Hengtong(SH:600226)2020-06-29 16:00Financial Performance - The company's consolidated financial statements reported a net loss attributable to shareholders of the parent company of ¥672,992,723.05 for the year 2019[6]. - The parent company's net profit for 2019 was ¥542,994,243.33, with an undistributed profit carried forward from the previous year of ¥572,332,669.19, resulting in an ending undistributed profit of -¥39,195,210.00 after deducting cash dividends of ¥68,533,635.86[6]. - The company's operating revenue for 2019 was RMB 805,256,358.25, a decrease of 18.00% compared to RMB 982,064,939.24 in 2018[26]. - The net profit attributable to shareholders for 2019 was a loss of RMB 672,992,723.05, a decline of 574.88% from a profit of RMB 141,719,552.61 in 2018[26]. - The basic earnings per share for 2019 was -0.22 RMB, down 540.00% from 0.05 RMB in 2018[27]. - The total assets at the end of 2019 were RMB 4,159,059,189.32, a decrease of 17.95% from RMB 5,068,902,850.12 at the end of 2018[26]. - The net assets attributable to shareholders at the end of 2019 were RMB 3,546,130,674.44, down 18.24% from RMB 4,337,402,756.71 at the end of 2018[26]. - The net cash flow from operating activities for 2019 was -RMB 102,419,843.91, an improvement from -RMB 176,120,333.71 in 2018[26]. - The weighted average return on equity for 2019 was -17.10%, a decrease of 20.42 percentage points from 3.32% in 2018[27]. Legal and Compliance Issues - The company has faced legal issues, including a court order freezing assets valued at ¥133,229,480 due to non-compliance with decision-making procedures for providing guarantees[11]. - The auditor issued a disclaimer of opinion on the company's 2019 financial statements, indicating significant concerns regarding the accuracy and completeness of the financial reporting[11]. - The internal control effectiveness was deemed ineffective by the auditor, raising concerns about the company's governance and operational integrity[11]. Strategic Initiatives and Market Position - The company has not disclosed any new product developments or market expansion strategies in the report[7]. - The company has not provided specific guidance for future performance or strategic initiatives in the report[7]. - The company aims to enhance its business model by integrating IP authorization, development, and sales into a comprehensive industry chain[40]. - The company plans to leverage its strengths in game development and overseas distribution to capture market opportunities[40]. Industry Trends and Market Analysis - The gaming industry in China saw a total revenue of ¥2,308.8 billion in 2019, with a year-on-year growth of 7.7%[40]. - The mobile gaming market generated ¥1,581.1 billion in 2019, accounting for 68.5% of the total market, reflecting an 18.0% increase year-on-year[40]. - The overall gaming market in China is expected to maintain a stable growth trajectory, with export revenues also on the rise[40]. - In 2019, the number of game users in China reached 640 million, with a year-on-year growth of 2.5%, indicating a significant slowdown in growth[43]. - The actual sales of independently developed games in the overseas market amounted to 82.52 billion yuan in 2019, representing a year-on-year increase of 21.0%[43]. Financial Management and Shareholder Relations - The company plans not to distribute profits or increase capital reserves for the year 2019, pending approval at the annual shareholders' meeting[6]. - The company has a cash dividend policy that requires a minimum of 10% of distributable profits to be distributed as cash dividends annually, with a cumulative distribution of at least 30% of the average annual distributable profits over the last three years[169]. - In 2019, the company distributed cash dividends of 0.22 yuan per 10 shares, totaling approximately 68.53 million yuan (including tax) based on a total share base of 3,115,165,266 shares[171]. - The company did not propose any cash profit distribution plan for 2019 despite having a positive profit available for distribution to ordinary shareholders[173]. Research and Development - The company has invested in advanced research facilities, including gene engineering and microbiology laboratories, to support its R&D efforts in biopharmaceuticals and agricultural products[59]. - The company plans to enhance internal control and risk management systems to improve operational efficiency and competitiveness in 2020[64]. - The company’s investment in research and development is expected to increase as it focuses on high-efficiency, safe, and low-residue products in the veterinary drug market[153]. Environmental and Regulatory Challenges - The chemical industry is facing stricter regulations due to the revised Food Safety Law and Environmental Protection Law, which require higher standards for pesticide and veterinary drug production[99]. - The implementation of the Environmental Protection Tax Law has increased the environmental costs for pesticide companies, with specific tax amounts based on pollution equivalents[102]. - The Ministry of Agriculture has set a target for zero growth in the use of veterinary antibiotics, aiming to control drug residues and antibiotic resistance in livestock[102]. - New regulations require pesticide products to have traceable QR codes, enhancing market supervision and product safety[102]. Operational Efficiency and Cost Management - The company’s cash flow from operating activities showed an improvement, with a net cash outflow of RMB 102,419,843.91, a 41.85% reduction compared to the previous year[68]. - The company's operating costs decreased by 10.06% year-on-year, totaling RMB 521,284,591.07[70]. - Total costs decreased by 9.39% year-on-year, from 495,902,211.46 to 449,335,456.95[76]. Shareholder Commitments and Governance - The controlling shareholder committed to ensuring the independence of the company’s management and financial operations, including establishing an independent financial accounting department[177]. - The actual controller has promised to avoid any actions that could harm the company's interests or those of its shareholders[188]. - The company will ensure that its governance structure is independent and operates in compliance with relevant regulations[188].