富创精密(688409) - 2023 Q4 - 年度财报(更正)

Definitions This section defines key terminology, company entities, and industry-specific terms to provide a foundational understanding of the report[273][295][318] Company Profile and Key Financial Indicators This section introduces the company's background and presents key financial data, highlighting revenue growth alongside a decline in net profit Company Profile Shenyang Fuchuang Precision Equipment Co, Ltd is a STAR Market listed company focused on semiconductor equipment precision components Company Basic Information | Item | Information | | :--- | :--- | | Company Name | Shenyang Fuchuang Precision Equipment Co, Ltd | | Company Abbreviation | Fuchuang Precision | | Stock Code | 688409 | | Listing Exchange | Shanghai Stock Exchange STAR Market | | Legal Representative | Zheng Guangwen | | Registered Address | No 18A-1, Feiyun Road, Hunnan District, Shenyang City, Liaoning Province | Key Accounting Data and Financial Indicators In 2023, revenue grew by 33.75%, but net profit attributable to shareholders fell by 31.28% due to product mix changes and increased costs Key Financial Data for FY2023 | Key Accounting Data | 2023 (CNY Million) | 2022 (CNY Million) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 2,065.76 | 1,544.46 | 33.75% | | Net Profit Attributable to Shareholders | 168.69 | 245.46 | -31.28% | | Net Profit Attributable to Shareholders (Non-recurring) | 86.39 | 178.05 | -51.48% | | Net Cash Flow from Operating Activities | -386.38 | -22.32 | N/A | | Key Financial Indicators | 2023 | 2022 | Change | | Basic Earnings Per Share (CNY/Share) | 0.81 | 1.45 | -44.14% | | Weighted Average Return on Equity (%) | 3.61 | 12.19 | Decreased by 8.58 p.p. | | R&D Expenditure to Operating Revenue Ratio (%) | 9.97 | 7.89 | Increased by 2.08 p.p. | - The decline in net profit was mainly due to: 1) an increased revenue share of module products with relatively lower gross margins; 2) increased labor and depreciation costs from preparing for new production capacity; and 3) higher R&D expenses from increased investment[307][325] - The negative operating cash flow was primarily caused by: 1) increased procurement of key materials for module products; 2) longer payment cycles and settlement via notes from mainland China customers; and 3) increased labor costs due to talent acquisition[61][307][325] Management's Discussion and Analysis (MD&A) This section details the company's operating performance, business model, industry landscape, and core competencies, along with risk factors and future outlook Discussion and Analysis of Operations Despite an industry downturn, revenue grew 33.75% to CNY 2.07 billion, while net profit fell 31.28% to CNY 169 million due to strategic investments 2023 Operating Performance Overview | Indicator | 2023 (CNY Million) | 2022 (CNY Million) | YoY Growth Rate | | :--- | :--- | :--- | :--- | | Operating Revenue | 2,065.76 | 1,544.46 | 33.75% | | Net Profit Attributable to Shareholders | 168.69 | 245.46 | -31.28% | | Net Profit Attributable to Owners (Non-recurring) | 86.39 | 178.05 | -51.48% | - Revenue growth was primarily driven by domestic semiconductor market demand and the trend of component localization, with revenue from mainland China increasing by 72.04%[315][336] - The company continued to increase R&D investment, with the R&D expense ratio reaching 9.97%, achieving breakthroughs in surface treatment special processes (e.g, Y-Al series coatings) and module manufacturing technologies[339][363][364] - To address international dynamics and expand business, the company is actively pursuing a global footprint by establishing subsidiaries in Singapore and the US, and advancing the construction of Nantong and Beijing plants[340][365] Business, Model, Industry, and R&D The company manufactures precision components for semiconductor equipment, operating on a direct sales, make-to-order model in a growing market Main Business and Products The company's main products are precision components for semiconductor and pan-semiconductor equipment, categorized into four types - The company's products cover key components in semiconductor equipment, from high-precision process parts to functional module products, meeting diverse customer needs[346][348][349] Operating Model The company utilizes a make-to-order production model and a direct sales model, with a stringent supplier qualification system for procurement - The company's direct sales model with leading domestic and international customers allows it to stay abreast of market dynamics and industry trends, enhancing its technical capabilities[378][405] - The procurement model combines independent selection and customer designation to ensure the stability, consistency, and traceability of raw material quality[351] Industry Situation and Position The company holds a leading position in the high-barrier semiconductor components sector, poised to benefit from growing fab equipment spending - According to SEMI forecasts, global 300mm fab equipment spending is projected to surpass $100 billion in 2025 and continue growing to a record $137 billion in 2027, indicating a promising industry outlook[6] - The company has entered the supply chains of global semiconductor equipment leaders such as Customer A, Tokyo Electron, HITACHI High-Tech, and ASMI, and is a global strategic supplier to Customer A, demonstrating international recognition of its products and technology[382] - The company is one of the few global manufacturers capable of mass-producing precision components for 7nm process semiconductor equipment, holding a leading technological position in China[409] Core Technology and R&D Progress The company achieved breakthroughs in coating and film technologies, with R&D investment increasing 69.08% to CNY 206 million in 2023 - During the reporting period, the company successfully developed "Dense Spray Y-Al Coating Technology," "Plasma Spray Fluoropolymer Coating Technology," and "Nanofilm Technology," with products meeting or exceeding the standards of major international clients for cleanliness and corrosion resistance[11][12][386] 2023 Intellectual Property Acquisition | Category | New Applications (Count) | Granted (Count) | Cumulative Granted (Count) | | :--- | :--- | :--- | :--- | | Invention Patent | 56 | 4 | 48 | | Utility Model Patent | 75 | 47 | 184 | | Design Patent | 0 | 2 | 2 | | Software Copyright | 1 | 0 | 1 | | Total | 132 | 53 | 235 | R&D Investment | Item | Current Year (CNY Million) | Prior Year (CNY Million) | Change (%) | | :--- | :--- | :--- | :--- | | Total R&D Investment | 206.02 | 121.85 | 69.08% | | R&D Investment to Revenue Ratio (%) | 9.97 | 7.89 | Increased by 2.08 p.p. | Core Competitiveness Analysis The company's core strengths lie in its stable customer relationships, diverse product portfolio, and flexible, intelligent manufacturing management - The company has established deep, long-term partnerships within the supply chains of internationally renowned and mainstream domestic semiconductor equipment manufacturers, providing a strong foundation for sustainable operations[20][424] - The company has mastered multiple manufacturing processes and production know-how, creating a rich product portfolio that offers one-stop services to customers, reducing their supply chain costs and improving procurement efficiency[399][425][48] - The company has developed a common technology platform system tailored for discrete manufacturing, enabling flexible and intelligent production management that reduces reliance on manual experience and enhances product quality and efficiency[22] Risk Factors The company faces operational, financial, and macroeconomic risks, including capacity-demand mismatch, margin volatility, and industry cyclicality Operational Risks Key operational risks include a mismatch between capacity expansion and market demand, failure to keep pace with technological advancements, and challenges in managing organizational growth - The company faces a risk of mismatch between capacity reservation and market development; during the reporting period, pre-emptive capacity expansion amid lower-than-expected orders led to increased depreciation and pressure on profits[23][451] - The company must keep pace with the technological iteration of downstream semiconductor equipment; failure to meet customer needs with timely product R&D would adversely affect operating performance[24][452] Financial Risks Major financial risks include gross margin volatility, potential bad debt from growing receivables, inventory write-down risk, and currency fluctuations - The company's gross margin is subject to fluctuation risk, influenced by factors such as technological iteration, industry sentiment, capacity investment pace, geopolitics, and raw material prices[26][428] - As of the reporting date, the carrying value of accounts receivable was CNY 778 million, accounting for 10.24% of total assets; the increasing revenue share from mainland customers with longer payment cycles elevates accounts receivable risk[28][429] - The inventory balance is large, with a carrying value of CNY 906 million (a 69.92% YoY increase), mainly due to advance procurement for module products and existing orders; ineffective management could adversely impact performance[29][456] Industry and Macroeconomic Risks The company is exposed to risks from semiconductor industry cyclicality and changes in the macroeconomic environment, including international trade friction - The company's business is significantly affected by the semiconductor industry's cyclical nature; a decline in end-market demand leading to reduced capital expenditure by equipment manufacturers would substantially impact revenue[30][52] - Escalating international trade friction significantly impacts the semiconductor industry and could negatively affect the company's export business and the operations of its domestic customers[53][56][459] Analysis of Key Operations Revenue grew 33.75% driven by domestic demand, but gross margin fell to 24.77% and operating cash flow turned negative to -CNY 386 million Main Business Analysis (Revenue and Cost) Main business revenue grew 33.32% to CNY 2.04 billion, but a faster cost increase of 47.87% lowered the overall gross margin to 24.77% Main Business by Product (Unit: CNY Million) | Product Segment | Operating Revenue | YoY Change (%) | Operating Cost | YoY Change (%) | Gross Margin (%) | Gross Margin YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Process Components | 456.55 | 11.95% | 318.67 | 21.43% | 30.20 | Decreased by 5.45 p.p. | | Structural Components | 490.95 | -1.75% | 354.78 | 5.55% | 27.74 | Decreased by 5.00 p.p. | | Module Products | 924.80 | 126.13% | 743.58 | 146.07% | 19.60 | Decreased by 6.51 p.p. | | Gas Pipelines | 165.17 | -22.00% | 115.81 | -14.76% | 29.88 | Decreased by 5.96 p.p. | Main Business by Region (Unit: CNY Million) | Region | Operating Revenue | YoY Change (%) | Operating Cost | YoY Change (%) | Gross Margin (%) | Gross Margin YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mainland China | 1,435.70 | 72.04% | 1,128.50 | 90.38% | 21.40 | Decreased by 7.57 p.p. | | Outside Mainland China | 601.77 | -13.25% | 404.34 | -8.90% | 32.81 | Decreased by 3.21 p.p. | - The revenue contribution from mainland China increased significantly from 54.61% in 2022 to 70.46%, primarily benefiting from the push for component localization, while revenue from outside mainland China declined due to geopolitical factors[65][336] Production and Sales Analysis Production and sales volumes fluctuated with changes in the revenue mix, with a significant increase in process components and a decrease in gas pipelines 2023 Key Product Production and Sales (Unit: Units) | Key Product | Production Volume | Sales Volume | Inventory | Production YoY Change (%) | Sales YoY Change (%) | Inventory YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Process Components | 139,855 | 140,034 | 11,462 | 160.72% | 182.84% | -1.54% | | Structural Components | 624,326 | 608,682 | 141,652 | -4.27% | -5.96% | 12.42% | | Module Products | 28,735 | 26,791 | 4,795 | 17.71% | 15.24% | 68.19% | | Gas Pipelines | 99,207 | 99,116 | 27,173 | -42.14% | -39.30% | 0.34% | Key Customers and Suppliers The top five customers accounted for 74.63% of total sales, showing high concentration, while the top five suppliers accounted for 31.72% of purchases Top Five Customers in 2023 (Unit: CNY Million) | Rank | Customer Name | Sales Amount | % of Total Annual Sales | | :--- | :--- | :--- | :--- | | 1 | Customer 1 | 536.92 | 26.35% | | 2 | Customer 2 | 487.41 | 23.92% | | 3 | Customer 3 | 193.14 | 9.48% | | 4 | Customer 4 | 193.09 | 9.48% | | 5 | Customer 5 | 110.00 | 5.40% | | Total | / | 1,520.55 | 74.63% | - The customer structure shifted, with sales to Customer 2 (a domestic client) surging by 467.27% due to domestic substitution and deeper collaboration; sales to Customer 4 (non-semiconductor sector) grew 172.36%, placing it among the top five[44] Top Five Suppliers in 2023 (Unit: CNY Million) | Rank | Supplier Name | Purchase Amount | % of Total Annual Purchases | | :--- | :--- | :--- | :--- | | 1 | Supplier 1 | 148.57 | 11.00% | | 2 | Huahang Aluminum and its affiliates | 117.68 | 8.72% | | 3 | Shanghai Yingpei Trading Co, Ltd | 62.83 | 4.65% | | 4 | Supplier 4 | 52.51 | 3.89% | | 5 | Supplier 5 | 46.73 | 3.46% | | Total | / | 428.32 | 31.72% | Expense Analysis Administrative and R&D expenses grew significantly by 98.28% and 69.08% respectively, while financial expenses decreased due to higher interest income 2023 Expense Changes (Unit: CNY Million) | Item | Current Period | Prior Period | Change (%) | | :--- | :--- | :--- | :--- | | Selling Expenses | 36.61 | 28.80 | 27.12% | | Administrative Expenses | 220.78 | 111.35 | 98.28% | | Financial Expenses | 6.88 | 17.12 | -59.83% | | R&D Expenses | 206.02 | 121.85 | 69.08% | - The sharp increase in administrative expenses was mainly due to increased labor costs from business expansion, professional consulting fees, and share-based payment expenses[81] - The significant rise in R&D expenses was driven by increased R&D investment, leading to higher salaries for R&D personnel and greater consumption of R&D materials[81] Cash Flow Analysis Net cash flow from operating activities was -CNY 386 million, a significant decrease primarily due to increased inventory procurement and longer customer payment cycles 2023 Cash Flow Statement Highlights (Unit: CNY Million) | Item | Current Period | Prior Period | Change (%) | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -386.38 | -22.32 | N/A | | Net Cash Flow from Investing Activities | -560.51 | -1,937.78 | N/A | | Net Cash Flow from Financing Activities | 532.12 | 3,637.33 | -85.37% | - The substantial decrease in net operating cash flow is attributed to: 1) increased procurement expenses due to inventory buildup; 2) slower cash collection from mainland customers who have longer payment cycles and often use notes; and 3) increased labor costs from talent acquisition[61][106] Asset and Liability Analysis Total assets grew to CNY 7.59 billion, with fixed assets doubling and inventory rising 69.92% due to capacity expansion and advance procurement - Fixed assets increased by 105.85% YoY, mainly due to the capitalization of self-constructed buildings and the purchase of machinery and equipment to expand production capacity[85][87] - Inventory grew by 69.92% YoY, primarily due to an increase in raw materials, work-in-progress, and finished goods corresponding to revenue growth[85][110] - Long-term borrowings increased by 106.40% and non-current liabilities due within one year rose by 601.38%, mainly from increased bank loans to support business development and capacity construction[85][87] Future Development Discussion and Analysis The company will focus on domestic substitution and technological self-reliance, planning to increase R&D, expand capacity globally, and upgrade its product portfolio - The company's core strategy is to achieve domestic substitution of semiconductor equipment precision components and support domestic equipment enterprises in achieving self-reliance for key equipment[157] - Future development plans include: * Technology R&D: Accelerate the development of components for 5nm and more advanced process nodes * Customer Collaboration: Actively participate in customers' new product design to enhance stickiness * Product Upgrading: Drive the product structure from individual parts to components and complex modules * Capacity Building: Expedite construction of domestic plants in Nantong and Beijing, and advance new plants in Singapore and the US to enhance global presence * Supply Chain: Leverage scale to enhance supply chain capabilities and promote industry chain collaboration[157][174] Corporate Governance This section outlines the company's governance structure, board and management composition, compensation, and internal control mechanisms Corporate Governance Overview The company operates in strict compliance with relevant laws, featuring a well-defined governance structure and specialized board committees - The company's governance structure is sound and operates in strict compliance with relevant laws and regulations, with no material deviations from listed company governance requirements[160][177] - The Board of Directors has established four specialized committees—Strategy, Audit, Nomination, and Compensation & Appraisal—each with its own rules of procedure to provide professional advice on major decisions[140][200] Directors, Supervisors, and Senior Management This section details the remuneration and background of key personnel, with total compensation for directors, supervisors, and senior management reaching CNY 13.20 million Pre-tax Remuneration for Select Key Personnel in 2023 (Unit: CNY Million) | Name | Position | Total Pre-tax Remuneration from the Company | | :--- | :--- | :--- | | Zheng Guangwen | Chairman, General Manager | 4.39 | | Ni Shiwen | Director, Deputy GM, Core Technical Personnel | 2.16 | | Chen Xiyao | Deputy General Manager | 1.42 | | Song Yansong | Deputy GM, Core Technical Personnel | 1.02 | | Total | / | 13.20 | - During the reporting period, the company's Board of Directors underwent a re-election, with several directors and independent directors being replaced[219] Board and Committee Operations The Board of Directors held 11 meetings to review major issues such as equity incentives and financial reports, with full attendance and unanimous approvals - In 2023, the Board of Directors convened 11 meetings, approving a series of major items including the 2023 restricted stock incentive plan, the annual profit distribution plan, and a share repurchase plan[1][138][166] - All directors personally attended their required board meetings, with no instances of proxy attendance or absence, demonstrating good performance of their duties[139] Employee Information As of year-end, the company had 2,541 employees, with production staff forming the largest group and 40% holding a bachelor's degree or higher Employee Professional Composition | Professional Category | Number of People | | :--- | :--- | | Production Personnel | 1,771 | | Sales Personnel | 89 | | Technical Personnel | 480 | | Finance Personnel | 32 | | Administrative Personnel | 169 | | Total | 2,541 | Employee Education Level | Education Level | Number of People | | :--- | :--- | | Doctorate | 6 | | Master's | 198 | | Bachelor's | 823 | | College | 924 | | College and Below | 590 | | Total | 2,541 | Profit Distribution Plan The proposed 2023 profit distribution includes a cash dividend of CNY 5.00 per 10 shares and a capital reserve transfer of 4.8 shares per 10 shares 2023 Profit Distribution Proposal | Item | Value | | :--- | :--- | | Cash Dividend per 10 Shares (CNY) (pre-tax) | 5.00 | | Shares Transferred per 10 Shares | 4.80 | | Total Cash Dividend (pre-tax) | CNY 103,098,605.00 | | Payout Ratio (% of Net Profit) | 61.12% | | Total Distribution Amount (incl. cash buybacks) | CNY 236,885,483.45 | | Total Payout Ratio (% of Net Profit) | 140.43% | Equity Incentive Plan The company launched a restricted stock plan in 2023, granting 1.67 million shares to 324 employees, with the first performance target met - The company implemented the 2023 Restricted Stock Incentive Plan, granting 1.67 million restricted shares to 324 participants (17.60% of total employees)[123] - The performance target for the first vesting period was met, as 2023 operating revenue of CNY 2.07 billion reached the CNY 2 billion trigger value, paving the way for future vesting[197] - The incentive plan resulted in recognized share-based payment expenses of CNY 24.89 million for the reporting period, impacting administrative expenses and profit[197] Internal Control The company maintained effective internal controls throughout the reporting period, receiving a standard unqualified audit opinion on their effectiveness - The company's internal control system is well-established and effectively implemented, receiving a standard unqualified internal control audit report from its accounting firm[163][220] Environment, Social, and Governance (ESG) This section details the company's performance and initiatives related to environmental protection, social responsibility, and corporate governance practices Environmental Information (E) As a key polluter, the company invested CNY 51.51 million in environmental protection, ensuring all pollutant emissions meet required standards - The company is classified as a key polluting unit and invested CNY 51.51 million in environmental protection during the reporting period, having established relevant environmental mechanisms[223][240] - The company has built and operates facilities for treating waste gas, wastewater, and solid waste, with all pollutants discharged in compliance with standards[226][241] - The company actively implements carbon reduction measures, such as the Nantong Fuchuang solar power project expected to generate 6 million kWh annually; total greenhouse gas emissions in 2023 were approximately 21,500 tons[234][235][248] Social Responsibility (S) The company actively fulfills its social responsibilities, with donations totaling CNY 12.39 million and a strong focus on employee and stakeholder rights - In 2023, the company's external donations totaled CNY 12.39 million, including a CNY 12 million donation to the Westlake Education Foundation to support education and scientific research[636][658] - The company enabled 130 employees (5.12% of the workforce) to hold shares through employee stock ownership platforms and strategic placement plans[642][664] - The company provides close-to-customer service through on-site personnel and a "triangle" service model, with plans to establish R&D, manufacturing, and service centers in the US, Japan, and Singapore[642] Other Governance Matters (G) The company maintains strong investor relations through various communication channels and has robust systems for information disclosure and IP protection - The company actively communicates with investors by holding 3 earnings calls and 9 investor relations events using new media platforms[670] - The company has established policies such as the "Information Disclosure Management Measures" and "Trade Secret Management Measures" to ensure transparent disclosure and protect intellectual property[649][650] Important Matters This section covers the fulfillment of commitments, accounting policy changes, related-party transactions, and the use of IPO proceeds Fulfillment of Commitments The company and its related parties have strictly fulfilled all commitments made during the IPO, with no instances of non-compliance - All commitments made by the company and related parties during or continuing into the reporting period, such as share lock-ups and price stabilization, were fulfilled in a timely and strict manner[674][704] Accounting Policy Changes The company adopted Interpretation No 16 of the Accounting Standards for Business Enterprises, leading to retrospective adjustments for deferred income tax - The company implemented "ASBE Interpretation No 16," recognizing deferred income tax on temporary differences arising from transactions like leases and decommissioning obligations, and made retrospective adjustments to its financial statements[737][761] Significant Related-Party Transactions The company engaged in ordinary course purchase and sale transactions with related parties, including sales of CNY 110 million to Toptim and CNY 26 million to Beijing Yisheng Key Related-Party Sales Transactions in 2023 (Unit: CNY Million) | Related Party | Transaction Type | Transaction Content | Transaction Amount | | :--- | :--- | :--- | :--- | | Toptim Technology Co, Ltd | Sale of goods | Sale of equipment components | 110.02 | | Beijing Yisheng Precision Semiconductor Co, Ltd | Sale of goods | Sale of equipment components | 26.08 | | Shanghai Guangchuan Technology Co, Ltd | Sale of goods | Sale of equipment components | 13.86 | Major Contracts and Guarantees The company had no major custody or lease contracts, and all guarantees were for subsidiaries, totaling CNY 289 million at year-end - At the end of the reporting period, the company's guarantee balance for subsidiaries was CNY 289 million, representing 6.32% of net assets, primarily for loans to subsidiaries like Nantong Fuchuang and Beijing Fuchuang[778][793] Use of Raised Funds The company raised CNY 3.40 billion in its IPO, with committed projects 90.59% complete and excess funds used for working capital and share buybacks Overall Use of Raised Funds (As of Year-End) | Item | Amount (CNY) | | :--- | :--- | | Net Proceeds from Fundraising | 3,394,811,233.57 | | Adjusted Total Committed Investment | 1,847,205,525.46 | | Cumulative Investment of Raised Funds | 1,673,303,127.44 | | Cumulative Investment Progress | 90.59% | - Excess funds were primarily used for: CNY 1.04 billion to permanently supplement working capital, CNY 134 million for share repurchases, and CNY 247 million to increase investment in the "IC Equipment Component Intelligent Manufacturing Base" project[812][841] - The company used up to CNY 1.35 billion of temporarily idle raised funds for cash management, with a balance of CNY 500 million at the end of the reporting period[811][832] Changes in Share Capital and Shareholders This section details changes in the company's share structure and provides an overview of its major shareholders and actual controller Changes in Share Capital Total share capital remained unchanged, but the proportion of unrestricted shares increased to 57.62% following the release of lock-up shares - During the reporting period, due to the release of lock-up shares from the IPO offline placement and other restricted shares, the company's unrestricted floating shares increased by 75,948,961, raising their proportion of total share capital from 21.29% to 57.62%[847][850] Shareholders and Actual Controller The company has a dispersed ownership structure with no controlling shareholder; the actual controller is Chairman and GM Mr Zheng Guangwen Top Three Shareholders | Shareholder Name | Shares Held at Year-End | Percentage (%) | | :--- | :--- | :--- | | Shenyang Advanced Manufacturing Technology Industry Co, Ltd | 35,349,500 | 16.91% | | Ningbo Xiangpu Venture Capital Partnership (LP) | 33,810,800 | 16.17% | | SDIC (Shanghai) Sci-Tech Achievement Transformation Venture Capital Fund (LP) | 28,571,400 | 13.67% | - The company has a dispersed ownership structure with no single shareholder holding more than 30%, and thus has no controlling shareholder[877] - The company's actual controller is Mr Zheng Guangwen, who serves as the Chairman and General Manager[465] Preferred Shares Information The company had no preferred shares during the reporting period - During the reporting period, the company had no preferred shares[468] Bond Information The company had no corporate bonds or other debt financing instruments during the reporting period - During the reporting period, the company had no corporate bonds, company bonds, or non-financial enterprise debt financing instruments[883][906] Financial Report This section presents the audited financial statements, key accounting policies, and detailed notes to the financial statements for the year 2023 Audit Opinion Lixin Certified Public Accountants issued a standard unqualified audit opinion on the company's 2023 financial statements - The auditor, Lixin Certified Public Accountants (Special General Partnership), issued a standard unqualified audit opinion[264][469] - Key audit matters included: 1. Recognition of product sales revenue 2. Provision for bad debts on accounts receivable 3. Provision for inventory write-downs[471][486][884] Key Financial Statements This section provides the consolidated and parent company financial statements, showing asset growth but declines in net profit and operating cash flow Consolidated Balance Sheet Summary (December 31, 2023) | Item | Amount (CNY) | | :--- | :--- | | Total Assets | 7,589,863,878.25 | | Total Liabilities | 2,829,980,141.29 | | Total Equity | 4,759,883,736.96 | Consolidated Income Statement Summary (FY 2023) | Item | Amount (CNY) | | :--- | :--- | | Total Operating Revenue | 2,065,755,897.63 | | Total Operating Costs | 2,024,835,931.96 | | Total Profit | 196,405,649.51 | | Net Profit | 167,965,761.36 | Consolidated Cash Flow Statement Summary (FY 2023) | Item | Amount (CNY) | | :--- | :--- | | Net Cash Flow from Operating Activities | -386,381,806.21 | | Net Cash Flow from Investing Activities | -560,514,561.78 | | Net Cash Flow from Financing Activities | 532,124,912.60 | | Net Increase in Cash and Cash Equivalents | -418,517,593.17 | Company Basics and Basis of Preparation This section outlines the company's profile and confirms that financial statements are prepared on a going-concern basis in accordance with ASBE - The company's financial statements are prepared in accordance with the Accounting Standards for Business Enterprises (ASBE) and related regulations, on a going-concern basis[576][577] Significant Accounting Policies and Estimates This section details key accounting policies for revenue recognition, financial instruments, inventory valuation, and R&D capitalization - Revenue Recognition: Revenue is recognized when control of goods or services is transferred to the customer, typically upon delivery and acceptance for domestic sales and based on contract terms for export sales[950][1017] - Financial Instrument Impairment: The company uses an expected credit loss (ECL) model to provide for impairment of financial assets like accounts receivable, assessing them in different portfolios based on credit risk characteristics[615][619] - Inventory: Inventory is measured at the lower of cost and net realizable value, with cost determined primarily using the first-in, first-out (FIFO) method[951][954] Notes to Consolidated Financial Statements This section provides detailed breakdowns of key items in the consolidated financial statements, including receivables, inventory, and fixed assets - The year-end balance of accounts receivable was CNY 811 million, with a bad debt provision of CNY 29.89 million calculated based on portfolio groupings[1096][1102] - The year-end carrying value of inventory was CNY 906 million, with a write-down provision of CNY 45.37 million, primarily for finished goods and raw materials[1197][1198] - The year-end balance of construction in progress was CNY 461 million, a significant decrease from CNY 814 million at the beginning of the year, mainly because CNY 1.11 billion was transferred to fixed assets[1275][1276] Notes to Parent Company Financial Statements This section details key items for the parent company, highlighting a significant increase in long-term equity investments in its subsidiaries - The parent company's long-term equity investment in subsidiaries increased from CNY 709 million to CNY 1.53 billion, mainly due to increased investments in FORTUNE USA, INC and Nantong Fuchuang[1633] - The parent company's operating revenue was CNY 1.89 billion, differing from the consolidated revenue and reflecting the contribution of its subsidiaries to the group's total income[1714]