盛路通信(002446) - 2018 Q2 - 季度财报

Important Notice, Table of Contents and Definitions The Board of Directors, Supervisory Board, and senior management guarantee the truthfulness, accuracy, and completeness of this semi-annual report, free from false records, misleading statements, or major omissions - The company's responsible person Yang Hua, chief accountant Yang Jun, and head of accounting department Wang Qiying declare that the financial report in this semi-annual report is true, accurate, and complete[5] - The company's 2018 semi-annual plan does not include cash dividends, bonus shares, or capital increase from capital reserves[7] - The company's Board of Directors, Supervisory Board, and senior management guarantee the truthfulness, accuracy, and completeness of this semi-annual report, free from false records, misleading statements, or major omissions[5] Company Profile and Key Financial Indicators Company Profile This chapter provides the company's basic information, including its stock ticker "Shenglu Communication" (code 002446), listing exchange, full Chinese and English names, and legal representative Company Profile | Item | Content | | :--- | :--- | | Stock Abbreviation | Shenglu Communication | | Stock Code | 002446 | | Listing Exchange | Shenzhen Stock Exchange | | Company's Full Chinese Name | Guangdong Shenglu Telecommunication Technology Co., Ltd | | Legal Representative | Yang Hua | Key Accounting Data and Financial Indicators During the reporting period, the company's operating revenue increased by 40.29% year-on-year, but net profit attributable to shareholders grew slower at 5.48%, while net cash flow from operating activities significantly decreased by 393.77% from positive to negative, mainly due to increased material procurement for higher order volumes, and non-recurring gains and losses totaled 14.38 million RMB, primarily from government subsidies and wealth management income 2018 Semi-Annual Key Financial Indicators | Indicator | Current Reporting Period | Prior Year Period | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue (RMB) | 714,350,448.28 | 509,184,511.38 | 40.29% | | Net Profit Attributable to Shareholders of Listed Company (RMB) | 95,146,253.77 | 90,206,720.13 | 5.48% | | Net Profit Attributable to Shareholders of Listed Company (Excluding Non-recurring Items) (RMB) | 80,767,554.96 | 77,330,901.91 | 4.44% | | Net Cash Flow from Operating Activities (RMB) | -75,733,277.52 | 25,779,988.98 | -393.77% | | Basic Earnings Per Share (RMB/share) | 0.12 | 0.12 | 0.00% | | Weighted Average Return on Net Assets | 3.70% | 3.64% | 0.06% | | Total Assets (RMB) | 3,569,772,182.91 | 3,399,382,366.97 | 5.01% (Period-end vs. Prior Year-end) | | Net Assets Attributable to Shareholders of Listed Company (RMB) | 2,606,602,750.60 | 2,522,885,937.29 | 3.32% (Period-end vs. Prior Year-end) | - Net cash flow from operating activities significantly decreased by 393.77% year-on-year, primarily due to increased material procurement expenditures resulting from higher order volumes during the reporting period[39] 2018 Semi-Annual Non-recurring Gains and Losses | Item | Amount (RMB) | | :--- | :--- | | Non-current asset disposal gains and losses | -39,971.39 | | Government grants | 13,198,742.72 | | Gains and losses from entrusted investments or asset management | 2,994,010.12 | | Other non-operating income and expenses | 890,583.90 | | Total Non-recurring Gains and Losses | 14,378,698.81 | Business Overview Main Businesses During the Reporting Period The company's main businesses span three key areas: telecommunications, automotive electronics, and military-civilian integration, with a focus on 5G and IoT in telecommunications, smart electronic equipment and in-car infotainment systems in automotive electronics, and microwave hybrid integrated circuits in military-civilian integration, actively promoting the conversion of military technology to civilian applications like 5G - Telecommunications Sector: The company actively deploys 5G and IoT, improving product lines such as microwave antennas and IoT base station antennas, and has established stable cooperative relationships with clients including China Unicom, China Mobile, and Huawei[26][30] - Automotive Electronics Sector: Centered on its subsidiary Hezheng Electronics, products cover in-car entertainment navigation and intelligent driving assistance systems (e.g., night vision, soft-close doors, streaming media rearview mirrors), providing intelligent solutions for both vehicle manufacturers and the aftermarket[26][31] - Military-Civilian Integration Sector: Subsidiary Nanjing Hengdian specializes in microwave hybrid integrated circuit products for radar and electronic countermeasures, leveraging military technology advantages to successfully develop 5G millimeter-wave active phased array antennas, promoting dual-use technology development[27][32] Analysis of Core Competencies The company's core competencies lie in its leading position and technological innovation capabilities across three major business segments: telecommunications, automotive electronics, and military-civilian integration, with significant achievements in 5G and IoT, securing Tier-1 supplier status with Dongfeng Nissan, and pioneering microwave hybrid integrated circuit technology applied to 5G millimeter-wave active phased array antennas - The company holds a leading position in the civilian telecommunications antenna and RF device business, maintaining stable relationships with clients like Huawei and China Mobile, and achieving significant innovation in 5G and IoT fields[30] - Automotive electronics subsidiary Hezheng Electronics obtained Tier-1 supplier qualification from Dongfeng Nissan and established an advanced SMT intelligent manufacturing line, enhancing its high-end product service capabilities[31] - Military subsidiary Nanjing Hengdian, leveraging its microwave hybrid integrated circuit technology, successfully developed a 5G millimeter-wave active phased array antenna which won a second prize in the MIIT 5G Application Competition, indicating broad market prospects[32] Management Discussion and Analysis Overview In the first half of 2018, the company achieved operating revenue of 714.35 million RMB, a year-on-year increase of 40.29%, and net profit attributable to shareholders of 95.15 million RMB, up 5.48%, by focusing on three major business segments: telecommunications (IoT and 5G), automotive electronics (customer and product structure adjustment), and military (microwave integrated circuit technology), while also strengthening operational management and R&D innovation 2018 First Half Key Operating Results | Indicator | Amount (RMB) | Year-on-Year Growth | | :--- | :--- | :--- | | Operating Revenue | 714,350,448.28 | 40.29% | | Operating Profit | 109,865,956.34 | 25.25% | | Net Profit Attributable to Parent Company | 95,146,253.77 | 5.48% | - During the reporting period, the company focused on strategic deployment across its three major business segments, improved operational management systems, and strengthened R&D collaboration with key clients and industry-academia-research integration[35][36] Analysis of Main Business During the reporting period, the company's main business experienced strong growth, with double-digit revenue increases across telecommunications equipment, automotive electronics, and military electronics segments, notably a 68.85% year-on-year surge in telecommunications equipment revenue, while base station antenna revenue grew by 94.95% but DA intelligent connection system revenue significantly declined by 60.27%, and gross profit margins improved for automotive electronics but decreased for telecommunications equipment and military electronics Key Financial Data Year-on-Year Changes | Item | Year-on-Year Change | Reason for Change | | :--- | :--- | :--- | | Operating Revenue | 40.29% | Increase in sales orders | | Operating Cost | 48.23% | Increase in turnover, rise in raw material and labor costs | | Financial Expenses | -405.06% | Increase in loan interest expenses | | Net Cash Flow from Operating Activities | -393.77% | Increase in orders, leading to higher material procurement expenditures | | Net Cash Flow from Investing Activities | -155.51% | Increase in fixed asset investments and new investments in associates | | Net Cash Flow from Financing Activities | -208.62% | Repayment of bank loans and distribution of cash dividends | 2018 First Half Operating Revenue Composition (by Industry) | Industry Segment | Operating Revenue (RMB) | Proportion of Operating Revenue | Year-on-Year Change | Gross Profit Margin | Gross Profit Margin Change from Prior Year | | :--- | :--- | :--- | :--- | :--- | :--- | | Telecommunications Equipment | 351,177,356.13 | 49.16% | 68.85% | 25.08% | -3.68% | | Automotive Electronics | 235,777,096.33 | 33.01% | 22.64% | 34.91% | 7.78% | | Military Electronics | 118,723,521.65 | 16.62% | 28.59% | 50.71% | -14.26% | 2018 First Half Operating Revenue Composition (by Product) | Product Segment | Operating Revenue (RMB) | Proportion of Operating Revenue | Year-on-Year Change | | :--- | :--- | :--- | | Base Station Antennas | 182,829,806.49 | 25.59% | 94.95% | | Microwave Communication Antennas | 87,163,919.85 | 12.20% | 45.76% | | DA Intelligent Connection Systems | 69,384,262.70 | 9.71% | -60.27% | | Intelligent Driving Assistance Systems, etc. | 166,392,833.63 | 23.29% | 100.00% | | Military Electronics | 118,723,521.65 | 16.62% | 28.59% | Analysis of Investment Status During the reporting period, the company's investment amounted to 43.52 million RMB, a significant decrease of 68.59% year-on-year, with notable equity investments including capital increases in Nanjing Weixiang Technology and Foshan Xinlitu Information Technology, and the establishment of Hezheng Woqi Technology and Dongguan Hongcai Wire and Cable, while accumulated raised funds totaled 789 million RMB, primarily for technical transformation projects and working capital, with 21.68 million RMB invested during the reporting period - During the reporting period, the company's investment amounted to 43.52 million RMB, a year-on-year decrease of 68.59%[47] Significant Equity Investments During the Reporting Period | Investee Company | Investment Method | Investment Amount (RMB) | Shareholding Ratio | | :--- | :--- | :--- | :--- | | Nanjing Weixiang Technology Co., Ltd. | Capital Increase | 32,500,000.00 | 13.00% | | Foshan Xinlitu Information Technology Co., Ltd. | Capital Increase | 5,000,000.00 | 20.00% | | Shenzhen Hezheng Woqi Technology Co., Ltd. | New Establishment | 1,020,000.00 | 51.00% | | Dongguan Hongcai Wire and Cable Co., Ltd. | New Establishment | 5,000,000.00 | 100.00% | - As of the end of the reporting period, the company's total raised funds were 835 million RMB, with 789 million RMB cumulatively invested, and 21.68 million RMB invested during the reporting period, primarily for technical transformation projects such as high-performance microwave communication antennas and mobile communication base station antennas, and to supplement working capital[56][58][59] Analysis of Major Holding and Participating Companies During the reporting period, key subsidiaries significantly contributed to the company's performance, with Shenzhen Hezheng Automotive Electronics Co., Ltd. and Nanjing Hengdian Electronics Co., Ltd. being the primary profit drivers, achieving net profits of 29.98 million RMB and 30.10 million RMB respectively, while Foshan Shengfu Telecommunication Equipment Co., Ltd. also reported profits, and Shenzhen Qianhai Shengyuan Investment Co., Ltd. and Guangdong Xingci Testing Technology Research Co., Ltd. incurred losses Major Subsidiary Operating Performance in 2018 First Half | Company Name | Operating Revenue (RMB) | Operating Profit (RMB) | Net Profit (RMB) | | :--- | :--- | :--- | :--- | | Shenzhen Hezheng Automotive Electronics Co., Ltd. | 241,514,362.23 | 34,413,550.31 | 29,984,058.47 | | Nanjing Hengdian Electronics Co., Ltd. | 116,048,999.01 | 35,417,659.81 | 30,100,647.80 | | Foshan Shengfu Telecommunication Equipment Co., Ltd. | 34,209,010.23 | 2,071,486.91 | 1,758,501.93 | | Shenzhen Qianhai Shengyuan Investment Co., Ltd. | 7,041,105.91 | -3,251,018.31 | -2,293,047.03 | | Guangdong Xingci Testing Technology Research Co., Ltd. | 1,173,687.27 | -666,469.11 | -666,469.11 | Forecast of Operating Performance for January-September 2018 The company expects net profit attributable to shareholders for January-September 2018 to remain stable, ranging from 108 million RMB to 128 million RMB, representing a change of -3.44% to 14.44% compared to 111.85 million RMB in the same period last year 2018 January-September Performance Forecast | Item | Forecast Data | | :--- | :--- | | Net Profit Attributable to Parent Company Change Range | -3.44% to 14.44% | | Net Profit Attributable to Parent Company Change Interval (10,000 RMB) | 10,800 to 12,800 | | 2017 Same Period Net Profit Attributable to Parent Company (10,000 RMB) | 11,185.04 | Risks Faced by the Company and Countermeasures The company faces key risks including macroeconomic and market competition, technological obsolescence, goodwill impairment from M&A, management risks from scale expansion, and talent shortages, which it plans to address by closely monitoring the market, increasing R&D, optimizing integration, strengthening internal controls, and improving talent mechanisms - The company has identified five major risks: macroeconomic and market competition risk, technology risk, goodwill impairment risk, management risk, and talent shortage risk[69][70] - To address technology risk, the company will increase R&D investment, ensure team stability, and continuously introduce high-end industry talent to build reserves for 5G core technologies and IoT fields[69] - To mitigate goodwill impairment risk, the company will integrate acquired businesses and promote business synergy to achieve sustainable development and reduce the adverse impact of goodwill impairment on performance[70] Significant Matters Significant Related Party Transactions During the reporting period, the company engaged in a significant related party transaction where its wholly-owned subsidiary, Shenzhen Qianhai Shengyuan Investment Co., Ltd., sold its 10% equity stake in Shenzhen DiDi Internet Technology Co., Ltd. to company director Guo Yiqin for 17.6 million RMB, a transaction approved by the Board of Directors and Shareholders' Meeting and completed with industrial and commercial registration changes - The company's wholly-owned subsidiary Shengyuan Investment sold its 10% equity stake in DiDi Internet for 17.6 million RMB (10% premium over cost) to related party director Guo Yiqin, with the transaction now completed[88] Significant Contracts and Their Performance During the reporting period, the company had no significant entrustment, contracting, or leasing contracts, but provided a total guarantee limit of 150 million RMB for its subsidiary Shenzhen Hezheng Automotive Electronics Co., Ltd., with an actual guarantee balance of 118 million RMB at the end of the reporting period, representing 4.53% of the company's net assets Significant Guarantees for Subsidiaries | Guaranteed Party | Approved Guarantee Limit at Period-end (10,000 RMB) | Actual Guarantee Balance at Period-end (10,000 RMB) | | :--- | :--- | :--- | | Shenzhen Hezheng Automotive Electronics Co., Ltd. | 15,000 | 11,800 | - The company's actual total guarantee amount accounts for 4.53% of its net assets, and there are no guarantees provided for guaranteed parties with an asset-liability ratio exceeding 70%[93] Explanation of Other Significant Matters Subsequent to the reporting period, the company publicly issued 1 billion RMB in convertible corporate bonds ("Shenglu Convertible Bonds") on July 17, 2018, which began trading on August 14, and is also planning a significant cash acquisition of 100% equity in Chengdu Chuangxinda Microwave Electronics Co., Ltd. to strengthen its military sector presence, a matter still in the planning stage - The company publicly issued 1 billion RMB in convertible corporate bonds on July 17, 2018, with the bond abbreviation "Shenglu Convertible Bonds" and code "128041"[97] - The company is planning a cash acquisition of 100% equity in Chengdu Chuangxinda Microwave Electronics Co., Ltd. to strengthen its military business layout, with this matter currently in the planning stage[99] Changes in Shareholding and Shareholder Information Changes in Shareholding During the reporting period, the company's total share capital remained unchanged at 762,110,260 shares, with restricted shares decreasing by 4.585 million shares and unrestricted shares increasing proportionally due to the unlocking of 25% of shares held by directors, supervisors, and senior management, and the expiration of share lock-up commitments from major asset restructuring, resulting in restricted shares accounting for 44.58% and unrestricted shares for 55.42% at period-end Changes in Shareholding | Share Type | Quantity Before Change | Increase/Decrease in This Change | Quantity After Change | Proportion After Change | | :--- | :--- | :--- | :--- | :--- | | Restricted Shares | 344,363,243 | -4,585,084 | 339,778,159 | 44.58% | | Unrestricted Shares | 417,747,017 | +4,585,084 | 422,332,101 | 55.42% | | Total Share Capital | 762,110,260 | 0 | 762,110,260 | 100.00% | - 16,358,416 shares held by 34 natural person shareholders of Nanjing Hengdian were released from lock-up during this period due to share lock-up commitments from the 2015 major asset restructuring[106] Number of Shareholders and Shareholding Information As of the end of the reporting period, the company had 39,883 common shareholders, with Yang Hua, Li Zairong, and He Yongxing as the top three shareholders holding 18.00%, 11.29%, and 10.91% respectively, and no related party relationships or concerted actions among the top ten shareholders, while most major shareholders' holdings were highly pledged - As of the end of the reporting period, the company had 39,883 common shareholders[109] Top Five Shareholders' Shareholding and Pledge Status | Shareholder Name | Shareholding Ratio | Number of Common Shares Held | Number of Pledged Shares | | :--- | :--- | :--- | :--- | | Yang Hua | 18.00% | 137,199,406 | 79,630,000 | | Li Zairong | 11.29% | 86,059,731 | 80,400,000 | | He Yongxing | 10.91% | 83,149,530 | 60,300,000 | | Yang Zhenfeng | 5.03% | 38,319,162 | 13,530,000 | | Guo Yiqin | 5.00% | 38,105,513 | 29,469,800 | Information on Corporate Bonds Basic Information on Corporate Bonds The company publicly issued 1 billion RMB in convertible corporate bonds on July 17, 2018, named "Shenglu Convertible Bonds" with code "128041" and a 6-year term, featuring a tiered coupon rate from 0.5% in the first year to 2.0% in the sixth year, and was rated AA- for long-term corporate credit and AA for bond credit by United Credit Ratings Co., Ltd., with a "stable" outlook Shenglu Convertible Bonds Basic Information | Item | Content | | :--- | :--- | | Bond Name | Guangdong Shenglu Telecommunication Technology Co., Ltd. Convertible Corporate Bonds | | Bond Abbreviation | Shenglu Convertible Bonds | | Bond Code | 128041 | | Issue Date | July 17, 2018 | | Maturity Date | July 16, 2024 | | Bond Balance | 1,000,000,000 RMB | | Coupon Rate | 0.5% in the first year, increasing annually to 2.0% in the sixth year | - United Credit Ratings Co., Ltd. assigned the company's long-term corporate credit rating as AA- with a "stable" outlook, and the convertible bond credit rating as AA[126] - At the end of the reporting period, the company's EBITDA interest coverage ratio decreased by 43.60% compared to the same period last year, primarily due to increased loan interest expenses in the current reporting period[129] Financial Report Financial Statements This chapter presents the company's unaudited 2018 semi-annual consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity, showing total assets steadily growing to 3.57 billion RMB, total liabilities of 960 million RMB, total operating revenue of 714 million RMB, net profit of 95.01 million RMB, and net cash outflow from operating activities of 75.73 million RMB Consolidated Balance Sheet Key Items (2018-06-30) | Item | Period-end Balance (RMB) | | :--- | :--- | | Total Assets | 3,569,772,182.91 | | Total Liabilities | 959,635,527.96 | | Total Owners' Equity Attributable to Parent Company | 2,606,602,750.60 | | Total Owners' Equity | 2,610,136,654.95 | Consolidated Income Statement Key Items (2018 First Half) | Item | Current Period Amount (RMB) | | :--- | :--- | | I. Total Operating Revenue | 714,350,448.28 | | III. Operating Profit | 109,865,956.34 | | V. Net Profit | 95,009,534.91 | | Net Profit Attributable to Parent Company Owners | 95,146,253.77 | Consolidated Cash Flow Statement Key Items (2018 First Half) | Item | Current Period Amount (RMB) | | :--- | :--- | | Net Cash Flow from Operating Activities | -75,733,277.52 | | Net Cash Flow from Investing Activities | -61,092,252.28 | | Net Cash Flow from Financing Activities | -47,415,295.14 | | Net Increase in Cash and Cash Equivalents | -184,155,171.90 | Notes to Consolidated Financial Statements The financial statement notes detail the composition and changes of each accounting item, with accounts receivable balance of 776 million RMB at period-end (80.7% within six months) and a bad debt provision of 32.86 million RMB, inventory book value of 434 million RMB with a 18.56 million RMB impairment provision, goodwill original book value of 1.228 billion RMB (including 9.4278 million RMB impairment for Hezheng Electronics), and operating revenue primarily from telecommunications equipment, automotive electronics, and military electronics - At period-end, the book balance of accounts receivable was 776 million RMB, with 80.7% of it being within six months of age, and the top five accounts receivable by debtor accounted for 31.02% of the total[275][278][284] - At period-end, the book value of inventory was 434 million RMB, primarily composed of finished goods, goods in transit, and work-in-progress, with the company having provided a total of 18.56 million RMB in impairment provisions for raw materials and finished goods[307][308] - The original book value of goodwill was 1.228 billion RMB, mainly from the acquisitions of Hezheng Electronics (437 million RMB) and Nanjing Hengdian (788 million RMB), with a 9.4278 million RMB impairment provision recognized for Hezheng Electronics' goodwill during the reporting period, while Nanjing Hengdian's goodwill showed no impairment[344][346][347][348] - Subsequent to the reporting period, in July 2018, the company sold 10% of its available-for-sale financial asset "DiDi Internet" for 17.6 million RMB[320] Segment Information The company's business is segmented by industry into telecommunications equipment, automotive electronics, and military electronics, with telecommunications equipment being the largest revenue source at 49.8% of main business revenue, followed by automotive electronics (33.4%) and military electronics (16.8%), while base station antennas and intelligent driving assistance systems are key product revenue contributors, and domestic sales overwhelmingly dominate at 98.9% 2018 First Half Main Business Revenue by Industry Segment | Industry Segment | Operating Revenue (RMB) | Operating Cost (RMB) | | :--- | :--- | :--- | | Telecommunications Equipment | 351,177,356.13 | 263,091,178.19 | | Automotive Electronics | 235,777,096.33 | 153,470,723.90 | | Military Electronics | 118,723,521.65 | 58,516,558.29 | | Total | 705,677,974.11 | 475,078,460.38 | 2018 First Half Main Business Revenue by Region Segment | Region Segment | Operating Revenue (RMB) | Operating Cost (RMB) | | :--- | :--- | :--- | | Overseas Sales | 7,889,646.41 | 4,154,865.08 | | Domestic Sales | 697,788,327.70 | 470,923,595.30 | | Total | 705,677,974.11 | 475,078,460.38 | Reference Documents Catalog This report's reference documents include the original semi-annual report signed by the legal representative, accounting statements signed and sealed by relevant responsible persons, and original drafts of all publicly disclosed documents and announcements during the reporting period - This report's reference documents include the original semi-annual report signed by the legal representative, accounting statements signed and sealed by relevant responsible persons, and original drafts of all publicly disclosed documents and announcements during the reporting period[487]