TCKG(SH:600112)2021-04-29 16:00Financial Performance - The company's operating revenue for 2020 was CNY 139,312,904.18, a decrease of 47.70% compared to CNY 266,355,402.38 in 2019[21]. - The net profit attributable to shareholders was CNY 195,503,958.07, a significant recovery from a loss of CNY 846,007,878.14 in 2019, representing a 76.89% improvement[21]. - The net cash flow from operating activities was -CNY 18,487,952.94, an improvement of 83.73% compared to -CNY 113,661,944.24 in 2019[21]. - The total assets at the end of 2020 were CNY 1,262,384,768.80, down 24.53% from CNY 1,672,653,738.49 in 2019[21]. - The net asset attributable to shareholders was -CNY 63,144,621.01 at the end of 2020, a decrease of 117.1% from CNY 367,366,174.10 in 2019[21]. - The basic earnings per share for 2020 was -CNY 0.3839, an improvement of 76.89% from -CNY 1.6614 in 2019[22]. - The weighted average return on equity was -72.51% in 2020, compared to -110.11% in 2019[22]. - The company reported a substantial increase in production and sales volume, as well as net profit, compared to the same period in 2019, despite challenges posed by the COVID-19 pandemic[33]. - The company achieved operating revenue of CNY 139.31 million, a decrease of 47.70% compared to CNY 266.36 million in the same period last year[43]. - The net profit attributable to shareholders improved to CNY -19.55 million, a 76.89% increase from CNY -84.60 million year-on-year[43]. - The total comprehensive loss for 2020 was CNY -391.98 million, compared to CNY -885.39 million in 2019, showing a 55.8% reduction[177]. Legal and Compliance Issues - The company has been involved in 108 litigation and arbitration cases, with a total amount of 115,633.65 million RMB, of which 78 cases remain unresolved, involving 101,674.6 million RMB[9]. - The company is under investigation by the China Securities Regulatory Commission for violations related to information disclosure since July 8, 2020[6]. - The company has committed to enhancing internal control measures to prevent future violations and ensure compliance with legal regulations[7]. - The company is addressing issues related to shareholder fund occupation and illegal guarantees, actively seeking resolutions to protect shareholder interests[75]. - The company is involved in 108 litigation and arbitration cases since January 1, 2020, with a total amount of RMB 1,156.34 million, of which 78 cases remain unresolved, involving RMB 1,016.75 million[80]. - The company has 653 securities false statement liability disputes with a total amount of RMB 96.02 million, which has not significantly impacted its operations[80]. - The company has been under investigation by the China Securities Regulatory Commission for suspected violations of information disclosure laws, with no conclusive findings reported as of the audit date[158]. Shareholder and Capital Structure - The company will not distribute profits or increase capital reserves due to not meeting the profit distribution conditions as per its articles of association[4]. - The company has not proposed any cash dividend distribution plan for the past three years, with net profits of RMB -195.50 million in 2020 and RMB -846.01 million in 2019[84]. - The largest shareholder, Yinhe Tiancheng Group, held 93,403,800 shares, representing 18.34% of the total shares, with no shares under lock-up[112]. - The second-largest shareholder, Li Lujun, increased his holdings by 2,972,140 shares to a total of 10,053,988 shares, accounting for 1.97% of the total[112]. - The company’s controlling shareholder, Yinhe Tiancheng Group, held 88,603,800 shares as of the report date, which is 17.40% of the total shares[119]. - The total number of ordinary shareholders at the end of the reporting period was 30,684, an increase from 30,347 at the end of the previous month[111]. Operational Challenges and Strategies - The company has faced significant cash flow issues and increasing debt pressure due to the involvement of its controlling shareholder in fund occupation and litigation, leading to continued losses[39]. - The company plans to actively negotiate debt settlements and manage its financial obligations to maintain normal operations[9]. - The company plans to focus on improving operational efficiency and exploring new market opportunities in the upcoming fiscal year[21]. - The company plans to enhance product variety and technological innovation to improve market competitiveness in the medium-voltage equipment sector[68]. - The company aims to expand its market share in the medium-voltage product sector, driven by urbanization and power grid construction investments[68]. - The company plans to optimize and integrate resources within its subsidiaries, reduce product and management costs, and enhance product quality to maintain core competitiveness and drive revenue growth[71]. - The company is committed to continuous R&D investment to improve technological innovation capabilities and accelerate product upgrades[40]. Financial Health and Risks - The company reported a significant financial distress, with continuous losses for two consecutive years, resulting in insolvency and numerous debt defaults[90]. - The company has made full provisions for bad debts related to other receivables amounting to CNY 9.77 million, but the nature of these transactions remains uncertain[91]. - The company’s cash and cash equivalents were restricted due to guarantees and frozen funds amounting to ¥5,140,478.85[59]. - The company faces risks from macroeconomic conditions, raw material price fluctuations, and market competition, and will implement strategies to mitigate these risks[78]. - The company has fully recognized bad debt provisions for non-operational fund occupation by related parties amounting to CNY 310.70 million, raising concerns about the accuracy of these estimates[159]. Internal Control and Governance - The company has faced significant internal control deficiencies, including a debt default leading to the freezing of multiple bank accounts, with a total debit amount of CNY 40,257,238.72 and a credit amount of CNY 39,987,860.10 during the year[152]. - The internal control audit report issued a negative opinion on the effectiveness of the company's internal controls, highlighting major deficiencies that impacted the financial reporting[152]. - The board of directors has committed to implementing corrective measures to address identified internal control deficiencies and ensure compliance with regulations[153]. - The company has established a governance structure that guarantees equal rights for all shareholders and ensures fair and reasonable related party transactions[139]. - The company has committed to enhancing the quality of information disclosure, ensuring compliance and transparency for all stakeholders[141]. Market and Industry Outlook - The electrical equipment manufacturing industry in China is experiencing accelerated development due to increased policy support for major equipment research and development[32]. - The market demand for electrical equipment is expected to grow significantly with increased national investment in power sources and grids[32]. - The company’s main business includes electrical equipment manufacturing and mineral resource development, with a focus on medium-voltage electrical equipment[29]. - The company has established stable relationships with suppliers to ensure the quality and stability of components, reducing the impact of price fluctuations on production costs[31]. - The company is actively expanding its market presence by focusing on the sales of ring network cabinet products and developing new customer relationships while optimizing pricing strategies[40].