AVIC AVIONICS(SH:600372)2023-03-15 16:00Financial Performance - The net profit attributable to the parent company for 2022 was CNY 871,912,569.27, with no cash dividends or stock bonuses proposed[2]. - The company's operating revenue for 2022 was approximately ¥11.19 billion, representing a 13.69% increase compared to ¥9.84 billion in 2021[14]. - Net profit attributable to shareholders for 2022 was approximately ¥871.91 million, a 9.17% increase from ¥798.70 million in 2021[14]. - The net cash flow from operating activities for 2022 was negative at approximately -¥793.67 million, a significant decrease of 151.21% compared to ¥1.55 billion in 2021[14]. - The total assets at the end of 2022 were approximately ¥28.40 billion, an 8.15% increase from ¥26.26 billion at the end of 2021[16]. - The net assets attributable to shareholders at the end of 2022 were approximately ¥12.19 billion, an increase of 8.44% from ¥11.24 billion at the end of 2021[16]. - Basic earnings per share for 2022 were ¥0.4546, reflecting a 9.15% increase from ¥0.4165 in 2021[17]. - The weighted average return on equity for 2022 was 7.44%, an increase of 0.13 percentage points from 7.31% in 2021[17]. - The company reported non-recurring gains of approximately ¥176.95 million for 2022, compared to ¥111.35 million in 2021[20]. Asset Restructuring - The company is currently in the implementation phase of a major asset restructuring involving the merger with AVIC Electromechanical Systems Co., Ltd., approved by the China Securities Regulatory Commission in December 2022[2]. - The company plans to expedite profit distribution matters after the completion of the major asset restructuring, in accordance with regulatory requirements and company bylaws[2]. - The company emphasizes the importance of investor returns and aims to ensure smooth progress in the restructuring work[2]. - The company successfully completed the merger and acquisition project with a 98.4% approval rate at the shareholders' meeting on October 26[23]. - The company plans to merge with AVIC Electromechanical Systems Co., Ltd. through a share swap and raise supporting funds, with the transaction approved by relevant authorities[52]. - The company aims to enhance its long-term development and sustainable operational capacity through the merger, which aligns with the interests of all shareholders[55]. - The company is focused on compliance with regulations regarding major asset restructuring, ensuring that the transaction does not dilute immediate returns[77]. Research and Development - Research and development expenses surged by 44.04% to ¥1,191,397,963.75, up from ¥827,134,387.49 in the previous year[32]. - The total R&D expenditure for the period was CNY 1,191,397,963.75, accounting for 10.65% of the operating revenue[39]. - The number of R&D personnel is 3,628, representing 31% of the total workforce[40]. - The company is focusing on technological innovation, with breakthroughs in several key aerospace electronic technologies supporting product development and delivery[24]. - The company emphasizes the importance of technological innovation, particularly in emerging fields such as quantum science and artificial intelligence, to drive avionics technology advancements[59]. Compliance and Governance - The company has established a comprehensive compliance management system, identifying five major risks for 2022 while ensuring no significant compliance issues occurred in subsidiaries[25]. - The company has implemented a governance structure that aligns with regulatory requirements, ensuring that the board of directors and management operate independently and in compliance with laws[70]. - The company has a total of 11 directors, including 4 independent directors, adhering to the relevant requirements for board composition[71]. - The company has established a performance evaluation and incentive mechanism to enhance the effectiveness and motivation of its management team[72]. - The company maintains transparency in information disclosure, with the chairman responsible for ensuring compliance with disclosure regulations[73]. - The company has established specialized committees, including an audit committee and a strategic committee, to enhance governance and oversight[93]. Market Expansion and Strategy - The company is actively expanding its civil aviation strategy, becoming a supplier for the C919 project and enhancing its product offerings in various aircraft categories[23]. - The company aims to enhance its competitiveness in the avionics system industry by 2025, focusing on advanced product systems and a robust innovation framework[63]. - The company is committed to expanding its defense business by exploring new markets in aerospace, weaponry, and naval sectors[64]. - The company is enhancing its capabilities in civil aviation services, including parts distribution and maintenance, to capture new growth opportunities[65]. - The company is actively pursuing mergers and acquisitions to strengthen its position as a leading integrated supplier in the avionics system sector[60]. Environmental and Social Responsibility - The company invested ¥9.8942 million in environmental protection during the reporting period[114]. - The company successfully achieved zero environmental pollution incidents and met all environmental discharge standards[114]. - The company reduced carbon emissions by 2,299 tons through the use of clean energy and carbon reduction technologies[122]. - A total of ¥1.1699 million was invested in public welfare projects, benefiting 24,600 people[123]. - The company contributed ¥4.983 million to poverty alleviation and rural revitalization projects, benefiting 16,420 people[124]. - The company has established a comprehensive environmental management system to ensure compliance with national regulations[116]. Financial Management - The company has a structured performance evaluation and incentive system for the remuneration of directors, supervisors, and senior management, which is approved by the shareholders' meeting[84]. - The company has a dedicated team for financial planning and investment, aimed at optimizing resource allocation and enhancing financial performance[82]. - The company has committed to maintaining a competitive and fair compensation policy linked to individual performance and company profitability[104]. - The company reported a total of 11,247 employees, with 11,236 in major subsidiaries and 11 in the parent company[101]. - The company has 2,060 employees with a master's degree or above, and 4,696 with a bachelor's degree[101]. Risks and Challenges - The company faces intensified market competition risks due to the entry of new competitors, including private enterprises, as a result of national military-civilian integration strategies and state-owned enterprise reforms[67]. - Supply chain risks are heightened by U.S. trade restrictions on China, potentially impacting the procurement of electronic components essential for the company's aviation electronic products[67]. - The company has a long supply chain and lengthy aircraft development cycles, leading to high accounts receivable and inventory levels, which may affect asset turnover efficiency[67]. Shareholder Engagement - The company plans to implement a shareholder return plan for the next three years (2022-2024) as discussed in the third extraordinary general meeting on November 15, 2022[77]. - The company will provide dissenting shareholders with a buyout option at a price of 18.44 CNY per share, ensuring protection of minority shareholder interests[127]. - The cash buyout option for dissenting shareholders of AVIC Electromechanical is set at 10.33 CNY per share, with adjustments for any dividends or stock distributions prior to the buyout[128].