东星医疗(301290) - 2024 Q2 - 季度财报

Part I Important Notice, Table of Contents and Definitions Important Notice The board and management assure report accuracy and completeness, with financial statements verified, and the company plans no cash dividends or bonus shares - The company's board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of the semi-annual report, assuming individual and joint legal responsibility[2] - Company head Wan Shiping, chief accountant Gong Aiqin, and head of accounting department Xu Hailan declare the financial report is true, accurate, and complete[2] - The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital[2] Table of Contents This section outlines the report's ten main chapters, providing a comprehensive structural overview for investors - The report comprises ten main chapters, covering important notices, company profile, management discussion and analysis, corporate governance, environmental and social responsibility, significant matters, share changes and shareholder information, preferred shares, bonds, and financial reports[3] List of Reference Documents This section lists the report's reference documents and their storage location, ensuring information accessibility - Reference documents include signed and sealed financial statements, original drafts of publicly disclosed documents, original semi-annual report texts, and other relevant materials[4] - The aforementioned filed documents are available at the company's Board of Directors Office[4] Definitions This section defines key terms, including company details, reporting periods, competitors, and medical device classifications, to enhance report comprehension - The reporting period refers to January 1, 2024, to June 30, 2024, and the prior year period refers to January 1, 2023, to June 30, 2023[5] - The company's main competitors include well-known domestic and international medical device companies such as Johnson & Johnson, Medtronic, Inc., Mindray (Shenzhen Mindray Bio-Medical Electronics Co., Ltd.), and Becton, Dickinson and Company[5] - Key business-related terms such as medical devices, Class III medical devices, Class II medical devices, Class I medical devices, high-value consumables, low-value consumables, staplers, endoscopes, trocars, CE certification, and FDA are defined in detail[6] Part II Company Profile and Key Financial Indicators This section provides an overview of the company's basic information and key financial performance metrics I. Company Profile This section provides an overview of the company's basic information, including stock details and legal representative - The company's stock abbreviation is "Dongxing Medical," stock code "301290," listed on the Shenzhen Stock Exchange[7] - The company's legal representative is Wan Shiping[7] II. Contact Person and Contact Information This section provides contact details for the Board Secretary and Securities Affairs Representative for investor communication - The Board Secretary's name is Gong Aiqin, contact address is No. 24-4 Changyang Road, Wujin District, Changzhou City, Jiangsu Province, phone 0519-86632199, email gongaiqin@dx-med.com[8] III. Other Information The company's contact information, disclosure details, and registration status remained unchanged during the reporting period - The company's registered address, office address, website, and email remained unchanged during the reporting period[9] - Information disclosure and storage 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 This section presents key accounting data and financial indicators, showing revenue growth but a decline in net profit and EPS compared to the prior year Key Accounting Data and Financial Indicators Year-on-Year Change | Indicator | Current Reporting Period (RMB) | Prior Year Period (RMB) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue | 213,553,049.86 | 201,802,103.61 | 5.82% | | Net Profit Attributable to Shareholders of Listed Company | 47,679,809.37 | 50,034,885.79 | -4.71% | | Net Profit Attributable to Shareholders of Listed Company After Deducting Non-Recurring Gains and Losses | 30,596,502.81 | 32,939,106.31 | -7.11% | | Net Cash Flow from Operating Activities | 70,317,683.91 | 64,035,419.50 | 9.81% | | Basic Earnings Per Share (RMB/share) | 0.48 | 0.50 | -4.00% | | Diluted Earnings Per Share (RMB/share) | 0.48 | 0.50 | -4.00% | | Weighted Average Return on Net Assets | 2.12% | 2.27% | -0.15% | | Amount at End of Current Reporting Period (RMB) | Amount at End of Prior Year (RMB) | Change from Prior Year-End to Current Period-End | | | Total Assets | 2,373,152,059.47 | 2,393,581,909.51 | -0.85% | | Net Assets Attributable to Shareholders of Listed Company | 2,197,841,813.21 | 2,238,716,685.61 | -1.83% | V. Differences in Accounting Data Under Domestic and Overseas Accounting Standards The company reports no differences in net profit or net assets between domestic and international accounting standards during the period - The company's financial reports for the reporting period show no differences in net profit and net assets when compared between International Accounting Standards and Chinese Accounting Standards[13] - The company's financial reports for the reporting period show no differences in net profit and net assets when compared between overseas accounting standards and Chinese Accounting Standards[13] VI. Non-Recurring Gains and Losses and Amounts This section itemizes non-recurring gains and losses for the period, totaling RMB 17,083,306.56, with explanations for key items Non-Recurring Gains and Losses and Amounts | Item | Amount (RMB) | Explanation | | :--- | :--- | :--- | | Gains and losses from disposal of non-current assets | -33,857.52 | Primarily due to losses from disposal of fixed assets | | Government grants recognized in current profit or loss | 7,885,201.56 | Primarily due to government special grants received during the reporting period | | Fair value changes and disposal gains/losses from financial assets and liabilities held by non-financial enterprises, excluding effective hedging activities related to normal business operations | 13,908,912.72 | Primarily due to investment income from financial assets held for trading | | Other non-operating income and expenses apart from the above | -631,315.86 | Primarily due to public welfare donation expenses | | Other profit and loss items meeting the definition of non-recurring gains and losses | 415,146.68 | Includes individual income tax handling fee refunds, additional input VAT deductions, and directly reduced VAT | | Less: Income tax impact | 4,424,053.78 | | | Impact on minority interests (after tax) | 36,727.24 | | | Total | 17,083,306.56 | | Part III Management Discussion and Analysis This section provides an in-depth analysis of the company's business operations, financial performance, core competencies, and risk factors I. Main Business Activities During the Reporting Period The company specializes in R&D, production, and sales of surgical medical devices, expanding into a platform-based group with significant growth in electric endoscopic stapler sales (347.87%) and overseas open stapler sales (28.70%) - The company primarily engages in the R&D, production, and sales of surgical medical devices, represented by staplers, and has developed into a platform-based group company covering multiple categories of surgical equipment and medical consumables[16] - During the reporting period, the sales revenue of the company's electric endoscopic stapler products increased by 347.87% year-on-year, accounting for 29.82% of stapler product operating revenue, a year-on-year increase of 22.38%[16] - Overseas sales of open staplers significantly grew, driving a 28.70% year-on-year increase in overall open stapler sales, accounting for 23.02% of stapler product operating revenue[16] 1. Company's Main Business The company primarily engages in the R&D, production, and sales of surgical medical devices, expanding its product lines through organic growth and external expansion - The company primarily engages in the R&D, production, and sales of surgical medical devices, represented by staplers[16] - Through organic growth and external expansion, the company continuously expands and extends its product lines, evolving from agency sales to a platform-based group company covering multiple categories of surgical equipment and medical consumables[16] 2. Main Products and Uses The company's product portfolio includes self-developed surgical staplers and equipment, alongside agency sales of other medical devices and consumables - The company's self-developed and manufactured products include endoscopic staplers (electric and manual), open staplers, stapler components, and surgical equipment (such as electric hydraulic operating tables, surgical shadowless lamps, pendant bridges, and delivery beds)[16][17] - The company's agency sales products are categorized into medical equipment (such as surgical shadowless lamps, operating tables, monitors, ventilators) and low-value consumables (such as blood collection tubes, catheters, blood glucose test strips)[18] - During the reporting period, sales of the company's self-developed and manufactured surgical equipment accounted for 94.02% of total sales, a year-on-year increase of 4.27%, indicating a steady improvement in independent production and sales capabilities[18] 3. Company's Main Business Model The company operates with centralized procurement, "production-to-order" manufacturing, and a dual sales model of distribution and direct sales - Procurement models are divided into raw and auxiliary material procurement (centralized and unified procurement, qualified supplier management) and agency business procurement (annual agency agreements, procurement based on demand and forecasts)[18] - The production model is "production-to-order with appropriate inventory," possessing full industry chain production capabilities for staplers, with outsourced processing mainly for non-core links such as sterilization and some component processing[19] - Sales models are divided into distribution (traditional distribution, two-invoice system distribution, secondary distribution) and direct sales (primarily for stapler components, molds, and assemblies)[19][20][21] 4. Industry Overview The global and Chinese medical device markets, particularly for staplers and endoscopic staplers, show strong growth, with the company actively pursuing technological advancements and market certifications - The global medical device market continues to grow, projected to reach $913 billion by 2030, with a compound annual growth rate of 6.18% from 2022 to 2030[21] - China's medical device market has become the world's second-largest, projected to grow to RMB 1,652 billion by 2030, with a compound annual growth rate of 7.3% from 2022 to 2030[21] - The stapler market continues to show positive development, with the global stapler market projected to grow to $12.93 billion by 2030, and the Chinese stapler market projected to grow to RMB 20.5 billion by 2030[22] - The endoscopic stapler market is experiencing rapid demand growth with significant import substitution potential; electric endoscopic staplers are cutting-edge products with high technological content[23] - The company has achieved technological R&D breakthroughs in endoscopic staplers, being one of the earliest domestic manufacturers to apply "unequal height staple" technology and participating in industry standard drafting[23] - As of the end of the reporting period, the company has obtained 44 medical device registration certificates and filing credentials (4 Class I, 39 Class II, 1 Class III), and has received certifications from multiple countries including US FDA, Brazil ANVISA, and South Korea KFDA[23] II. Analysis of Core Competencies The company's core strengths lie in its complete industry chain, robust R&D, extensive marketing, growing brand, unique location, strict quality control, and experienced management - The company has achieved a full industry chain layout in surgical staplers, from product R&D and design, mold development, precision component processing, and production assembly to downstream sales[28] - As of the end of the reporting period, the company has obtained 243 patents, including 54 invention patents, and has made breakthroughs in innovative products such as electric endoscopic staplers and disposable electric ligation staplers[28] - The company has established a nationwide sales network centered in the Yangtze River Delta, covering multiple core cities and large tertiary hospitals, with 98 new distributors added during the reporting period[29] - The company actively participates in domestic and international academic forums and clinical training courses to enhance brand awareness and influence; its subsidiary Weike Medical collaborated with Xiangya Hospital of Central South University to establish the "Minimally Invasive Technology Innovation and Surgical Physician Training Joint Research Center" project[30] - Changzhou City, where the company is located, is an important production base for domestic staplers, offering geographical advantages that facilitate industry exchanges and cooperation[30] - The company has established a complete and comprehensive quality management system based on the ISO13485 quality management system and strictly adhering to regulations and standards such as the "Good Manufacturing Practices for Medical Devices"[30] - The management teams of the company and its subsidiaries possess extensive experience in the medical device industry and team management, with a stable core management team and good coordination with subsidiaries at all levels[30] III. Analysis of Main Business Main business analysis reveals a 5.82% increase in operating revenue but a 4.71% decrease in net profit, with stapler business having the highest revenue share and a 68.55% gross profit margin Year-on-Year Changes in Key Financial Data | Indicator | Current Reporting Period (RMB) | Prior Year Period (RMB) | Year-on-Year Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 213,553,049.86 | 201,802,103.61 | 5.82% | | | Operating Cost | 111,536,743.85 | 104,037,290.33 | 7.21% | | | Selling Expenses | 22,621,178.59 | 19,760,159.63 | 14.48% | | | Administrative Expenses | 34,648,528.09 | 29,997,318.49 | 15.51% | | | Financial Expenses | -2,711,325.82 | -6,134,605.68 | 55.80% | Primarily due to decreased interest income | | R&D Investment | 9,723,871.09 | 13,227,443.69 | -26.49% | | Products or Services Accounting for Over 10% of Revenue | By Product or Service | Operating Revenue (RMB) | Operating Cost (RMB) | Gross Profit Margin | Year-on-Year Change in Operating Revenue | Year-on-Year Change in Operating Cost | Year-on-Year Change in Gross Profit Margin | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Staplers | 90,752,358.01 | 28,546,112.45 | 68.55% | 12.15% | 17.88% | -1.53% | | Medical Equipment | 35,538,703.90 | 23,682,749.90 | 33.36% | -23.56% | -23.05% | -0.45% | | Low-Value Consumables | 26,109,683.81 | 17,298,327.95 | 33.75% | 15.87% | 20.57% | -2.58% | | Stapler Components | 57,901,294.22 | 39,464,849.74 | 31.84% | 16.70% | 18.99% | -1.31% | IV. Analysis of Non-Core Business Non-core business analysis shows investment income, mainly from bank wealth management, as the largest contributor to total profit, despite negative fair value change losses Impact of Non-Core Business on Total Profit | Item | Amount (RMB) | Proportion of Total Profit | Explanation of Formation Reason | Is it Sustainable | | :--- | :--- | :--- | :--- | :--- | | Investment Income | 18,250,206.02 | 32.22% | Primarily due to investment income from bank wealth management products | No | | Fair Value Change Gains and Losses | -4,461,677.91 | -7.88% | Primarily due to changes in gains from financial assets held for trading | No | | Asset Impairment | 138,752.51 | 0.24% | Primarily due to provisions for inventory write-downs and contract asset impairment losses | No | | Non-Operating Income | 54,082.37 | 0.10% | Primarily due to compensation and fine income | No | | Non-Operating Expenses | 685,398.23 | 1.21% | Primarily due to public welfare donation expenses | No | V. Analysis of Assets and Liabilities Analysis of assets and liabilities shows a significant decrease in monetary funds due to wealth management purchases and a substantial increase in construction in progress from fundraising project investments Significant Changes in Asset Composition | Item | Amount at End of Current Reporting Period (RMB) | Proportion of Total Assets | Amount at End of Prior Year (RMB) | Proportion of Total Assets | Change in Proportion | Explanation of Significant Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Monetary Funds | 200,288,963.78 | 8.44% | 568,855,578.18 | 23.77% | -15.33% | Primarily due to increased purchases of wealth management products with monetary funds during the period | | Construction in Progress | 104,930,060.26 | 4.42% | 37,358,470.21 | 1.56% | 2.86% | Primarily due to increased investment in fundraising projects during the period | | Right-of-Use Assets | 2,506,764.59 | 0.11% | | | 0.11% | Primarily due to subsidiary Sanfeng Original leasing factory buildings externally during the period | | Short-Term Borrowings | 13,729,263.65 | 0.58% | 2,200,000.00 | 0.09% | 0.49% | Primarily due to increased bank borrowings during the period | | Contract Liabilities | 7,403,350.87 | 0.31% | 5,615,087.78 | 0.23% | 0.08% | Primarily due to increased advance receipts during the period | | Lease Liabilities | 2,061,891.46 | 0.09% | | | 0.09% | Primarily due to subsidiary Sanfeng Original leasing factory buildings externally during the period | Assets and Liabilities Measured at Fair Value | Item | Beginning Balance (RMB) | Fair Value Change Gains and Losses for the Period (RMB) | Amount Purchased During the Period (RMB) | Amount Sold During the Period (RMB) | Ending Balance (RMB) | | :--- | :--- | :--- | :--- | :--- | :--- | | Financial Assets Held for Trading | 674,291,095.76 | -4,461,677.91 | 1,613,500,000.00 | 1,332,000,000.00 | 951,329,417.85 | | Investments in Other Equity Instruments | | | 6,000,000.00 | | 6,000,000.00 | | Subtotal of Financial Assets | 674,291,095.76 | -4,461,677.91 | 1,619,500,000.00 | 1,332,000,000.00 | 957,329,417.85 | - As of the end of the reporting period, the company's restricted monetary funds amounted to RMB 1,373,735.00 for letter of guarantee deposits[37] VI. Analysis of Investment Status Investment analysis covers fair value financial assets, raised fund utilization (RMB 144.5397 million invested this period, RMB 315.8131 million cumulatively), and entrusted wealth management totaling RMB 1,142.1 million Financial Assets Measured at Fair Value | Asset Category | Initial Investment Cost (RMB) | Amount Purchased During Reporting Period (RMB) | Amount Sold During Reporting Period (RMB) | Ending Balance (RMB) | Source of Funds | | :--- | :--- | :--- | :--- | :--- | :--- | | Funds | | 6,000,000.00 | | 6,000,000.00 | Own Funds | Overall Use of Raised Funds | Indicator | Amount (RMB 10,000) | | :--- | :--- | | Total Raised Funds | 110,416.06 | | Total Raised Funds Invested During Reporting Period | 14,453.97 | | Cumulative Total Raised Funds Invested | 31,581.31 | | Cumulative Amount of Raised Funds with Changed Use | 19,462.15 | | Proportion of Cumulative Raised Funds with Changed Use | 17.63% | - As of June 30, 2024, the company used RMB 144.5397 million of raised funds this year, with a cumulative use of RMB 315.8131 million, and an unused balance of RMB 686.9096 million[40] Overview of Entrusted Wealth Management | Specific Type | Source of Entrusted Wealth Management Funds | Amount of Entrusted Wealth Management Occurred (RMB 10,000) | Unmatured Balance (RMB 10,000) | | :--- | :--- | :--- | :--- | | Bank Wealth Management Products | Own Funds | 23,210 | 5,660 | | Bank Wealth Management Products | Raised Funds | 67,000 | 64,500 | | Brokerage Wealth Management Products | Own Funds | 24,000 | 24,000 | | Total | | 114,210 | 94,160 | - The company had no derivative investments or entrusted loans during the reporting period[49][50] VII. Significant Asset and Equity Sales The company did not engage in any significant asset or equity sales during the reporting period - The company did not sell any significant assets during the reporting period[51] - The company did not sell any significant equity during the reporting period[52] VIII. Analysis of Major Holding and Participating Companies Major subsidiaries Weike Medical and Zihang Precision performed well, with Weike's electric endoscopic stapler sales up 347.87% and Zihang's revenue up 19.78% Financial Status of Major Subsidiaries | Company Name | Company Type | Main Business | Registered Capital (RMB 10,000) | Total Assets (RMB 10,000) | Net Assets (RMB 10,000) | Operating Revenue (RMB 10,000) | Operating Profit (RMB 10,000) | Net Profit (RMB 10,000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Changzhou Weike Medical Devices Co., Ltd. | Subsidiary | R&D, production, and sales of surgical stapler products | 500.00 | 22,871.57 | 7,911.61 | 9,074.36 | 3,181.14 | 2,741.55 | | Jiangsu Zihang Precision Hardware Co., Ltd. | Subsidiary | R&D, design, mold development, production, and sales of surgical stapler components and assemblies | 500.00 | 32,432.21 | 23,205.08 | 8,467.71 | 1,619.08 | 1,448.72 | - Weike Medical's electric endoscopic stapler product sales revenue increased by 347.87% year-on-year during the reporting period, accounting for 29.82% of the current period's stapler product operating revenue[54] - Zihang Precision's operating revenue for the reporting period was RMB 84.6771 million, a 19.78% increase year-on-year, achieving a net profit of RMB 14.4872 million, a 29.14% increase year-on-year[55] IX. Information on Structured Entities Controlled by the Company The company did not control any structured entities during the reporting period - The company had no controlled structured entities during the reporting period[56] X. Risks Faced by the Company and Countermeasures This section details key risks, including volume-based procurement, technological changes, distributor management, agency rights, regulatory compliance, and goodwill impairment, outlining corresponding mitigation strategies - "Volume-based procurement" policies may lead to a significant drop in the company's product terminal prices; failure to win bids could result in decreased sales, potentially affecting the stapler components business[56] - Company countermeasures include closely monitoring policies, improving product quality, implementing a "price-for-volume" strategy, expanding market share, and increasing R&D investment while promoting intelligent manufacturing to reduce costs[57] - The company faces the risk of rapid technological iteration in the medical device industry; failure to update products promptly may lead to loss of market acceptance[58] - Company countermeasures involve increasing R&D investment, optimizing product structure, accelerating product R&D iteration, and focusing on developing forward-looking products such as electric endoscopic staplers, ultrasonic scalpels, and absorbable medical products[58] - The company primarily operates through a distribution model, facing distributor management risks where adverse changes in key distributors could impact sales revenue[59] - Company countermeasures include improving the distributor control system, strengthening evaluation and supervision, selecting high-quality distributors, and enhancing distributor work quality through business training and technical support[59] - The company's agency sales products face the risk of changes in agency operating rights; failure to continuously secure agency rights could lead to adverse impacts[60] - Company countermeasures include strictly adhering to contractual agreements, actively seeking new agency products, expanding agency categories, and carefully selecting suitable agency brands[60] - The company's products are classified as National Class I, II, and III medical devices, facing strict regulatory risks; failure to obtain renewal approvals or product non-compliance would result in adverse effects[61] - Company countermeasures involve strictly controlling product quality and actively organizing professional teams to ensure timely renewal of relevant qualification licenses before expiration[61] - As of June 30, 2024, the company's consolidated goodwill book value was RMB 533.9309 million, posing a risk of goodwill impairment due to factors such as policy changes and market competition[62] - Company countermeasures include continuously enriching subsidiary product lines, enhancing the driving force for sustainable business development, leveraging synergies, and focusing on and regularly assessing goodwill impairment risk points[62] XI. Registration Form for Research, Communication, Interview, and Other Activities During the Reporting Period This section details investor engagement activities during the period, including dates, methods, participants, and key discussion topics - On May 15, 2024, the company participated in the 2023 Annual Performance Briefing via Panorama Network's "Investor Relations Interactive Platform," engaging in online discussions with investors regarding the company's annual production and operation, industry policy impacts, overseas markets, R&D status, and future development plans[63] XII. Implementation of "Dual Improvement in Quality and Returns" Action Plan The company has not disclosed its "Dual Improvement in Quality and Returns" action plan announcement - The company has not disclosed an announcement regarding the "Dual Improvement in Quality and Returns" action plan[64] Part IV Corporate Governance This section details the company's corporate governance structure, including shareholder meetings, management changes, profit distribution, and incentive plans I. Information on Annual and Extraordinary General Meetings Held During the Reporting Period This section details the annual and extraordinary general meetings held during the period, with resolutions duly convened and disclosed Shareholder Meetings During the Reporting Period | Session | Meeting Type | Investor Participation Rate | Date Held | Disclosure Date | Meeting Resolution | | :--- | :--- | :--- | :--- | :--- | :--- | | First Extraordinary General Meeting of 2024 | Extraordinary General Meeting | 31.96% | January 25, 2024 | January 25, 2024 | Specific content detailed in Juchao Information Network's "Resolution Announcement of the First Extraordinary General Meeting of 2024" (Announcement No.: 2024-006) | | 2023 Annual General Meeting | Annual General Meeting | 33.83% | May 13, 2024 | May 13, 2024 | Specific content detailed in Juchao Information Network's "Resolution Announcement of the 2023 Annual General Meeting" (Announcement No.: 2024-036) | - There were no instances during the reporting period where preferred shareholders with restored voting rights requested an extraordinary general meeting[66] II. Changes in Directors, Supervisors, and Senior Management There were no changes in the company's directors, supervisors, or senior management during the reporting period - There were no changes in the company's directors, supervisors, and senior management during the reporting period; details can be found in the 2023 annual report[66] III. Profit Distribution and Capital Reserve Conversion to Share Capital During the Reporting Period The company plans no cash dividends, bonus shares, or capital reserve conversions for the half-year period - The company plans not to distribute cash dividends, bonus shares, or convert capital reserves into share capital for the half-year period[67] IV. Implementation of Company Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures The company's 2023 Restricted Stock Incentive Plan has been approved by all relevant bodies and is progressing as planned - The company's 2023 Restricted Stock Incentive Plan (Revised Draft) and its summary, along with the Implementation and Assessment Management Measures (Revised Draft), have been approved by the board of directors, supervisory board, and general meeting of shareholders[67][68] - As of June 30, 2024, the company's 2023 Restricted Stock Incentive Plan is progressing in an orderly manner[68] - The company had no employee stock ownership plans or other employee incentive measures implemented during the reporting period[69] Part V Environmental and Social Responsibility This section outlines the company's commitment to environmental protection and its various social responsibility initiatives I. Significant Environmental Issues The company is not a key polluting unit, received no environmental penalties, and strictly adheres to environmental laws and regulations - The company is not classified as a key polluting unit by environmental protection authorities[70] - During the reporting period, the company did not incur any penalties for violating environmental protection laws and regulations[70] II. Social Responsibility The company actively fulfills social responsibilities across investor rights, Party building, school-enterprise cooperation, employee welfare, supply chain, environmental sustainability, philanthropy, and international relations - The company fulfills information disclosure obligations through various means, safeguards the legitimate rights and interests of all shareholders, and adopts a stable cash dividend policy to protect the interests of small and medium investors[71] - The company's Party branch has 15 members, developed 9 new Party activists during the reporting period, and deeply studies and implements the Party's lines, principles, and policies[71] - The company has established a strategic partnership with Changzhou University, serving as its practical teaching and employment base, and actively participates in campus recruitment to strengthen talent development[71] - The company adheres to a people-oriented approach, focuses on enhancing employees' comprehensive abilities and career development, strictly complies with the "Labor Law" and "Labor Contract Law," and protects employees' legitimate rights and interests[72] - The company adheres to the principles of equality, voluntariness, and mutual benefit, builds and develops strategic partnerships with upstream and downstream entities, strictly controls product quality, and protects consumer interests[72] - The company highly values environmental protection, adheres to green, low-carbon, and sustainable development concepts, and its subsidiary Weike Medical was recognized as a Green Factory in Changzhou City[72] - The company actively participates in public welfare activities, donating RMB 100,000 to the Wujin District Charity Federation and RMB 500,000 to the Changzhou Charity Federation during the reporting period, and organizing employees to participate in public welfare activities[72] - The company emphasizes international market expansion; its subsidiary Weike Medical collaborated with Xiangya Hospital of Central South University to conduct international minimally invasive technology training programs and participated in the Dubai Arab Health Exhibition and the "Belt and Road" Thoracic Surgery Medical Quality Control Summit Forum[72] Part VI Significant Matters This section covers significant events, including commitments, related party transactions, litigation, and other material disclosures I. Fulfilled and Overdue Unfulfilled Commitments by Actual Controllers, Shareholders, Related Parties, Acquirers, and the Company During the Reporting Period This section details share lock-up commitments made during the IPO by actual controllers, shareholders, and related parties, with Wei Jiangang and Gong Aiqin's commitments fulfilled - The share lock-up commitments made by Wei Jiangang and Gong Aiqin during the initial public offering were fulfilled on May 30, 2024[73] - Commitments include not transferring shares within 12 months from the company's listing date, and an automatic 6-month extension of the lock-up period if the closing price falls below the offering price within 6 months of listing[73] - While serving as a director or senior manager of the company, no more than 25% of the total shares held by the individual may be transferred annually[73] II. Non-Operating Occupation of Funds by Controlling Shareholders and Other Related Parties of the Listed Company There was no non-operating occupation of funds by controlling shareholders or other related parties during the reporting period - There was no non-operating occupation of funds by controlling shareholders or other related parties of the listed company during the reporting period[74] 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[74] IV. Appointment and Dismissal of Accounting Firms The company's semi-annual financial report was not audited - The company's semi-annual report was not audited[74] V. Explanation by the Board of Directors and Supervisory Board on "Non-Standard Audit Report" for the Current Reporting Period There was no non-standard audit report for the company during the reporting period - There was no non-standard audit report for the company during the reporting period[74] VI. Explanation by the Board of Directors on "Non-Standard Audit Report" for the Prior Year There was no non-standard audit report for the company during the reporting period - There was no non-standard audit report for the company during the reporting period[74] VII. Bankruptcy and Reorganization Matters The company did not experience any bankruptcy or reorganization matters during the reporting period - The company did not experience any bankruptcy or reorganization matters during the reporting period[74] VIII. Litigation Matters The company had no major litigation, but other lawsuits totaling RMB 3.1281 million are ongoing, with some withdrawn or settled - The company had no significant lawsuits or arbitrations during the reporting period[75] Other Litigation Matters | Basic Information on Litigation (Arbitration) | Amount Involved (RMB 10,000) | Whether a Provision for Liabilities has been Formed | Progress of Litigation (Arbitration) | Outcome and Impact of Litigation (Arbitration) | Enforcement Status of Litigation (Arbitration) Judgment | | :--- | :--- | :--- | :--- | :--- | :--- | | Summary of Other Litigation Not Meeting Significant Litigation Disclosure Standards | 312.81 | No | Some cases have been withdrawn, some have been settled and executed, and some cases are yet to be heard | No significant impact | Some cases have been executed, and cases involving a remaining target amount of 281.67 million RMB are yet to be heard | 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[76] X. Integrity Status of the Company, its Controlling Shareholder, and Actual Controller There were no integrity issues concerning the company, its controlling shareholder, or actual controller during the reporting period - There were no integrity issues concerning the company's controlling shareholder or actual controller during the reporting period[77] XI. Significant Related Party Transactions Significant related party transactions include RMB 1.9968 million in catering services from an actual controller-controlled entity, remaining within the approved limit Related Party Transactions Related to Daily Operations | Related Party | Relationship | Type of Related Party Transaction | Content of Related Party Transaction | Amount of Related Party Transaction (RMB 10,000) | Approved Transaction Limit (RMB 10,000) | Exceeded Approved Limit | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Changzhou Kaizhou Hotel Co., Ltd. | Enterprise controlled by the company's actual controller Wan Shiping | Purchase of Goods | Catering Services | 199.68 | 500 | No | - The company had no related party transactions involving asset or equity acquisitions or sales during the reporting period[78] - The company had no related party transactions involving joint external investments during the reporting period[79] - The company had no related party creditor-debtor relationships during the reporting period[80] - There were no deposits, loans, credit lines, or other financial transactions between the company and related financial companies, or between the company's controlled financial companies and related parties[81][82] - The company had no other significant related party transactions during the reporting period[83] XII. Significant Contracts and Their Performance Leasing activities involved RMB 0.2042 million in expenditures and RMB 2.5 million in income, with no single lease significantly impacting profit; no other major contracts or guarantees existed - During the reporting period, the company and its subsidiaries, as lessees, incurred cumulative lease expenditures totaling RMB 0.2042 million[83][84] - The company and its subsidiaries, as lessors, cumulatively received rental income totaling RMB 2.5 million (including tax)[83] - The company had no leasing projects during the reporting period where the gains or losses accounted for more than 10% of the company's total profit for the period[84] - The company had no significant guarantees during the reporting period[85] - The company had no major daily operating contracts during the reporting period[85] - The company had no other significant contracts during the reporting period[85] XIII. Explanation of Other Significant Matters There were no other significant matters requiring explanation during the reporting period - There were no other significant matters requiring explanation during the reporting period[85] XIV. Significant Matters of Company Subsidiaries There were no significant matters concerning the company's subsidiaries during the reporting period - There were no significant matters concerning the company's subsidiaries during the reporting period[85] Part VII Share Changes and Shareholder Information This section details changes in the company's share capital, shareholder structure, and the status of share lock-ups and buybacks I. Share Change Status This section details share changes, including the lifting of lock-ups on pre-IPO shares, actual tradable executive-locked shares, and the progress of the share repurchase plan Share Change Status | | Quantity Before This Change (shares) | Proportion | Increase/Decrease in This Change (+, -) Other (shares) | Subtotal (shares) | Quantity After This Change (shares) | Proportion | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | I. Restricted Shares | 32,175,434 | 32.12% | -181,250 | -181,250 | 31,994,184 | 31.94% | | Of which: Shares held by domestic natural persons | 27,420,434 | 27.37% | -181,250 | -181,250 | 27,239,184 | 27.19% | | II. Unrestricted Shares | 67,997,900 | 67.88% | +181,250 | +181,250 | 68,179,150 | 68.06% | | Of which: RMB Ordinary Shares | 67,997,900 | 67.88% | +181,250 | +181,250 | 68,179,150 | 68.06% | | III. Total Shares | 100,173,334 | 100.00% | 0 | 0 | 100,173,334 | 100.00% | - On May 31, 2024, 725,000 restricted shares held by 2 shareholders (Wei Jiangang, Gong Aiqin) from the company's pre-IPO issuance were released from lock-up, with an actual tradable quantity of 181,250 shares[86] - The company's share repurchase plan has been completed, with a cumulative repurchase of 1,492,651 shares, accounting for 1.4901% of the total share capital, and a total transaction amount of RMB 29,982,395.65[87] Changes in Restricted Shares | Shareholder Name | Restricted Shares at Beginning of Period (shares) | Restricted Shares Released During Period (shares) | Restricted Shares Increased During Period (shares) | Restricted Shares at End of Period (shares) | Reason for Restriction | Planned Release Date | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Wan Shiping | 25,052,934 | 0 | 0 | 25,052,934 | Pre-IPO Restricted Shares | May 30, 2026 | | Wei Jiangang | 540,000 | 540,000 | 405,000 | 405,000 | Pre-IPO Restricted Shares, Executive Locked Shares | During tenure as director, supervisor, or senior executive, 25% of total shares held are released annually, with the remaining 75% automatically locked | | Gong Aiqin | 185,000 | 185,000 | 138,750 | 138,750 | Pre-IPO Restricted Shares, Executive Locked Shares | During tenure as director, supervisor, or senior executive, 25% of total shares held are released annually, with the remaining 75% automatically locked | II. Securities Issuance and Listing Status 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[88] III. Number of Shareholders and Shareholding Status At period-end, the company had 12,276 ordinary shareholders, with Wan Shiping as the largest shareholder, holding 25.01% - The total number of ordinary shareholders at the end of the reporting period was 12,276 households[88] Top 10 Shareholders' Shareholding Status | Shareholder Name | Shareholder Nature | Shareholding Proportion | Number of Shares Held at End of Reporting Period (shares) | Number of Restricted Shares Held (shares) | Number of Unrestricted Shares Held (shares) | | :--- | :--- | :--- | :--- | :--- | :--- | | Wan Shiping | Domestic Natural Person | 25.01% | 25,052,934 | 25,052,934 | 0 | | Jiang Shihua | Domestic Natural Person | 5.06% | 5,070,000 | 0 | 5,070,000 | | Changzhou Kaizhou Investment Management Co., Ltd. | Domestic Non-State-Owned Legal Person | 4.49% | 4,500,000 | 4,500,000 | 0 | | Wang Hailong | Domestic Natural Person | 4.30% | 4,310,000 | 0 | 4,310,000 | | Suzhou Jifeng Equity Investment Partnership (Limited Partnership) | Domestic Non-State-Owned Legal Person | 4.13% | 4,142,000 | 0 | 4,142,000 | - Wan Shiping is Wan Zhengyuan's father, and Changzhou Kaizhou Investment Management Co., Ltd. is a company controlled by Wan Shiping[88] IV. Cumulative Pledged Shares of Controlling Shareholder or Largest Shareholder and Their Concerted Parties Reaching 80% of Their Total Holdings The company's controlling shareholder or largest shareholder and their concerted parties did not have cumulative pledged shares reaching 80% of their total holdings - During the reporting period, there was no situation where the cumulative pledged shares of the controlling shareholder or largest shareholder and their concerted parties reached 80% of their total holdings in the company[92] V. Changes in Shareholdings of Directors, Supervisors, and Senior Management There were no changes in the shareholdings of the company's directors, supervisors, or senior management during the reporting period - There were no changes in the shareholdings of the company's directors, supervisors, and senior management during the reporting period; details can be found in the 2023 annual report[92] VI. Changes in Controlling Shareholder or Actual Controller There were no changes in the company's controlling shareholder or actual controller during the reporting period - The company's controlling shareholder did not change during the reporting period[93] - The company's actual controller did not change during the reporting period[93] Part VIII Preferred Share Information This section confirms the absence of preferred shares in the company during the reporting period The Company Had No Preferred Shares During the Reporting Period The company had no preferred shares during the reporting period - The company had no preferred shares during the reporting period[94] Part IX Bond Information This section confirms the absence of bonds issued by the company during the reporting period The Company Had No Bonds During the Reporting Period The company had no bonds during the reporting period - The company had no bonds during the reporting period[95] Part X Financial Report This section presents the company's unaudited semi-annual financial statements and detailed notes on accounting policies, taxes, and financial items I. Audit Report The company's semi-annual financial report was not audited - The company's semi-annual financial report was not audited[96] II. Financial Statements This section presents the company's consolidated and parent company financial statements for H1 2024, detailing financial position and operating results - This section includes the consolidated balance sheet, parent company balance sheet, consolidated income statement, parent company income statement, consolidated cash flow statement, parent company cash flow statement, consolidated statement of changes in owners' equity, and parent company statement of changes in owners' equity[97][100][103][106][109][111][113][119] 1. Consolidated Balance Sheet The consolidated balance sheet provides a snapshot of the company's assets, liabilities, and equity at the end of the reporting period Key Data from Consolidated Balance Sheet | Item | Ending Balance (RMB) | Beginning Balance (RMB) | | :--- | :--- | :--- | | Monetary Funds | 200,288,963.78 | 568,855,578.18 | | Financial Assets Held for Trading | 957,329,417.85 | 674,291,095.76 | | Accounts Receivable | 92,219,159.77 | 97,097,633.66 | | Inventories | 108,616,171.22 | 102,751,487.49 | | Total Assets | 2,373,152,059.47 | 2,393,581,909.51 | | Short-Term Borrowings | 13,729,263.65 | 2,200,000.00 | | Total Liabilities | 168,038,096.96 | 147,371,481.33 | | Total Equity Attributable to Parent Company Owners | 2,197,841,813.21 | 2,238,716,685.61 | | Total Liabilities and Owners' Equity | 2,373,152,059.47 | 2,393,581,909.51 | 2. Parent Company Balance Sheet The parent company balance sheet details the assets, liabilities, and equity of the parent entity at the end of the reporting period Key Data from Parent Company Balance Sheet | Item | Ending Balance (RMB) | Beginning Balance (RMB) | | :--- | :--- | :--- | | Monetary Funds | 139,759,314.59 | 478,991,880.99 | | Financial Assets Held for Trading | 874,730,210.96 | 643,146,679.46 | | Accounts Receivable | 34,240,727.97 | 41,077,023.64 | | Long-Term Equity Investments | 844,303,743.52 | 843,755,712.49 | | Total Assets | 2,169,296,783.21 | 2,196,598,820.08 | | Short-Term Borrowings | 11,729,263.65 | 200,000.00 | | Total Liabilities | 54,919,634.32 | 40,753,476.84 | | Total Owners' Equity | 2,114,377,148.89 | 2,155,845,343.24 | | Total Liabilities and Owners' Equity | 2,169,296,783.21 | 2,196,598,820.08 | 3. Consolidated Income Statement The consolidated income statement presents the company's revenues, expenses, and net profit for the reporting period Key Data from Consolidated Income Statement | Item | H1 2024 (RMB) | H1 2023 (RMB) | | :--- | :--- | :--- | | Total Operating Revenue | 213,553,049.86 | 201,802,103.61 | | Total Operating Cost | 178,057,565.42 | 162,689,502.68 | | Operating Profit | 57,273,796.95 | 61,370,309.81 | | Total Profit | 56,642,481.09 | 61,465,963.24 | | Net Profit | 47,458,216.10 | 51,837,595.49 | | Net Profit Attributable to Parent Company Shareholders | 47,679,809.37 | 50,034,885.79 | | Basic Earnings Per Share (RMB/share) | 0.48 | 0.50 | | Diluted Earnings Per Share (RMB/share) | 0.48 | 0.50 | 4. Parent Company Income Statement The parent company income statement outlines the parent entity's revenues, expenses, and net profit for the reporting period Key Data from Parent Company Income Statement | Item | H1 2024 (RMB) | H1 2023 (RMB) | | :--- | :--- | :--- | | Operating Revenue | 54,114,737.28 | 51,228,470.82 | | Operating Cost | 37,729,288.86 | 33,775,940.80 | | Operating Profit | 51,095,859.74 | 51,542,653.24 | | Total Profit | 50,410,787.19 | 51,531,985.28 | | Net Profit | 46,636,487.42 | 45,880,092.63 | 5. Consolidated Cash Flow Statement The consolidated cash flow statement details the company's cash inflows and outflows from operating, investing, and financing activities Key Data from Consolidated Cash Flow Statement | Item | H1 2024 (RMB) | H1 2023 (RMB) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 70,317,683.91 | 64,035,419.50 | | Net Cash Flow from Investing Activities | -360,652,953.53 | -498,667,660.09 | | Net Cash Flow from Financing Activities | -76,984,024.48 | -70,014,460.95 | | Net Increase in Cash and Cash Equivalents | -367,370,694.40 | -504,422,303.09 | | Cash and Cash Equivalents at End of Period | 197,887,388.78 | 607,222,023.01 | 6. Parent Company Cash Flow Statement The parent company cash flow statement presents the parent entity's cash flows from operating, investing, and financing activities Key Data from Parent Company Cash Flow Statement | Item | H1 2024 (RMB) | H1 2023 (RMB) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -74,890,237.22 | -10,476,637.75 | | Net Cash Flow from Investing Activities | -183,982,221.10 | -434,528,684.43 | | Net Cash Flow from Financing Activities | -79,164,188.08 | -70,242,283.48 | | Net Increase in Cash and Cash Equivalents | -338,036,646.40 | -515,247,605.66 | | Cash and Cash Equivalents at End of Period | 138,731,474.59 | 522,962,834.75 | 7. Consolidated Statement of Changes in Owners' Equity The consolidated statement of changes in owners' equity tracks the movements in the company's equity components over the reporting period - Total comprehensive income attributable to parent company owners for the current period was RMB 47,679,809.37[114] - Owners' contributions and capital reductions resulted in a RMB 28,741,711.97 decrease in equity attributable to parent company owners for the current period[114] - Profit distribution for the current period resulted in a RMB 59,812,969.80 decrease in equity attributable to parent company owners, primarily including the appropriation of RMB 4,663,648.74 for surplus reserves and RMB 59,812,969.80 distributed to owners[114][115] 8. Parent Company Statement of Changes in Owners' Equity The parent company statement of changes in owners' equity details the movements in the parent entity's equity components during the reporting period - Total comprehensive income for the parent company in the current period was RMB 46,636,487.42[120] - Owners' contributions and capital reductions resulted in a RMB 28,741,711.97 decrease in owners' equity for the current period[120] - Profit distribution for the current period resulted in a RMB 59,362,969.80 decrease in owners' equity, primarily including the appropriation of RMB 4,663,648.74 for surplus reserves and RMB 59,362,969.80 distributed to owners[120][121] III. Company Overview This section provides fundamental company information, including establishment, listing, share capital, registered capital, main business, and actual controllers - Jiangsu Dongxing Smart Medical Technology Co., Ltd. was established on February 21, 2001, and listed on the Shenzhen Stock Exchange on November 30, 2022[125] - As of June 30, 2024, the company's cumulative issued share capital totaled 100,173,334 shares, with a registered capital of RMB 100,173,334.00[125] - The company's main business activities include the R&D, production, sales, and related services of Class I, II, and III medical devices, with Wan Shiping and Wan Zhengyuan (father and son) as the actual controllers[125] IV. Basis of Financial Statement Preparation The financial statements are prepared under Enterprise Accounting Standards and CSRC regulations, based on a going concern assumption - These financial statements are prepared in accordance with the "Enterprise Accounting Standards" issued by the Ministry of Finance and the relevant provisions of the China Securities Regulatory Commission's "Information Disclosure Rules for Companies Issuing Securities Publicly No. 15 – General Provisions for Financial Reports"[126] - These financial statements are prepared on a going concern basis, and the company has the ability to continue as a going concern for at least 12 months from the end of the reporting period[127] V. Significant Accounting Policies and Estimates This section outlines the company's significant accounting policies and estimates, ensuring financial information accuracy and comparability across various aspects, including lease accounting - The company has formulated specific accounting policies and estimates for transactions and matters such as fixed asset depreciation, intangible asset amortization, and revenue recognition, based on its actual production and operational characteristics[128] - These financial statements comply with the requirements of the Enterprise Accounting Standards issued by the Ministry of Finance, truly and completely reflecting the company's financial position, operating results, and cash flows[129] - The company has detailed accounting policies and measurement methods for financial instruments, inventories, long-term equity investments, fixed assets, intangible assets, revenue recognition, government grants, and leases[141][154][159][164][170][191][194][197] VI. Taxes This section details the company's and its subsidiaries' main tax categories, rates, and preferential tax policies, including VAT, Urban Maintenance and Construction Tax, and EIT Main Tax Categories and Rates | Tax Category | Tax Basis | Tax Rate | | :--- | :--- | :--- | | Value-Added Tax (VAT) | Sales of goods and taxable services calculated according to tax laws, with input VAT deducted, the difference being VAT payable | 13%, 9%, 6% | | Urban Maintenance and Construction Tax | Calculated based on actual VAT paid | 7% | | Enterprise Income Tax (EIT) | Calculated based on taxable income | 25%, 20%, 15% | - Subsidiaries Changzhou Weike Medical Devices Co., Ltd. and Jiangsu Zihang Precision Hardware Co., Ltd. are subject to an Enterprise Income Tax rate of 15% in 2024 due to their high-tech enterprise certificates[203] - Subsidiaries Suzhou Sanfeng Original Medical Technology Co., Ltd., Sanfeng Dongxing Medical Equipment (Jiangsu) Co., Ltd., and Changzhou Changheng Precision Mold Technology Co., Ltd. qualify as small and micro enterprises, enjoying a preferential Enterprise Income Tax rate of 20%[203] VII. Notes to Consolidated Financial Statement Items This section provides detailed notes on consolidated financial statement items, in