中国龙工(03339) - 2020 - 中期财报

Financial Highlights Financial Highlights For H1 2020, the company reported a slight revenue decrease but improved operating and net profits, with basic EPS increasing and mixed liquidity indicators Key Financial Data Summary for H1 2020 | Metric | For the six months ended June 30, 2020 (RMB thousand) | For the six months ended June 30, 2019 (RMB thousand) | Change | | :--- | :--- | :--- | :--- | | Revenue | 6,513,807 | 6,759,674 | -3.64% | | Operating Profit | 1,064,603 | 987,780 | +7.78% | | Profit attributable to owners of the parent | 943,836 | 886,621 | +6.45% | | Basic earnings per share | 0.22 RMB | 0.21 RMB | +4.76% | | Overall gross profit margin | 22.89% | 23.24% | -0.35 percentage points | | Net profit margin | 14.49% | 13.15% | +1.34 percentage points | | Current ratio | 1.80 | 2.19 | -0.39 | | Inventory turnover days | 107 days | 90 days | +17 days | Review Report on Interim Financial Information Review Report The interim condensed consolidated financial information has been reviewed by independent auditors, with a scope smaller than a full audit, thus no audit opinion is expressed - Independent auditors reviewed the interim condensed consolidated financial information for the six months ended June 30, 2020, with a scope smaller than a full audit, thus no audit opinion is expressed[8][9] Interim Condensed Consolidated Financial Statements Interim Condensed Consolidated Statement of Profit or Loss Despite a revenue decrease to RMB 6.51 billion in H1 2020, profit before tax and profit for the period increased due to positive other income and lower finance costs Key Profit or Loss Items for H1 2020 | Item | For the six months ended June 30, 2020 (RMB thousand) | For the six months ended June 30, 2019 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 6,513,807 | 6,759,674 | | Gross Profit | 1,490,784 | 1,571,179 | | Profit before tax | 1,125,055 | 1,048,227 | | Profit for the period | 943,836 | 888,879 | | Profit attributable to owners of the parent | 943,608 | 888,621 | | Basic and diluted earnings per share | 0.22 RMB | 0.21 RMB | Interim Condensed Consolidated Statement of Comprehensive Income Total comprehensive income for H1 2020 increased to RMB 941 million, primarily driven by profit for the period and foreign exchange differences from overseas operations - Total comprehensive income for the period was RMB 941 million, with RMB 940 million attributable to owners of the parent, primarily influenced by profit for the period and exchange differences from overseas operations[12] Interim Condensed Consolidated Statement of Financial Position As of June 30, 2020, total assets slightly increased to RMB 16.06 billion, with current assets rising and current liabilities significantly growing, while net assets remained stable Key Financial Position Items Changes | Item | As of June 30, 2020 (RMB thousand) | As of December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Total non-current assets | 3,604,000 | 3,787,707 | | Total current assets | 12,457,814 | 10,829,996 | | Total current liabilities | 6,913,622 | 4,741,297 | | Total non-current liabilities | 106,692 | 799,441 | | Net assets | 9,041,500 | 9,076,965 | Interim Condensed Consolidated Statement of Changes in Equity Total equity slightly decreased to RMB 9.04 billion as of June 30, 2020, primarily due to total comprehensive income offset by the 2019 final dividend distribution - Total equity decreased by approximately RMB 35.47 million, primarily due to a RMB 941 million increase from total comprehensive income for the period, offset by a RMB 976 million decrease from the 2019 final dividend distribution[17] Interim Condensed Consolidated Statement of Cash Flows Net cash flow from operating activities significantly decreased to RMB 407 million in H1 2020, mainly due to increased trade receivables, while cash and cash equivalents increased to RMB 2.73 billion at period-end Cash Flow Overview for H1 2020 | Item | For the six months ended June 30, 2020 (RMB thousand) | For the six months ended June 30, 2019 (RMB thousand) | | :--- | :--- | :--- | | Net cash flows from operating activities | 406,669 | 850,146 | | Net cash flows used in investing activities | (113,611) | (70,466) | | Net cash flows (used in)/from financing activities | (61,843) | 79,433 | | Net increase in cash and cash equivalents | 231,215 | 859,113 | | Cash and cash equivalents at end of period | 2,733,009 | 3,424,131 | Notes to the Financial Statements Operating Segment Information The Group's business is primarily driven by construction machinery sales, with wheel loaders as the largest revenue source, followed by excavators and forklifts Segment Performance for H1 2020 | Segment | Revenue (RMB thousand) | Results (RMB thousand) | | :--- | :--- | :--- | | Construction Machinery Sales | 6,513,057 | 823,957 | | Construction Machinery Finance Lease | 750 | 262 | | Financial Investments | – | 242,398 | Product Revenue Composition for H1 2020 | Product | Revenue (RMB thousand) | Percentage | | :--- | :--- | :--- | | Wheel Loaders | 3,216,119 | 49.4% | | Excavators | 1,282,636 | 19.7% | | Forklifts | 1,348,666 | 20.7% | | Parts | 617,112 | 9.5% | | Road Rollers | 48,524 | 0.7% | Dividends The Board does not recommend an interim dividend for H1 2020, while the 2019 final dividend of HKD 0.25 per share was paid on July 20, 2020 - No interim dividend is recommended for H1 2020[39] - The 2019 final dividend of HKD 0.25 per share was paid on July 20, 2020[39] Trade Receivables Net trade receivables increased significantly to RMB 2.97 billion as of June 30, 2020, with the majority aged within 90 days Trade Receivables Aging Analysis | Aging | As of June 30, 2020 (RMB thousand) | As of December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | 0 to 90 Days | 2,095,697 | 1,395,345 | | 91 to 180 Days | 417,991 | 421,823 | | 181 to 360 Days | 375,237 | 363,494 | | Over 1 Year | 83,609 | 64,360 | Management Discussion and Analysis Performance and Business Review Despite a slight revenue decrease in H1 2020 due to COVID-19, net profit grew due to effective cost control and stable financial investment income, with wheel loaders remaining the primary revenue source - Despite a 3.64% year-on-year revenue decrease, net profit increased by 6.18% year-on-year through cost control and investment income[72] - Export sales accounted for 4.8% of total sales, growing by 21.7% year-on-year[73] Major Product Sales Changes (H1 2020 vs H1 2019) | Product | Sales (RMB million) | Year-on-year Change | | :--- | :--- | :--- | | Wheel Loaders | 3,216 | -3.6% | | Excavators | 1,283 | -8.9% | | Forklifts | 1,349 | -0.1% | | Road Rollers | 49 | -31.9% | | Parts | 617 | +4.6% | Financial Review The Group's financial position remained solid with total shareholders' equity of RMB 9.04 billion, increased cash and bank balances, a current ratio of 1.80, and capital expenditure for strategic and product transformation - As of June 30, 2020, Group bank balances and cash were approximately RMB 2.73 billion, an increase of RMB 231 million from the beginning of the year[80] - The current ratio was 1.80, and the total asset-liability ratio was approximately 43.71%[81][82] - Capital expenditure for property, plant, and equipment amounted to approximately RMB 98 million in H1 2020, supporting strategic and product transformation[83] Outlook Management is optimistic about H2 2020, expecting increased infrastructure investment to drive demand for construction machinery, with the Group focusing on core products, quality, domestic market share, and international expansion - Increased national infrastructure investment is expected to boost demand for construction machinery in H2[90] - Strategic focus: Concentrate on four main products—wheel loaders, excavators, forklifts, and road machinery—to enhance quality, service, and cost-effectiveness[90] - Market strategy: Deepen domestic market penetration, consolidate the leading position in wheel loaders, increase excavator market share, and expand international presence by improving overseas marketing networks[90][91] Corporate Governance Corporate Governance The company maintains high corporate governance standards, adhering to most Listing Rules, but disclosed deviations including lack of directors' liability insurance, non-attendance of independent non-executive directors at AGM, and combined Chairman and CEO roles - The company disclosed several deviations from the Corporate Governance Code: - Code Provision A.1.8: No liability insurance purchased for directors - Code Provision A.6.7: Three independent non-executive directors did not attend the 2020 AGM - Code Provision A.2.1: The roles of Chairman and Chief Executive Officer are not separated, both held by Mr. Li Xinyan[93][94][96] Disclosure of Interests Disclosure of Interests As of June 30, 2020, Chairman Mr. Li Xinyan and Non-executive Director Ms. Ni Yinying (couple) are the controlling shareholders, jointly holding 56.03% of issued share capital, with Citigroup Inc. holding 5.00% Directors' and Chief Executive's Interests | Director Name | Capacity | Number of Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Li Xinyan and Ni Yinying | Beneficial Owner | 2,398,273,188 | 56.03% | - Major shareholder Citigroup Inc. holds 214,427,208 shares, representing 5.00% of the issued share capital[108] Other Information Other Information The Board did not recommend an interim dividend for H1 2020, the Group employed approximately 7,828 staff, and the interim results were reviewed by the Audit Committee - The Board did not recommend an interim dividend for the six months ended June 30, 2020[109] - As of June 30, 2020, the Group employed approximately 7,828 staff[110] - The interim results for the six months ended June 30, 2020, were reviewed by the company's Audit Committee[111] Company Information Company Information This section provides essential company details, including board and committee members, company secretary, registered office, principal place of business, legal advisors, auditor (Ernst & Young), and share registrar - The company's Chairman and Chief Executive Officer is Mr. Li Xinyan[112] - The company's auditor is Ernst & Young[113]