VEKEN TECHNOLOGY(SH:600152)2019-04-22 16:00Financial Performance - The net profit attributable to the parent company for 2018 was CNY 54,579,586.18, while the net profit based on the parent company's perspective was CNY -176,294,129.77, leading to no profit distribution or capital reserve transfer for the year[5]. - The company's operating revenue for 2018 was CNY 1,602,678,942.81, representing a year-on-year increase of 0.34% compared to CNY 1,597,220,000 in 2017[20]. - The net profit attributable to shareholders of the listed company in 2018 was CNY 54,579,586.18, a significant increase of 241.58% from CNY 15,978,700 in 2017[20]. - The basic earnings per share for 2018 was CNY 0.1249, reflecting a 197.38% increase compared to CNY 0.0420 in 2017[21]. - The total assets at the end of 2018 were CNY 2,471,257,834.68, a decrease of 9.10% from CNY 2,718,650,000 at the end of 2017[20]. - The cash flow from operating activities for 2018 was CNY -17,225,790.53, compared to CNY -41,327,000 in 2017[20]. - The company reported non-operating income of CNY 116,643,341.08 in 2018, compared to CNY 7,930,120.09 in 2017[26]. - The weighted average return on equity for 2018 was 3.89%, an increase of 2.22 percentage points from 1.67% in 2017[21]. - The company experienced a net loss attributable to shareholders of CNY 162,830,624.24 in 2018, compared to a loss of CNY 87,457,000 in 2017[20]. - The diluted earnings per share for 2018 was CNY 0.1228, indicating a 192.38% increase from CNY 0.0420 in 2017[21]. Audit and Compliance - The company has received a standard unqualified audit report from Lixin Zhonglian Certified Public Accountants[4]. - The company’s board of directors and senior management have guaranteed the authenticity, accuracy, and completeness of the annual report[8]. - The report includes a detailed description of potential risks faced by the company in the future, which can be found in the section discussing operational conditions and analysis[7]. Business Operations and Strategy - The company's energy business is the main source of revenue, focusing on lithium batteries for consumer electronics, with a significant shift away from textile operations after the divestiture of textile subsidiaries in October 2018[30][38]. - The total revenue from the energy business is projected to grow, driven by increasing demand for lithium-ion batteries in smartphones and emerging technologies like 5G and wearable devices[36][37]. - The company is implementing a flexible production system to reduce costs and improve efficiency, adapting to market demands with a "small batch" production approach[34]. - The company anticipates strong growth in the wearable device market, with global shipments expected to reach 123 million units in 2018, continuing double-digit growth through 2022[37]. - The company is facing external risks such as tightening monetary conditions and rising trade protectionism, which may impact its operations and profitability[39]. - The company is adjusting its product structure, particularly in the battery segment, to reduce the production of small-capacity batteries[74]. - The company aims to strengthen its market position and explore new markets, particularly in high-growth areas like smart home devices and electronic vaporizers[132]. - The company plans to enhance internal management to improve profitability and reduce manufacturing costs[133]. Asset Management and Divestitures - The company completed the divestment of loss-making textile assets by the end of October 2018, streamlining its business structure[66]. - The company transferred 100% equity of its wholly-owned subsidiary Ningbo Yongda Textile Co., Ltd. for a price of RMB 7.9 million after an initial auction failed[40]. - The company successfully auctioned 100% equity of its wholly-owned subsidiary Ningbo Weike Cotton Textile Co., Ltd. for RMB 13.403 million, which was set at 90% of the net asset evaluation price[41]. - The company sold assets of its subsidiary Zhenjiang Weike Jinghua Cotton Textile Co., Ltd. for RMB 7.149 million, based on 90% of the asset evaluation price[42]. - The company acquired 100% equity of Dongguan Lianzhi Enterprise Management Co., Ltd. for RMB 110 million and 100% equity of Dongguan Zhongxin Enterprise Management Co., Ltd. for RMB 68 million, totaling RMB 178 million[43]. - The company transferred a total of 93.34% equity of Ningbo Weike Home Textile Co., Ltd. and other subsidiaries for an initial price of RMB 81.9522 million, but the auction failed due to no bids[44]. - The company adjusted the auction price for the aforementioned equity to RMB 57.36 million, which was successfully sold to its controlling shareholder[45]. - The company sold real estate assets located in Ningbo for RMB 14.96312 million and RMB 2.46366 million, respectively, to its controlling shareholder[46]. Research and Development - The company holds 25 authorized invention patents and 10 utility model patents, enhancing its technological innovation capabilities[59]. - Research and development expenses rose significantly by 25.25% to approximately ¥63.98 million, indicating a focus on innovation[69]. - The number of R&D personnel was 451, accounting for 20.22% of the total workforce[83]. - Weike Battery is gradually increasing its investment in the research and development of power lithium-ion batteries and energy storage lithium-ion batteries, aiming to diversify its product offerings[154]. Related Party Transactions - The company reported a total of 34.31 million RMB in related party purchases and 774.35 million RMB in related party sales during the reporting period, with related party sales accounting for 0.54% of the company's main business revenue[178]. - The total amount of related party transactions during the reporting period was 808.66 million RMB, which does not affect the company's independence[178]. - The company’s procurement from related parties was 34.31 million RMB, while sales to related parties were 774.35 million RMB, indicating a significant reliance on related party transactions[178]. - The company’s related party transactions included various utility services, with significant amounts for water and electricity services[177]. Future Outlook - The company will continue to implement a "dual-driven" development strategy focusing on operations and capital in 2019[136]. - The company focuses on the 3C digital lithium-ion battery business as a strategic development priority, aiming to enhance capacity and scale advantages to capture opportunities in emerging markets such as 5G technology and smart home devices[137]. - The company plans to optimize its resources and expand into small power PACK businesses for two-wheeled vehicles, vacuum cleaners, and electric tools, leveraging existing equipment and capacity[138]. - The company is establishing an industrial merger and acquisition fund to enhance capital operations and achieve capital growth through investments and mergers[139]. - In 2019, the company aims to improve operational capabilities in the energy business, increase R&D investment, and enhance lithium battery energy density and safety performance[140].