长川科技(300604) - 2019 Q4 - 年度财报

Important Notice, Table of Contents, and Definitions This section provides essential preliminary information, the report's structure, and definitions of key terms Company Profile and Key Financial Indicators This chapter outlines the company's profile and key financial indicators, showing significant revenue growth but a sharp decline in net profit and negative operating cash flow in 2019 Key Accounting Data and Financial Indicators This section details the company's 2019 financial performance, including 84.54% revenue growth, a 67.27% decline in net profit, and negative operating cash flow, primarily due to the STI acquisition Key Annual Financial Data | Indicator | 2019 (yuan) | 2018 (yuan) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue (yuan) | 398,834,098.54 | 216,121,510.66 | 84.54% | | Net Profit Attributable to Shareholders (yuan) | 11,935,305.79 | 36,471,059.63 | -67.27% | | Net Profit Attributable to Shareholders Excluding Non-recurring Gains/Losses (yuan) | -17,866,036.62 | 27,956,496.42 | -163.91% | | Net Cash Flow from Operating Activities (yuan) | -42,889,765.25 | 12,449,428.95 | -444.51% | | Basic Earnings Per Share (yuan/share) | 0.04 | 0.13 | -69.23% | | Total Assets (yuan) | 1,321,218,368.95 | 678,387,815.05 | 94.76% | | Net Assets Attributable to Shareholders (yuan) | 996,569,677.42 | 470,561,114.97 | 111.78% | Key Quarterly Financial Data | Quarter | Operating Revenue (yuan) | Net Profit Attributable to Shareholders (yuan) | | :--- | :--- | :--- | | Q1 | 42,752,193.98 | 482,029.70 | | Q2 | 59,340,727.35 | 594,020.79 | | Q3 | 100,342,410.29 | 244,502.70 | | Q4 | 196,398,766.92 | 10,614,752.60 | Non-recurring Gains and Losses Items and Amounts This section details the significant increase in non-recurring gains and losses in 2019, primarily from government grants and acquisition-related income, crucial for profitability Non-recurring Gains and Losses | Item | 2019 Amount (yuan) | 2018 Amount (yuan) | Description | | :--- | :--- | :--- | :--- | | Government Grants Included in Current Profit/Loss | 19,023,221.19 | 7,417,484.57 | Government grants | | Investment Income from Acquiring Subsidiaries | 4,042,595.62 | - | Investment income from subsidiaries | | Other Gains/Losses Meeting the Definition of Non-recurring Items | 10,960,048.28 | - | Performance compensation | | Total | 29,801,342.41 | 8,514,563.21 | -- | Business Overview This chapter outlines the company's core business in integrated circuit testing equipment, its expansion via the STI acquisition, and its competitive edge in R&D and service Principal Business This section outlines the company's principal business in integrated circuit testing equipment, its expansion into AOI through the STI acquisition, and the impact on revenue and net profit - The company primarily engages in the R&D, production, and sales of integrated circuit testing equipment, including testers, handlers, and probers[23] - During the reporting period, the company acquired Singapore-based STI, adding automated semiconductor optical inspection (AOI) equipment to its product portfolio[23] Key Financial Performance | Indicator | 2019 Amount | Year-on-Year Growth | | :--- | :--- | :--- | | Operating Revenue | CNY 398.83 million | 84.54% | | Net Profit Attributable to Shareholders | CNY 11.94 million | -67.27% | Significant Changes in Major Assets This section details significant asset changes, including increases in intangible assets, receivables, and inventory, primarily driven by the STI acquisition Major Asset Changes | Major Asset | Change from Beginning of Year | Explanation of Significant Change | | :--- | :--- | :--- | | Intangible Assets | +558.88% | Primarily due to the consolidation of patent rights from the Singaporean subsidiary in the current period | | Accounts Receivable | +135.45% | Growth in business scale and consolidation of approximately CNY 100 million in accounts receivable from the Singaporean subsidiary | | Inventory | +218.61% | Increase in stock levels and consolidation of CNY 127 million in inventory from the Singaporean subsidiary | | Goodwill | New Item | Arising from the acquisition of Singapore-based STI | - The company's primary overseas asset is its Singaporean subsidiary STI, with an asset scale of CNY 301 million, accounting for 23.62% of the company's net assets, and achieving a net profit of CNY 16.02 million in 2019[27] Analysis of Core Competencies This section analyzes the company's core competencies, highlighting high R&D investment, mastery of key technologies, and enhanced product lines via the STI acquisition - In 2019, R&D expenditure reached CNY 106.98 million, accounting for 26.82% of operating revenue, and by year-end, the company held 312 patents (including 223 invention patents) and 47 software copyrights[28][58] - The company successfully developed China's first independently intellectual property-owned fully automatic ultra-precision prober, compatible with 8/12-inch wafer testing, achieving international first-class precision[30] - The acquired Singapore-based STI company possesses over 200 core technologies and patents, with its technology leading the industry in automated semiconductor optical inspection (AOI)[33] - Compared to foreign equipment suppliers, the company's local presence enables it to provide fast, cost-effective technical support and customer maintenance, with a 24-hour after-sales service response commitment[33] Management Discussion and Analysis This chapter analyzes 2019 operations, highlighting revenue growth from the STI acquisition, increased expenses, and strategic initiatives for market expansion and integration Overview This section overviews 2019 performance, noting significant revenue growth from the STI acquisition, a net profit decline, and active market expansion efforts - The completion of the acquisition of Changxin Investment (holding 100% equity in Singapore-based STI) and its consolidation was the primary driver of the significant revenue growth[35] - R&D expenses totaled CNY 106.98 million, accounting for 26.82% of operating revenue, reflecting continuous efforts in technological innovation and intellectual property protection[36] - The company actively expanded into new markets, successfully entering the Taiwan and Southeast Asian markets and systematically onboarding new customers[36] Analysis of Principal Business This section analyzes principal business, showing substantial revenue growth from handler sales and increased overseas revenue post-STI acquisition, with a gross margin decline Principal Business Revenue and Gross Margin by Product and Region | Business Category | 2019 Operating Revenue (yuan) | Year-on-Year Change | 2019 Gross Margin | Gross Margin Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | | By Product | | | | | | Testers | 98,913,889.60 | 14.50% | 71.27% | -3.56% | | Handlers | 263,982,307.80 | 124.60% | 42.05% | 0.96% | | By Region | | | | | | Mainland China | 299,072,203.34 | 38.99% | 53.34% | -2.26% | | Outside Mainland China | 99,761,895.20 | 10,417.12% | 44.59% | -12.13% | - During the reporting period, sales to the top five customers totaled CNY 161 million, accounting for 40.28% of the total annual sales[54] - The change in the company's consolidated scope due to the acquisition of Changxin Investment significantly impacted the year-on-year composition of principal business costs during the reporting period[51][52] Expense Analysis This section analyzes the significant increase in sales, administrative, and R&D expenses in 2019, primarily driven by company expansion and STI consolidation Key Expense Items | Expense Item | 2019 (yuan) | 2018 (yuan) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Selling Expenses | 54,187,852.45 | 31,131,575.03 | 74.06% | | Administrative Expenses | 56,058,519.34 | 20,388,429.36 | 174.95% | | R&D Expenses | 106,978,372.82 | 61,709,866.31 | 73.36% | | Financial Expenses | -229,989.29 | -3,600,670.97 | -93.61% | R&D Investment This section details the company's substantial R&D investment in 2019, reaching CNY 106.98 million, aimed at enhancing core product competitiveness R&D Investment Overview | Indicator | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | Number of R&D Personnel (persons) | 380 | 244 | 145 | | Proportion of R&D Personnel | 49.22% | 53.98% | 47.23% | | R&D Investment Amount (yuan) | 106,978,372.82 | 61,709,866.31 | 36,871,303.61 | | R&D Investment as % of Operating Revenue | 26.82% | 28.55% | 20.51% | Cash Flow Analysis This section analyzes the significant deterioration in 2019 cash flow, with negative operating cash flow due to increased operating outflows outpacing inflows Cash Flow Summary | Item | 2019 (yuan) | 2018 (yuan) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -42,889,765.25 | 12,449,428.95 | -444.51% | | Net Cash Flow from Investing Activities | 24,389,484.27 | -110,014,769.02 | -122.17% | | Net Cash Flow from Financing Activities | -10,937,892.01 | 19,343,682.32 | -156.55% | | Net Increase in Cash and Cash Equivalents | -31,908,195.57 | -78,221,657.75 | -59.21% | - The significant discrepancy between net cash flow from operating activities and net profit is primarily due to a substantial increase in the company's sales scale during the reporting period, leading to a year-on-year increase in operating receivables and inventory amounts tied up within the settlement cycle[61] Outlook on Company's Future Development This section outlines the company's future strategy to become a world-class IC equipment supplier, focusing on new products, market expansion, and STI integration, while acknowledging key risks - The company's development strategy is to specialize and strengthen existing product areas while focusing on developing new product lines such as probers, digital testers, MEMS, IGBT, and SOC, aiming to become a world-class integrated circuit equipment supplier[84] - Key R&D directions include memory testing, RF circuit testing, tri-temperature probers, 5G communication chip sorting equipment, new material power device testing, and advanced packaging testing[84][85] - The company plans to fully integrate Singapore-based STI, leveraging its customer channels in Southeast Asia, Taiwan, and Korea to expand overseas business and achieve R&D synergies[86] - The company faces major risks including technology development, high customer concentration, industry cyclicality, growth risks, and integration and goodwill impairment risks associated with the STI acquisition[86][87][88][89] Significant Matters This chapter covers significant corporate matters, including no 2019 profit distribution, the major related party acquisition of STI, and the 2017 restricted stock incentive plan Profit Distribution and Capital Reserve to Share Capital Conversion This section details the company's 2019 decision to not distribute profits or convert capital reserves to share capital, citing growth stage and significant capital expenditure plans - The company's 2019 profit distribution proposal is to not distribute cash dividends, not issue bonus shares, and not convert capital reserves to share capital[4][91] Profit Distribution History | Dividend Year | Cash Dividend Amount (Tax Included) (yuan) | Ratio of Net Profit Attributable to Common Shareholders in Consolidated Statements | | :--- | :--- | :--- | | 2019 | 0.00 | 0.00% | | 2018 | 14,910,840.00 | 40.88% | | 2017 | 11,703,900.00 | 23.29% | Major Related Party Transactions This section details the major related party transaction involving the acquisition of 90% equity in Changxin Investment (STI's parent company) through share issuance to strategic investors - The company acquired a total of 90% equity in Changxin Investment from the National Integrated Circuit Industry Investment Fund, Shanghai Semiconductor Equipment and Materials Industry Investment Fund, and Ningbo Tiantang Silicon Valley and Huichuang Venture Capital Partnership through share issuance, with a transaction price of CNY 490 million[148][149] - This transaction constituted a related party transaction because the National Integrated Circuit Industry Investment Fund is a shareholder holding over 5% of the company's shares, and Mr. Yang Zhengfan, a director of the listed company, serves on the investment decision committee of Shanghai Semiconductor Equipment and Materials Industry Investment Fund[162] Equity Incentive Plan This section details the ongoing implementation of the 2017 restricted stock incentive plan, including the unlocking of the first restricted period and the repurchase/cancellation of some shares - The conditions for the first restricted period of the 2017 restricted stock incentive plan's initial grant have been met, allowing 56 incentive recipients to unlock a total of 1.030218 million shares[38][166] - Due to the departure of some incentive recipients and failure to meet individual performance targets, the company repurchased and canceled 14,022 restricted shares[146][167] Share Changes and Shareholder Information This chapter details the company's share capital increase from 149 million to 314 million shares, primarily due to new share issuance for STI, capital reserve conversion, and equity adjustments Share Change Information This section details the company's share capital increase from 149 million to 314 million shares, primarily due to new share issuance for the STI acquisition and capital reserve conversion Share Capital Changes | Item | Quantity Before Change (shares) | Increase/Decrease in This Change (shares) | Quantity After Change (shares) | | :--- | :--- | :--- | :--- | | I. Restricted Shares | 83,435,563 | +104,126,301 | 187,561,864 | | II. Unrestricted Shares | 65,672,837 | +61,040,090 | 126,712,927 | | III. Total Shares | 149,108,400 | +165,166,391 | 314,274,791 | - The main reasons for share changes were: issuance of new shares for asset acquisition, the 2018 profit distribution (capital reserve to share capital conversion), and restricted stock repurchase/cancellation and unlocking[166][168][169] Number of Shareholders and Shareholding Information This section provides shareholder information, noting 21,239 common shareholders, with the actual controller Zhao Yi as largest and National IC Fund as second largest Top Shareholders | Shareholder Name | Shareholder Nature | Shareholding Percentage | Shares Held at End of Reporting Period (shares) | | :--- | :--- | :--- | :--- | | Zhao Yi | Domestic Natural Person | 25.33% | 79,606,419 | | National Integrated Circuit Industry Investment Fund Co., Ltd. | State-owned Legal Person | 9.85% | 30,960,411 | | Hangzhou Changchuan Investment Management Partnership (Limited Partnership) | Domestic Non-state-owned Legal Person | 7.86% | 24,709,544 | | Zhong Fenghao | Domestic Natural Person | 6.39% | 20,091,057 | Directors, Supervisors, Senior Management, and Employees This chapter details changes in directors, supervisors, and senior management, including the CFO's resignation, and outlines the employee structure, highlighting a high proportion of technical personnel Changes in Directors, Supervisors, and Senior Management This section details changes in the company's senior management, specifically the resignation of the former Chief Financial Officer for personal reasons in September 2019 - The company's former Chief Financial Officer, Ms. Qiu Junhua, resigned from her position due to personal reasons on September 3, 2019[189][194] Employee Information This section details the company's employee structure, with 772 total employees and technical personnel comprising 49.22%, reflecting the company's technology-intensive nature Employee Composition by Profession | Professional Category | Number of Employees | | :--- | :--- | | Production Personnel | 168 | | Sales Personnel | 112 | | Technical Personnel | 380 | | Financial Personnel | 14 | | Administrative Personnel | 98 | | Total | 772 | Corporate Governance This chapter outlines the company's corporate governance and internal controls, confirming regulatory compliance, operational independence, and effective board committee functioning - The company's actual corporate governance status does not materially differ from the normative documents on listed company governance issued by the China Securities Regulatory Commission[205] - The company maintains complete independence from its controlling shareholder in business, personnel, assets, organization, and finance, possessing independent and complete operational capabilities[206] - According to the internal control self-assessment report, total assets and operating revenue within the scope of evaluation both accounted for 100% of the consolidated financial statements, with no material or significant deficiencies found in financial or non-financial reporting[215][216] Financial Report This chapter presents the audited 2019 financial report, which received an unqualified audit opinion, detailing key financial statements and significant accounting notes Audit Report This section presents the unqualified audit opinion for the 2019 financial statements, highlighting revenue recognition and goodwill impairment as key audit matters - Tianjian Certified Public Accountants (Special General Partnership) issued a standard unqualified audit opinion (Tianjian Audit [2020] No. 4078)[220][221] - Key audit matters include: revenue recognition, which is a critical performance indicator with inherent risk of inappropriate management recognition; and goodwill impairment, which is a significant amount and involves substantial management judgment in impairment testing[221][222] Financial Statements This section includes the company's consolidated and parent company financial statements for 2019, showing total assets of CNY 1.32 billion and net profit of CNY 11.94 million Key Consolidated Balance Sheet Items | Consolidated Balance Sheet Major Item | December 31, 2019 (yuan) | December 31, 2018 (yuan) | | :--- | :--- | :--- | | Total Assets | 1,321,218,368.95 | 678,387,815.05 | | Total Liabilities | 324,648,691.53 | 207,826,700.08 | | Total Owners' Equity Attributable to Parent Company | 996,569,677.42 | 470,561,114.97 | Key Consolidated Income Statement Items | Consolidated Income Statement Major Item | 2019 (yuan) | 2018 (yuan) | | :--- | :--- | :--- | | Total Operating Revenue | 398,834,098.54 | 216,121,510.66 | | Total Operating Costs | 415,162,914.09 | 207,760,509.55 | | Total Profit | 3,925,671.26 | 34,327,943.40 | | Net Profit | 11,935,305.79 | 36,471,059.63 | Notes to Consolidated Financial Statements This section provides detailed notes to the consolidated financial statements, including information on goodwill impairment, accounts receivable, and inventory, and their respective provisions - Goodwill had a carrying amount of CNY 275 million, with an impairment provision of CNY 19.09 million recognized in the current period, and the discount rate used in goodwill impairment testing was 10.90%[396][397] - Accounts receivable had an ending book balance of CNY 291 million, with a bad debt provision of CNY 17.15 million, resulting in a carrying value of CNY 273 million, and the top five accounts receivable by debtor accounted for 47.96% of the total ending balance[336][344] - Inventory had an ending book value of CNY 333 million, including an impairment provision of CNY 24.26 million, with the significant increase primarily due to the consolidation of STI[363][364] Documents Available for Inspection This section lists the documents available for public inspection, including the audited financial statements and other relevant reports