TDG(SH:600330)2024-08-20 10:25Glossary A concise explanation of key terms and definitions used throughout the report Company Profile and Key Financial Indicators An overview of the company's background and a summary of its core financial performance metrics Company Profile TDG Holding Co., Ltd. (TDG Holding) is a company listed on the Shanghai Stock Exchange (stock code: 600330), with Pan Zhengqiang as its legal representative, primarily engaged in the manufacturing of electronic components, including magnetic and crystal materials Company Information | Item | Content | | :--- | :--- | | Company Name | TDG Holding Co., Ltd. | | Stock Abbreviation | TDG Holding (A-share) | | Stock Code | 600330 | | Listing Exchange | Shanghai Stock Exchange | | Legal Representative | Pan Zhengqiang | Key Accounting Data and Financial Indicators In the first half of 2024, the company faced significant performance pressure, with operating revenue decreasing by 21.14% and net profit attributable to shareholders declining by 57.80% year-on-year, while net cash flow from operating activities turned negative, plummeting by 196.01% Key Accounting Data (January-June 2024) | Key Accounting Data | Current Period | Prior Year Period | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 1.568 billion CNY | 1.988 billion CNY | -21.14% | | Net Profit Attributable to Shareholders | 79 million CNY | 187 million CNY | -57.80% | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) | 60 million CNY | 151 million CNY | -60.54% | | Net Cash Flow from Operating Activities | -142 million CNY | 148 million CNY | -196.01% | | Basic Earnings Per Share (CNY/share) | 0.064 | 0.152 | -57.89% | | Weighted Average Return on Net Assets (%) | 0.98% | 2.36% | Decreased by 1.38 percentage points | Non-recurring Gains and Losses (January-June 2024) | Non-recurring Gains and Losses Item | Amount (CNY) | | :--- | :--- | | Government Grants | 30,680,118.25 | | Net Other Non-operating Income and Expenses | -6,902,454.70 | | Gains and Losses from Disposal of Non-current Assets | -923,136.44 | | Total | 19,205,356.74 | Management Discussion and Analysis A comprehensive review of the company's operational performance, financial condition, and future outlook, including key business segments and risk factors Industry and Main Business Overview The company's main business is divided into two segments: electronic materials, including magnetic, sapphire, and piezoelectric crystal materials for new energy vehicles, PV energy storage, and 5G communication, and high-end specialized equipment for crystal growth and powder material processing, serving the PV, semiconductor, and magnetic material industries - Electronic Materials: Business covers magnetic materials, sapphire crystal materials, and piezoelectric crystal materials. The company maintains a leading position in magnetic materials, with steady growth particularly in new energy vehicles and data center applications. For sapphire materials, the company has achieved mass production of 400kg-class crystals and successfully exhibited 1000kg-class crystals, demonstrating significant technological advantages. In piezoelectric crystal materials, the company has broken through key technologies for large-size high-performance lithium niobate wafers, breaking foreign monopolies151617 - High-end Specialized Equipment: Business includes specialized equipment for crystal materials and powder materials. Crystal equipment focuses on PV and sapphire growth and processing equipment, with a new generation RCZ single crystal furnace meeting the demand for N-type battery cells. Powder equipment mainly consists of powder forming and thermal sintering equipment, applied in magnetic materials, lithium battery materials, and other fields, benefiting from the stable growth trend in the powder metallurgy industry17 Analysis of Core Competencies The company's core competencies are rooted in its technological leadership, talent development, strong customer relationships, and superior quality, evidenced by 637 core intellectual property rights and strategic collaborations with industry leaders - As of the first half of 2024, the company possesses 637 core intellectual property rights in electronic materials and equipment, including 210 invention patents, with an additional 185 patents currently under application, ensuring independent technological control18 Discussion and Analysis of Operations Facing a complex external environment, the company implemented strategic adjustments, increased technological innovation, refined cost control, and strengthened cash flow management, but overall operating revenue and profit declined due to overcapacity in the photovoltaic industry impacting smart equipment sales Analysis of Main Business During the reporting period, the company's operating revenue decreased by 21.14% due to reduced photovoltaic crystal growth orders in the smart equipment sector, while net cash flow from operating activities plummeted by 196.01% and net cash outflow from investing activities expanded by 155.87% Analysis of Major Financial Statement Item Changes | Item | Current Period Amount (CNY) | Prior Year Period Amount (CNY) | Change (%) | Explanation of Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 1,568,145,630.11 | 1,988,392,637.78 | -21.14 | Sales revenue from smart equipment's photovoltaic crystal growth orders decreased due to industry overcapacity | | Net Cash Flow from Operating Activities | -142,370,310.56 | 148,293,133.25 | -196.01 | Decrease in cash received from sales and increase in cash paid for purchases | | Net Cash Flow from Investing Activities | -612,017,845.94 | -239,192,925.71 | -155.87 | Increase in cash paid for the acquisition of long-term assets and decrease in cash received from investment recovery | | Net Cash Flow from Financing Activities | 125,244,197.47 | 2,016,571.02 | 6,110.75 | Increase in cash received from borrowings | Analysis of Assets and Liabilities At the end of the reporting period, total assets were 11.414 billion CNY, a slight 1.51% decrease from the beginning of the period, with significant increases in construction in progress and prepayments, while short-term borrowings rose by 35.77% Changes in Major Asset and Liability Items | Item Name | Period-end Balance (CNY) | Change from Prior Year-end (%) | Explanation | | :--- | :--- | :--- | :--- | | Notes Receivable | 8,656,894.04 | 363.45% | Primarily due to an increase in bank acceptance bills received by the company during the reporting period | | Prepayments | 86,447,572.07 | 128.55% | Primarily due to an increase in prepayments for materials and equipment by the company during the reporting period | | Construction in Progress | 1,750,808,320.37 | 21.31% | Primarily due to the company's continuous progress in project construction during the reporting period | | Other Non-current Assets | 180,165,323.81 | 152.59% | Primarily due to an increase in prepayments for long-term asset acquisitions by the company during the reporting period | | Short-term Borrowings | 1,016,085,785.93 | 35.77% | Primarily due to the company increasing borrowings to meet operational needs during the reporting period | | Employee Remuneration Payable | 49,586,773.56 | -43.37% | Primarily due to the company paying year-end bonuses accrued at the end of the previous year | | Taxes Payable | 16,028,767.58 | -46.42% | Primarily due to a decrease in the company's income tax payable during the reporting period | - As of the end of the reporting period, the company's major restricted assets, including monetary funds and accounts receivable financing, totaled approximately 251 million CNY, primarily serving as collateral for bank acceptance bills and guarantees26 Analysis of Investment Status During the reporting period, the company's total external equity investment was 6.9 million CNY, a significant 95.43% year-on-year decrease, primarily for the acquisition of TDG Kaimi and capital increase in Beijing Zhongding Shuzhi, while several major non-equity investment projects continued with substantial cumulative investment but some experienced delays due to optimization adjustments Progress of Major Non-equity Investment Projects | Project Name | Total Investment (million CNY) | Cumulative Investment (million CNY) | Project Progress | | :--- | :--- | :--- | :--- | | High-Performance Soft Magnetic Materials Green Manufacturing Project | 588.0860 | 400.7193 | 68% | | Sapphire Crystal Manufacturing and Processing Base | 1,712.8218 | 817.0049 | 48% | | Annual Production of 25,300 Tons of High-End Magnetic Materials Project | 562.6201 | 336.0038 | 60% | | Large-Size RF Piezoelectric Wafer Project | 1,467.6086 | 228.2116 | 16% | | New Efficient Crystal Growth and Precision Processing Smart Equipment Project | 664.5375 | 65.4200 | 10% | Analysis of Major Holding and Participating Companies During the reporting period, key subsidiaries TDG Jicheng, TDG New Environment, and TDG Rizhen significantly contributed to operating revenue and net profit in specialized high-end equipment, environmental technology, and electronic specialized equipment sectors Operating Performance of Major Subsidiaries (Unit: million CNY) | Company Name | Main Business | Total Assets | Net Assets | Operating Revenue | Net Profit | | :--- | :--- | :--- | :--- | :--- | :--- | | TDG Jicheng Machine Technology Co., Ltd. | Production and sales of specialized high-end equipment | 1,897.1547 | 1,169.1404 | 320.6835 | 22.9842 | | TDG New Environment Technology Co., Ltd. | R&D of new energy-saving and environmental protection technologies | 415.1986 | 283.1719 | 86.7371 | 15.5002 | | TDG Rizhen Precision Technology Co., Ltd. | Technology development of electronic specialized equipment | 802.4206 | 244.2518 | 246.0472 | 15.3539 | Potential Risks The company faces multiple risks including macroeconomic fluctuations, rising raw material prices, declining product gross margins, and accounts receivable collection, with mitigation strategies focusing on R&D, procurement optimization, cost reduction, and improved receivables management - The company identified four major risks: - Macroeconomic and Market Risks: Industry cyclical fluctuations may lead to unstable market demand - Raw Material Procurement Price Fluctuation Risk: Piezoelectric crystal raw material prices are on an upward trend - Product Price and Gross Margin Decline Risk: Technological maturity and intensified market competition may lead to increased product costs and decreased prices - Accounts Receivable Collection Risk: As of the end of June 2024, accounts receivable balance was 2.05 billion CNY, posing a risk of uncollectibility3334 Corporate Governance An overview of the company's governance structure, including board operations, shareholder meetings, and executive changes Corporate Governance Status During the reporting period, the company held its 2023 Annual General Meeting, approving the annual report and profit distribution plan, while experiencing executive changes with Teng Bin resigning as Chairman of the Supervisory Board to become Vice President, and Guo Yuebo elected as the new Chairman, with no profit distribution or capital reserve capitalization plans for the current period - During the reporting period, changes occurred among the company's directors, supervisors, and senior management: Teng Bin resigned as Chairman of the Supervisory Board and was appointed as the company's Vice President; Guo Yuebo was elected as the Chairman of the Ninth Supervisory Board; Jin Xuexiao was elected as an employee supervisor38 - The company has no profit distribution or capital reserve capitalization plans for this half-year period39 Environmental and Social Responsibility The company's commitment and actions towards environmental protection, sustainable development, and social welfare initiatives Environmental and Social Responsibility Status The company actively fulfills its environmental and social responsibilities, ensuring compliance with environmental regulations as a key pollutant-discharging entity and implementing emergency plans, while also deepening "Three Links and Three Drives" common prosperity initiatives and providing 300,000 CNY in targeted assistance to Renchuan Town, Pan'an County - The parent company, TDG Holding, is a key water pollutant-discharging entity, and its wholly-owned subsidiary, TDG Jingdian, is a key solid waste-generating entity, with all pollutants treated to meet discharge standards41 - The company continues to deepen the "Three Links and Three Drives" common prosperity project and solidify the "Mountain-Sea Collaboration" assistance project, with a targeted donation of 300,000 CNY to the Renchuan Town, Pan'an County assistance project in June 202449 Significant Matters A review of critical events and actions, including commitments, litigation, fundraising, and other material developments Fulfillment of Commitments During the reporting period, the company's controlling shareholder, TDG Gaoxin, and actual controller, Pan Jianqing, strictly adhered to their long-term commitment to avoid horizontal competition, and the company also fulfilled its profit distribution commitment to distribute at least 10% of distributable profits in cash annually, subject to cash dividend conditions - The company's controlling shareholder, TDG Gaoxin, and actual controller, Pan Jianqing, committed not to engage in businesses that compete with TDG Holding, a long-term commitment strictly fulfilled during the reporting period50 Major Litigation and Arbitration Matters During the reporting period, the company was involved in several major lawsuits, primarily sales contract disputes between subsidiaries like TDG Jingmei and TDG New Environment with customers or suppliers, with some cases resolved through mediation and others still pending Major Litigation and Arbitration Cases During the Reporting Period | Plaintiff | Defendant | Litigation Type | Amount Involved (million CNY) | Progress | | :--- | :--- | :--- | :--- | :--- | | TDG Jingmei | Shanghai Zhijin Technology Co., Ltd. | Lawsuit | 4.03 | Awaiting formal case filing | | Shanghai Zhijin Technology Co., Ltd. | TDG Jingmei | Lawsuit | 5.3799 | Still in pre-litigation mediation stage | | TDG New Environment | China Construction Installation Group Co., Ltd. | Lawsuit | 6.0543 | Mediation completed, fulfilled | | TDG New Environment | Shanghai Kangheng Environmental Co., Ltd. | Lawsuit | 3.4645 | Mediation completed, fulfilled | | TDG New Environment | Lianyungang Gangcheng Water Affairs Co., Ltd. | Lawsuit | 18.3852 | Pre-litigation mediation stage | Explanation of Progress in Use of Raised Funds In November 2022, the company raised 2.325 billion CNY through a private placement, with 670 million CNY cumulatively invested by the end of the reporting period, representing 28.80% of the total, primarily for the "Large-Size RF Piezoelectric Wafer Project" and "New Efficient Crystal Growth and Precision Processing Smart Equipment Project," both of which are behind schedule due to optimization adjustments Overall Use of Raised Funds (Unit: million CNY) | Net Raised Funds (1) | Cumulative Investment (4) | Cumulative Investment Progress (6)=(4)/(1) | Amount Invested This Year (8) | | :--- | :--- | :--- | :--- | | 2,324.6960 | 669.5535 | 28.80% | 113.5219 | Details of Raised Fund Investment Projects | Project Name | Planned Investment from Raised Funds (million CNY) | Cumulative Investment (million CNY) | Cumulative Investment Progress (%) | Reason for Investment Progress Not Meeting Plan | | :--- | :--- | :--- | :--- | :--- | | Large-Size RF Piezoelectric Wafer Project | 1,351.3500 | 174.1335 | 12.89% | The company is constructing based on actual business development | | New Efficient Crystal Growth and Precision Processing Smart Equipment Project | 534.1093 | 65.4200 | 12.25% | The company is optimizing and adjusting the project's production process and equipment layout | | Replenishment of Working Capital and Repayment of Bank Loans | 439.2367 | 430.0000 | 97.90% | - | Explanation of Other Significant Matters During the reporting period, the company implemented a share repurchase plan, cumulatively repurchasing 9.7969 million shares, representing 0.79% of its total share capital, with a total repurchase amount between 100 million CNY and 200 million CNY by the end of June 2024 - The company repurchased its shares using its own funds through centralized bidding transactions, with a total repurchase amount not less than 100 million CNY and not exceeding 200 million CNY. As of the end of June 2024, 9.7969 million shares have been cumulatively repurchased, accounting for 0.79% of the total share capital61 Changes in Shares and Shareholder Information Details on changes in the company's share capital and an overview of its shareholder structure, including major shareholders and their holdings Shareholder Information As of the end of the reporting period, the company had 101,621 common shareholders, with TDG Gaoxin Group Co., Ltd. (10.50%) and actual controller Pan Jianqing (4.65%) as the top two shareholders, both having pledged portions of their holdings Top Ten Shareholders' Shareholding Information | Shareholder Name | Shares Held at Period-end | Percentage (%) | Share Status | | :--- | :--- | :--- | :--- | | TDG Gaoxin Group Co., Ltd. | 129,561,810 | 10.50 | Pledged 90,752,000 | | Pan Jianqing | 57,306,180 | 4.65 | Pledged 32,400,000 | | Guangdong Hengjian International Investment Co., Ltd. | 20,152,020 | 1.63 | Unpledged | | Pan Jianzhong | 19,920,000 | 1.62 | Unpledged | | Pan Juanmei | 19,056,000 | 1.54 | Unpledged | Information on Preferred Shares A statement confirming the absence of preferred shares issued by the company Information on Bonds A statement confirming the absence of bonds issued by the company Financial Report The complete set of financial statements, including balance sheets, income statements, and cash flow statements, along with their detailed notes Financial Statements This section includes the company's consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity for the first half of 2024, comprehensively reflecting the financial position, operating results, and cash flows for the period Consolidated Balance Sheet Summary (June 30, 2024) | Item | Period-end Balance (CNY) | Period-start Balance (CNY) | | :--- | :--- | :--- | | Total Assets | 11,414,111,687.73 | 11,588,548,682.06 | | Total Liabilities | 3,378,390,744.13 | 3,413,523,179.24 | | Total Equity Attributable to Parent Company Shareholders | 7,976,842,465.03 | 8,127,906,581.08 | Consolidated Income Statement Summary (January-June 2024) | Item | Current Period Amount (CNY) | Prior Period Amount (CNY) | | :--- | :--- | :--- | | Total Operating Revenue | 1,568,145,630.11 | 1,988,392,637.78 | | Total Operating Costs | 1,544,922,150.72 | 1,872,066,156.01 | | Total Profit | 84,098,628.49 | 208,413,722.64 | | Net Profit | 82,123,286.07 | 190,171,144.06 | | Net Profit Attributable to Parent Company Shareholders | 78,861,082.82 | 186,889,833.33 | Notes to Financial Statements The notes to the financial statements provide detailed information on the company's basic situation, basis of financial statement preparation, significant accounting policies and estimates, and explanations for major items in the consolidated financial statements, including monetary funds, accounts receivable, inventories, fixed assets, construction in progress, borrowings, and related party relationships and transactions