华丰股份(605100) - 2025 Q2 - 季度财报

Section 1 Definitions This section provides essential definitions of terms used throughout the report, ensuring clarity for specialized terminology and company-specific designations Definitions of Common Terms This chapter provides definitions of common terms used in the report, ensuring readers have a clear understanding of specialized terminology and company-specific designations, covering terms from stock exchanges to specific products and related companies - The reporting period is defined as January 1, 2025, to June 30, 2025[15] - AIDC refers to Artificial Intelligence Data Centers, indicating the company's business relevance to emerging technology sectors[15] - Reliance Group (India) is defined as a leading integrated telecommunications operator in India, a Fortune Global 500 company, indicating its status as a key client for the company[15] Section 2 Company Profile and Key Financial Indicators This section presents the company's fundamental information and a comparative overview of its key financial performance and indicators for the reporting period I. Company Information This section outlines Huafeng Power Co., Ltd.'s basic registration information, including its Chinese name, abbreviation, foreign name, and legal representative, providing essential identification for investors - The company's Chinese name is Huafeng Power Co., Ltd., abbreviated as Huafeng Shares, with Xu Huadong as the legal representative[17] II. Contact Person and Information This section provides contact information for the company's Board Secretary and Securities Affairs Representative, including name, address, phone, fax, and email, facilitating investor inquiries and communication - Both the Board Secretary and Securities Affairs Representative are Liu Xiang, with the contact address at No. 7879 Yingqian Street, High-tech Zone, Weifang City[18] III. Brief Introduction to Changes in Basic Information This section details the company's registered and office addresses, along with historical changes, ensuring accuracy and transparency of information - Both the company's registered and office addresses are No. 7879 Yingqian Street, High-tech Zone, Weifang City, with no historical changes to the registered address[19] IV. Brief Introduction to Changes in Information Disclosure and Document Storage Locations This section specifies the company's designated newspapers for information disclosure, the website address for semi-annual reports, and the report storage location, facilitating public access to disclosed information - The company's designated newspapers for information disclosure are China Securities Journal, Shanghai Securities News, and Securities Daily, with the report published on **http://www.sse.com.cn**[20](index=20&type=chunk) V. Company Stock Overview This section provides basic information about the company's stock, including type, listing exchange, stock abbreviation, and code, for investor identification and trading - The company's A-shares are listed on the Shanghai Stock Exchange, with the stock abbreviation Huafeng Shares and stock code 605100[21] VII. Company's Key Accounting Data and Financial Indicators This section discloses the company's key accounting data and financial indicators for H1 2025, compared to the prior year, showing significant declines in revenue and profit, and negative operating cash flow H1 2025 Key Accounting Data Comparison with Prior Year | Major Accounting Data (Jan-Jun) | Current Period (CNY) | Prior Year Same Period (CNY) | Current Period vs. Prior Year Same Period Change (%) | | :------------------------------ | :------------------- | :------------------- | :------------------------------------------------- | | Operating Revenue | 373,429,343.73 | 558,207,787.04 | -33.10 | | Total Profit | 14,440,302.88 | 55,203,470.40 | -73.84 | | Net Profit Attributable to Shareholders of Listed Company | 13,152,306.37 | 46,877,612.27 | -71.94 | | Net Profit Excluding Non-recurring Items | 11,550,716.79 | 45,574,692.91 | -74.66 | | Net Cash Flow from Operating Activities | -14,110,630.80 | 174,901,502.72 | -108.07 | | Net Assets Attributable to Shareholders of Listed Company (Period-end) | 1,819,044,414.43 | 1,842,581,641.89 | -1.28 | | Total Assets (Period-end) | 2,274,324,599.93 | 2,441,827,062.25 | -6.86 | H1 2025 Key Financial Indicators Comparison with Prior Year | Major Financial Indicators (Jan-Jun) | Current Period | Prior Year Same Period | Current Period vs. Prior Year Same Period Change (%) | | :----------------------------------- | :------------- | :------------- | :------------------------------------------------- | | Basic Earnings Per Share (CNY/share) | 0.08 | 0.28 | -71.43 | | Diluted Earnings Per Share (CNY/share) | 0.08 | 0.28 | -71.43 | | Basic EPS Excluding Non-recurring Items (CNY/share) | 0.07 | 0.27 | -74.07 | | Weighted Average Return on Net Assets (%) | 0.71 | 2.48 | Decrease 1.77 percentage points | | Weighted Average Return on Net Assets Excluding Non-recurring Items (%) | 0.63 | 2.41 | Decrease 1.78 percentage points | - The decline in operating revenue was primarily due to market demand fluctuations, changes in customer product structure, and strategic adjustments, leading to reduced company orders[24] - The decrease in net profit, basic earnings per share, and weighted average return on net assets was mainly due to reduced orders and lower capacity utilization at the parent company, as well as decreased revenue and profit from the Indian subsidiary's O&M business affected by customer strategic adjustments[25] IX. Non-recurring Gains and Losses Items and Amounts This section details the company's non-recurring gains and losses for H1 2025, totaling CNY 1,601,589.58, primarily including non-current asset disposal gains/losses, government grants, fair value changes in financial assets, and debt restructuring gains/losses H1 2025 Non-recurring Gains and Losses Items | Non-recurring Gains and Losses Item | Amount (CNY) | | :-------------------------------- | :----------- | | Gains/Losses on Disposal of Non-current Assets | 121,070.58 | | Government Grants | 7,477.33 | | Gains/Losses from Fair Value Changes of Financial Assets | 1,452,760.10 | | Gains/Losses from Debt Restructuring | 264,586.86 | | Other Non-operating Income and Expenses | 37,872.62 | | Less: Income Tax Impact | 282,177.91 | | Total | 1,601,589.58 | Section 3 Management Discussion and Analysis This section provides an in-depth analysis of the company's operating performance, industry trends, core competencies, and strategic initiatives during the reporting period I. Explanation of the Company's Industry and Main Business Operations during the Reporting Period This section details the market status and development trends of the company's industries (commercial heavy trucks, diesel engines, intelligent generator sets) and describes the four main businesses: core components, diesel engines, intelligent generator sets, and communication base station O&M services - In H1 2025, China's cumulative heavy truck sales reached 539,000 units, a 6.9% year-on-year increase, with new energy heavy trucks showing significant growth of approximately 1.86 times, while demand for traditional diesel heavy trucks was weaker[31] - From January to June 2025, domestic cumulative diesel engine sales reached 2.6641 million units, a 4.12% year-on-year increase; loader sales increased by 13.6% year-on-year[32] - The data center market continues to grow, with China's data center market size expected to exceed CNY 318 billion in 2025, at a CAGR of approximately 26.7%, driving demand for high-power diesel generator sets[33] - The company's main businesses include engine core components (cylinder blocks, cylinder heads, crankcases, primarily for heavy trucks), diesel engines (off-road, power 10kW-176kW), intelligent generator sets (10kW-2400kW, for data centers, communication base stations), and comprehensive O&M services for communication base stations in India[35][36] (1) Industry Overview This section analyzes the market environment for the company's main businesses, including the new energy transition trend in the commercial heavy truck market, stable demand for diesel engines, and rapid growth in the data center backup power market, providing a basis for the company's strategic planning - In H1 2025, cumulative sales of new energy heavy trucks were approximately 79,200 units, growing about 1.86 times year-on-year, transitioning from a "policy-driven introduction period" to a "market-driven growth period"[31] - Natural gas heavy truck sales decreased by 16% year-on-year, with their cost advantage weakened, while demand for traditional diesel heavy trucks gradually recovered[31] - Diesel engines have strong irreplaceability in transportation, industry, agriculture, and emergency power, with domestic cumulative diesel engine sales growing 4.12% year-on-year from January to June 2025[32] - Emerging applications like AI and cloud computing drive data center construction demand, with China's data center computing power demand projected to grow at an average annual rate of approximately 20% from 2025-2030, increasing demand for high-power diesel generator sets[32][33] (2) Explanation of Main Business Operations This section details the product scope and application areas of the company's four main businesses, highlighting its business layout and market positioning in engine core components, diesel engines, intelligent generator sets, and communication base station O&M services - Core components primarily include cylinder blocks, cylinder heads, and crankcases, applied in heavy trucks, construction machinery, and buses, with product series covering 9L-16L[35] - Diesel engines focus on off-road applications, with power ranging from 10kW-176kW, used in construction machinery, agricultural machinery, marine, power generation equipment, and stationary power[35] - Intelligent generator sets cover power from 10kW-2400kW, providing integrated solutions for emergency power in data/computing centers, nuclear power plants, and other applications[36] - Comprehensive O&M services for communication base stations are primarily provided in India to operators and tower companies for installation, commissioning, and operation and maintenance[36] II. Discussion and Analysis of Operations This section analyzes the reasons for the company's H1 2025 operating performance decline and details key work and progress in intelligent generator sets, core components, diesel engines, new energy business layout, and innovative R&D - In H1 2025, the company's operating revenue was CNY 373 million, a 33.10% year-on-year decrease; net profit attributable to shareholders of the listed company was CNY 13.1523 million, a 71.94% year-on-year decrease[36] - The performance decline was mainly due to changes in heavy truck market demand structure (increased new energy penetration, no related new energy heavy truck component business for the company), natural gas engine production line technical upgrades in the debugging and verification phase, reduced revenue from the Indian subsidiary's O&M business due to customer strategic adjustments and visa policies, and increased credit impairment provisions[36][37] - The company prioritizes the data center market for expansion, signing a strategic cooperation agreement with Shanghai Jipian Artificial Intelligence Technology Co., Ltd., planning to invest CNY 20 million for a 20% stake to jointly promote an integrated "energy + computing power" support model[39] - In core components business, production line technical upgrades are underway for new natural gas engine models, with new 15NG4.0 cylinder blocks and heads passing sample and small-batch verification, and 13S cylinder blocks in the sample verification phase[40] - In diesel engine business, multiple tractor platform matching intentions have been reached with Lovol, with prototypes passing verification tests, and bulk supply expected in H2[40] - The company established Huafeng New Energy (Changzhou) Co., Ltd. in a joint venture with a professional technical team to explore R&D, manufacturing, and integrated application of new energy battery products, and to advance the solid-state battery project jointly developed with the Shanghai Institute of Ceramics, Chinese Academy of Sciences[42] Operating Overview This section briefly summarizes the company's H1 2025 financial performance, noting significant declines in operating revenue and net profit attributable to the parent, and outlining the main reasons for these changes H1 2025 Operating Performance Overview | Indicator | Amount/Ratio | | :-------- | :----------- | | Operating Revenue | CNY 373 million | | Year-on-year Decline | 33.10% | | Net Profit Attributable to Parent | CNY 13.1523 million | | Year-on-year Decrease | 71.94% | - Key reasons include changes in heavy truck market demand structure (new energy penetration increased, company has no related component business), natural gas engine production line technical upgrades affecting revenue, reduced O&M revenue from the Indian subsidiary, and increased credit impairment provisions[36][37] Key Initiatives in H1 2025 This section details the company's specific measures during the reporting period for business transformation and innovative development, including data center market expansion, technological upgrades, new product development, new energy business layout, and solid-state battery R&D progress - The company targets the data center market as a key expansion area, signing a strategic cooperation agreement with Shanghai Jipian Artificial Intelligence Technology Co., Ltd., planning to invest CNY 20 million for a 20% stake to provide highly reliable backup power system solutions[39] - In core components, production line technical upgrades for new natural gas engine models are underway, with new 15NG4.0 cylinder blocks and heads passing sample and small-batch verification, and 13S cylinder blocks in the sample verification phase[40] - In diesel engines, multiple tractor platform matching intentions have been reached with Lovol, with prototypes passing verification tests, and bulk supply expected in H2, alongside new development of dual-shaft balance and high-cost-performance naturally aspirated models[40][41] - For new energy business, Huafeng New Energy (Changzhou) Co., Ltd. was established as a joint venture to explore R&D, manufacturing, and integrated application of new energy battery products, and to accelerate the solid-state battery project jointly developed with the Shanghai Institute of Ceramics, Chinese Academy of Sciences[42] - In innovative R&D, solid-state battery performance indicators significantly improved, with invention patent applications submitted, and collaboration with Xiamen University on cooling cutting fluid development[42] III. Analysis of Core Competencies during the Reporting Period This section comprehensively analyzes the company's core competencies in customer resources, technology R&D, intelligent manufacturing, quality management, and business synergy and innovation, highlighting its competitive advantages and sustainable development potential in the industry - The company has accumulated high-quality customer resources such as Weichai Power, FAW Jiefang, Weichai Lovol, CIMC Vehicles, and Reliance Group (India), which aids in new business development[43] - The company possesses long-term R&D and manufacturing experience in core components, diesel engines, and intelligent generator sets, forming a flexible processing technology system, and establishing industry-university-research cooperation with institutions like the Shanghai Institute of Ceramics, Chinese Academy of Sciences, and Xiamen University[44] - The company continuously advances its "lean manufacturing + intelligent upgrade" strategy, building flexible, automated, modular intelligent production lines for components and advanced assembly lines for diesel engines and generator sets[44][45] - The company operates quality management systems such as ISO9001 and IATF16949, implementing comprehensive, company-wide, and full-process quality management to ensure product quality[45] - The company deepens technical synergy and product linkage with key clients, possessing capabilities for simultaneous development, design, and manufacturing, and actively expanding new business models to cultivate potential growth points[45][46] IV. Major Operating Conditions during the Reporting Period This section details the company's financial statement item changes, asset-liability status, investment situation, and operating performance of major controlled and investee companies during the reporting period, revealing operational challenges and subsidiary performance fluctuations Analysis of Major Financial Statement Item Changes (Jan-Jun 2025) | Item | Current Period Amount (CNY) | Prior Year Same Period Amount (CNY) | Change Ratio (%) | | :--- | :-------------------------- | :-------------------------- | :--------------- | | Operating Revenue | 373,429,343.73 | 558,207,787.04 | -33.10 | | Operating Cost | 333,027,542.84 | 472,851,324.47 | -29.57 | | Selling Expenses | 7,597,315.03 | 7,002,085.72 | 8.50 | | Administrative Expenses | 17,429,867.99 | 23,387,081.80 | -25.47 | | R&D Expenses | 10,290,960.03 | 15,849,749.74 | -35.07 | | Net Cash Flow from Operating Activities | -14,110,630.80 | 174,901,502.72 | -108.07 | | Net Cash Flow from Investing Activities | 7,613,454.16 | -257,305,525.56 | Not applicable | | Net Cash Flow from Financing Activities | -40,137,753.64 | -63,046,464.02 | Not applicable | - The decline in operating revenue was primarily due to changes in heavy truck market demand, technical upgrades to natural gas engine production lines, and reduced O&M revenue from the Indian subsidiary[49] - Trading financial assets decreased by 31.86% compared to the end of the prior year, mainly due to reduced purchases of structured deposit products; accounts receivable increased by 35.83%, primarily due to increased outstanding receivables within the credit period from major customers[51][52] - Overseas assets amounted to CNY 214,067,681.39, accounting for 9.41% of total assets[53] - PowerHF India Private Limited's operating revenue decreased by 64.21% year-on-year, and net profit decreased by 96.49% year-on-year, mainly due to strategic adjustments by a key Indian client and visa policy impacts[59] - Huafeng (Jiangsu) Machinery Manufacturing Co., Ltd.'s operating revenue increased by 16367.02% year-on-year, but due to low capacity utilization, net profit decreased by 56.98% year-on-year[59] (1) Analysis of Main Business This section analyzes changes in financial statement items, revealing significant shifts in the company's operating revenue, costs, expenses, and cash flow, and explains the primary drivers such as market demand, technical upgrades, and overseas business impacts Analysis of Major Financial Statement Item Changes (Jan-Jun 2025) | Item | Current Period Amount (CNY) | Prior Year Same Period Amount (CNY) | Change Ratio (%) | | :--- | :-------------------------- | :-------------------------- | :--------------- | | Operating Revenue | 373,429,343.73 | 558,207,787.04 | -33.10 | | Operating Cost | 333,027,542.84 | 472,851,324.47 | -29.57 | | Administrative Expenses | 17,429,867.99 | 23,387,081.80 | -25.47 | | R&D Expenses | 10,290,960.03 | 15,849,749.74 | -35.07 | | Net Cash Flow from Operating Activities | -14,110,630.80 | 174,901,502.72 | -108.07 | - The decline in operating revenue was primarily due to changes in heavy truck market demand, technical upgrades to natural gas engine production lines, and reduced O&M revenue from the Indian subsidiary[49] - Net cash flow from operating activities turned negative, mainly due to decreased fund recovery resulting from lower operating revenue[50] (3) Analysis of Assets and Liabilities This section analyzes changes in the company's period-end asset and liability structure, noting decreases in trading financial assets, increases in accounts receivable, and reductions in certain payables, while also disclosing the scale of overseas assets Changes in Assets and Liabilities (Period-end vs. Prior Year-end) | Item Name | Current Period-end Amount (CNY) | Prior Year-end Amount (CNY) | Change Ratio (%) | | :-------- | :------------------------------ | :-------------------------- | :--------------- | | Trading Financial Assets | 170,577,835.62 | 250,325,095.90 | -31.86 | | Accounts Receivable | 132,112,920.66 | 97,260,110.49 | 35.83 | | Prepayments | 5,777,799.40 | 3,405,944.84 | 69.64 | | Non-current Assets Due Within One Year | 55,333,692.98 | 37,774,573.41 | 46.48 | | Notes Payable | 46,823,464.61 | 115,329,547.91 | -59.40 | | Employee Benefits Payable | 4,441,434.50 | 8,805,797.06 | -49.56 | - The decrease in trading financial assets was mainly due to reduced purchases of structured deposit products; the increase in accounts receivable was primarily due to increased outstanding receivables within the credit period from major customers[51][52] - Overseas assets amounted to CNY 214,067,681.39, accounting for 9.41% of total assets[53] (4) Analysis of Investment Status This section discloses the company's period-end restricted assets and financial assets measured at fair value, indicating that some monetary funds and intangible assets are subject to pledges or margin restrictions, with bank structured deposits being the primary fair value measured financial assets Period-end Major Restricted Assets | Item Name | Period-end Book Value (CNY) | Reason | | :-------- | :-------------------------- | :------------------- | | Monetary Funds | 2,037,621.73 | Acceptance bill margin | | Monetary Funds | 2,000,000.00 | Letter of guarantee margin | | Intangible Assets | 43,486,529.79 | Loan collateral | | Total | 47,524,151.52 | / | Financial Assets Measured at Fair Value (Other) | Asset Category | Beginning Balance (CNY) | Amount Purchased in Current Period (CNY) | Amount Sold/Redeemed in Current Period (CNY) | Period-end Balance (CNY) | | :------------- | :---------------------- | :--------------------------------------- | :------------------------------------------- | :----------------------- | | Bank Structured Deposits | 250,325,095.90 | 262,500,000.00 | 342,500,000.00 | 170,577,835.62 | (6) Analysis of Major Controlled and Investee Companies This section analyzes the operating performance of the company's major controlled subsidiaries, particularly PowerHF India Private Limited and Huafeng (Jiangsu) Machinery Manufacturing Co., Ltd., and the reasons for their performance fluctuations, reflecting the impact of overseas markets and capacity utilization on subsidiary profits Major Subsidiary Financial Data (Jan-Jun 2025) | Company Name | Operating Revenue (CNY) | Operating Profit (CNY) | Net Profit (CNY) | | :----------- | :---------------------- | :--------------------- | :--------------- | | PowerHF India Private Limited | 5,111,398.03 | -20,581.50 | 111,683.18 | | Huafeng (Jiangsu) Machinery Manufacturing Co., Ltd. | 12,983,010.13 | -5,477,070.49 | -4,118,824.40 | | Shanghai Juxin Import and Export Co., Ltd. | 4,320,480.03 | 2,295,081.58 | 2,295,081.58 | - PowerHF India Private Limited's operating revenue decreased by 64.21% year-on-year, and net profit decreased by 96.49% year-on-year, mainly due to strategic adjustments by a key Indian client and visa policy impacts[59] - Huafeng (Jiangsu) Machinery Manufacturing Co., Ltd.'s operating revenue increased by 16367.02% year-on-year, but due to low capacity utilization and higher unit manufacturing costs, net profit decreased by 56.98% year-on-year[59] V. Other Disclosures This section details six major risks the company may face, including macroeconomic, customer concentration, product gross margin decline, new energy substitution, international situation, and fundraising project delay or change risks, along with corresponding countermeasures - The company faces domestic macroeconomic environment risks and will respond by expanding domestic and international markets, diversifying products and customers, and developing new businesses[60] - There is a risk of major customer concentration and reliance on key clients; the company will pursue a customer diversification strategy, consolidating existing clients and expanding to new ones[60] - Core component product prices and gross margins face a decline risk; the company will continue to advance process improvement, product structure optimization, and cost reduction and efficiency enhancement[60] - The development of the new energy industry poses a substitution risk to the internal combustion engine industry; the company has established a new energy joint venture and is expanding into high-end power markets such as data centers and computing centers[61] - International situations and overseas market risks affect Indian business revenue and profit; the company will strengthen international trade research, explore diversified overseas markets, and manage exchange rate risks[61] - The fundraising project "New Lightweight Engine Core Components Intelligent Manufacturing Project" faces risks of delay or change; the company will closely monitor market demand and may initiate procedures for changing the use of raised funds[62] Section 4 Corporate Governance, Environment, and Society This section details changes in the company's governance structure, profit distribution plans, employee incentives, and environmental information disclosure during the reporting period I. Changes in Directors, Supervisors, and Senior Management This section discloses changes in the company's Board Secretary during the reporting period, with Ms. Wang Hongxia resigning due to work adjustments and Mr. Liu Xiang appointed as the new Board Secretary Changes in Directors, Supervisors, and Senior Management | Name | Position Held | Change Type | | :------- | :--------------- | :---------- | | Wang Hongxia | Board Secretary | Resignation | | Liu Xiang | Board Secretary | Appointment | - After resigning as Board Secretary, Ms. Wang Hongxia continues to serve as a company director and CFO[66] - Mr. Liu Xiang was appointed as the company's Board Secretary on April 28, 2025[66] II. Profit Distribution or Capital Reserve Conversion Plan This section discloses the company's H1 2025 profit distribution plan, proposing a cash dividend of CNY 0.10 per share (tax inclusive) to all shareholders, totaling CNY 17,113,200.00, representing 130.12% of H1 net profit attributable to the parent H1 2025 Profit Distribution Plan | Item | Amount | | :--- | :----- | | Whether to Distribute or Convert | Yes | | Dividend per 10 Shares (CNY) (tax inclusive) | 1.00 | | Total Proposed Cash Dividend (tax inclusive) | CNY 17,113,200.00 | | Percentage of H1 2025 Net Profit Attributable to Parent | 130.12% | - This profit distribution plan is subject to approval by the General Meeting of Shareholders and may be adjusted in total amount due to changes in total share capital[67] III. Status and Impact of Company Equity Incentive Plans, Employee Stock Ownership Plans, or Other Employee Incentive Measures This section outlines the progress of the company's 2024 Restricted Stock Incentive Plan, including approval by the Board, Supervisory Committee, and General Meeting of Shareholders, public disclosure of the incentive recipient list, and completion of restricted stock registration - The company approved the "2024 Restricted Stock Incentive Plan (Draft)" and its summary on June 24, 2024[68] - The list of incentive recipients was publicly disclosed from June 26 to July 5, 2024, with no objections received by the Supervisory Committee[69] - On July 15, 2024, the General Meeting of Shareholders approved the resolutions related to the incentive plan[69] - On August 21, 2024, the registration of restricted shares granted under the 2024 Restricted Stock Incentive Plan was completed[69] IV. Environmental Information of Listed Companies and Their Major Subsidiaries Included in the List of Enterprises Required to Disclose Environmental Information by Law This section discloses the inquiry index for the environmental information disclosure report of the company, as a listed entity included in the list of enterprises required to disclose environmental information by law, reflecting its compliance in environmental information transparency - The company is included in the list of enterprises required to disclose environmental information by law, and relevant reports can be found on the "Enterprise Environmental Information Disclosure System (Shandong)"[71] Section 5 Significant Matters This section outlines the fulfillment of key commitments, integrity status, significant contracts, and the progress of fundraising projects, along with associated risks I. Fulfillment of Commitments This section details multiple commitments made by the company's actual controllers, shareholders, related parties, and the company itself regarding IPO and equity incentives, stating that all commitments were strictly fulfilled during the reporting period - Actual controllers and directors Xu Huadong and CHUI LAP LAM committed not to transfer more than 25% of their total shares annually during their tenure and within six months after resignation[74] - Controlling shareholder Engineus Power committed that within two years after the lock-up period expires, the number of shares reduced annually will not exceed 25% of the total shares held at the time of the company's IPO, and the reduction price will not be lower than the offering price[75][76] - All company directors and senior management committed not to transfer benefits to other entities or individuals without compensation or under unfair conditions, and to restrict job-related consumption[77] - Controlling shareholder Engineus Power committed not to engage in businesses that constitute horizontal competition with Huafeng Shares and to prioritize transferring such business opportunities to Huafeng Shares[78] - Actual controllers Xu Huadong and CHUI LAP LAM committed to avoid horizontal competition and related party transactions with the company, and to bear legal responsibility for the truthfulness, accuracy, and completeness of the prospectus[79][80][81][82][87][88] - The company committed not to provide loans or other financial assistance to equity incentive recipients, and incentive recipients committed to return all benefits received if disclosure documents contain false records[89] IX. Explanation of the Integrity Status of the Company, its Controlling Shareholder, and Actual Controller during the Reporting Period This section states that the company, its controlling shareholder, and actual controller maintained good integrity during the reporting period, with no unfulfilled obligations, overdue debts, unfulfilled commitments, or public condemnations - During the reporting period, the company, its controlling shareholder, and actual controller maintained good integrity, with no unfulfilled obligations determined by effective legal documents, overdue large debts, unfulfilled commitments, or public condemnations by the CSRC or SSE[92] XI. Significant Contracts and Their Fulfillment This section discloses the company's fulfillment of significant contracts during the reporting period, including the factory lease by its wholly-owned subsidiary Huafeng (Jiangsu) Machinery Manufacturing Co., Ltd. and major guarantees provided to subsidiaries - Wholly-owned subsidiary Huafeng (Jiangsu) Machinery Manufacturing Co., Ltd. leased a factory area of 17,014.10 square meters with an annual rent of CNY 5,104,230.00 for a 10-year term (December 1, 2022, to November 30, 2032), for the "Lightweight High-end New Series Engine Cylinder Block and Cylinder Head Intelligent Manufacturing Project"[95] Company Guarantees to Subsidiaries (June 30, 2025) | Indicator | Amount (CNY) | | :-------- | :----------- | | Total Guarantees to Subsidiaries Incurred During Reporting Period | 61,860,973.06 | | Total Guarantees to Subsidiaries Balance at Period-end (B) | 57,173,160.39 | | Total Guarantees (A+B) | 57,173,160.39 | | Percentage of Total Guarantees to Company's Net Assets (%) | 3.14 | | Debt Guarantee Amount Provided Directly or Indirectly to Guaranteed Parties with Asset-Liability Ratio Exceeding 70% (D) | 57,173,160.39 | (1) Custody, Contracting, and Leasing Matters This section details the factory lease by the company's wholly-owned subsidiary Huafeng (Jiangsu) Machinery Manufacturing Co., Ltd., for the "Lightweight High-end New Series Engine Cylinder Block and Cylinder Head Intelligent Manufacturing Project," with a 10-year lease term - Huafeng (Jiangsu) Machinery Manufacturing Co., Ltd. leased a factory area of 17,014.10 square meters with an annual rent of CNY 5,104,230.00[95] - The lease term is from December 1, 2022, to November 30, 2032, for the "Lightweight High-end New Series Engine Cylinder Block and Cylinder Head Intelligent Manufacturing Project"[95] (2) Significant Guarantees Performed and Unfulfilled during the Reporting Period This section discloses the company's total guarantees to subsidiaries and their percentage of net assets, noting that all guarantees were provided to guaranteed parties with an asset-liability ratio exceeding 70% Company Guarantees to Subsidiaries (June 30, 2025) | Indicator | Amount (CNY) | | :-------- | :----------- | | Total Guarantees to Subsidiaries Incurred During Reporting Period | 61,860,973.06 | | Total Guarantees to Subsidiaries Balance at Period-end (B) | 57,173,160.39 | | Total Guarantees (A+B) | 57,173,160.39 | | Percentage of Total Guarantees to Company's Net Assets (%) | 3.14 | | Debt Guarantee Amount Provided Directly or Indirectly to Guaranteed Parties with Asset-Liability Ratio Exceeding 70% (D) | 57,173,160.39 | XII. Explanation of Progress in Use of Raised Funds This section details the overall use of the company's raised funds and the specific progress of fundraising projects, particularly the reasons for delay and potential change risks for the "New Lightweight Engine Core Components Intelligent Manufacturing Project," and discloses cash management of idle raised funds Overall Use of Raised Funds (As of Period-end) | Indicator | Amount (CNY 10,000) | | :-------- | :------------------ | | Total Raised Funds | 85,563.10 | | Net Raised Funds | 79,677.09 | | Total Raised Funds Cumulatively Invested as of Period-end | 65,052.22 | | Investment Progress as of Period-end (%) | 81.64 | - The "New Lightweight Engine Core Components Intelligent Manufacturing Project" did not meet planned progress; Phase I is largely complete and operational, but Phase II is postponed due to declining market demand and existing capacity meeting needs, posing risks of further delay or change in the fundraising project[106][107][108] - The company uses temporarily idle raised funds of no more than CNY 150 million for cash management, investing in highly secure, liquid principal-protected investment products with a term not exceeding 12 months[111] (1)Overall Use of Raised Funds This section outlines the overall receipt of the company's raised funds, the total committed investment, and the cumulative invested amount and progress as of the reporting period end, indicating that most of the raised funds have been invested Overall Use of Raised Funds (As of Period-end) | Indicator | Amount (CNY 10,000) | | :-------- | :------------------ | | Total Raised Funds | 85,563.10 | | Net Raised Funds | 79,677.09 | | Total Committed Investment of Raised Funds in Prospectus or Offering Document | 79,677.09 | | Total Raised Funds Cumulatively Invested as of Period-end | 65,052.22 | | Investment Progress as of Period-end (%) | 81.64 | (2)Details of Fundraising Projects This section details the total investment, current year investment, cumulative investment progress, and benefit realization of each fundraising project, specifically explaining the reasons for delay and potential change risks for the "New Lightweight Engine Core Components Intelligent Manufacturing Project" Details of Fundraising Project Usage (As of Period-end) | Project Name | Total Committed Investment of Raised Funds (CNY 10,000) | Total Raised Funds Cumulatively Invested as of Period-end (CNY 10,000) | Investment Progress (%) | | :----------- | :------------------------------------------ | :----------------------------------------------------------- | :---------------------- | | Engine Core Components Intelligent Manufacturing Project | 30,942.49 | 28,325.66 | 91.54 | | Repayment of Bank Loans | 10,000.00 | 10,000.00 | 100 | | Technology Center Upgrade Project | 108.95 | 108.95 | 100 | | Enterprise Informationization Construction Project | 181.04 | 181.04 | 100 | | New Lightweight Engine Core Components Intelligent Manufacturing Project | 34,892.05 | 22,753.77 | 65.21 | | Lightweight High-end New Series Engine Cylinder Block and Cylinder Head Intelligent Manufacturing Project | 3,675.00 | 3,682.81 | 100.21 | - The "New Lightweight Engine Core Components Intelligent Manufacturing Project" is delayed until December 2025, mainly due to declining market demand, existing capacity meeting needs, and some contract payments and quality assurance funds not reaching payment milestones[106] - The urgency for Phase II construction of this project is low; the company is closely monitoring market demand changes and may initiate procedures for changing the use of raised funds[107][108] - The "Lightweight High-end New Series Engine Cylinder Block and Cylinder Head Intelligent Manufacturing Project" did not achieve expected benefits because it had not yet reached mass production in H1 2025[108] (4)Other Uses of Raised Funds during the Reporting Period This section discloses the company's cash management of idle raised funds, specifying authorized limits, investment types, and usage periods to enhance fund utilization efficiency - The company's Board of Directors approved the use of temporarily idle raised funds not exceeding CNY 150 million for cash management[111] - Investment products are highly secure, liquid principal-protected types, with a term not exceeding 12 months, and funds can be rolled over[111] Section 6 Share Changes and Shareholder Information This section details changes in the company's share capital, provides an overview of its shareholder structure, and lists information on directors, supervisors, and senior management I. Changes in Share Capital This section states that there were no changes in the company's total share capital and share structure during the reporting period - During the reporting period, there were no changes in the company's total share capital and share structure[114] II. Shareholder Information This section discloses the total number of common shareholders, the top ten shareholders, and the top ten unrestricted tradable share shareholders as of the reporting period end, and explains the related party relationships among major shareholders - As of the reporting period end, the total number of common shareholders was 27,550[115] Top Ten Shareholders' Shareholding as of Period-end | Shareholder Name | Period-end Shareholding (shares) | Percentage (%) | Shareholder Nature | | :--------------- | :------------------------------- | :------------- | :----------------- | | Engineus Power Holding Inc. | 88,200,000 | 51.54 | Overseas Legal Person | | Shanghai Guankun Venture Capital Partnership (Limited Partnership) | 4,900,000 | 2.86 | Other | | Yan Minying | 4,100,000 | 2.40 | Overseas Natural Person | | Lin Jiyang | 3,600,000 | 2.10 | Overseas Natural Person | | UBS AG | 852,051 | 0.50 | Overseas Legal Person | - Controlling shareholder Engineus Power Holding Inc. holds 88,200,000 shares, with a shareholding ratio of 51.54%[117] - Engineus Power Holding Inc. and Shanghai Guankun Venture Capital Partnership (Limited Partnership) are controlled by the same actual controller[118] Top Ten Restricted Shareholders' Shareholding and Restriction Conditions | No. | Restricted Shareholder Name | Number of Restricted Shares Held (shares) | Restriction Conditions | | :-- | :-------------------------- | :---------------------------------------- | :--------------------------------- | | 1 | 31 Incentive Recipients of 2024 Restricted Stock Incentive Plan | 1,200,000 | Agreed unlocking conditions not yet met | III. Information on Directors, Supervisors, and Senior Management This section states that there were no changes in shareholdings of the company's directors, supervisors, and senior management during the reporting period, nor were they granted equity incentives - During the reporting period, there were no changes in the shareholdings of the company's directors, supervisors, and senior management[120] - During the reporting period, directors, supervisors, and senior management were not granted equity incentives[121] Section 7 Bond-Related Information This section confirms the absence of corporate bonds, enterprise bonds, non-financial enterprise debt financing instruments, and convertible corporate bonds during the reporting period I. Corporate Bonds (Including Enterprise Bonds) and Non-financial Enterprise Debt Financing Instruments This section states that the company had no corporate bonds (including enterprise bonds) or non-financial enterprise debt financing instruments during the reporting period - The company had no corporate bonds or non-financial enterprise debt financing instruments during the reporting period[123] II. Convertible Corporate Bonds This section states that the company had no convertible corporate bonds during the reporting period - The company had no convertible corporate bonds during the reporting period[123] Section 8 Financial Report This section presents the company's unaudited financial statements, including balance sheets, income statements, cash flow statements, and detailed notes on accounting policies and financial items I. Audit Report This section states that the company's H1 2025 semi-annual report is unaudited - This semi-annual report is unaudited[5] II. Financial Statements This section provides the company's H1 2025 consolidated and parent company balance sheets, income statements, cash flow statements, and statements of changes in owners' equity, comprehensively presenting the company's financial position, operating results, and cash flow Consolidated Balance Sheet Key Data (June 30, 2025) | Item | Period-end Balance (CNY) | Beginning Balance (CNY) | | :--- | :----------------------- | :---------------------- | | Monetary Funds | 236,332,552.99 | 299,561,094.72 | | Trading Financial Assets | 170,577,835.62 | 250,325,095.90 | | Accounts Receivable | 132,112,920.66 | 97,260,110.49 | | Inventories | 155,238,404.43 | 188,263,797.72 | | Total Current Assets | 1,091,585,022.62 | 1,246,044,929.66 | | Fixed Assets | 763,636,145.10 | 805,809,105.99 | | Total Assets | 2,274,324,599.93 | 2,441,827,062.25 | | Notes Payable | 46,823,464.61 | 115,329,547.91 | | Accounts Payable | 188,090,123.46 | 240,242,130.51 | | Total Current Liabilities | 293,084,624.14 | 426,627,769.25 | | Total Liabilities | 455,280,062.02 | 599,245,302.26 | | Total Owners' Equity Attributable to Parent Company | 1,819,044,414.43 | 1,842,581,641.89 | | Total Owners' Equity | 1,819,044,537.91 | 1,842,581,759.99 | Consolidated Income Statement Key Data (Jan-Jun 2025) | Item | Current Period Amount (CNY) | Prior Period Amount (CNY) | | :--- | :-------------------------- | :------------------------ | | Total Operating Revenue | 373,429,343.73 | 558,207,787.04 | | Total Operating Cost | 362,604,850.69 | 511,124,148.77 | | Operating Profit | 14,402,430.26 | 55,055,509.38 | | Total Profit | 14,440,302.88 | 55,203,470.40 | | Net Profit | 13,152,311.98 | 46,877,614.00 | | Net Profit Attributable to Parent Company Shareholders | 13,152,306.37 | 46,877,612.27 | | Basic Earnings Per Share (CNY/share) | 0.08 | 0.28 | Consolidated Cash Flow Statement Key Data (Jan-Jun 2025) | Item | Current Period Amount (CNY) | Prior Period Amount (CNY) | | :--- | :-------------------------- | :------------------------ | | Net Cash Flow from Operating Activities | -14,110,630.80 | 174,901,502.72 | | Net Cash Flow from Investing Activities | 7,613,454.16 | -257,305,525.56 | | Net Cash Flow from Financing Activities | -40,137,753.64 | -63,046,464.02 | | Net Increase in Cash and Cash Equivalents | -46,997,692.60 | -145,521,314.00 | | Period-end Cash and Cash Equivalents Balance | 232,294,931.26 | 227,656,954.39 | III. Company Basic Information This section introduces the company's registered address, headquarters address, and main business activities, clarifying that the company belongs to the equipment manufacturing industry, with its main business covering the design, development, production, and sales of internal combustion engines, generator sets, new energy powertrain systems and related products, precision components, general machinery products and their accessories, as well as installation, commissioning, and comprehensive O&M services for communication base station equipment and facilities - The company's registered and headquarters address is No. 7879 Yingqian Street, High-tech Zone, Weifang City[153] - The company's main business includes the design, development, production, and sales of internal combustion engines, generator sets, new energy powertrain systems and related products, precision components, general machinery products and their accessories, as well as installation, commissioning, and comprehensive O&M services for communication base station equipment and facilities[153] IV. Basis of Financial Statement Preparation This section states that the company's financial statements are prepared on a going concern basis and comply with the Accounting Standards for Business Enterprises issued by the Ministry of Finance, ensuring the truthfulness and completeness of financial reporting - The company's financial statements are prepared on a going concern basis and in accordance with the "Accounting Standards for Business Enterprises" and other regulations issued by the Ministry of Finance[154] - The company has the ability to continue as a going concern for at least 12 months from the end of the reporting period, with no significant matters affecting its going concern ability[155] V. Significant Accounting Policies and Estimates This section details the significant accounting policies and estimates followed by the company in preparing financial statements, including classification, recognition, and measurement of financial instruments, determination of expected credit losses, inventory valuation and impairment provisions, and depreciation and amortization methods for fixed assets and intangible assets, providing a basis for understanding financial data - The company's financial statements comply with the requirements of Accounting Standards for Business Enterprises, truthfully and completely reflecting its financial position and operating results[156] - The company uses a 12-month period as its normal operating cycle, and its functional currency is RMB[158][159] - Financial assets are classified into three categories: measured at amortized cost, measured at fair value with changes recognized in other comprehensive income, and measured at fair value with changes recognized in profit or loss[171] - Expected credit losses are measured using a "three-stage" model, with a simplified approach for accounts receivable, always measuring loss provisions based on expected credit losses over the entire lifetime[174][175] - Inventories are valued using the weighted average method upon issuance, and measured at the lower of cost and net realizable value at the balance sheet date, with inventory impairment provisions recognized[194][195] - Fixed assets are depreciated using the straight-line method, with depreciation periods of 20-40 years for buildings and 5-15 years for machinery and equipment[208] - Intangible assets (land use rights, computer software) are amortized using the straight-line method, with amortization periods of 50 years for land use rights and 5-10 years for computer software[212] - Revenue is recognized when the customer obtains control of the related goods or services, at the transaction price allocated to the performance obligations[227] VI. Taxes This section discloses the company's main tax categories and rates, including VAT, urban maintenance and construction tax, and corporate income tax, and explains the differences in income tax rates for various taxable entities and the high-tech enterprise tax incentives enjoyed by the company Major Tax Categories and Rates | Tax Category | Tax Basis | Tax Rate | | :----------- | :------------------------- | :------------ | | Value-Added Tax (VAT) | Taxable Income | 6%、13%、18% | | Urban Maintenance and Construction Tax | Amount of Turnover Tax Payable | 7% | | Corporate Income Tax | Taxable Income | 15%、17%、25%、25.168% | | Education Surcharge | Amount of Turnover Tax Payable | 3% | | Local Education Surcharge | Amount of Turnover Tax Payable | 2% | - Huafeng Power Co., Ltd. applies a 15% corporate income tax rate, Shanghai Juxin Import and Export Co., Ltd. applies 25%, and PowerHF India Private Limited applies 25.168%[241] - The company was recognized as a high-tech enterprise in 2023 and enjoys a 15% income tax preferential policy from 2023 to 2025[242] VII. Notes to Consolidated Financial Statement Items This section provides detailed notes for each item in the consolidated financial statements, including monetary funds, trading financial assets, notes receivable, accounts receivable, inventories, fixed assets, construction in progress, intangible assets, deferred tax assets/liabilities, notes payable, accounts payable, employee benefits payable, other payables, long-term borrowings, lease liabilities, share capital, treasury stock, other comprehensive income, retained earnings, operating revenue and costs, taxes and surcharges, selling expenses, administrative expenses, R&D expenses, financial expenses, other income, investment income, fair value change gains, credit impairment losses, asset impairment losses, asset disposal gains, non-operating income, non-operating expenses, income tax expenses, and cash flow statement items, offering detailed explanations and disclosures for various financial data - Period-end monetary funds balance was CNY 236,332,552.99, including bill margin of CNY 2,037,621.73 and letter of guarantee margin of CNY 2,000,000.00[245] - Period-end trading financial assets balance was CNY 170,577,835.62, primarily debt instrument investments[247] - Period-end accounts receivable book balance was CNY 143,602,675.15, with bad debt provision of CNY 11,489,754.49, and book value of CNY 132,112,920.66[258] - Period-end inventory book value was CNY 155,238,404.43, with total inventory impairment provision and contract performance cost impairment provision of CNY 19,944,522.51[284] - Period-end fixed assets book value was CNY 761,938,976.70, including buildings of CNY 210,373,088.96 and machinery and equipment of CNY 549,366,692.06[300] - Period-end construction in progress book value was CNY 156,652,782.88, primarily including intelligent manufacturing technical upgrade projects for engine core components, and intelligent manufacturing projects for data center and communication generator sets[308] - Current period operating revenue was CNY 373,429,343.73, and operating cost was CNY 333,027,542.84[373] - Current period credit impairment loss was CNY -3,180,198.79, and asset impairment loss was CNY 244,619.34[384][385] VIII. R&D Expenses This section lists the company's R&D expenses during the reporting period, primarily including employee compensation, new product development, and trial production costs, with all R&D expenses recognized as current period expenses R&D Expenses by Nature of Expense (Jan-Jun 2025) | Item | Current Period Amount (CNY) | Prior Period Amount (CNY) | | :--- | :-------------------------- | :------------------------ | | Employee Compensation | 5,643,292.02 | 5,186,866.21 | | New Product Development and Trial Production | 1,644,393.76 | 9,707,730.73 | | Travel Expenses | 109,653.13 | 128,271.44 | | Depreciation and Amortization Expenses | 494,793.40 | 529,891.44 | | Office Expenses | 98,787.71 | 38,918.79 | | Other | 2,300,040.01 | 258,071.13 | | Total | 10,290,960.03 | 15,849,749.74 | | Of which: Expensed R&D | 10,290,960.03 | 15,849,749.74 | | Capitalized R&D | - | - | - Total R&D expenses for the current period were CNY 10,290,960.03, a decrease from the prior period, and all were expensed[408] IX. Changes in Consolidation Scope This section states that during the reporting period, the company did not experience business combinations not under common control, business combinations under common control, reverse acquisitions, or disposal of subsidiaries leading to loss of control - During the reporting period, the company did not experience business combinations not under common control, business combinations under common control, reverse acquisitions, or disposal of subsidiaries leading to loss of control[411] X. Interests in Other Entities This section details the composition of the company's enterprise group, including the names, principal places of business, registered capital, nature of business, and shareholding percentages of all subsidiaries, and explains the company's control methods over these subsidiaries Composition of Enterprise Group | Subsidiary Name