世华科技(688093) - 2025 Q2 - 季度财报

Section I Definitions This section defines key terms and entities, including company names, reporting period, and industry terms like OLED, LCD, OCA, and AI - “Shihua Technology/the Company” refers to Suzhou Shihua New Material Technology Co., Ltd[12] - Key subsidiaries include Shichen Technology, Shituo Material, Shenzhen Shihua, Hong Kong Magi, US Shihua, Singapore Shijia, and Japan Shijia[12] - The "Reporting Period" refers to January 1, 2025, to June 30, 2025[12] - Industry technical terms defined include OLED (Organic Light-Emitting Diode Display), LCD (Liquid Crystal Display), OCA (Optically Clear Adhesive), and AI (Artificial Intelligence)[12][13] Section II Company Profile and Key Financial Indicators This section outlines the company's basic information, contact details, stock overview, and key financial performance for H1 2025, showing significant growth in revenue, net profit, and operating cash flow due to new projects and increased sales I. Company Basic Information This section provides the company's registered name, abbreviation, legal representative, registered and office addresses, website, and email - Company's Chinese name is Suzhou Shihua New Material Technology Co., Ltd, abbreviated as Shihua Technology[15] - The legal representative is Gu Zhengqing, and the company's registered and office address is No. 168 Dagu Road, Wujiang Economic and Technological Development Zone, Suzhou[15] - Company website is www.shihua-group.com, and email is zhengquan@shihua-group.com[15] II. Contact Person and Information This section lists the names, contact addresses, phone numbers, and email addresses of the company's Board Secretary and Securities Affairs Representative for investor communication - The Board Secretary (domestic representative for information disclosure) is Ji Yuwen, and the Securities Affairs Representative is Zhu Xiaoyan[16] - Contact phone numbers are both 0512-63190989, and email addresses are both zhengquan@shihua-group.com[16] III. Information Disclosure and Document Custody Location Changes This section specifies the designated newspaper and website for company information disclosure, along with the custody location for the semi-annual report - The company's designated newspaper for information disclosure is "Shanghai Securities News" (www.cnstock.com)[17](index=17&type=chunk) - The website address for publishing the semi-annual report is www.sse.com.cn[17](index=17&type=chunk) - The custody location for the company's semi-annual report is the Securities Department of Suzhou Shihua New Material Technology Co., Ltd[17] IV. Company Stock/Depositary Receipt Overview This section introduces the company's stock information, including stock type, listing exchange and board, stock abbreviation, and code - The company's stock type is RMB ordinary shares (A-shares), listed on the STAR Market of the Shanghai Stock Exchange[18] - The stock abbreviation is Shihua Technology, and the stock code is 688093[18] VI. Company's Key Accounting Data and Financial Indicators This section presents the company's key accounting data and financial indicators for H1 2025, showing significant year-over-year growth in operating revenue, total profit, net profit attributable to parent, and net cash flow from operating activities, indicating enhanced profitability 2025 Semi-Annual Key Accounting Data (Consolidated Statements) | Indicator | Current Period (Jan-Jun) (yuan) | Prior Period (yuan) | Period-over-Period Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 536,507,823.63 | 308,707,747.44 | 73.79 | | Total Profit | 221,770,229.04 | 120,762,398.75 | 83.64 | | Net Profit Attributable to Shareholders of Listed Company | 193,062,172.51 | 103,583,181.49 | 86.38 | | Net Profit Attributable to Shareholders of Listed Company After Deducting Non-Recurring Gains and Losses | 186,061,768.85 | 92,553,079.34 | 101.03 | | Net Cash Flow from Operating Activities | 202,352,289.36 | 107,459,343.62 | 88.31 | | Net Assets Attributable to Shareholders of Listed Company (Period-end) | 2,111,389,618.02 | 1,958,527,266.51 | 7.80 | | Total Assets (Period-end) | 2,254,715,701.53 | 2,128,399,703.59 | 5.93 | 2025 Semi-Annual Key Financial Indicators (Consolidated Statements) | Indicator | Current Period (Jan-Jun) | Prior Period | Period-over-Period Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (yuan/share) | 0.74 | 0.40 | 85.00 | | Diluted Earnings Per Share (yuan/share) | 0.74 | 0.40 | 85.00 | | Basic Earnings Per Share After Deducting Non-Recurring Gains and Losses (yuan/share) | 0.71 | 0.35 | 102.86 | | Weighted Average Return on Net Assets (%) | 9.45 | 5.42 | Increased by 4.03 percentage points | | Weighted Average Return on Net Assets After Deducting Non-Recurring Gains and Losses (%) | 9.11 | 4.85 | Increased by 4.26 percentage points | | R&D Investment as Percentage of Operating Revenue (%) | 5.32 | 7.63 | Decreased by 2.31 percentage points | - Operating revenue, total profit, net profit attributable to parent, and non-recurring net profit increased by 73.79%, 83.64%, 86.38%, and 101.03% year-over-year respectively, primarily due to continuous introduction of new projects and increased product sales[21] - Net cash flow from operating activities increased by 88.31% year-over-year, mainly due to expanded operating revenue and increased cash received from sales of goods[21] VIII. Non-Recurring Gains and Losses Items and Amounts This section lists the company's non-recurring gains and losses items and their amounts for the reporting period, totaling 7,000,403.66 yuan, primarily comprising government grants and fair value changes in financial assets 2025 Semi-Annual Non-Recurring Gains and Losses Items and Amounts | Non-Recurring Gains and Losses Item | Amount (yuan) | | :--- | :--- | | Gains or losses from disposal of non-current assets | -8,063.69 | | Government grants recognized in current profit or loss, excluding those closely related to the company's normal business operations, compliant with national policies, enjoyed according to fixed standards, and having a continuous impact on the company's profit or loss | 1,705,020.00 | | Gains or losses from changes in fair value of financial assets and liabilities held by non-financial enterprises, and gains or losses from disposal of financial assets and liabilities, excluding effective hedging activities related to normal business operations | 6,948,931.92 | | Other non-operating income and expenses apart from the above | -410,442.94 | | Less: Income tax impact | 1,235,041.63 | | Total | 7,000,403.66 | Section III Management Discussion and Analysis This section discusses the company's H1 2025 operations, including industry, main business, operating model, core competencies, risk factors, and key achievements, highlighting innovation in functional materials, growth in high-performance optical materials, and progress in fundraising projects, while acknowledging risks like technological updates and market competition I. Description of Industry and Main Business During the Reporting Period This section explains the company's main business of R&D, production, and sales of functional materials, including functional electronic materials and high-performance optical materials, utilizing direct sales, production-based procurement, and customer-oriented R&D models within a high-tech, policy-driven, and rapidly developing industry - The company's main business is the R&D, production, and sales of functional materials, focusing on core technologies such as key resin synthesis, functional coating design, adhesive preparation, and precision coating[25] - Main products include functional electronic materials (applied in consumer electronics, AI smart hardware, automotive electronics, medical electronics) and high-performance optical materials (applied in OLED/LCD display panels)[25] - The company primarily adopts a direct sales model, with a "production-based procurement" purchasing model, a "sales-based production, demand-based production" manufacturing model, and a customer demand and market forecast-oriented R&D model[27] - The functional materials industry is a strategically emerging industry supported by the state, driven by R&D, with high technical barriers requiring long-term accumulation[28][29] - The booming downstream electronic information manufacturing, consumer electronics, new energy vehicles, and AI smart industries are driving increasing demand for functional materials, with a future trend towards customized high-performance, multi-functional composite materials[32][33] II. Discussion and Analysis of Operations In H1 2025, the company achieved operating revenue of 537 million yuan, a 73.79% increase, and net profit attributable to parent of 193 million yuan, an 86.38% increase, driven by high-performance optical materials becoming a second growth curve with 166.48% revenue growth, while advancing fundraising projects and expanding industrial layout - In H1 2025, the company achieved operating revenue of 537 million yuan, a 73.79% year-over-year increase, and net profit attributable to parent of 193 million yuan, an 86.38% year-over-year increase[34] - Revenue from high-performance optical materials reached 197 million yuan, a 166.48% year-over-year increase, becoming the company's second growth curve[34] - The company's proposed 2.05 billion yuan "High-Performance Optical Film Material Project" has commenced construction, further enhancing its functional materials industry layout[34] - The IPO fundraising project "Functional Materials Expansion and Upgrade Project" was successfully completed, and the "New High-Efficiency Sealant Project" utilized all raised funds[35] - The company initiated a new round of private placement financing to implement the optical display film material expansion project, enhancing its core competitiveness in high-performance optical materials[35] III. Analysis of Core Competencies During the Reporting Period The company's core competencies include systematic R&D innovation, extensive industry experience, rapid customer response, a high-caliber talent team, stable customer relationships, and advanced quality control, with continued R&D investment, numerous patents, and recognition as a national "Little Giant" enterprise - The company possesses core technical capabilities in key resin synthesis, functional coating design, adhesive preparation, and precision coating, supported by a high-level scientist R&D innovation team[37] - Company products are widely used in AI smart hardware, display panels, new energy vehicles, and other industries, enabling rapid response to customer needs and provision of diversified solutions[37][38] - The company is a national "Little Giant" enterprise, with 139 authorized patents (including 81 invention patents) and 95 other intellectual property rights as of the end of the reporting period[41][42] 2025 Semi-Annual R&D Investment | Indicator | Current Period (yuan) | Prior Period (yuan) | Change (%) | | :--- | :--- | :--- | :--- | | Expensed R&D Investment | 28,520,651.49 | 23,567,585.38 | 21.02 | | Total R&D Investment | 28,520,651.49 | 23,567,585.38 | 21.02 | | Total R&D Investment as Percentage of Operating Revenue (%) | 5.32 | 7.63 | Decreased by 2.31 percentage points | - The company has 16 R&D projects underway, including high-temperature low-deformation OLED support films, industrial adhesives, and optical-grade functional composite materials for OLED processes, with several projects in small-batch trial production or sample trial production stages[46][47] - The R&D team comprises 114 personnel, accounting for 20.77% of the total workforce, with total R&D personnel compensation amounting to 19.3335 million yuan[51] IV. Risk Factors The company faces multiple risks, including core competency risks such as R&D mismatch with customer needs, rapid technological iteration, and loss of key technical personnel; operational risks like reliance on terminal brands, challenges in new market development, raw material price fluctuations, and management risks from scale expansion; financial risks from declining gross profit margins; industry risks from intensified market competition, changes in the consumer electronics sector, and policy adjustments; and macroeconomic risks like trade friction - Core competency risks include R&D capabilities failing to match customer demands, rapid technological iteration, and the loss of key technical personnel[52][53] - Operational risks primarily involve reliance on terminal brands and their industrial chains, challenges in developing new customers and markets, fluctuations in major raw material prices, and management challenges arising from company scale expansion[53][54] - Financial risk mainly pertains to the risk of declining gross profit margins, potentially influenced by changes in product structure and intensified market competition[54] - Industry risks include intensified market competition in the functional materials sector, changes in the consumer electronics industry market environment, and risks from industrial policy adjustments[55] - Macroeconomic risks primarily refer to trade frictions potentially leading to reduced downstream customer demand or requests for lower procurement prices[56] V. Key Operating Performance During the Reporting Period During the reporting period, the company achieved substantial growth in operating revenue and net profit, with this section detailing changes in key financial statement items, asset and liability status, significant investments, and major subsidiaries, noting increased cash outflow from investing activities for fixed and intangible assets and steady progress in fundraising projects - During the reporting period, the company achieved operating revenue of 537 million yuan, a 73.79% year-over-year increase, and net profit attributable to shareholders of 193 million yuan, an 86.38% year-over-year increase[57] 2025 Semi-Annual Financial Statement Item Change Analysis | Item | Current Period (yuan) | Prior Period (yuan) | Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 536,507,823.63 | 308,707,747.44 | 73.79 | | Operating Cost | 238,112,691.76 | 135,962,112.93 | 75.13 | | Selling Expenses | 18,637,443.88 | 19,256,621.39 | -3.22 | | Administrative Expenses | 26,486,408.02 | 23,498,691.52 | 12.71 | | Financial Expenses | -889,289.57 | -1,960,140.81 | 54.63 | | R&D Expenses | 28,520,651.49 | 23,567,585.38 | 21.02 | | Net Cash Flow from Operating Activities | 202,352,289.36 | 107,459,343.62 | 88.31 | | Net Cash Flow from Investing Activities | -256,894,237.16 | -16,383,530.19 | -1,468.00 | | Net Cash Flow from Financing Activities | -42,599,250.50 | -163,024,396.53 | 73.87 | - Net cash flow from investing activities decreased by 1,468.00% year-over-year, primarily due to increased cash payments for the acquisition of fixed assets, intangible assets, and other long-term assets[60] - The ending balance of intangible assets increased by 85.85% compared to the end of the previous year, mainly due to the acquisition of new land use rights[63] 2025 Semi-Annual Significant Non-Equity Investment Projects | Project Name | Budget (ten thousand yuan) | Current Period Investment (ten thousand yuan) | Cumulative Investment (ten thousand yuan) | Cumulative Investment Ratio (%) | Project Progress | | :--- | :--- | :--- | :--- | :--- | :--- | | Innovation Center Project | 27,339.42 | 2,698.26 | 26,756.25 | 97.87 | Under Construction | | New High-Efficiency Sealant Project | 23,067.18 | 944.70 | 26,340.89 | 114.19 | Under Construction | | High-Performance Optical Film Material Project | 129,617.60 | 5,721.98 | 5,721.98 | 4.41 | Under Construction | | Functional Materials Expansion and Upgrade Project | 41,369.30 | 509.21 | 43,223.47 | 104.48 | Completed | - The company absorbed and merged its wholly-owned subsidiary Suzhou Shinuo in 2024, with the cancellation procedures completed within the reporting period[70] Section IV Corporate Governance, Environment, and Society This section covers corporate governance, environmental, and social responsibility information, noting no changes in directors, supervisors, senior management, or core technical personnel, no profit distribution or equity incentive plans, the inclusion of the company and its subsidiary Shituo Material in the environmental information disclosure list, and active participation in poverty alleviation through consumer support I. Changes in Directors, Supervisors, Senior Management, and Core Technical Personnel During the reporting period, there were no changes in the company's directors, supervisors, senior management, or core technical personnel, and this section also defines the criteria and lists the specific core technical personnel - During the reporting period, there were no changes in the company's directors, supervisors, senior management, or core technical personnel[73] - The company's core technical personnel are Gu Zhengqing, Zhou Kuiren, Zhou Shuai, Wen Qiang, and Han Chaoqing, identified based on their contributions to core technologies, invention patents, and technical roadmap formulation[73] II. Profit Distribution or Capital Reserve Conversion Plan This section explicitly states that the company has no profit distribution plan or capital reserve conversion to share capital plan for this semi-annual period - The proposed profit distribution plan or capital reserve conversion to share capital plan for this semi-annual period is "none"[74] III. Status and Impact of Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures This section indicates that there were no developments or changes in the company's equity incentive plans, employee stock ownership plans, or other employee incentive measures during the reporting period - During the reporting period, the company had no developments or changes in equity incentives, employee stock ownership plans, or other employee incentive measures[75][76] IV. Environmental Information of Listed Companies and Their Major Subsidiaries Included in the List of Enterprises Required to Disclose Environmental Information This section discloses that two entities, Shihua Technology and Shituo Material, are included in the list of enterprises required to disclose environmental information - The company has 2 entities included in the list of enterprises required to disclose environmental information: Shihua Technology and Shituo Material[76] - The environmental information disclosure report can be accessed on the website of the Jiangsu Provincial Department of Ecology and Environment[76] V. Specifics of Consolidating Poverty Alleviation Achievements and Rural Revitalization Efforts The company actively supports national rural revitalization by purchasing agricultural products through consumer-based poverty alleviation, generating income for local farmers and promoting specialty agricultural products - The company actively responds to the national rural revitalization strategy by purchasing poverty alleviation agricultural products through consumer-based poverty alleviation, supporting the promotion of agricultural products and increasing farmers' income in impoverished areas[76] Section V Significant Matters This section details the company's significant matters during the reporting period, including the fulfillment of commitments, absence of irregular guarantees and related party fund occupation, execution of major contracts, progress in the use of raised funds, and other significant events, confirming strict adherence to commitments, smooth progress of fundraising projects, and successful refinancing approval I. Fulfillment of Commitments This section details the commitments made by the company, controlling shareholder, actual controller, directors, supervisors, senior management, and core technical personnel during IPO and refinancing, covering share lock-up, reduction intentions, information disclosure, profit distribution, avoidance of horizontal competition, and regulation of related party transactions, confirming strict fulfillment of all commitments - Commitments regarding share lock-up period and reduction by the company's controlling shareholder, actual controller, directors, senior management, and core technical personnel, including Mr. Gu Zhengqing, have been strictly fulfilled[78][81][82] - Commitments by the company and related parties regarding prospectus information disclosure responsibility, share repurchase for fraudulent issuance, compensation for diluted immediate returns, implementation of profit distribution policies, and restrictive measures for non-fulfillment of commitments have all been strictly fulfilled[78][79][96][97][98][99][100][101][102][103][104][105][106] - Commitments by the company's controlling shareholder and actual controller to avoid horizontal competition and regulate and reduce related party transactions have been strictly fulfilled[79][107][108][109][110] - The company's 2025 private placement of A-shares commitment letters, including not providing financial assistance or compensation, not creating new horizontal competition, and not engaging in obviously unfair related party transactions, have all been fulfilled[79][80][115] II. Non-Operating Fund Occupation by Controlling Shareholder and Other Related Parties During the Reporting Period This section explicitly states that there was no non-operating occupation of company funds by the controlling shareholder or other related parties during the reporting period - During the reporting period, there was no non-operating occupation of funds by the controlling shareholder or other related parties[120] III. Irregular Guarantees This section declares that the company did not provide external guarantees in violation of prescribed decision-making procedures during the reporting period - During the reporting period, there were no external guarantees provided in violation of prescribed decision-making procedures[8][120] IX. Explanation of the Integrity Status of the Company, its Controlling Shareholder, and Actual Controller During the Reporting Period This section confirms that the company, its controlling shareholder, and actual controller maintained good integrity during the reporting period, with no unfulfilled court judgments or overdue significant debts - During the reporting period, the company, its controlling shareholder, and actual controller maintained good integrity, with no unfulfilled effective court judgments or significant overdue debts[120] X. Significant Related Party Transactions This section discloses that there were no significant related party transactions not disclosed in temporary announcements during the reporting period, including those related to daily operations, asset acquisitions or disposals, joint external investments, and related party creditor-debtor relationships - During the reporting period, there were no related party transactions related to daily operations not disclosed in temporary announcements[121] - During the reporting period, there were no related party transactions involving asset or equity acquisitions or disposals not disclosed in temporary announcements[122] - During the reporting period, there were no significant related party transactions involving joint external investments not disclosed in temporary announcements[122] - During the reporting period, there were no related party creditor-debtor transactions not disclosed in temporary announcements[122] XI. Significant Contracts and Their Fulfillment This section discloses the company's significant guarantee activities and a major credit line agreement during the reporting period, noting that guarantees for subsidiaries have been fulfilled, and a 440 million yuan credit line from Bank of China supports projects like the high-performance optical film material project 2025 Semi-Annual Company and its Subsidiaries' Guarantees for Subsidiaries | Guaranteed Party | Guarantee Amount (ten thousand yuan) | Guarantee Start Date | Guarantee End Date | Guarantee Fulfilled | | :--- | :--- | :--- | :--- | :--- | | Shichen Technology | 1,480.00 | 2023-05-22 | 2025-06-03 | Yes | - The total guarantee amount for subsidiaries during the reporting period was 14.80 million yuan, with the total outstanding guarantee balance for subsidiaries at the end of the reporting period being 0 yuan[125] - The company signed a credit line agreement and supplementary agreement with Bank of China Suzhou Yangtze River Delta Integration Demonstration Zone Branch, obtaining a 440 million yuan credit line primarily for projects such as the "High-Performance Optical Film Material Project"[126] XII. Explanation of Progress in Use of Raised Funds This section details the overall use of funds raised from the company's initial public offering and private placement, including specific project progress, noting that several projects are completed or have fully utilized their funds, with remaining funds transferred to working capital, and the company also generated investment income from cash management of idle raised funds Overall Use of Raised Funds (Unit: ten thousand yuan) | Source of Raised Funds | Date Funds Received | Net Raised Funds (1) | Total Investment Pledged in Prospectus (2) | Cumulative Raised Funds Invested as of Period-end (4) | Cumulative Investment Progress of Raised Funds as of Period-end (%) (6)=(4)/(1) | Current Year Investment (8) | Current Year Investment Ratio (%) (9)=(8)/(1) | Total Raised Funds with Changed Use | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Initial Public Offering (IPO) | September 24, 2020 | 70,051.02 | 80,365.20 | 70,135.36 | 100.12 | 2,213.56 | 3.16 | 5,500.00 | | Issuance of Shares to Specific Investors | June 7, 2023 | 38,257.12 | 39,000.00 | 33,360.06 | 87.20 | 1,796.32 | 4.70 | 0 | | Total | / | 108,308.14 | 119,365.20 | 103,495.42 | 95.56 | 4,009.88 | 3.70 | 5,500.00 | - The "Functional Materials Expansion and Upgrade Project" has been completed, and the remaining raised funds of 8.1545 million yuan have been permanently transferred to working capital[130] - The "New High-Efficiency Sealant Project" has fully utilized its raised funds, with remaining interest of 0.0009 million yuan transferred to working capital[131] - The company used idle raised funds from its initial public offering for cash management, with actual investment income of 0.2188 million yuan received in the current period[134] - The company used idle raised funds from its 2022 private placement of A-shares for cash management, with actual investment income of 3.0450 million yuan received in the current period[134] XIII. Explanation of Other Significant Matters This section discloses two other significant matters: the share increase plan by Yefuyou Investment, an acting-in-concert party of the controlling shareholder, and the company's 2025 private placement of A-shares receiving approval from the China Securities Regulatory Commission - Yefuyou Investment, an acting-in-concert party of Mr. Gu Zhengqing, the company's controlling shareholder and actual controller, plans to increase its holdings in the company's shares, with an investment amount of no less than 60 million yuan and no more than 100 million yuan. As of June 30, 2025, it has cumulatively increased its holdings by 1,490,000 shares, totaling approximately 30.0559 million yuan[137] - The company's 2025 private placement of A-shares proposal has received approval for registration from the China Securities Regulatory Commission (CSRC License [2025] No. 1714)[138] Section VI Share Changes and Shareholder Information This section details the company's share capital changes, total shareholders, top ten shareholders' holdings, and changes in holdings of directors, supervisors, senior management, and core technical personnel during the reporting period, noting no change in share capital structure but an increase in holdings by an acting-in-concert party of the controlling shareholder I. Share Capital Changes This section states that there were no changes in the company's total ordinary share capital or share capital structure during the reporting period - During the reporting period, there were no changes in the company's total ordinary share capital or share capital structure[140] II. Shareholder Information This section discloses the total number of shareholders, the top ten shareholders' holdings (including restricted and unrestricted shares) as of the end of the reporting period, and the related party relationships among major shareholders, also noting shares held in the company's buyback special securities account - As of the end of the reporting period, the total number of ordinary shareholders was 7,734[141] - Among the top ten shareholders, Gu Zhengqing, Lü Gang, Yefuyou Investment Development (Suzhou) Co., Ltd., Cai Huijuan, and Suzhou Shilu Enterprise Management Center (Limited Partnership) are major shareholders[143] - Gu Zhengqing is the company's controlling shareholder; Gu Zhengqing, Lü Gang, and Cai Huijuan are acting-in-concert parties and the company's actual controllers[144] - Yefuyou Investment Development (Suzhou) Co., Ltd. and Suzhou Shilu Enterprise Management Center (Limited Partnership) are enterprises controlled by the company's actual controller, Gu Zhengqing[144] - The company's buyback special securities account held 1,659,641 shares at the end of the reporting period, representing 0.63% of the total share capital[144] III. Directors, Supervisors, Senior Management, and Core Technical Personnel This section describes the changes in shareholdings of the company's directors, supervisors, senior management, and core technical personnel during the reporting period, specifically noting that Yefuyou Investment, an acting-in-concert party of the controlling shareholder, increased its stake - During the reporting period, Yefuyou Investment, an acting-in-concert party of Mr. Gu Zhengqing, the company's controlling shareholder, actual controller, chairman, and general manager, cumulatively increased its holdings in the company's shares by 1,490,000 shares through centralized bidding transactions, accounting for approximately 0.57% of the company's total share capital[146] Section VII Bond-Related Information This section states that the company had no corporate bonds (including enterprise bonds) or non-financial enterprise debt financing instruments, nor any convertible corporate bonds, during the reporting period - The company has no corporate bonds (including enterprise bonds) or non-financial enterprise debt financing instruments[149] - The company has no convertible corporate bonds[149] Section VIII Financial Report This section includes the company's unaudited consolidated and parent company financial statements, comprising the balance sheet, income statement, cash flow statement, and statement of changes in owners' equity, along with detailed notes on financial statement items, significant accounting policies and estimates, taxation, R&D expenses, changes in consolidation scope, interests in other entities, government grants, financial instrument risks, fair value disclosures, related parties and transactions, share-based payments, commitments and contingencies, events after the balance sheet date, and supplementary information I. Audit Report This section explicitly states that the company's 2025 semi-annual report is unaudited - This semi-annual report is unaudited[5] II. Financial Statements This section provides the company's consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity for H1 2025, comprehensively reflecting the financial position at the end of the reporting period and operating results during the period - As of June 30, 2025, consolidated total assets amounted to 2,254,715,701.53 yuan, and total equity attributable to parent company owners was 2,111,389,618.02 yuan[154] - For H1 2025, consolidated total operating revenue was 536,507,823.63 yuan, and net profit attributable to parent company shareholders was 193,062,172.51 yuan[159][161] - For H1 2025, consolidated net cash flow from operating activities was 202,352,289.36 yuan[166] III. Company Basic Information This section reiterates the company's overview, primarily engaged in the R&D, production, and sales of functional materials, with products covering functional electronic materials and high-performance optical materials - The company is primarily engaged in the R&D, production, and sales of functional materials, with products mainly including functional electronic materials and high-performance optical materials[183] IV. Basis of Financial Statement Preparation This section states that the company's financial statements are prepared on a going concern basis, in accordance with enterprise accounting standards and relevant CSRC regulations, accurately and completely reflecting the company's financial position and operating results - The company's financial statements are prepared on a going concern basis, complying with enterprise accounting standards, and accurately and completely reflecting the company's financial position, operating results, and cash flows[184][185][187] V. Significant Accounting Policies and Estimates This section details the company's specific accounting policies and estimates for accounting periods, operating cycles, functional currency, business combinations, financial instruments, notes receivable, accounts receivable, inventories, long-term equity investments, fixed assets, construction in progress, borrowing costs, intangible assets, long-term deferred expenses, contract liabilities, employee compensation, provisions, share-based payments, revenue, government grants, deferred income tax, and leases - The company's accounting year runs from January 1 to December 31 of the Gregorian calendar, with one year (12 months) as the normal operating cycle[188][189] - Financial assets are classified based on business model and contractual cash flow characteristics as measured at amortized cost, at fair value through other comprehensive income, or at fair value through profit or loss[199] - Accounts receivable, regardless of whether they contain a significant financing component, are measured at an amount equal to the expected credit losses over their entire lifetime[208] - Inventories are valued using the weighted average method, with a perpetual inventory system, and low-value consumables and packaging materials are amortized in a single instance[216] - Fixed assets are depreciated using the straight-line method, with depreciation periods of 20/30 years for buildings and 5/10 years for machinery and equipment[223] - Revenue recognition principle is to recognize revenue when the customer obtains control of the related goods, with domestic sales recognized upon customer acceptance or actual use, and export sales recognized based on customs declaration documents or customer acceptance[245][246] VI. Taxation This section lists the company's and its subsidiaries' main tax categories and rates, detailing applicable tax preferential policies, including high-tech enterprise income tax benefits, small and micro-enterprise income tax benefits, R&D expense super deduction, and advanced manufacturing enterprise VAT additional deduction - Main tax categories include VAT (13%), corporate income tax (ranging from 8.25% to 29.84%), urban maintenance and construction tax, education surcharge, and local education surcharge[255] - The company (parent company) and its subsidiary Shichen Technology enjoy high-tech enterprise income tax benefits, taxed at a reduced rate of 15%[257] - Subsidiary Shenzhen Shihua enjoys small and micro-enterprise income tax benefits, and Hong Kong Magi enjoys a profits tax rate of 8.25%[257][258] - The company and its subsidiaries Shichen Technology and Shituo Material enjoy a 100% super deduction policy for R&D expenses before tax[258] - The company (parent company) enjoys a 5% additional VAT deduction policy for advanced manufacturing enterprises[258] VII. Notes to Consolidated Financial Statement Items This section provides detailed notes for each item in the consolidated financial statements, including monetary funds, accounts receivable, inventories, fixed assets, construction in progress, intangible assets, various liabilities, as well as revenue, costs, expenses, and profits, explaining their period-end balances, current period changes, and main components - The period-end balance of monetary funds is 215,158,703.16 yuan, of which 11,536,999.58 yuan is deposited overseas[260] - The period-end book value of accounts receivable is 276,992,217.30 yuan, with a bad debt provision of 5,652,902.42 yuan[265] - The period-end book value of inventories is 108,762,336.76 yuan, with an inventory impairment provision of 9,542,708.05 yuan, where current period reversals or write-offs are mainly due to the use or sale of inventories for which impairment provisions had been made[289][290] - The period-end balance of non-current assets due within one year is 214,850,502.58 yuan, primarily consisting of large negotiable certificates of deposit due within one year[292] - The period-end book value of fixed assets is 571,687,467.14 yuan, with 131,904,646.79 yuan transferred from construction in progress to fixed assets in the current period[302][303] - The period-end balance of construction in progress is 278,662,113.62 yuan, mainly including the Innovation Center Project, New High-Efficiency Sealant Project, and High-Performance Optical Film Material Project[307] - The period-end book value of intangible assets is 223,507,606.46 yuan, with an increase of 105,559,600.65 yuan in the current period primarily due to the acquisition of land use rights[314][315] - Operating revenue for the current period amounted to 536,507,823.63 yuan, of which main business revenue was 536,148,516.51 yuan, primarily from functional electronic materials and high-performance optical materials[358][360] - Investment income for the current period amounted to 6,948,931.92 yuan, mainly from interest income and disposal gains from other debt investments held during the period[368] VIII. Research and Development Expenses This section lists the company's R&D expenses for H1 2025 by nature of expense, totaling 28,520,651.49 yuan, a 21.02% increase from the prior year, primarily composed of direct labor, materials and power, depreciation, and other costs 2025 Semi-Annual R&D Expenses (by Nature of Expense) | Item | Current Period (yuan) | Prior Period (yuan) | | :--- | :--- | :--- | | Direct Labor | 19,333,497.73 | 16,633,623.54 | | Materials and Power | 5,846,499.55 | 3,118,074.27 | | Depreciation | 1,990,044.93 | 1,460,636.56 | | Other | 1,350,609.28 | 2,355,251.01 | | Total | 28,520,651.49 | 23,567,585.38 | | Of which: Expensed R&D Investment | 28,520,651.49 | 23,567,585.38 | - Total R&D investment increased by 21.02% year-over-year, indicating the company's continued increase in R&D expenditure[43][392] IX. Changes in Consolidation Scope This section states that the company's consolidation scope did not change during the reporting period due to non-common control business combinations, common control business combinations, reverse acquisitions, or disposal of subsidiaries - During the reporting period, the company's consolidation scope did not change due to non-common control business combinations, common control business combinations, reverse acquisitions, or disposal of subsidiaries[393][394] X. Interests in Other Entities This section outlines the composition of the company's enterprise group, including the registered locations, business nature, and shareholding percentages of its major subsidiaries, indicating that the company owns multiple wholly-owned subsidiaries and sub-subsidiaries - The company owns wholly-owned subsidiaries including Shichen Technology, Shituo Material, Shenzhen Shihua, Hong Kong Magi, US Shihua, Singapore Shijia, and the sub-subsidiary Japan Shijia[394] - All subsidiaries have a 100% shareholding ratio[394] XI. Government Grants This section discloses the details of government grants recognized in current profit or loss during the reporting period, totaling 1,705,020.00 yuan, primarily from technology leader talent project funds, enterprise stabilization and assistance awards, and smart manufacturing space quality project construction awards - The total government grants recognized in current profit or loss for the current period amounted to 1,705,020.00 yuan[397] - Major government grant projects include the 2019 Wujiang District 20th Batch Technology Leader Talent Project Fund (0.15 million yuan), 2024 Spring Festival Wujiang Development Zone Enterprise Stabilization and Assistance Award (0.1841 million yuan), and 2024 Smart Manufacturing Space Quality Project Construction related work award funds (1.20 million yuan)[397] XII. Risks Related to Financial Instruments This section analyzes the company's financial instrument risks, including credit risk, liquidity risk, and market risk (interest rate risk and exchange rate risk), and describes how these risks are managed and controlled through transactions with reputable customers, cash flow forecasting, credit line management, and balancing foreign currency receipts and payments - The company faces credit risk, liquidity risk, and market risk (interest rate risk and exchange rate risk)[397][399][400] - Credit risk is managed through transactions with reputable customers, credit reviews, and continuous monitoring of accounts receivable[398] - Liquidity risk is managed through cash flow forecasting, sufficient cash reserves, and credit lines[399] - Interest rate risk primarily arises from other debt investments and is controlled by investing in highly secure and liquid bank wealth management products[399] - Exchange rate risk primarily arises from foreign sales revenue settlement of accounts receivable and is mitigated by balancing foreign currency receipts and payments and timely settlement[400] XIII. Disclosure of Fair Value This section discloses the fair value of the company's assets and liabilities measured at fair value at the end of the period, primarily comprising other debt investments and non-current assets due within one year, all of which are large negotiable certificates of deposit measured using Level 1 fair value inputs - The total assets continuously measured at fair value amounted to 524,085,761.89 yuan[404] - This primarily includes other debt investments (309,235,259.31 yuan) and non-current assets due within one year (214,850,502.58 yuan), all of which are large negotiable certificates of deposit[404] - The fair value measurement of these financial assets uses Level 1 fair value inputs, which are quoted prices in active markets[404][406] XIV. Related Parties and Related Party Transactions This section identifies the company's other related parties, including associate shareholders and their controlled entities, and discloses key management personnel compensation, noting no significant related party transactions such as purchases and sales of goods, provision of services, leases, guarantees, fund transfers, asset transfers, or debt restructuring during the reporting period - Other related parties include associate shareholders Yefuyou Investment Development (Suzhou) Co., Ltd., Suzhou Shilu Enterprise Management Center (Limited Partnership), and others[409] - Key management personnel compensation amounted to 6.0931 million yuan in the current period, compared to 5.4416 million yuan in the prior period[411] - During the reporting period, the company did not engage in significant related party transactions such as purchases and sales of goods, provision and acceptance of services, related party leases, related party guarantees, related party fund transfers, related party asset transfers, or debt restructuring[409][410] XV. Share-Based Payments This section states that the company had no share-based payment plans or related expenses during the reporting period - During the reporting period, the company had no details of equity instruments, outstanding share options or other equity instruments at period-end, equity-settled share-based payment arrangements, cash-settled share-based payment arrangements, current period share-based payment expenses, or modifications or terminations of share-based payments[413][414] XVI. Commitments and Contingencies This section states that as of the balance sheet date, the company had no significant commitments or contingencies requiring disclosure - As of the balance sheet date, the company had no significant commitments or contingencies requiring disclosure[414] XVII. Events After the Balance Sheet Date This section states that no significant non-adjusting events, profit distribution, or sales returns occurred between the reporting period and the date the financial report was approved for issuance - No significant non-adjusting events, profit distribution, or sales returns occurred between the reporting period and the date the financial report was approved for issuance[414] XVIII. Other Significant Matters This section states that the company had no prior period accounting error corrections, significant debt restructurings, asset exchanges, or annuity plans, and that segment information is not presented as management manages and evaluates the company's main business as a whole - The company had no prior period accounting error corrections, significant debt restructurings, asset exchanges, or annuity plans[414][415] - The company's main business is managed and evaluated as a whole by management, thus segment information is not presented in these financial statements[415] XIX. Notes to Parent Company Financial Statement Items This section provides detailed notes for the parent company's financial statement items, including accounts receivable, other receivables, long-term equity investments, operating revenue and cost, and investment income, noting significant changes in parent company accounts receivable and long-term equity investments, with investment income primarily from other debt investments - The parent company's period-end book value of accounts receivable is 337,728,744.77 yuan, with a bad debt provision of 4,573,012.30 yuan[420] - The parent company's period-end book balance of other receivables is 361,027,199.23 yuan, with a bad debt provision of 25,612.34 yuan, primarily consisting of intercompany balances[431][433][435] - The parent company's period-end book value of long-term equity investments is 283,393,927.23 yuan, with a current period increase of 80,379,582.00 yuan, mainly due to additional investments in subsidiaries Shichen Technology and Singapore Shijia[441][443] - The parent company's operating revenue for the current period amounted to 524,857,871.62 yuan, of which main business revenue was 524,327,841.10 yuan, primarily from functional electronic materials and high-performance optical materials[446][445] - The parent company's investment income for the current period amounted to 6,557,232.85 yuan, mainly from interest income and disposal gains from other debt investments held during the period[447] XX. Supplementary Information This section provides supplementary financial information, including a detailed statement of non-recurring gains and losses for the current period and weighted average return on net assets and earnings per share, noting that total non-recurring gains and losses amounted to 7,000,403.66 yuan, with significant improvements in both net asset return and earnings per share 2025 Semi-Annual Non-Recurring Gains and Losses Detail Statement | Item | Amount (yuan) | | :--- | :--- | | Gains or losses from disposal of non-current assets, including the reversal of impairment provisions already made | -8,063.69 | | Government grants recognized in current profit or loss, excluding those closely related to the company's normal business operations, compliant with national policies, enjoyed according to fixed standards, and having a continuous impact on the company's profit or loss | 1,705,020.00 | | Gains or losses from changes in fair value of financial assets and liabilities held by non-financial enterprises, and gains or losses from disposal of financial assets and liabilities, excluding effective hedging activities related to normal business operations | 6,948,931.92 | | Other non-operating income and expenses apart from the above | -410,442.94 | | Less: Income tax impact | 1,235,041.63 | | Total | 7,000,403.66 | 2025 Semi-Annual Weighted Average Return on Net Assets and Earnings Per Share | Profit for the Reporting Period | Weighted Average Return on Net Assets (%) | Earnings Per Share | | :--- | :--- | :--- | | Net Profit Attributable to Ordinary Shareholders of the Company | 9.45 | Basic Earnings Per Share: 0.74 yuan/share, Diluted Earnings Per Share: 0.74 yuan/share | | Net Profit Attributable to Ordinary Shareholders of the Company After Deducting Non-Recurring Gains and Losses | 9.11 | Basic Earnings Per Share: 0.71 yuan/share, Diluted Earnings Per Share: 0.71 yuan/share |