Baota Industry(SZ:000595)2018-05-16 16:00Financial Performance - The company achieved operating revenue of ¥435,761,930.44 in 2017, representing a 22.51% increase compared to ¥355,699,118.61 in 2016[6]. - The net profit attributable to shareholders was ¥18,742,523.49, a significant turnaround from a loss of ¥84,432,511.13 in the previous year, marking a 122.20% improvement[6]. - The total assets increased by 56.54% to ¥1,879,364,915.83 at the end of 2017, up from ¥1,200,562,664.84 in 2016[19]. - The net assets attributable to shareholders rose by 5.13% to ¥696,506,127.94, compared to ¥662,522,871.40 in 2016[19]. - The company reported a basic earnings per share of ¥0.02, a recovery from a loss of ¥0.11 per share in 2016, reflecting an 118.18% increase[19]. - The net cash flow from operating activities improved significantly, with a net outflow of ¥978,361.59 in 2017, compared to a net outflow of ¥44,034,149.34 in 2016, representing a 95.30% improvement[19]. - The weighted average return on equity improved to 2.76% in 2017, up from -11.99% in 2016, indicating a positive trend in profitability[19]. - The company reported a net profit excluding non-recurring gains and losses of -¥39,858,014.53, an improvement of 49.18% from -¥78,430,503.10 in 2016[19]. - The company reported a significant increase in non-operating income, with a total of 19,059,165.87 in 2017 compared to a loss of 15,928,528.88 in 2016, indicating a turnaround in financial performance[24]. Business Operations and Strategy - The company plans to apply for the removal of the delisting risk warning, which would change its stock name from "*ST Baoshi" to "Baota Industry" and restore the daily price limit from 5% to 10%[6]. - The company will not distribute cash dividends or issue bonus shares for the year[7]. - The bearing business showed substantial improvement, contributing to profitability, with the overall performance of the company turning from a loss to profit in 2017[29]. - The company completed a significant acquisition of Guilin Haiwei, which contributed to stable revenue and exceeded performance expectations for the year[29]. - The company has made strides in the rail transit bearing sector, successfully passing industry assessments and obtaining production qualifications for metro bearings, breaking the reliance on imports[32]. - The company is focusing on high-value-added products, particularly in the rail transit and military sectors, to enhance competitiveness and profitability[32]. - The company has established a comprehensive innovation system, with a national-level technology center and a high-quality technical research team, supporting its R&D capabilities[33]. - The company has released production capacity through equipment upgrades and new factory constructions, with a new facility covering 930 acres[33]. - The company is constructing a new facility in Yinchuan Economic Development Zone, covering over 700 acres, to enhance production capacity and equipment modernization[84]. Market Trends and Growth Potential - The total revenue for the bearing industry among major enterprises reached 83.562 billion in 2017, representing a year-on-year increase of 14.14%[31]. - The military sector is expected to grow due to increased defense spending, which will benefit the company's military-related product lines[34]. - China's military expenditure has been increasing annually by over 10%, with total military spending reaching CNY 954.3 billion in 2016, indicating significant growth potential compared to developed countries[35]. - In 2017, the domestic heavy-duty truck market saw a 52% year-on-year increase in sales, with total heavy-duty truck production reaching 1.1497 million units, up 55.07% from the previous year[36]. - The coal mining machinery market is expected to continue its rapid growth, with the demand for coal mining machinery components, such as scraper conveyors, increasing annually[37]. - The company has developed capabilities to produce key coal mining machinery components, which account for approximately 80% of the coal mining equipment market share, indicating strong market control[38]. Research and Development - The company has established a strong R&D team and has developed three main products: motor bearings, machine tool spindle bearings, and precision forged parts, with machine tool bearings already recognized by major domestic manufacturers[40]. - The company has achieved significant advancements in its equipment capabilities, including the establishment of automated production lines for railway freight car bearings, enhancing overall production efficiency[41]. - Research and development investment increased by 19.17% to ¥14,160,300, representing 3.25% of operating revenue[62]. - The company plans to focus on high-value-added bearing products, including urban rail and railway freight car bearings, with successful qualification for metro bearing production achieved in September 2017[82]. Corporate Governance and Management - The total remuneration for directors, supervisors, and senior management during the reporting period amounted to CNY 3.0408 million[165]. - The annual salary for the general manager is set at CNY 300,000 (pre-tax), with other positions determined by a coefficient based on this amount[164]. - The company has implemented a performance-based remuneration scheme linked to operational results since 2015[164]. - The company has a total of 14 senior management personnel, with varying remuneration based on their positions and performance[165]. - The performance assessment for senior management in 2017 has not yet concluded, affecting the final remuneration calculations[164]. - The company has experienced a change in its board composition, with some members having prior regulatory penalties[162]. - The company’s management performance evaluation includes metrics such as sales revenue, cash collection, and net profit, with assessments conducted quarterly or annually[191]. - The company’s board of directors established four specialized committees, including the audit committee, which actively reviewed financial reports and ensured compliance with legal and regulatory requirements[184]. Shareholder Relations and Equity - The company did not distribute any cash dividends in the past three years due to negative profits available for distribution[90]. - The actual controller and related parties have made commitments regarding performance guarantees, including a cumulative net profit of no less than 34 million RMB for 2017[94]. - The company is currently fulfilling its commitments related to performance guarantees and related transactions[94]. - The company has committed to avoiding any related party transactions that could harm the interests of other shareholders[96]. - The company will ensure that any related party transactions are conducted at fair market prices and comply with legal procedures[97]. - The company reported a total of 124,740,125 shares issued in a non-public offering in 2014, with the shares becoming tradable on March 9, 2015[98]. - The company’s total number of limited shares before the change was 249,744,250, representing 33.53% of total shares[133]. - The largest shareholder, Baota Petrochemical Group Co., Ltd., holds 53.05% of the shares, totaling 405,415,924 shares, with 155,935,674 shares frozen[140]. Environmental and Social Responsibility - The company actively fulfilled its social responsibilities, enhancing communication with shareholders and stakeholders[125]. - The company provided various insurance benefits to employees, including pension and medical insurance[125]. - The company reported a chemical oxygen demand (COD) discharge concentration of 37.5 mg/L, which is below the regulatory limit of 500 mg/L, with a total discharge of 5,280 kg[127]. - The company has a valid pollution discharge permit, which is effective until August 19, 2020[128]. - The company has installed an online monitoring system for wastewater, which has consistently shown that wastewater discharges meet standards[129]. - The company’s wastewater monitoring results have been verified quarterly by the Yinchuan Environmental Monitoring Station, confirming compliance with discharge standards[129]. - The company’s emergency response plan for environmental incidents has been filed with the Yinchuan Environmental Protection Bureau[129].