ETERN(SH:600105)2021-04-19 16:00Financial Performance - In 2020, the company's operating revenue was CNY 3,285,355,632.15, a decrease of 2.54% compared to CNY 3,371,003,476.55 in 2019[26]. - The net profit attributable to shareholders of the listed company for 2020 was a loss of CNY 559,592,484.36, a significant decline of 2,686.19% from a profit of CNY 21,637,709.18 in 2019[26]. - The net cash flow from operating activities increased by 132.76% to CNY 1,030,314,085.94 in 2020, compared to CNY 442,657,881.62 in 2019[26]. - The company proposed no profit distribution for 2020 due to the reported losses, with a year-end distributable profit of CNY 206,617,897.35[7]. - The company reported a net profit attributable to shareholders after deducting non-recurring gains and losses of CNY -603,116,556.57 for 2020, compared to CNY -22,114,317.63 in 2019[26]. - The basic earnings per share for 2020 was CNY -0.43, a decrease of 2,250% compared to CNY 0.02 in 2019[30]. - The total operating revenue for the reporting period was CNY 3,285,355,632.15, a decrease of 2.54% from the previous year, while operating costs increased by 6.08% to CNY 3,244,102,446.63[115][117]. - The company's total profit for the period was a loss of CNY 55,347.09 million, indicating significant financial challenges[115]. Operational Highlights - The company did not report any significant new product developments or technological advancements during the year[8]. - There were no mergers or acquisitions reported in 2020, indicating a focus on internal restructuring and operational efficiency[8]. - The company has not engaged in any non-operating fund occupation by controlling shareholders or related parties during the reporting period[8]. - The company is committed to addressing industry and market risks as detailed in the management discussion and analysis section of the report[8]. - The company recognized an impairment loss of CNY 13.75 million on goodwill due to reduced future cash flow expectations from certain projects[30]. - The company has established a strategic layout focusing on the full industry chain of optical communication and power transmission, enhancing its competitive edge[43]. - The company plans to continue expanding its market presence and developing new products in the optical communication and power transmission sectors[43]. Market Trends and Industry Insights - The optical communication industry reported a revenue of 407.2 billion yuan, an increase of 11% year-on-year, with a growth rate improvement of 6.3 percentage points[48]. - The total length of newly built optical cable lines in China reached 4.28 million kilometers in 2020, a decrease of 1.38% compared to 2019, while the total length of optical cable lines reached 51.69 million kilometers[50]. - The number of internet broadband access ports increased by 30.27 million, reaching 946 million, with fiber access ports accounting for 93% of the total[50]. - The demand for optical modules and optical devices remains strong, driven by the ongoing construction of 5G networks and the rapid development of data communication markets[54][55]. - The optical communication market in China is expected to maintain a compound annual growth rate of around 12% from 2021 to 2025, with the market size projected to exceed 170 billion yuan by 2025[55]. - The integration of 5G technology and big data applications is expected to drive substantial growth in the optical communication sector, with a strong recovery forecasted post-pandemic[54][55]. - The domestic market for optical chips is heavily reliant on imports, with only 3% of high-speed optical chips (25Gb/s and above) being domestically produced[57]. Research and Development - The company has established research centers in Wuhan and Suzhou for chip design and process development, focusing on high-profit segments of the optical communication industry[108]. - Research and development expenses rose by 5.69% to CNY 167,074,162.57, indicating a focus on innovation despite financial losses[117]. - The company applied for 194 patents in 2020, including 66 invention patents, and authorized 163 patents, with 24 being invention patents[136]. - The company has applied for a total of 24 patents in the superconducting materials and applications department during the reporting period, including 20 invention patents[142]. - The company plans to enhance its R&D capabilities by acquiring advanced testing equipment for its laboratories[141]. Strategic Initiatives - The company aims to enhance its competitive edge by expanding its product offerings across the entire optical communication value chain, from chips to systems[46]. - The company is transitioning from traditional cable products to a more integrated service model, providing systematic solutions and services to clients[46]. - The company aims to align with national policies such as "Digital China" and "New Infrastructure" to support its business expansion[94]. - The company has established a comprehensive solution provider model, extending from cable manufacturing to the entire communication industry[95]. - The company is actively promoting the transformation of smart factories, with multiple technical reform and smart projects currently underway[64]. Challenges and Risks - The net profit attributable to shareholders decreased by CNY 581.23 million compared to the previous year, primarily due to a significant decline in orders from major telecom operators and a drop in bidding prices, resulting in a gross profit decrease of CNY 29.38 million for optical cables[30]. - The weighted average return on net assets dropped to -20.51%, a decrease of 21.29 percentage points from 0.78% in 2019[30]. - The automotive wiring harness segment reported a gross margin of -10.20%, with revenue declining by 11.62% compared to the previous year[122]. - The company's total cost of materials for overseas engineering contracting was ¥671,466,142.95, which is 64.32% of the total cost for that segment, showing a 99.82% increase compared to the previous year[128]. Future Outlook - The company anticipates strong recovery in the optical fiber and cable industry driven by 5G, data centers, and smart city initiatives[175]. - The demand for 5G network upgrades is driven by the need for ultra-low latency and high reliability for applications like ultra-HD video communication and remote healthcare[178]. - The market space for 5G optical modules is projected to be significant, with various transmission rates and corresponding market values outlined in the report[179]. - The company aims for a "century-long" development goal, focusing on brand enhancement, high-end positioning, and internationalization[194].