润农节水(830964) - 2024 Q2 - 季度财报

Important Notice, Table of Contents, and Definitions This section provides essential disclaimers, the report's structure, and key definitions for the reporting period - Company directors, supervisors, and senior management guarantee the truthfulness, accuracy, and completeness of this semi-annual report, with no false records, misleading statements, or major omissions[5] - This semi-annual report has not been audited by an accounting firm[5] - The reporting period is defined as January 1, 2024, to June 30, 2024[8] Company Profile This section provides an overview of the company's basic information, including its stock details, industry, main business, and controlling shareholders Company Basic Information Hebei Runnong Water-Saving Technology Co., Ltd. (stock code: 830964) is listed on the Beijing Stock Exchange, specializing in water-saving irrigation equipment manufacturing and related engineering services Company Basic Information | Item | Information | | :--- | :--- | | Stock Abbreviation | Runnong Water-Saving | | Stock Code | 830964 | | Listing Exchange | Beijing Stock Exchange | | Listing Date | November 15, 2021 | | Industry Classification | Construction - Water Conservancy and Water Transport Engineering Construction | | Main Business | Manufacturing and sales of water-saving drip irrigation pipes (belts), sprinkler equipment, filtration and fertilization systems; design, construction, installation, technical consulting, and services for water-saving irrigation projects | | Controlling Shareholder | Xue Baosong | | Actual Controller | Xue Baosong, Li Mingxin (Concerted parties: Xue Lixia, Xue Lichao) | Accounting Data and Operating Performance This section details the company's financial performance, including key accounting data, operational highlights, and risk factors Key Accounting Data and Financial Indicators During the reporting period, the company experienced a significant decline in profitability, with revenue decreasing by 10.87% and net profit attributable to shareholders by 47.85% Profitability Indicators (H1 2024) | Indicator | Current Period | Prior Year Period | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue (RMB) | 285,005,804.75 | 319,761,253.36 | -10.87% | | Net Profit Attributable to Shareholders (RMB) | 9,956,351.19 | 19,091,244.13 | -47.85% | | Non-recurring Net Profit Attributable to Shareholders (RMB) | 6,812,223.39 | 17,563,151.84 | -61.21% | | Gross Margin (%) | 17.58% | 17.88% | - | | Basic Earnings Per Share (RMB) | 0.04 | 0.07 | -42.86% | Solvency and Operating Capability Indicators (As of June 30, 2024) | Indicator | Current Period End / Current Period | Prior Year End / Prior Year Period | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets (RMB) | 1,270,518,638.14 | 1,147,851,693.79 | 10.69% | | Total Liabilities (RMB) | 376,679,630.91 | 250,908,637.75 | 50.13% | | Asset-Liability Ratio (Consolidated) (%) | 29.65% | 21.86% | - | | Net Cash Flow from Operating Activities (RMB) | -119,249,228.18 | -57,637,408.24 | N/A | Business Overview and Core Competencies The company operates across the entire water-saving irrigation value chain, from equipment manufacturing to engineering and services, and has expanded into agricultural operations - Company's business model covers the entire value chain from water-saving irrigation equipment supply, engineering design and construction to technical services and post-operation management[20][21] - During the reporting period, a new planting and agricultural service operation segment was added to enhance data collection for the smart agriculture platform and extend the industrial chain[21] - The company is a national-level 'specialized, refined, distinctive, and innovative' 'Little Giant' enterprise, owns the 'Derunnong' China Well-known Trademark, and holds 114 patents (including 11 invention patents) and 31 software copyrights[21][22][23] Operating Performance Review Despite increased new contract value, revenue and net profit declined due to lower industry gross margins and unconfirmed project revenues, while the company expanded market presence and innovated in technology Operating Plan and Performance Revenue and net profit declined due to lower industry gross margins and unconfirmed project revenues, despite steady growth in new contract value and strategic market expansion - The primary reasons for the decline in revenue and net profit are: 1. A general decline in industry gross margins; 2. The majority of projects awarded during the reporting period have not yet been accepted, thus not meeting revenue recognition criteria[24] - Market Expansion: Established Hebei Huishou Agriculture Technology Co., Ltd. and Yunnan Longrun Digital Industry Co., Ltd. to expand post-project management, technology R&D, and business footprint[26] - Technological Innovation: Independently developed small-flow (0.6 L/h) drip irrigation belts have been widely adopted; as of the end of the reporting period, the company holds 114 patents (including 11 invention patents) and 31 software copyrights[27] Industry Conditions and Policies Global water scarcity and strong government support for agricultural infrastructure in China drive significant growth potential for the water-saving irrigation industry - China's effective utilization coefficient for farmland irrigation water is 0.576, significantly lower than the 0.80 average in developed countries, indicating substantial market potential[29] - The 2024 Central Document No. 1 explicitly requires strengthening agricultural infrastructure construction, especially high-standard farmland, key water sources, and irrigation areas, providing strong policy support for the water-saving irrigation industry[29][30] Financial Analysis The company's financial position shows increased short-term and long-term borrowings to fund operations and investments, while profitability was impacted by higher financial expenses and credit impairment losses Key Balance Sheet Item Changes | Item | Period-End Amount (RMB) | Year-Beginning Amount (RMB) | Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 48,022,084.28 | 91,845,373.17 | -47.71% | Sales collection decreased | | Short-term Borrowings | 102,800,000.00 | 10,300,000.00 | 898.06% | Increased upfront funding for new orders and investment needs | | Long-term Borrowings | 30,000,000.00 | - | 100.00% | Decreased sales collection, new bank borrowings | | Right-of-Use Assets | 30,064,542.56 | 8,326,088.58 | 261.09% | New land lease by subsidiary Huishou Agriculture | Key Income Statement Item Changes | Item | Current Period Amount (RMB) | Prior Period Amount (RMB) | Change (%) | Primary Reason | | :--- | :--- | :--- | :--- | :--- | | Operating Profit | 9,619,620.88 | 22,535,886.80 | -57.31% | Increase in financial expenses and credit impairment losses | | Financial Expenses | 2,055,435.20 | 439,715.17 | 367.45% | Increased interest due to new bank borrowings | | Credit Impairment Losses | -7,441,169.63 | -3,717,156.93 | 100.18% | Increased provision due to growth in total accounts receivable and extended aging | | Other Income | 3,618,972.52 | 490,859.52 | 637.27% | R&D project acceptance and transfer to other income | Key Cash Flow Statement Item Changes | Item | Current Period Amount (RMB) | Prior Period Amount (RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -119,249,228.18 | -57,637,408.24 | N/A | | Net Cash Flow from Investing Activities | -7,904,820.50 | 88,121,276.33 | -108.97% | | Net Cash Flow from Financing Activities | 85,621,584.34 | -15,750,224.64 | N/A | Analysis of Major Holding and Participating Companies The company expanded its consolidated financial reporting scope by establishing two new wholly-owned subsidiaries, with existing subsidiaries Gansu Runnong and Sichuan Zhonglongtai contributing the most profit - During the reporting period, Hebei Huishou Agriculture Technology Co., Ltd. and Yunnan Longrun Digital Industry Co., Ltd. were newly established and included in the consolidated financial statements[43][44] Operating Performance of Major Holding Subsidiaries (H1 2024) | Company Name | Net Assets (RMB) | Operating Revenue (RMB) | Net Profit (RMB) | | :--- | :--- | :--- | :--- | | Gansu Runnong | 40,530,019.94 | 44,223,632.92 | 3,132,231.41 | | Sichuan Zhonglongtai | 49,397,763.26 | 56,097,634.25 | 3,094,405.95 | | Baichuan Design Institute | -239,692.83 | 520,518.89 | -1,012,159.38 | | Huishou Agriculture | 24,790,240.92 | - | -109,759.08 | | Yunnan Longrun | 4,085,212.93 | 733,084.55 | -314,787.07 | Corporate Social Responsibility The company actively contributes to high-standard farmland construction and rural revitalization through water-saving irrigation technologies, while maintaining a comprehensive environmental management system - The company integrates smart agriculture development with rural revitalization by leveraging high-standard farmland projects, addressing issues of high labor intensity and low efficiency in agriculture[45] - The company has established a comprehensive environmental protection management system, including procedures for waste gas, wastewater, noise, and solid waste treatment, and regularly conducts emergency drills for environmental incidents[47] Company Risks and Countermeasures The company addresses risks such as intensified competition, policy changes, raw material price volatility, and increased accounts receivable through innovation, supply chain management, and enhanced internal controls - Key risks include: intensified industry competition, potential withdrawal of industrial policies, price fluctuations of raw materials (polyvinyl chloride and polyethylene), increasing accounts receivable, and risks associated with engineering project construction and delays, and product quality control[49][50][51] - Countermeasures: Focus on smart agriculture projects to enhance profitability; extend the industrial chain to reduce reliance on government subsidies; strengthen procurement management and accounts receivable collection; reinforce engineering quality and safety control[49][50][51] Significant Events This section details significant events during the reporting period, including litigation, related party transactions, and asset restrictions Details of Significant Events During the reporting period, the company had no major lawsuits or arbitration cases, with minor litigation solely for accounts receivable recovery, and no instances of shareholder fund occupation - No major lawsuits or arbitration matters occurred during the reporting period; all lawsuits were initiated by the company to recover accounts receivable, totaling 3.61 million RMB[53] - The company had no instances of shareholders or their related parties occupying or transferring company funds or assets[53] - As of the end of the reporting period, 3,006,725.15 RMB in cash and cash equivalents were restricted for use as performance bonds and migrant worker wage guarantees[56] Share Changes and Financing This section outlines the company's share capital structure, shareholder information, and financing activities during the reporting period Common Share Capital Structure and Shareholder Information The company's total share capital remained unchanged at 261.21 million shares, with 68.68% unrestricted and 31.32% restricted, and the top ten shareholders holding 53.98% Common Share Capital Structure | Share Type | Number of Shares | Proportion (%) | | :--- | :--- | :--- | | Unrestricted Shares | 179,395,411 | 68.68% | | Restricted Shares | 81,812,589 | 31.32% | | Total Share Capital | 261,208,000 | 100.00% | - The largest shareholder, Xue Baosong, holds 86,970,163 shares, accounting for 33.30% of the total share capital[59] Directors, Supervisors, Senior Management, and Employees This section details the composition and changes in the company's board of directors, supervisors, senior management, and employee structure Changes and Shareholdings of Directors, Supervisors, and Senior Management No changes occurred in the company's directors, supervisors, or senior management during the reporting period, with key executives holding a combined 41.77% stake - During the reporting period, no changes occurred in the company's key positions, including Chairman, General Manager, Board Secretary, and CFO[65] - Chairman Xue Baosong and Director, Deputy General Manager Li Mingxin are a married couple[62] Employee Information As of the end of the reporting period, the company and its subsidiaries employed 444 individuals, with technical personnel forming the largest group and over 60% holding college degrees or higher Employee Structure (As of June 30, 2024) | By Job Function | Number at Period End | | :--- | :--- | | Administrative Staff | 42 | | Production Staff | 125 | | Sales Staff | 51 | | Technical Staff | 191 | | Financial Staff | 35 | | Total Employees | 444 | Financial Accounting Report This section presents the company's unaudited semi-annual financial statements and detailed notes, providing a comprehensive view of its financial position and performance Financial Statements This section provides the company's unaudited 2024 semi-annual consolidated and parent company financial statements, including balance sheets, income statements, cash flow statements, and statements of changes in equity - Includes consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in shareholders' equity[67][71][74][79][84] Notes to Financial Statements The notes detail the company's background, financial statement preparation basis, significant accounting policies, and estimates, including revenue recognition, financial instrument impairment, and inventory valuation - Revenue recognition policy: Sales revenue is recognized upon customer acceptance; water-saving engineering revenue is recognized based on the percentage of completion when the outcome can be reliably estimated[162][163] - Financial instrument impairment: Impairment provisions for financial assets measured at amortized cost (e.g., accounts receivable) and contract assets are based on expected credit losses[118] - Changes in consolidation scope: Hebei Huishou Agriculture Technology Co., Ltd. and Yunnan Longrun Digital Industry Co., Ltd. were newly established and included in the consolidated scope during the reporting period[278] Reference Documents This section lists all documents available for reference, including signed financial statements and publicly disclosed announcements - Reference documents include financial statements signed and sealed by the company's responsible person, chief accountant, and head of accounting department, as well as original copies of all publicly disclosed documents and announcements during the reporting period[327]