Dunhuang Seed(SH:600354)2020-03-19 16:00Financial Performance - In 2019, the company reported a net profit of -215,861,822.75 RMB, with a net profit attributable to shareholders of -169,953,913.09 RMB, resulting in a total distributable profit of -928,772,681.93 RMB[5]. - The company's operating revenue for 2019 was 1,183,712,575.19 RMB, representing a year-on-year increase of 54.24% compared to 767,469,079.12 RMB in 2018[21]. - The net asset attributable to shareholders decreased by 24.06% from 698,785,599.97 RMB in 2018 to 530,681,376.13 RMB in 2019[21]. - The company reported a basic earnings per share of -0.3220 RMB for 2019, compared to -0.4122 RMB in 2018[22]. - The cash flow from operating activities for 2019 was -2,746,985.02 RMB, an improvement from -82,786,226.17 RMB in 2018[21]. - The total assets of the company decreased by 7.56% from 2,125,305,447.14 RMB in 2018 to 1,964,665,507.74 RMB in 2019[21]. - The company did not declare any profit distribution for the reporting period due to the negative profit situation[5]. - The weighted average return on equity was -27.65% in 2019, slightly worse than -26.94% in 2018[22]. - The company reported a non-recurring profit of 18,473,283.91 RMB in 2019, compared to 10,218,890.83 RMB in 2018[27]. Revenue Breakdown - In 2019, the company's seed industry revenue accounted for 28.58% of total revenue, while food and trade revenue made up 65.64%[31]. - The seed industry achieved revenue of 338.32 million yuan, a slight decrease of 0.07% compared to the previous year, with a gross profit margin of 21.88%, an increase of 4.94 percentage points[41]. - The food and trade industry reported revenue of 777.03 million yuan, an increase of 88.45% year-on-year, with a gross profit margin of 5.11%, down 1.09 percentage points[42]. - The total revenue from other business segments accounted for 5.78% of the company's total revenue in 2019[31]. Operational Challenges - The company faced significant challenges, as indicated by the negative net profit and cash flow, which may impact future operational strategies[6]. - The food industry is facing challenges due to increased competition and rising costs, with a shift towards higher value-added products expected in the future[34]. - The company faced challenges in the seed industry due to reduced corn planting areas and increased processing costs in the food sector[64]. - The company is focusing on stabilizing the planting area and seed demand for major grain crops to ensure food security[102]. Research and Development - The total R&D expenditure amounted to $19.32 million, which is 1.63% of total operating revenue[53]. - The company invested CNY 20 million to establish a wholly-owned subsidiary for corn variety research, enhancing its R&D capabilities[54]. - The company has established 6 breeding stations across various provinces, covering 649 acres of experimental land[54]. - The company has formed long-term cooperative relationships with several research institutions to accelerate the development of new crop varieties[55]. - The company has developed advanced seed breeding techniques, including the use of male sterility and hybridization methods, ensuring high-quality seed production[70]. Market Strategy - The company aims to capitalize on the growing demand for specialty, organic, and functional foods driven by changing consumer preferences[34]. - The company plans to enhance its proprietary seed variety breeding efforts to reduce reliance on contract seed production[31]. - The company is focusing on expanding its food processing capabilities, with plans to enhance raw material procurement and sales channels to improve profitability[68]. - The company is exploring new direct sales models, which currently account for only 2% of total sales, indicating potential for growth[76]. Financial Management - The company has established a financing structure that includes short-term loans, long-term loans, and leasing to manage its working capital needs effectively[89]. - The company has a significant seasonal cash flow pattern, with operational cash inflow peaking from October to May of the following year[89]. - The company has a unique seed production model involving "company + farmers + bases," focusing on both contract seed production and self-operated varieties[68][76]. Government Support and Subsidies - The total amount of government subsidies received in 2019 was approximately 3,190,510.00, with a total balance of 26,392,536.61 at the end of the period[80]. - The company benefits from VAT exemptions on the sale of agricultural products, including seeds and fertilizers, which significantly reduces tax liabilities[82]. - The company’s subsidiaries are exempt from corporate income tax for income derived from agricultural projects, including the breeding of new crop varieties[85]. Corporate Governance - The company appointed Da Xin Certified Public Accountants (Special General Partnership) as the financial audit and internal control audit institution for the 2019 fiscal year[120]. - The total amount of guarantees provided by the company, including those to subsidiaries, is CNY 20.6 million, which accounts for 37.57% of the company's net assets[126]. - The company has not engaged in any significant related party transactions during the reporting period[122]. - The company has established internal control mechanisms, with an internal control audit report available for review[180]. Employee Engagement and Training - The total number of employees in the parent company and major subsidiaries is 799, with 374 in the parent company and 425 in subsidiaries[168]. - The company has conducted various training programs, including financial, safety, internal audit, and quality system training, to enhance employee skills[170]. - The management team includes individuals with advanced degrees and significant industry experience, enhancing strategic decision-making[159]. Social Responsibility and Community Engagement - The company has actively implemented poverty alleviation initiatives in accordance with national policies[127]. - A total of 7,995.11 million RMB was allocated for poverty alleviation efforts, with 35 individuals successfully lifted out of poverty[134]. - The company provided 40,000 RMB worth of flower seeds and 4,000 RMB worth of sweet sorghum seeds to support local agricultural development[132]. - The company facilitated the establishment of cooperative models such as "cooperatives + poor households" to enhance agricultural income[130].