70 | 69.64 | 39.40 | -4.66 | | Beijing Huatai Runda Energy Saving Technology Co., Ltd. | General contracting for construction; energy-saving technology development, etc. | 50.00 | 673.73 | 278.16 | 130.27 | 26.32 | | Luanping Huitong Photovoltaic Power Generation Co., Ltd. | PV power station operation | 30.00 | 539.29 | 72.89 | 32.07 | 1.50 | IX. Structured Entities Controlled by the Company The company did not control any structured entities during the reporting period - The company had no structured entities under its control during the reporting period[59] X. Risks Faced by the Company and Countermeasures The company faces risks from global economic fluctuations, policy changes, trade friction, market competition, raw material price volatility, and accounts receivable, which it addresses through product competitiveness, refined management, market monitoring, and robust supply chain and financial management - The company faces global economic fluctuations and industry policy change risks and will actively enhance product competitiveness and strengthen refined management[59] - The company's residential energy storage and PV inverter R&D and production business primarily targets overseas markets, facing risks from trade friction and tariff barriers, and will closely monitor overseas trade relations and adopt pragmatic and stable market strategies[60] - The industry in which the company operates is highly competitive, and it will closely follow market changes, enhance product innovation, and improve customer service capabilities[61] - Fluctuations in raw material prices and supply shortages may lead to increased procurement costs, and the company will strengthen raw material tracking and analysis and improve its global supply chain management system[62] - The company's accounts receivable balance is gradually increasing, posing a risk of bad debts, and it will improve its capital management system and strengthen special control over accounts receivable[63] XI. Registration Form for Investor Relations Activities During the Reporting Period During the reporting period, the company conducted three investor relations activities, including two on-site visits and one online exchange, to update investors on performance, operations, and strategic plans - On May 9, 2024, the company hosted on-site research from institutions and individuals, including Pacific Securities and China Securities, reporting on Q1 2024 performance and operations, and introducing its industrial planning and business philosophy[64] - On May 23, 2024, the company participated in the 2023 Annual and Q1 2024 Earnings Briefing via an online platform[64] - On June 12, 2024, the company met with institutions such as Debon Securities and Junyang Fund at a brokerage strategy conference in Shanghai, introducing its business model and operating philosophy[64] XII. Implementation of 'Dual Improvement in Quality and Returns' Action Plan The company has not disclosed an announcement regarding its 'Dual Improvement in Quality and Returns' action plan - The company has not disclosed an announcement regarding its 'Dual Improvement in Quality and Returns' action plan[65] Section IV Corporate Governance This section details the company's shareholder meetings, changes in directors, supervisors, and senior management, profit distribution plans, and the implementation of equity incentive and employee stock ownership plans I. Annual and Extraordinary General Meetings of Shareholders During the Reporting Period During the reporting period, the company held its 2024 First Extraordinary General Meeting and 2023 Annual General Meeting, with investor participation rates of 17.80% and 19.71%, respectively, and no requests from preferred shareholders to convene extraordinary meetings Shareholder Meetings During the Reporting Period | Session | Meeting Type | Investor Participation Rate | Meeting Date | Disclosure Date | Meeting Resolution | | :--- | :--- | :--- | :--- | :--- | :--- | | 2024 First Extraordinary General Meeting | Extraordinary General Meeting | 17.80% | February 23, 2024 | February 24, 2024 | "Resolution Announcement of the 2024 First Extraordinary General Meeting" (2024-008) | | 2023 Annual General Meeting | Annual General Meeting | 19.71% | May 10, 2024 | May 11, 2024 | "Resolution Announcement of the 2023 Annual General Meeting" (2024-031) | - During the reporting period, there were no requests from preferred shareholders with restored voting rights to convene an extraordinary general meeting[67] II. Changes in Directors, Supervisors, and Senior Management During the reporting period, there were no changes in the company's directors, supervisors, and senior management, with specific details available in the 2023 annual report - There were no changes in the company's directors, supervisors, and senior management during the reporting period[67] III. Profit Distribution and Capital Reserve Conversion to Share Capital During the Reporting Period The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital for the semi-annual period - The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital for the semi-annual period[68] IV. Implementation of Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures During the reporting period, the company approved the vesting of the third tranche of its 2020 restricted stock incentive plan and cancelled some unvested restricted shares, with no other employee stock ownership or incentive plans in effect - The company approved the 'Proposal on the Eligibility for Vesting of the Third Tranche of the First Grant under the 2020 Restricted Stock Incentive Plan,' agreeing to process matters related to restricted stock vesting[68] - The company cancelled a portion of the granted but unvested restricted shares under the 2020 Restricted Stock Incentive Plan[68] - During the reporting period, the company had no implementation of employee stock ownership plans or other employee incentive measures[69] Section V Environmental and Social Responsibility This section outlines the company's environmental protection efforts, including carbon emission reduction initiatives and compliance, and its commitment to social responsibility by upholding stakeholder rights, promoting employment, and contributing to industry standards and green energy development I. Significant Environmental Issues The company is not classified as a key polluting entity and received no environmental administrative penalties during the reporting period, actively reducing carbon emissions through solar power generation, energy storage, refined management, and process improvements - The company is not classified as a key polluting entity by environmental protection authorities and received no administrative penalties for environmental issues during the reporting period[70] - The company installed a 354.6 kW PV power station on its office building and workshop roofs, equipped with a 500 kWh energy storage system, generating approximately 370,000 kWh annually to reduce energy consumption[70] - The company reduces energy consumption by enhancing refined management, improving production processes, and implementing smart production lines[70] II. Social Responsibility The company actively fulfills its social responsibilities by safeguarding stakeholder rights, promoting employment, contributing to industry standards, prioritizing employee development and safety, ensuring transparent investor communication, advancing green energy, and participating in rural revitalization initiatives - The company actively fulfills its social responsibilities by operating legally, paying taxes diligently, creating employment opportunities, and supporting local economic development[70] - The company participated in the revision of national standards and IEC International Electrotechnical Commission standards related to high and low-voltage inverters, as well as the drafting of standards for the PV energy storage industry[34][70] - The company strictly adheres to the 'Labor Law,' signs labor contracts with all employees, provides social insurance, and prioritizes employee career development and well-being[70] - The company strictly complies with laws and regulations to disclose information in a timely, accurate, and complete manner, and strengthens investor relations management through various forms such as earnings briefings and on-site research[71] - The company actively promotes residential energy storage and PV EPC businesses, striving to reduce energy costs, increase global green energy penetration, and participates in PV poverty alleviation projects through its subsidiary Luanping Huitong Photovoltaic Power Generation Co., Ltd.[71] Section VI Significant Matters This section covers significant matters including commitments, related party transactions, litigation, and the establishment of a new subsidiary, while confirming no issues related to non-operating fund occupation, illegal external guarantees, or integrity concerns I. Commitments Fulfilled and Overdue Unfulfilled by Controlling Shareholder, Shareholders, Related Parties, Acquirers, and the Company During and as of the End of the Reporting Period During the reporting period, the company reported no commitments that were fulfilled or overdue and unfulfilled by its controlling shareholder, shareholders, related parties, acquirers, or the company itself - During the reporting period, the company reported no commitments that were fulfilled or overdue and unfulfilled by its controlling shareholder, shareholders, related parties, acquirers, or the company itself[72] II. Non-Operating Fund Occupation by Controlling Shareholder and Other Related Parties During the reporting period, there was no non-operating occupation of listed company funds by the controlling shareholder or other related parties - During the reporting period, there was no non-operating occupation of listed company funds by the controlling shareholder or other related parties[72] III. Irregular External Guarantees The company had no irregular external guarantees during the reporting period - The company had no irregular external guarantees during the reporting period[72] IV. Appointment and Dismissal of Accounting Firms The company's semi-annual financial report was unaudited - The company's semi-annual report was unaudited[72] V. Board of Directors' and Supervisory Board's Explanations on 'Non-Standard Audit Report' for the Current Period During the reporting period, there were no explanations from the board of directors or supervisory board regarding a 'non-standard audit report' for the current period - During the reporting period, there were no explanations from the board of directors or supervisory board regarding a 'non-standard audit report' for the current period[72] VI. Board of Directors' Explanations on 'Non-Standard Audit Report' for the Prior Year During the reporting period, there were no explanations from the board of directors regarding a 'non-standard audit report' for the prior year - During the reporting period, there were no explanations from the board of directors regarding a 'non-standard audit report' for the prior year[72] VII. Bankruptcy and Reorganization Matters The company had no bankruptcy and reorganization matters during the reporting period - The company had no bankruptcy and reorganization matters during the reporting period[72] VIII. Litigation Matters The company had no significant litigation or arbitration matters during the reporting period, with other lawsuits below the disclosure threshold totaling approximately CNY 70.93 million, some resolved and executed, others still pending - The company had no significant litigation or arbitration matters during the reporting period[73] - During the reporting period, other lawsuits not meeting the significant litigation disclosure standard involved a total amount of approximately CNY 70.93 million, with cases where the company was a defendant totaling approximately CNY 39.44 million[74] IX. Penalties and Rectification The company had no penalties or rectification situations during the reporting period - The company had no penalties or rectification situations during the reporting period[75] X. Integrity Status of the Company, its Controlling Shareholder, and Actual Controller During the reporting period, there were no issues concerning the integrity status of the company, its controlling shareholder, or actual controller - During the reporting period, there were no issues concerning the integrity status of the company, its controlling shareholder, or actual controller[75] XI. Significant Related Party Transactions During the reporting period, the company engaged in daily operational related party transactions with Midea Group and its subsidiaries, including procurement, leasing, and sales, with fair pricing, and maintained deposit accounts with Midea Group Finance Co., Ltd., while no related party transactions involving asset/equity acquisition/disposal, joint investments, or related party debts occurred Related Party Transactions Related to Daily Operations | Type of Related Party Transaction | Content of Related Party Transaction | Amount of Related Party Transaction (million CNY) | Approved Transaction Limit (million CNY) | Exceeded Approved Limit | | :--- | :--- | :--- | :--- | :--- | | Procurement of raw materials from related parties | Procurement of raw materials, daily operational products and services from Midea Group Co., Ltd. and its subsidiaries | 48.67 | 100.00 | No | | Leasing of factory buildings from related parties | Leasing of factory buildings, etc., from Midea Group Co., Ltd. and its subsidiaries | 2.65 | 8.00 | No | | Sale of products and goods to related parties | Sale of products and provision of EPC services to Midea Group Co., Ltd. and its subsidiaries | 0.97 | 600.00 | No | | Provision of labor to related parties | Provision of labor to Midea Group Co., Ltd. and its subsidiaries | 0 | 5.00 | No | | Acceptance of labor from related parties | Acceptance of labor from Midea Group Co., Ltd. and its subsidiaries | 0 | 15.00 | No | | Total | -- | 239.28 | 728.00 | -- | Transactions with Related Financial Companies (Deposit Business) | Related Party | Related Party Relationship | Daily Maximum Deposit Limit (million CNY) | Deposit Interest Rate Range | Beginning Balance (million CNY) | Ending Balance (million CNY) | | :--- | :--- | :--- | :--- | :--- | :--- | | Midea Group Finance Co., Ltd. | Enterprise controlled by Midea Group Co., Ltd., the company's indirect controlling shareholder | 3,000.00 | 0.25% | 1.87 | 3.85 | - During the reporting period, the company had no related party transactions involving asset or equity acquisition/disposal, joint external investments, or related party creditor-debtor relationships[78][79][80] XII. Significant Contracts and Their Performance The company had no entrustment, contracting, or leasing matters during the reporting period, but provided external guarantees totaling CNY 1.742 billion for its subsidiaries, representing 102.46% of its net assets, with CNY 1.476 billion for subsidiaries with a debt-to-asset ratio exceeding 70%, and completed a CNY 122.35 million engineering contract with Qinghai Xianghe Nonferrous Metals Co., Ltd., recognizing CNY 9.09 million in revenue in 2024 - The company had no entrustment, contracting, or leasing situations during the reporting period[84] Company Guarantees for Subsidiaries (As of End of Reporting Period) | Guaranteed Party Name | Guaranteed Limit (million CNY) | Actual Guaranteed Amount (million CNY) | Type of Guarantee | Guarantee Period | | :--- | :--- | :--- | :--- | :--- | | Changsha Riye Electric Co., Ltd. | 100.00 | 70.00 | Joint and several liability guarantee | From the expiration date of the contract debt to three years thereafter | | Beijing Hiconics New Energy Inverter Technology Co., Ltd. | 800.00 | 271.48 | Joint and several liability guarantee | From the expiration date of the contract debt to three years thereafter | | Beijing Huatai Runda Energy Saving Technology Co., Ltd. | 400.00 | 195.44 | Joint and several liability guarantee | From the expiration date of the contract debt to three years thereafter | | Hefei Midea Hiconics Photovoltaic Technology Co., Ltd. | 2,700.00 | 1,160.00 | Joint and several liability guarantee | From the expiration date of the contract debt to three years thereafter | | Anhui Midea Hiconics Power Engineering Co., Ltd. | 300.00 | 45.00 | Joint and several liability guarantee | From the expiration date of the contract debt to three years thereafter | | Total Actual Guaranteed Balance for Subsidiaries at Period-End | 4,400.00 | 1,741.92 | -- | -- | - The total actual guarantee amount represents 102.46% of the company's net assets[86] - The outstanding debt guarantees provided directly or indirectly for guaranteed parties with a debt-to-asset ratio exceeding 70% amounted to CNY 1.476 billion[87] Other Significant Contracts | Company Party to Contract | Counterparty to Contract | Contract Subject | Contract Signing Date | Transaction Price (million CNY) | Execution Status as of End of Reporting Period | | :--- | :--- | :--- | :--- | :--- | :--- | | Beijing Huatai Runda Energy Saving Technology Co., Ltd. | Qinghai Xianghe Nonferrous Metals Co., Ltd. | Overall technical upgrade and harmless treatment of zinc smelting slag and comprehensive recovery of valuable metals project for flue gas waste heat recovery and steam power generation | August 23, 2018 | 122.35 | Project construction completed 100%, CNY 9.09 million in revenue recognized in 2024 as of the end of the reporting period | XIII. Explanation of Other Significant Matters On February 23, 2024, the company established Anqing Midea Hiconics Green New Energy Co., Ltd., a wholly-owned subsidiary with a registered capital of CNY 50 million, focusing on energy storage technology services, transformer manufacturing, and new energy equipment sales - On February 23, 2024, the company established Anqing Midea Hiconics Green New Energy Co., Ltd., a wholly-owned subsidiary with a registered capital of CNY 50 million[88] - The new subsidiary's business scope includes energy storage technology services, manufacturing of transformers, rectifiers, and inductors, manufacturing of mechanical and electrical equipment, sales of electrical equipment, sales of smart power transmission and distribution and control equipment, manufacturing of power facility equipment, manufacturing and sales of new energy prime movers, operation of electric vehicle charging infrastructure, sales of charging piles, manufacturing and sales of electronic components and electromechanical equipment, manufacturing and sales of PV equipment and components, solar power generation technology services, and R&D of emerging energy technologies[88] XIV. Significant Matters of Company Subsidiaries The company's subsidiaries had no significant matters during the reporting period - The company's subsidiaries had no significant matters during the reporting period[89] Section VII Share Changes and Shareholder Information This section details changes in the company's share capital, including restricted and unrestricted shares, and provides an overview of shareholder numbers and major shareholders' holdings I. Share Changes During the reporting period, the company's restricted shares decreased by 350,000 shares, while unrestricted shares increased by 350,000 shares, with total share capital remaining unchanged, primarily due to the vesting of the third tranche of the 2020 restricted stock incentive plan Share Changes | Share Class | Number of Shares Before Change (shares) | Proportion | Net Change (shares) | Number of Shares After Change (shares) | Proportion | | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 1,400,000 | 0.13% | -350,000 | 1,050,000 | 0.09% | | II. Unrestricted Shares | 1,112,338,857 | 99.87% | 350,000 | 1,112,688,857 | 99.91% | | III. Total Shares | 1,113,738,857 | 100.00% | 0 | 1,113,738,857 | 100.00% | - The main reason for share changes was the eligibility for vesting of the third tranche of the first grant under the 2020 restricted stock incentive plan, and the company processed related vesting matters as per regulations[91] Changes in Restricted Shares | Shareholder Name | Restricted Shares at Beginning of Period (shares) | Restricted Shares Released This Period (shares) | Restricted Shares Increased This Period (shares) | Restricted Shares at End of Period (shares) | Reason for Restriction | Planned Release Date | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Ning Yu | 1,400,000 | 350,000 | 0 | 1,050,000 | Senior executive locked shares | November 26, 2026 | II. Securities Issuance and Listing The company had no securities issuance or listing activities during the reporting period - The company had no securities issuance or listing activities during the reporting period[93] III. Number of Shareholders and Shareholding Structure As of the end of the reporting period, the company had 27,034 common shareholders, with Guangdong Midea HVAC Equipment Co., Ltd. as the controlling shareholder holding 18.74% of shares, and some shareholders holding shares through margin trading and securities lending accounts - As of the end of the reporting period, the total number of common shareholders was 27,034[93] Top 10 Shareholders' Shareholding | Shareholder Name | Shareholder Nature | Shareholding Proportion | Number of Shares Held at End of Reporting Period (shares) | Number of Unrestricted Shares Held (shares) | | :--- | :--- | :--- | :--- | :--- | | Guangdong Midea HVAC Equipment Co., Ltd. | Domestic Non-State-Owned Legal Person | 18.74% | 208,685,418 | 208,685,418 | | Shanghai Shangfeng Group Co., Ltd. | Domestic Non-State-Owned Legal Person | 2.74% | 30,528,355 | 30,528,355 | | Zhang Yannan | Domestic Natural Person | 2.26% | 25,200,000 | 25,200,000 | | Luo Qiaosheng | Domestic Natural Person | 1.31% | 14,608,912 | 14,608,912 | | Hu Peihong | Domestic Natural Person | 1.03% | 11,459,703 | 11,459,703 | | He Tiantao | Domestic Natural Person | 0.93% | 10,373,737 | 10,373,737 | | Qian Xiaoying | Domestic Natural Person | 0.78% | 8,733,838 | 8,733,838 | | Li Ping | Domestic Natural Person | 0.78% | 8,704,000 | 8,704,000 | | Feng Jingming | Domestic Natural Person | 0.73% | 8,151,524 | 8,151,524 | | Wei Li | Domestic Natural Person | 0.72% | 8,046,300 | 8,046,300 | - Shareholders Luo Qiaosheng, Hu Peihong, and Feng Jingming held shares through client margin trading and securities lending accounts[97] - Shareholder Ms. Wei Li is the spouse of Mr. Lu Jianfeng, the company's Chairman and General Manager[97] [IV. Cumulative Pledged Shares of Controlling Shareholder or First Largest Shareholder and Their Concerted Parties Reaching 80% of Their Holdings](index=41&type=section&id=%E5%9B%9B%E3%80%81%E5%85%AC%E5%8F%B8%E6%8E%A7%E8%82%A1%E8%82%A1%E4%B8%9C%E6%88%96%E7%AC%AC%E4%B8%80%E5%A4%A7%E8%82%A1%E4%B8%9C%E5%8F%8A%E5%85%B6%E4%B8%80%E8%87%B4%E8%A1%8C%E5%8A%A8%E4%BA%BA%E7%B4%AF%E8%AE%A1%E8%B4%A8%E6%8A%BC%E8%82%A1%E4%BB%BD%E6%95%B0%E9%87%8F%E5%8D%A0%E5%85%B6%E6%89%80%E6%8C%81%E5%85%AC%E5%8F%B8%E8%82%A1%E4%BB%BD%E